Registered number:
Directors' Report and Financial Statements
For the Period Ended
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Company Information
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Contents
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Group Strategic Report
For the Period Ended 31 March 2023
The Strategic Report has been prepared by the directors to provide additional information to shareholders in respect of the Group’s strategies and business objectives.
The Strategic Report contains forward-looking statements, which have been made in good faith by the directors based on information available up to the point of approval of this report. Therefore, there are inherent uncertainties involved in making these statements, including both economic and business risk factors. The directors, in preparing the Strategic Report, have complied with s414C of the Companies Act 2006.
Brewer Topco Limited was incorporated on 7 October 2021 in order to facilitate the Investment in the Dains Group of businesses on 14 December 2021 whereby Horizon Capital acquired a controlling stake in the Group and provided capital to expand our capabilities further (“The Investment”).
For the trading period 14 December 2021 to 31 March 2023 the Group has recorded record turnover of £33.3m and EBITDA (earnings before interest, tax, depreciation and amortisation) of £6.38m. When considering our post year end acquisitions on a full year basis our proforma revenues are approximately £42 million with EBITDA of £8.8 million. This performance is in line with business plan and benchmarks well to target EBITDA margin of 20% per annum. Our strategy is to expand the Group service line proposition, as well as our geographical footprint, both organically and via the acquisition of similar and complimentary businesses. In our first period of trading following the Investment we are pleased to have acquired Barringtons Limited, a well-established accountancy practice with its primary office in Stoke, Isosceles Finance Limited, a multi-disciplinary outsourced accounting, FD and HR services business with offices in Surrey and South Yorkshire and William Duncan + Co, a long established general accountancy and business recovery practice with offices in Glasgow and Ayrshire. We are delighted with the progress we have made in delivering our strategy in the period and this strong momentum has continued post year end with the acquisition of two further business, Opto Group Limited, a specialist VAT and Employment tax advisory firm to the public sector and not for profit sector and HSKS Greenhalgh Limited, a well-regarded accountancy, audit and taxation firm based in the East Midlands. In addition further acquisitions are at an advanced stage which we anticipate completing in the next financial year, subject to satisfactory due diligence All acquired businesses provide a great cultural fit and we warmly welcome them into our enlarged Group which we are proud to say is now one of the fastest growing accountancy firms in the UK with a large and diverse client base, and high levels of repeat or re-occurring revenues. Gross margins are strong and cash generation is excellent confirming that both the legacy Dains business and the acquired businesses are performing well. With increased scale comes the ability to cross sell services across the Group and in a fragmented market we are very well placed to take advantage of many opportunities open to us for the benefit of staff and clients alike as we work towards our ambition of being the go-to firm in the profession.
Risks are managed across the Group which includes those relevant to the company.
The principal risks and uncertainties outlined in this section reflect those risks that, in the opinion of the Board, might materially affect the Group’s future performance, prospects or reputation. The Group uses a robust risk management framework, which provides control and oversight as we continue to scale our business. These controls include maintaining a comprehensive risk register which is reviewed regularly by the Board and the executive management team, in order to outline the key and emerging risks that the Group is exposed to, and any remedial actions required to mitigate such risks in a timely manner.
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Group Strategic Report (continued)
For the Period Ended 31 March 2023
The Board sets our overarching risk culture and appetite and ensures that we manage risk appropriately across the Group. Financial, regulatory and compliance and reputation and brand risks are top priorities. At a functional level, each service line is responsible for preparing and maintaining their functional risk registers and, with the assistance of the Board, identify, assess, manage and monitor the risks and review emerging risks within their service line. Each risk is assigned an owner through which ongoing activities, control measures and any actions related to that risk are updated whilst at all times applying the agreed risk appetite set by the Board.
Financial Risk The Group's activities expose it to a number of financial risks. These include movements in interest rates on bank borrowings, rising office costs including increasing energy costs and wage inflation. With these risks and uncertainties in mind, we are aware that any plans for the future development of the Group may be subject to unforeseen future events outside of our control. However, we will continue to show flexibility and respond to market conditions and opportunities as they arise. The Group’s principal financial instruments comprise bank balances, bank loans, other loans, trade debtors and trade creditors. The main purpose of these instruments is to finance the business' operations. In respect of bank balance, the liquidity risk is managed by maintaining a balance between the continuity of funding and flexibility. All of the Group's cash balances are held in such a way that achieves a competitive rate of interest. In respect of bank loans and other loans, the Group is financed through a combination of debt instruments which carry a mixture of fixed and variable rates of interest. Trade debtors are managed in respect of credit and cash flow risks by policies concerning the credit offered to customers and regular monitoring of the amounts outstanding for both time and credit limits. The amounts presented in the balance sheet are net of allowances for doubtful debtors. Trade creditors' liquidity risk is managed by ensuring sufficient funds are available to meet amounts due. Regulatory and Compliance Risk The accountancy, audit and taxation sectors are heavily regulated and as a result, in addition to the normal government guidelines and regulations that a business is subject to, the Group is also regulated by the Institute of Chartered Accountants in England and Wales ("ICAEW") and The Institute of Chartered Accountants of Scotland ("ICAS"), and Information Commissioners Office (‘ICO’). Non compliance with any regulations could result in reputation damage to the Group and may have financial implications. The Group has a strong Compliance and Regulatory team which regularly monitors compliance with all necessary regulations through a mixture of internal and external reviews. The Board is updated on any regulatory developments and any re-assessment of risk to the business so that it can ensure that such matters are fully considered in all business and strategic decisions. The Group aims to ensure that colleagues are appropriately trained, supervised and incentivised to ensure their behaviour and activities do not inadvertently result in poor outcomes for clients. The Group has embedded the International Standard on Quality Management (UK) 1 and 2 as issued by the Financial Reporting Council. Reputation and Brand Risk The Dains, William Duncan and Isosceles Finance brands and the reputation of the Group and its professionals are driving factors behind the success of the Group. Anything that damages the Group’s brand or reputation could negatively impact the future success of the business. Damage to the Group's brands could have a detrimental impact reputationally which ultimately could have financial implications for the Group. The Board has in place detailed processes to ensure that all work is undertaken in accordance with the ICAEW or ICAS Code of Conduct and Professional Ethics. Regular internal cold field reviews are undertaken to identify areas of non-compliance and the Group has employment policies and procedures in place to deal with such issues. The employment contracts for all employees also contain appropriate provisions in regard to the standards expected and preservation of confidential information.
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Group Strategic Report (continued)
For the Period Ended 31 March 2023
The management team and individual services lines uses a number of key performance indicators (KPIs) to monitor the Group’s performance against its strategic objectives. These comprise a number of financial measures which are agreed and monitored by the Board.
The financial indicators are generally calculated based on underlying results excluding any one-off transactional and acquisition related costs as these underlying KPIs provide a more meaningful comparison of the key drivers of the Group’s financial success. The overarching focus of the Board is on overall growth in both fee income and profitability, with a view to improving the profit margins achieved across the individual services and Group as a whole whilst still maintaining a well invested business with a strong management and support function able to meet its evolving needs. The Board considers the Groups key performance indicators to be revenue and EBITDA and are happy with the performance of the business as noted in the business review when measured against these indicators.
In addition to the financial key performance indicators, the Board use a number of non-financial key performance indicators to monitor the Group's performance against the strategic objectives.
The Groups non-financial key performance indicators are considered to be staff attrition and client and staff net promoter scores which for the year under review were as follows: Group Staff attrition – 16.7% Staff Net Promoter Score NPS +28 Client Net Promoter Score NPS +81
Section 172 of the Companies Act 2006 requires directors to act in a way that they consider, in good faith, would be, most likely to promote the success of a company. In doing so, directors must take into consideration the interests of the various stakeholders of the Group, the impact of the Group's operations on the community and the environment, take a long-term view on consequences of the decisions they make as well as aim to maintaining a reputation for high standards of business conduct and fair treatment between the members of the Group.
In complying with the requirements of section 172 of the Act, the directors should be able to ensure that all decisions are made in a responsible and sustainable way for the benefit of all stakeholders. In accordance with the requirements of the Companies (Miscellaneous Reporting) Regulations 2018, the Group explains below how the directors have discharged their duty under section 172. This section serves as the Company's Section 172 Statement. The Group's stakeholders include its employees, its clients, shareholders, regulators, as well as the wider community in which the Group operates and impacts. Details of how the Board seeks to understand the needs and priorities of the Group's stakeholders and how these are taken into account during all its discussions and as part of its decision making are set out below: Employees Employee engagement is important to our success. We work to create a diverse and inclusive workplace where every employee can reach their full potential and be at their best. We engage with our people to ensure we are delivering to their expectations, supporting wellbeing and making the right business decisions. This ensures we can retain and develop the best talent.
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Group Strategic Report (continued)
For the Period Ended 31 March 2023
Clients
Focusing on the needs of our clients is critical to the success of our business. We maintain a high degree of professionalism and client service and interaction in order to anticipate and understand the future needs of our clients and their stakeholders, building on our years of experience in delivering to our specialist services. We collaborate and innovate with our clients to improve our service offering and value to our clients. Shareholders and lenders We work to ensure that our shareholders have a strong understanding of our strategy, performance, ambition and culture. Regulators The Group continues to work hand in hand with its regulator, the Institute of Chartered Accountants in England and Wales ("ICAEW") and The Institute of Chartered Accountants of Scotland ("ICAS"), to ensure that it abides by its professional and regulatory duties and obligations in an open and transparent manner. The Board conducts regular internal and external compliance reviews. Communities Our ‘Dains in the Community’ initiative supports local charities, events and initiatives. We like to: take responsibility for the community; donate to, raise awareness of and support charities that are important to employees and our clients; and be a positive role model to other companies. We inspire by leading the way. Each year we help charities, schools, clubs, parish councils and other worthwhile Groups with their compliance requirements. Culture The Board are responsible for the overall effectiveness in directing the Group and promoting a culture of openness and debate and seeks to facilitate effective contributions by all Directors and employees. The Directors are required to act with integrity, lead by example and promote this culture within the Group. The Board seeks to ensure the alignment of the Group’s purpose, value and strategy with the culture of openness, debate and integrity through ongoing dialogue, and engagement with Stakeholders. It has adopted a number of policies, practices and behaviours to facilitate a culture of good governance and ensure that this is maintained.
This report was approved by the board on 6 October 2023 and signed on its behalf.
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Directors' Report
For the Period Ended 31 March 2023
The directors present their report and the financial statements for the period ended 31 March 2023.
The company was incorporated on 7 October 2021 and has extended its first accounting reference date to 31 March 2023.
The following disclosures as required by S414C (11) have been elevated to the strategic report:
• Financial risk management objectives and policies • Key financial key performance indicators • Key other key performance indicators The principal activity of the company is that of a holding company.
In its first period of trading the Group has recorded turnover of £33.3m and EBITDA of £6.38m. The loss for the period, after taxation and minority interests, amounted to £529,310.
The directors do not recommend payment of an ordinary dividend for the current period.
The directors who served during the period were:
The well-being of the Group’s employees is safeguarded through strict adherence to health and safety standards. The Safety, Health and Welfare at Work Act 1989 imposes certain requirements on employers and the Group has taken the necessary action to ensure compliance with the Act, including the adoption of a Safety Statement.
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Directors' Report (continued)
For the Period Ended 31 March 2023
The Group will seek to minimise adverse impacts on the environment from its activities, whilst continuing to address health, safety and economic issues. The Group has complied with all applicable legislation and regulations.
In August 2022, we partnered with Play It Green to improve our business’ sustainability practices and have a positive impact on the planet. In return for a monthly cost per person, Play it Green plant 13 trees per person per month, instantly rebalancing their personal carbon footprint. We are also making our business a Climate Positive one by rebalancing our historical and company emissions to become carbon neutral. To reduce our overall business carbon footprint moving forward, we are working with Play it Green’s Net Zero Framework, Green Energy giving us access to a network of sustainability experts.
The Board plans to continue to invest in technology, recruitment and acquisitions within the accountancy, audit and taxation sectors to support the Group’s strategy of becoming the leading advisor to the SME and not for profit sectors.
We care about all of our employees in the same way we care about our clients. When joining Dains staff become part of a team of people who collaborate and innovate together during the working day, but who also enjoy spending time together outside of that to relax and have fun.
We believe our employees are our greatest asset, and we look to provide the best working environment, along with hybrid and smart working options and generous benefits. We listen, learn and evolve as we strive to make Dains a great place to work. Everyone is treated with the same level of respect no matter what job title they have. We are all members of a team of people who are working together towards the same objective. So, if you need to ask a question or have a suggestion, you are encouraged to share it and get involved. We strive to create a working environment that promotes and values diversity, where everyone feels empowered to be themselves. We are committed to equal opportunities and to build a more inclusive team that reflects the communities we serve and are continuously making progress. We welcome and encourage applications from all backgrounds, particularly candidates who are under-represented in Dains. These include people from Black, Asian, and ethnic minority backgrounds. The firm, in supplying services, is also committed against unlawful discrimination of clients or the public. We engage with, consult and provide information to our staff through a variety of methods including staff newsletters, notice boards and regular office meetings to ensure we are delivering to their expectations, supporting wellbeing, and making the right business decisions. This ensures we can retain and develop the best talent.
It is important we have a clear understanding of the challenges facing our clients and suppliers, as these may have a significant impact on the business in a variety of ways. We seek to have early visibility of potential opportunities or threats by maintaining close dialogue with existing clients and suppliers either by regular communication and meetings.
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Directors' Report (continued)
For the Period Ended 31 March 2023
As noted in the strategic review, following the investment by Horizon capital the Group headed by Brewer Topco Limited is engaged in a strategy of growth, both organically and via acquisition. The Group has access to significant financial facilities from both the equity investor and the senior debt lender which is being deployed to fund this strategy. Gross margins are strong and cash generation is excellent with Group EBITDA in the first period of trading of £6.25m. The directors’ and strategic reports further describe the financial position of the Group; its liquidity position; the Group’s objectives, policies, and processes for managing its capital; its financial risk management objectives; and its exposure to credit risk and liquidity risk.
The directors have prepared cashflow forecasts and projections for a period extending beyond twelve months from the date of approval of the financial statements which demonstrate that the Group can continue to trade within its available financial facilities. The directors therefore have a reasonable expectation that the Group has adequate resources to continue in operational existence for a period of at least twelve months from the date of approval of these financial statements and thus they have concluded that it is reasonable to continue to prepare the financial statements on a going concern basis.
All IPCC 2007 GHGs were considered in the calculation of this organisational carbon footprint, which were converted to carbon dioxide equivalents (CO2e) using the 2007 IPCC Global Warming Potentials (GWPs).
Intensity Ratio Measurement (Per tonne of Carbon Emissions Generated)
CO2e tonne generated per employee: 0.650 CO2e generated per property m2 (tonne) 0.056
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting
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Directors' Report (continued)
For the Period Ended 31 March 2023
Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
On 16 August 2023 the Group acquired Opto Group Limited, a specialist VAT and Employment tax advisory firm to the public sector and not for profit sector.
On 31 August 2023 the Group acquired HSKS Greenhalgh Limited, a well-regarded accountancy, audit and taxation firm based in the East Midlands.
Following a rebranding exercise on 15 May 2023 the trading name of the group’s independent auditor changed from MHA MacIntyre Hudson to MHA. MHA has indicated their willingness to continue in office and will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on
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Independent Auditor's Report to the Members of Brewer Topco Limited
We have audited the financial statements of Brewer Topco Limited (the 'parent Company') and its subsidiaries (the 'Group') for the period ended 31 March 2023, which comprise the Consolidated Profit and Loss Account, the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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Independent Auditor's Report to the Members of Brewer Topco Limited (continued)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's Report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group Strategic Report and the Directors' Report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
∙the Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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Independent Auditor's Report to the Members of Brewer Topco Limited (continued)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙Enquiry of management around actual and potential litigation and claims;
∙Enquiry of management to identify any instances of non-compliance with laws and regulations;
∙Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness;
∙Reviewing accounting estimates for evidence of management bias; and
∙Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's Report.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditor's Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Statutory Auditor
Birmingham, United Kingdom
MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership in England and Wales (registered number OC312313)
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Consolidated Profit and Loss Account
For the Period Ended 31 March 2023
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Consolidated Statement of Comprehensive Income
For the Period Ended 31 March 2023
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Consolidated Balance Sheet
As at
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 6 October 2023.
The notes on pages 22 to 47 form part of these financial statements.
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Consolidated Balance Sheet (continued)
As at 31 March 2023
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Company Balance Sheet
As at
The profit for the financial period dealt with in the financial statements of the parent company was £326,944. As permitted by Section 408 of the Companies Act 2006, no separate profit and loss account or statement of comprehensive income is presented in respect of the parent company
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 22 to 47 form part of these financial statements.
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Consolidated Statement of Changes in Equity
For the Period Ended 31 March 2023
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Company Statement of Changes in Equity
For the Period Ended 31 March 2023
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Consolidated Statement of Cash Flows
For the Period Ended 31 March 2023
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Consolidated Statement of Cash Flows (continued)
For the Period Ended 31 March 2023
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Consolidated Analysis of Net Debt
For the Period Ended 31 March 2023
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Notes to the Financial Statements
For the Period Ended 31 March 2023
Brewer Topco Limited ('the company') is a private company limited by shares, incorporated in the United Kingdom in England and Wales under the Companies Act. The address of the registered office is given on the company information page. The nature of the group's operations and its principal activities is the provision of accountancy, taxation and business advice services.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Profit and Loss Account in these financial statements.
The following principal accounting policies have been applied:
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47,11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 26 Share-based Payment paragraphs 26.18(b), 26.19 to 26.21 and 26.23;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in these consolidated financial statements.
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Profit and Loss Account from the date on which control is obtained. They are deconsolidated from the date control ceases.
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Notes to the Financial Statements
For the Period Ended 31 March 2023
2.Accounting policies (continued)
As noted in the strategic review, following the investment by Horizon capital the Group headed by Brewer Topco Limited is engaged in a strategy of growth, both organically and via acquisition. The Group has access to significant financial facilities from both the equity investor and the senior debt lender which is being deployed to fund this strategy. Gross margins are strong and cash generation is excellent with Group EBITDA in the first period of trading of £6.38m. The directors’ and strategic reports further describe the financial position of the Group; its liquidity position; the Group’s objectives, policies, and processes for managing its capital; its financial risk management objectives; and its exposure to credit risk and liquidity risk.
The directors have prepared cashflow forecasts and projections for a period extending beyond twelve months from the date of approval of the financial statements which demonstrate that the Group can continue to trade within its available financial facilities. The directors therefore have a reasonable expectation that the Group has adequate resources to continue in operational existence for a period of at least twelve months from the date of approval of these financial statements and thus they have concluded that it is reasonable to continue to prepare the financial statements on a going concern basis.
Functional and presentation currency
Transactions and balances
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Notes to the Financial Statements
For the Period Ended 31 March 2023
2.Accounting policies (continued)
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Notes to the Financial Statements
For the Period Ended 31 March 2023
2.Accounting policies (continued)
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight-line basis to the Consolidated Profit and Loss Account over its useful economic life of 10 years.
At each reporting date the Group assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
The estimated useful lives range as follows:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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Notes to the Financial Statements
For the Period Ended 31 March 2023
2.Accounting policies (continued)
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
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Notes to the Financial Statements
For the Period Ended 31 March 2023
2.Accounting policies (continued)
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Group's Balance Sheet when the Group becomes party to the contractual provisions of the instrument.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
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Notes to the Financial Statements
For the Period Ended 31 March 2023
2.Accounting policies (continued)
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods. Valuation of accrued revenue In calculating revenue, the group makes certain estimates as to the stage of completion of those contracts. In doing so, the group estimates the remaining time and external costs to be incurred in completing contracts and clients' willingness and ability to pay from the services provided. A different assessment of the outturn on a contract may result in a different value being determined for revenue and also a different carrying value being determined for unbilled amounts for client work. Trade debtors The total carrying value of trade debtors and unbilled amounts for client work are net of impairment losses on trade debtors and after consideration to the clients' willingness to pay those amounts accrued in respect of incomplete contracts. A different assessment of the recoverability of either balance, with reference to either the ability or willingness of the client to pay, may result in different values being determined. Impairment of Goodwill and investments When considering any impairment of goodwill or investments, the Directors' use impairment models with detailed cash flow forecasts to determine the value in use of the assets. The impairment testing involves significant judgement as to whether the net present value of the estimated future cash flows can support the carrying value of the asset. The key assumptions utilised in determining these cash flows are the discount rate used and the long-term growth rate.
The whole of the turnover is attributable to the principal activity of the company.
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Notes to the Financial Statements
For the Period Ended 31 March 2023
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Notes to the Financial Statements
For the Period Ended 31 March 2023
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Notes to the Financial Statements
For the Period Ended 31 March 2023
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Notes to the Financial Statements
For the Period Ended 31 March 2023
11.Taxation (continued)
In the Spring Budget 2021, the government announced that from 1 April 2023 the headline corporation tax rate will increase to 25%. The proposal to increase the rate to 25% had been substantively enacted at the Group’s balance sheet date, therefore its effects have been included in these financial statements.
Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statement. There is no expiry date on timing differences, unused tax losses or tax credits.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Profit and Loss Account in these financial statements. The profit after tax of the parent Company for the period was £
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Notes to the Financial Statements
For the Period Ended 31 March 2023
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Notes to the Financial Statements
For the Period Ended 31 March 2023
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Notes to the Financial Statements
For the Period Ended 31 March 2023
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Notes to the Financial Statements
For the Period Ended 31 March 2023
Loan notes are unsecured, carry interest an interest rate of 10% and are due for repayment in June 2028.
Bank loans comprise a term loan and an acquisition facility loan. All facilities are secured via a debenture over the assets of certain group companies. The term loan and acquisition facility loan carries a variable interest rate of between 3.75% and 4.75% above SONIA. The term loan is repayable in full in December 2027. The acquisition facility loan is repayable in quarterly installments of £1.875m from June 2025, with the remaining balance being due in full in December 2027.
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Notes to the Financial Statements
For the Period Ended 31 March 2023
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Notes to the Financial Statements
For the Period Ended 31 March 2023
Shares issued
On incorporation 1 A Ordinary share was issued at par. On 14 December 2021, the 1 A Ordinary share was sub divided in to 100 £0.01 A ordinary shares. On 14 December 2021, 1,185,213 A Ordinary shares of £0.01 per share were issued at a premium of £0.99 per share, 344,687 B Ordinary shares of £0.01 per share were issued at a premium of £0.99 per share, 390,000 C Ordinary shares of £0.01 per share were issued at a premium of £0.99 per share and 5,471,272 Preference shares of £1.00 per share were issued at par. On 15 June 2022, 35,000 C Ordinary share of £0.01 per share were issued at a premium of £0.99 per share. On 15 June 2022, 11,853 A Ordinary shares of £0.01 each were re designated as 11,853 B Ordinary shares of £0.01 each. On 30 September 2022 the 5,471,272 Preference shares of £1.00 each were re-designated as 5,471,272 A Preference shares of £1.00 each. On 30 September 2022 1,500,000 B Preference shares of £1.00 each were issued at par. Rights of shares A Ordinary shares Each share is entitled to one vote per share held in any circumstances. Each share has rights to dividends. Each share is entitled to participate in a distribution (parri passu). Shares are not redeemable. B Ordinary shares Not entitled to any voting rights. Each share has rights to dividends. Each share is entitled to participate in a distribution (parri passu). Shares are not redeemable.
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Notes to the Financial Statements
For the Period Ended 31 March 2023
22.Share capital (continued)
C Ordinary shares
Each share is entitled to one vote per share held in any circumstances. Each share has rights to dividends. Each share is entitled to participate in a distribution (parri passu). Shares are not redeemable. A Preference shares Not entitled to any voting rights. Each share has rights to dividends. Each share is entitled to a fixed rate cumulative preferential dividend at the annual rate of 10% of the issue price per preference share (excluding any associated tax credit) compounded annually on each anniversary of the adoption date which shall accrue daily and be calculated in respect of the period to such date assuming a 365-day year. Each share is liable to be redeemed. B Preference shares Not entitled to any voting rights. Each share has rights to dividends and shall rank behind the c preference shares and pari passu to the A preference shares. Each share is entitled to a fixed rate cumulative preferential dividend at the annual rate of 10% of the issue price per preference share (excluding any associated tax credit) compounded annually on each anniversary of the adoption date which shall accrue daily and be calculated in respect of the period to such date assuming a 365-day year. Each share is liable to be redeemed.
Share premium account
Profit and loss account
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Notes to the Financial Statements
For the Period Ended 31 March 2023
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Notes to the Financial Statements
For the Period Ended 31 March 2023
24.Business combinations (continued)
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Notes to the Financial Statements
For the Period Ended 31 March 2023
24.Business combinations (continued)
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Notes to the Financial Statements
For the Period Ended 31 March 2023
24.Business combinations (continued)
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Notes to the Financial Statements
For the Period Ended 31 March 2023
24.Business combinations (continued)
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Notes to the Financial Statements
For the Period Ended 31 March 2023
24.Business combinations (continued)
The group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the group in an independently administered fund. The pension cost charge represents contributions payable by the group to the fund and amounted to £774,436. Contributions totalling £124,559 were payable to the fund at the balance sheet date and are included in creditors.
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Notes to the Financial Statements
For the Period Ended 31 March 2023
On 31 August 2023 the Group acquired HSKS Greenhalgh Limited, a well-regarded accountancy, audit and taxation firm based in the East Midlands.
At 31 March 2023, the Directors considered the ultimate controlling party to be Horizon Capital II Limited Partnership by virtue of their majority shareholding in the company.
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Notes to the Financial Statements
For the Period Ended 31 March 2023
29.Subsidiary undertakings (continued)
Subsidiary undertakings (continued)
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