Company Registration No. 12253108 (England and Wales)
LCap Group Limited
Annual report and
group financial statements
for the year ended 31 December 2022
LCap Group Limited
Company information
Directors
David Bushell
Thomas Cassidy
Graham Roadnight
Ruby Sheera
Paul Waite
Lee Colliss
(Appointed 1 March 2022)
Company number
12253108
Registered office
71 Queen Victoria Street
London
EC4V 4BE
Independent auditor
Saffery LLP
71 Queen Victoria Street
London
EC4V 4BE
LCap Group Limited
Contents
Page
Strategic report
1 - 6
Directors' report
7 - 8
Independent auditor's report
9 - 12
Income statement
13
Group statement of comprehensive income
14
Group statement of financial position
15 - 16
Company statement of financial position
17
Group statement of changes in equity
18
Company statement of changes in equity
19
Group statement of cash flows
20
Notes to the financial statements
21 - 42
LCap Group Limited
Strategic report
For the year ended 31 December 2022
Page 1

The directors present the strategic report for LCap Group Limited (LCap) and its group companies for the year ended 31 December 2022. The group includes subsidiary companies Drax Executive Limited (Drax) and Rowan Recruitment Limited (Rowan).

The LCap Group comprises of:

  1. Drax Executive Limited – a recognised UK and European market leader for high growth mid to large cap Private Equity backed companies. Drax is a strategic leadership specialist and executive search provider for high-growth companies. Supporting investors, founders and leadership teams throughout the leadership life cycle of creating and crystalising value, working with clients both pre and post investment.

  2. Rowan Recruitment Limited – a UK specialist Leadership Advisory and Executive Search firm for private and growth capital-backed businesses, pre and post-deal. Rowan, have offices regionally across the UK and operate nationally. Rowan was LCap’s first strategic investment, broadening LCap’s reach and deepening our understanding of the demands placed on Leadership teams across every stage of growth.

  3. Altus Partners Limited – subsequent to our FY22 close, in June 2023 the LCap Group made their second strategic investment in Altus Partners, who provide leadership advisory and executive search services to Private Equity Funds across Europe and M&A Directors to the fund’s portfolio investee companies.

Strategic review of the business
The LCap Group supports Private Equity, Family Offices, Sovereign Funds and ambitious listed high growth companies across their Leadership Insights, Development and Change needs. In a world where recent global macro-economic challenges have occurred in which no one has the experience of having gone through it before, the dependency on the capability of the leadership team has never been greater. The LCap Group believe in the power of people and that leadership is the primary lever for value creation.  We are committed to developing the deepest understanding of how Leadership teams develop value within high growth environments and have developed our leadership proprietary analytics platform, which underpins our customer solutions.
LCap is a proprietary tech enabled leadership insight, change & development disruptor
LCap has spent over 10 years developing its propriety analytics platform. The platform digitises an empirical leadership behavioural model and analyses an incumbent leadership team's probability to succeed dependent on their value creation strategy. It's smart, fast and impactful, analysing hundreds of different data points against different future scenarios. It's exclusive to the challenges faced by high growth companies and evaluates both the key physical criteria that makes an individual career as well as the behavioural quotient of the team and its relevance to their ambition.  Working with investors pre deal or with leadership teams post deal, we are there to support our clients in their leadership insights, change and development needs. We know leadership is the primary lever for value creation.
LCap Group Limited
Strategic report (continued)
For the year ended 31 December 2022
Page 2
LCap supports companies across all stages of the deal life cycle with its end-to-end service offering
LCap's product offering has been designed and developed to build long-term, trusted relationships with clients, both privately owned and those with investor backing. From pre-investment to the end of an investment cycle, LCap supports clients achieve their value creation goals.
1. Leadership Insights
Leadership Dynamics is proprietary to the LCap Group and is our digital product that provides clients with critical leadership insights as to the probability of the leadership to succeed the investment / growth hypothesis. Capable of being deployed with great accuracy both arm's length and with the knowledge of the management team, it quickly gets to the heart of the leadership teams capabilities and plots a path for optimisation. Utilised equally pre and post deal, it provides an objective data led analysis on the leadership (value) or as we call it on the leadership capital of the team.
Deal Advisory, is a particular service within our Leadership Insights business, providing clients with the most relevant subject matter deal advisory experts pre deal, new markets analysis, deal identification, access and origination.
2. Leadership Change
Through our different platforms of leadership advisory and executive search, Drax, Rowan & Altus support high growth business and investment funds with both the insight and talent required to achieve their business goals.
3. Leadership Development
PACE is proprietary to the LCap Group and is our model of development from which we engage with clients to first evaluate the leadership teams behavioural DNA before working with the leadership team to develop the behavioural profile required to support their growth ambition.
LCap Group Limited
Strategic report (continued)
For the year ended 31 December 2022
Page 3
LCap has created the Leadership Capital Analytics Platform (L.C.A.P.). This scalable platform consists of a suite of products that enable the services delivered by the group and its subsidiary companies. These products include:

1. PACE - A new approach to understanding leadership and the value it creates

Pragmatism – Agility – Curiosity - Execution

PACE is a proprietary specialist behavioural tool allowing high performing leadership teams to build their own customised profile and build a platform to drive their next stage of growth.

Evaluates cognitive diversity - Thinking differently is not guaranteed just by the leaders looking differently and having different career experience.

Benchmarks against high-performing leadership teams - PACE is the market’s only evaluation framework measuring the behaviours proven to differentiate better performing leadership teams.

Manages Behavioural concentration - A risk as significant as customer concentration within a fast-growing business.

Develops behavioural complementarity- Engineering differences between leaders creating a team greater than the sum of the parts.

Codifies what good looks like - Growth driving behaviours are not unique to the world of private equity, PACE finds these behaviours across a wider pool of candidates.

Ensures ESG compliance - PACE’s behavioural evaluation lifts assessments of leaders and leadership teams away from any form of unconscious bias.

Discovers high potential leaders - Enables the identification of high potential leaders amongst the C-suite, C-1 & C-2 employee base.

Empowers candidates - Candidates view their PACE results to see how they would fit into potential management teams. PACE gives insights to the individuals, allowing them to understand how to add value to themselves, their team and their organisation.

2. Leadership Dynamics the market’s only purpose-built tool to create, evaluate, and enhance leadership teams. It is the keystone digital product that provides insights on the strengths and weaknesses of the composition, experience and capabilities of leadership teams from an arms-length, using 13 years of benchmark analytics on the private equity market as a proxy for high growth companies.

3. Search AI the proprietary software that widens the pool of assessed candidates, highlighting individuals with the required behaviours, capabilities and experience who are outside the current pool of talent visible to traditional search consultants

4. Deal Origination provides an AI-driven, probabilistic model to provide insights into transaction opportunities, off-market transactions and value creation opportunities for investors and companies alike.

LCap Group Limited
Strategic report (continued)
For the year ended 31 December 2022
Page 4
Our Growth Strategy
Organically via:

1. Focus on key account management and growing client wallet share;

2. Continued adoption and commercialisation of the L.C.A.P software platform, with an increasing proportion of revenue driven from the Group's market disrupting software offerings;

3. Incremental growth in the established base of expert consultants.
Inorganically via:

1. LCap management have developed a clear, considered inorganic growth plan to become a market consolidator. The LCap acquisition strategy is underpinned by three pillars of value creation (Increase Functional and Sector Expertise, Internalisation, Leadership Insights Capability) that provide the framework for acquisitions both past and future. This framework was utilised in the 2021 acquisition of Rowan. LCap's service offerings are naturally complementary to acquisition targets, with no risk of crowding out of revenues, instead creating a natural waterfall of revenue pipeline opportunities, as demonstrated by Rowan's 41% increase in revenue in 2021, and a further 57% increase in 2022.
Key performance indicators
The directors use a number of measures to monitor and benchmark the performance of the Company, and Group, the most significant are:
• Revenue
• EBITDA
• Headcount
• Cash

Revenue: for the year ended 31 December 2022 was £21,326,050 (FY21: £14,042,587), a growth of £7,283,463 or 52%. Excluding interim revenue, which is non-core, revenue grew £8,323,059 or 66% (see note 3).

EBITDA: Adjusted EBITDA (as defined and quantified in the below table) for the year ended 31 December 2022 was £8,218,151 (FY21: £3,990,296), a growth of £4,227,855 or 106%.

Headcount: average headcount for the year ending 31 December 2022 was 116 (FY21: 89) as the Group increases its resource to deliver accelerated growth.

Cash: was £8,043,144 at 31 December 2022 (FY21: £5,554,699) which included the continued development of the L.C.A.P. software platform.

LCap Group Limited
Strategic report (continued)
For the year ended 31 December 2022
Page 5
Trading results summary
FY22
FY21
£
£
Revenue
20,874,410
12,551,353
Interim revenue
451,638
1,491,234
Revenue
21,326,048
14,042,587
Direct costs
(9,192,044)
(7,161,746)
Gross margin
12,134,004
6,880,841
Gross margin %
58%
49%
Indirect costs*
(3,915,855)
(2,890,545)
Adjusted EBITDA
8,218,149
3,990,296
*Indirect costs exclude non-recurring items and other administrative expenses totaling £2,962,711 (FY21: £1,180,262)
Future Prospects and Outlook
The directors are confident the LCap Group will continue to drive strong performance in our business and enhance our offerings to our clients. We are satisfied with the trading results of the year to 31 December 2021 and with the financial position of the Company and Group at the year end.

We believe the outlook for the business is positive as evidenced by the record retainers received during FY22, and the acceleration of the Insights software and Consultancy practices.

The directors are not aware, at the date of this report, of any likely major changes in the Group's activities in the next year.
LCap Group Limited
Strategic report (continued)
For the year ended 31 December 2022
Page 6
Principal risks and uncertainties
The Group's principal risks and uncertainties comprise of liquidity risk and the loss of key clients.

Liquidity risks are managed by ensuring an effective credit control process, careful consideration of working capital requirements and future financial forecasts.

On behalf of the board

Lee Colliss
Director
2 November 2023
LCap Group Limited
Directors' report
For the year ended 31 December 2022
Page 7

The directors present their annual report and financial statements for the year ended 31 December 2022.

Principal activities

LCap Group Limited (“the Group”) is a strategic leadership specialist to the private equity market, supporting executive search, leadership development and pre-deal advisory. The group includes subsidiary companies Drax Executive Limited and Rowan Recruitment Limited

Results and dividends

The results for the year are set out on page 13.

Ordinary dividends were paid amount to £200,000 (2021: £nil). The directors do not recommend payment of a further dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

David Bushell
Thomas Cassidy
Graham Roadnight
Ruby Sheera
Paul Waite
Lee Colliss
(Appointed 1 March 2022)
Auditor

In accordance with the company's articles, a resolution proposing that Saffery LLP be reappointed as auditor of the group will be put at a General Meeting.

LCap Group Limited
Directors' report (continued)
For the year ended 31 December 2022
Page 8
Statement of directors' responsibilities

The directors are responsible for preparing the Annual Report and the 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).

 

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 group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

On behalf of the board
Lee Colliss
Director
2 November 2023
LCap Group Limited
Independent auditor's report
To the members of LCap Group Limited
Page 9
Opinion

We have audited the financial statements of LCap Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2022 which comprise the group income statement, the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including 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). The revised financial statements have been prepared under the Companies (Revision of Defective Accounts and Reports) Regulations 2008 and accordingly do not take account of events which may have taken place after the date the original financial statements were approved.

In our opinion the financial statements:

Basis for opinion

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 and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’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.

Conclusions relating to going concern

In auditing the revised financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the revised 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 or the parent company’s ability to continue as a going concern for a period of at least twelve months from when the original 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.

 

LCap Group Limited
Independent auditor's report (continued)
To the members of LCap Group Limited
Page 10

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report other than the revised financial statements and our auditor's report thereon. Our opinion on the revised 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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

 

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.

LCap Group Limited
Independent auditor's report (continued)
To the members of LCap Group Limited
Page 11
Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the group and parent company revised 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 revised 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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.

 

Identifying and assessing risks related to irregularities:

We assessed the susceptibility of the group and parent company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the group and parent company by discussions with directors and by updating our understanding of the sector in which the group and parent company operates.

 

Laws and regulations of direct significance in the context of the group and parent company include The Companies Act 2006 and UK Tax legislation.

 

Audit response to risks identified

We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of group and parent company financial statement disclosures. We reviewed the parent company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the parent company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.

During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.

LCap Group Limited
Independent auditor's report (continued)
To the members of LCap Group Limited
Page 12

As group auditors, our assessment of matters relating to non-compliance with laws or regulations and fraud differed at group and component level according to their particular circumstances. Our communications included a request to identify instances of non-compliance with laws and regulations and fraud that could give rise to a material misstatement of the group financial statements in addition to our risk assessment.

 

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the parent 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 parent company's members those matters we are required to state to them in an auditors 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 parent company and the parent company's members as a body, for our audit work, for this report, or for the opinions we have formed.

 

Roger Weston (Senior Statutory Auditor)
For and on behalf of Saffery LLP
2 November 2023
Chartered Accountants
Statutory Auditors
71 Queen Victoria Street
London
EC4V 4BE
LCap Group Limited
Group income statement
For the year ended 31 December 2022
Page 13
2022
2021
Notes
£
£
Turnover
3
21,326,048
14,042,587
Cost of sales
(399,153)
(1,136,981)
Gross profit
20,926,895
12,905,606
Administrative expenses
(16,715,767)
(10,802,892)
Other operating income
-
100,801
Operating profit
4,211,128
2,203,515
Interest receivable and similar income
6
35,880
258
Interest payable and similar expenses
7
(160,981)
(133,402)
Profit before taxation
4,086,027
2,070,371
Tax on profit
8
(674,906)
(76,636)
Profit for the financial year
3,411,121
1,993,735
Profit for the financial year is attributable to:
- Owners of the parent company
2,950,818
1,921,099
- Non-controlling interests
460,303
72,636
3,411,121
1,993,735
LCap Group Limited
Group statement of comprehensive income
For the year ended 31 December 2022
Page 14
2022
2021
£
£
Profit for the year
3,411,121
1,993,735
Other comprehensive income
-
-
Total comprehensive income for the year
3,411,121
1,993,735
Total comprehensive income for the year is attributable to:
- Owners of the parent company
2,950,818
1,921,099
- Non-controlling interests
460,303
72,636
3,411,121
1,993,735
LCap Group Limited
Group statement of financial position
As at 31 December 2022
Page 15
2022
2021
Notes
£
£
£
£
Fixed assets
Goodwill
11
2,341,068
2,617,730
Other intangible assets
11
2,809,641
2,189,591
Total intangible assets
5,150,709
4,807,321
Tangible assets
12
229,251
184,101
5,379,960
4,991,422
Current assets
Debtors
15
5,425,840
4,133,825
Cash at bank and in hand
8,043,144
5,554,699
13,468,984
9,688,524
Creditors: amounts falling due within one year
16
(5,754,072)
(4,531,378)
Net current assets
7,714,912
5,157,146
Total assets less current liabilities
13,094,872
10,148,568
Creditors: amounts falling due after more than one year
17
(2,233,186)
(3,123,664)
Provisions for liabilities
Deferred tax liability
20
718,265
542,448
(718,265)
(542,448)
Net assets
10,143,421
6,482,456
Capital and reserves
Called up share capital
22
35
35
Share premium account
500,000
500,000
Other reserves
826,134
266,290
Profit and loss reserves
7,999,535
5,248,717
Equity attributable to owners of the parent company
9,325,704
6,015,042
Non-controlling interests
817,717
467,414
10,143,421
6,482,456
LCap Group Limited
Group statement of financial position (continued)
As at 31 December 2022
Page 16
The financial statements were approved by the board of directors and authorised for issue on
2 November 2023
02 November 2023
and are signed on its behalf by:
Lee Colliss
Director
Company Registration No. 12253108 (England and Wales)
LCap Group Limited
Company statement of financial position
As at 31 December 2022
Page 17
2022
2021
Notes
£
£
£
£
Fixed assets
Investments
13
4,292,573
3,732,729
Current assets
Debtors
15
35
35
Creditors: amounts falling due within one year
16
(2,966,436)
(2,966,436)
Net current liabilities
(2,966,401)
(2,966,401)
Net assets
1,326,172
766,328
Capital and reserves
Called up share capital
22
35
35
Share premium account
500,000
500,000
Other reserves
826,137
266,293
Total equity
1,326,172
766,328

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £200,000 (2021 - £0 profit).

These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the board of directors and authorised for issue on
2 November 2023
02 November 2023
and are signed on its behalf by:
Lee Colliss
Director
Company Registration No. 12253108 (England and Wales)
LCap Group Limited
Group statement of changes in equity
For the year ended 31 December 2022
Page 18
Share capital
Share premium account
Other reserves
Profit and loss reserves
Total controlling interest
Non-controlling interest
Total
Notes
£
£
£
£
£
£
£
Balance at 1 January 2021
11
-
0
12,597
3,367,618
3,380,226
-
3,380,226
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
-
-
1,921,099
1,921,099
72,636
1,993,735
Issue of share capital
22
24
-
0
-
-
24
-
24
Dividends
9
-
-
-
(40,000)
(40,000)
-
(40,000)
Share based payment
-
-
253,693
-
253,693
-
253,693
Purchase of shares in subsidiary from non-controlling interest
-
-
-
-
-
394,778
394,778
Share premium on share issue
-
500,000
-
-
500,000
-
500,000
Balance at 31 December 2021
35
500,000
266,290
5,248,717
6,015,042
467,414
6,482,456
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
-
2,950,818
2,950,818
460,303
3,411,121
Dividends
9
-
-
-
(200,000)
(200,000)
(110,000)
(310,000)
Share based payment
-
-
559,844
-
559,844
-
559,844
Balance at 31 December 2022
35
500,000
826,134
7,999,535
9,325,704
817,717
10,143,421
LCap Group Limited
Company statement of changes in equity
For the year ended 31 December 2022
Page 19
Share capital
Share premium account
Other reserves
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 January 2021
11
-
0
12,597
-
0
12,608
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
-
-
-
-
0
Issue of share capital
22
24
-
0
-
-
24
Share based payment
-
-
253,696
-
253,696
Share premium on share issue
-
500,000
-
-
500,000
Balance at 31 December 2021
35
500,000
266,293
-
0
766,328
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
-
200,000
200,000
Dividends
9
-
-
-
(200,000)
(200,000)
Share based payment
-
-
559,844
-
559,844
Balance at 31 December 2022
35
500,000
826,137
-
0
1,326,172
LCap Group Limited
Group statement of cash flows
For the year ended 31 December 2022
Page 20
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
26
5,310,975
873,597
Interest (paid)/received
(160,981)
133,402
Income taxes paid
(52,985)
(440,588)
Net cash inflow from operating activities
5,097,009
566,411
Investing activities
Purchase of business
-
(3,317,541)
Cash acquired on purchase of business
-
1,342,768
Purchase of intangible assets
(1,293,939)
(2,014,198)
Purchase of tangible fixed assets
(140,035)
(63,057)
Proceeds from disposal of tangible fixed assets
-
60
Interest received
35,880
-
Net cash used in investing activities
(1,398,094)
(4,051,968)
Financing activities
Proceeds from issue of shares
-
(176)
Issue of share premium
500,000
Repayment of bank loans
(871,428)
(241,667)
Payment of hire purchase obligations
(29,042)
(18,220)
Dividends paid to equity shareholders
(200,000)
(40,000)
Dividends paid to non-controlling interests
(110,000)
-
0
Net cash (used in)/generated from financing activities
(1,210,470)
199,937
Net increase/(decrease) in cash and cash equivalents
2,488,445
(3,285,620)
Cash and cash equivalents at beginning of year
5,554,699
8,840,319
Cash and cash equivalents at end of year
8,043,144
5,554,699
LCap Group Limited
Notes to the group financial statements
For the year ended 31 December 2022
Page 21
1
Accounting policies
Company information

LCap Group Limited (“the company”) is a private company limited by shares incorporated in England and Wales. The registered office is .

 

The group consists of LCap Group Limited and all of its subsidiaries.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.

1.2
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 22
1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company LCap Group Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

 

All financial statements are made up to 31 December 2022. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

 

In March 2020, the parent company acquired 100% of the shareholding in Drax Executive Limited following a share for share exchange. The ownership was to be effective from that date. The transaction was accounted for in accordance with the merger accounting basis and the true and fair override was evoked in respect of the legal requirements for merger accounting in respect of the existence of a controlling party.

 

In June 2021, the parent company acquired 64% of the shareholding in Rowan Recruitment Limited. The ownership was to be effective from that date. The transaction was accounted for in accordance with the acquisition accounting basis.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

1.4
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.5
Turnover

Turnover represents amounts receivable for services provided, net of value added tax. Turnover is recognised on completion of defined stages or work in accordance with specific terms of business agreed with the company's clients and includes revenue from executive search services and interim placement services.

 

Turnover for executive search services is recognised on confirmation dates of work completed, typically recognised across three stages. Turnover for interim placement services is recognised when the service has been provided.

1.6
Research and development expenditure

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 23
1.7
Intangible fixed assets - goodwill

Goodwill arising on the acquisition of subsidiary undertakings represents the excess of the fair value of the consideration over the fair value of the identifiable assets and liabilities acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

1.8
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Development costs
Straight line over 5 years
1.9
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Fixtures, fittings & equipment
Straight line over 4 years
Computer equipment
Straight line over 3-4 years
Motor vehicles
Straight line over 4 years

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.

LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 24
1.10
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

 

Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.

 

Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.

 

In the parent company financial statements, investments in associates are accounted for at cost less impairment.

Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

1.11
Impairment of fixed assets

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 25

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.12
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.13
Financial instruments

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method 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. Financial assets classified as receivable within one year are not amortised.

LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 26
Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 27
Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.14
Equity instruments

Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.

1.15
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 28
Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.16
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.17
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.18
Share-based payments

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Monte Carlo model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to Other reserves.

LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 29

When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

 

Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.

1.19
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

1.20
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

1.21
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
Page 30
2
Critical accounting judgements and key sources of estimation uncertainty

In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Share based payments

EMI share options were granted to employees in the financial year. The options were valued by management using the Monte Carlo model. The use of the Monte Carlo model required management to make several significant assumptions and estimations, including the volatility of shares and the expected life of the options.

3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by class of business
Executive search
20,874,410
12,551,353
Interim
451,638
1,491,234
21,326,048
14,042,587
2022
2021
£
£
Other significant revenue
Interest income
35,880
258
Coronavirus job retention scheme grant
-
0
100,801
LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
Page 31
4
Employees

The average monthly number of persons (including directors) employed by the group and company during the year was:

Group
Company
2022
2021
2022
2021
Number
Number
Number
Number
116
89
-
0
-
0

Their aggregate remuneration comprised:

Group
Company
2022
2021
2022
2021
£
£
£
£
Wages and salaries
10,154,132
6,708,006
-
0
-
0
Social security costs
1,324,894
983,439
-
0
-
0
Pension costs
227,112
146,025
-
0
-
0
11,706,138
7,837,470
-
0
-
0
5
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and the company's subsidiaries
40,500
28,750
6
Interest receivable and similar income
2022
2021
£
£
Interest income
Interest on bank deposits
897
258
Other interest income
34,983
-
Total income
35,880
258
LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
6
Interest receivable and similar income (continued)
Page 32

Investment income includes the following:

Interest on financial assets not measured at fair value through profit or loss
897
258
7
Interest payable and similar expenses
2022
2021
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
157,072
131,502
Other finance costs:
Interest on finance leases and hire purchase contracts
3,909
1,900
Total finance costs
160,981
133,402
8
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
466,848
13,183
Adjustments in respect of prior periods
32,241
(438,212)
Total current tax
499,089
(425,029)
Deferred tax
Origination and reversal of timing differences
177,975
501,665
Changes in tax rates
(2,158)
-
0
Total deferred tax
175,817
501,665
Total tax charge
674,906
76,636
LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
8
Taxation (continued)
Page 33

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2022
2021
£
£
Profit before taxation
4,086,027
2,070,371
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
776,345
393,370
Tax effect of expenses that are not deductible in determining taxable profit
273,934
81,466
Adjustments in respect of prior years
32,241
-
0
Deferred tax
175,817
501,665
Permanent capital allowances in excess of depreciation
(16,787)
21,980
Amortisation on assets not qualifying for tax allowances
128,039
63,961
Research and development tax credit
-
0
(67,425)
Other timing differences
2,888
(27,069)
Share based payment charge
106,370
48,202
Other tax allowances
(803,941)
(939,514)
Taxation charge
674,906
76,636
9
Dividends
2022
2021
Recognised as distributions to equity holders:
£
£
Final paid
200,000
-
During the year dividends of £110,000 (2021: £40,000) were voted paid by subsidiary entities to non-controlling parties and LCap Group Limited waived its rights to dividends.
10
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
1,142,056
607,193
Company pension contributions to defined contribution schemes
25,500
71
1,167,556
607,264
LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
10
Directors' remuneration (continued)
Page 34
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
267,243
267,243

None of the directors were remunerated through LCap Group Limited, but through the trading subsidiaries Drax Executive Limited and Rowan Recruitment Limited.

11
Intangible fixed assets
Group
Goodwill
Development costs
Total
£
£
£
Cost
At 1 January 2022
2,766,620
2,715,626
5,482,246
Additions
-
0
1,293,939
1,293,939
At 31 December 2022
2,766,620
4,009,565
6,776,185
Amortisation and impairment
At 1 January 2022
148,890
526,035
674,925
Amortisation charged for the year
276,662
673,889
950,551
At 31 December 2022
425,552
1,199,924
1,625,476
Carrying amount
At 31 December 2022
2,341,068
2,809,641
5,150,709
At 31 December 2021
2,617,730
2,189,591
4,807,321
The company had no intangible fixed assets at 31 December 2022 or 31 December 2021.
LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
Page 35
12
Tangible fixed assets
Group
Fixtures, fittings & equipment
Computer equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2022
108,254
246,466
99,099
453,819
Additions
540
139,495
-
0
140,035
Disposals
-
0
(1,540)
-
0
(1,540)
At 31 December 2022
108,794
384,421
99,099
592,314
Depreciation and impairment
At 1 January 2022
100,829
141,862
27,027
269,718
Depreciation charged in the year
2,497
64,238
27,027
93,762
Eliminated in respect of disposals
-
0
(417)
-
0
(417)
At 31 December 2022
103,326
205,683
54,054
363,063
Carrying amount
At 31 December 2022
5,468
178,738
45,045
229,251
At 31 December 2021
7,425
104,604
72,072
184,101

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Group
Company
2022
2021
2022
2021
£
£
£
£
Motor vehicles
45,045
72,072
-
0
-
0
13
Fixed asset investments
Group
Company
2022
2021
2022
2021
Notes
£
£
£
£
Investments in subsidiaries
14
-
0
-
0
4,292,573
3,732,729
LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
13
Fixed asset investments (continued)
Page 36
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 January 2022
3,732,729
Additions
559,844
At 31 December 2022
4,292,573
Carrying amount
At 31 December 2022
4,292,573
At 31 December 2021
3,732,729

Fixed asset investments additions relate to share based payments for an EMI option scheme recognised in the subsidiary entities where the employees are employed.

14
Subsidiaries

Details of the company's subsidiaries at 31 December 2022 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Drax Executive Limited
71 Queen Victoria Street, London, EC4V 4BE
Ordinary
100.00
Rowan Recruitment Limited
Xyz Building, 2 Hardman Boulevard, Manchester, M3 3AQ
Ordinary
64.00
15
Debtors
Group
Company
2022
2021
2022
2021
Amounts falling due within one year:
£
£
£
£
Trade debtors
3,927,821
2,356,599
-
0
-
0
Corporation tax recoverable
391,932
727,808
-
0
-
0
Other debtors
601,848
537,623
35
35
Prepayments and accrued income
504,239
511,795
-
0
-
0
5,425,840
4,133,825
35
35
LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
Page 37
16
Creditors: amounts falling due within one year
Group
Company
2022
2021
2022
2021
Notes
£
£
£
£
Bank loans
18
871,429
871,429
-
0
-
0
Obligations under hire purchase leases
19
21,595
31,587
-
0
-
0
Trade creditors
558,829
697,964
-
0
-
0
Amounts owed to group undertakings
-
0
-
0
2,966,436
2,966,436
Corporation tax payable
330,228
220,000
-
0
-
0
Other taxation and social security
1,152,155
874,687
-
-
Other creditors
242,091
93,931
-
0
-
0
Accruals and deferred income
2,577,745
1,741,780
-
0
-
0
5,754,072
4,531,378
2,966,436
2,966,436
17
Creditors: amounts falling due after more than one year
Group
Company
2022
2021
2022
2021
Notes
£
£
£
£
Bank loans
18
2,233,186
3,104,614
-
0
-
0
Obligations under hire purchase leases
19
-
0
19,050
-
0
-
0
2,233,186
3,123,664
-
0
-
0
18
Loans and overdrafts
Group
Company
2022
2021
2022
2021
£
£
£
£
Bank loans
3,104,615
3,976,043
-
0
-
0
Payable within one year
871,429
871,429
-
0
-
0
Payable after one year
2,233,186
3,104,614
-
0
-
0
LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
18
Loans and overdrafts (continued)
Page 38

The Drax Executive Limited bank loan is secured by fixed and floating charges covering all the property or undertaking of the company. The bank loan is a government-backed CBILS loan with a repayment term of six years, interest of 3.25% per annum and no interest charged in the first year.

 

The Rowan Recruitment Limited bank loan, which is part of the Coronavirus Business Interruption Loan Scheme, is secured on fixed and floating charges over the asset of the company as well as a personal guarantee by a director.

 

19
Hire purchase lease obligations
Group
Company
2022
2021
2022
2021
£
£
£
£
Future minimum lease payments due under hire purchase leases:
Within one year
21,595
31,587
-
0
-
0
In two to five years
-
0
19,050
-
0
-
0
21,595
50,637
-
-

Lease payments represent amounts payable by the company or group for certain fixed assets. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

20
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

Liabilities
Liabilities
2022
2021
Group
£
£
Accelerated capital allowances
718,265
542,448
The company has no deferred tax assets or liabilities.
LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
20
Deferred taxation (continued)
Page 39
Group
Company
2022
2022
Movements in the year:
£
£
Liability at 1 January 2022
542,448
-
Charge to profit or loss
177,975
-
Effect of change in tax rate - profit or loss
(2,158)
-
Liability at 31 December 2022
718,265
-

The deferred tax liability relates to accelerated capital allowances.

21
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
227,112
146,025

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

22
Share capital
Group and company
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
A Ordinary shares of 0.1p each
5,000
5,000
5
5
B1 Ordinary shares of 0.00001p each
100,000,000
100,000,000
10
10
B2 Ordinary shares of 0.00001p each
100,000,000
100,000,000
10
10
B3 Ordinary shares of 0.00001p each
100,000,000
100,000,000
10
10
R Ordinary shares of 0.00001p each
2,000,000
2,000,000
-
-
302,005,000
302,005,000
35
35
LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
22
Share capital (continued)
Page 40

A ordinary shares are carry voting rights, are entitles to dividend payments and the right to participate in a capital contribution.

 

B1, B2, B3 and R ordinary shares carry no rights to vote, are not entitled to dividend payments and have the right to participate in a capital contribution.

 

Post year end, B4 and B5 ordinary shares were issued. The B4 and B5 ordinary shares carry no rights to vote, are not entitled to dividend payments and have the right to participate in a capital contribution.

23
Share-based payment transactions

During the year ended 31 December 2022, EMI share options were issued by a director and shareholder over shares of the company to twelve employees (2021: nineteen employees). All share options remain outstanding at the period end.

 

EMI share options are allocated on a discretionary basis to employees. Share options allocated are subject to non-market vesting conditions and only become exercisable subject to the conditions set out in the option scheme rules. The options may not be exercised later than the 10th anniversary of the option agreement.

 

The fair value of the EMI share options as at the grant date is deemed to be the following over the company:

Group and company
Number of share options
2022
2021
Number
Number
Outstanding at 1 January 2022
68,250,550
2,400
Granted
20,375,250
88,890,000
Forfeited
(6,000,000)
(20,640,750)
Expired
-
(1,100)
Outstanding at 31 December 2022
82,625,800
68,250,550
Exercisable at 31 December 2022
-
-
LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
23
Share-based payment transactions (continued)
Page 41

At the year end, the share capital of the company over which various share options were granted was in total 302,005,000 shares and a nominal value of £35.20 split as:

- 5,000 (2021: 5,000) A Ordinary shares of £0.001 each;

- 100,000,000 (2021: 100,000,000) B1 Ordinary shares of £0.0000001 each;

- 100,000,000 (2021: 100,000,000) B2 Ordinary shares of £0.0000001 each;

- 100,000,000 (2021: 100,000,000) B3 Ordinary shares of £0.0000001 each;

- 2,000,000 (2021: 2,000,000) R Ordinary shares of £0.0000001 each.

 

At the year end, the number of outstanding share options was split for the following classes of share capital of the company:

- 800 (2021: 550) A Ordinary shares of £0.001 each

- 24,866,667 (2021: 22,750,000) B1 Ordinary shares of £0.0000001 each;

- 24,866,667 (2021: 22,750,000) B2 Ordinary shares of £0.0000001 each;

- 32,891,666 (2021: 22,750,000) B3 Ordinary shares of £0.0000001 each.

 

A charge of £559,844 has been recognised in the subsidiary entities in which the option holders are employed.

24
Operating lease commitments
Lessee

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Group
Company
2022
2021
2022
2021
£
£
£
£
Within one year
443,037
464,216
-
-
Between two and five years
1,174,127
1,677,048
-
-
1,617,164
2,141,264
-
-
25
Events after the reporting date

On 21 June 2023, LCap acquired 100% of the share capital of Altus Partners Limited, a private equity executive search firm.

LCap Group Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2022
Page 42
26
Cash generated from group operations
2022
2021
£
£
Profit for the year after tax
3,411,121
1,993,735
Adjustments for:
Taxation charged/(credited)
674,906
(78,958)
Finance costs
160,981
(133,402)
Investment income
(35,880)
-
Loss on disposal of tangible fixed assets
1,123
-
Amortisation and impairment of intangible assets
950,551
336,640
Depreciation and impairment of tangible fixed assets
93,762
120,980
Equity settled share based payment expense
559,844
253,693
Increase in provisions
-
524,962
Movements in working capital:
Increase in debtors
(1,627,891)
(1,460,086)
Increase/(decrease) in creditors
1,122,458
(683,967)
Cash generated from operations
5,310,975
873,597
27
Controlling party

The company is controlled by the directors who own the entire issued share capital. The directors consider there to be no one ultimate controlling party.

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