Company Registration No. 07434361 (England and Wales)
Rowan Recruitment Limited
Annual report and financial statements
for the year ended 31 December 2022
Rowan Recruitment Limited
Company information
Directors
Paul Waite
Graham Roadnight
Lee Colliss
(Appointed 1 March 2022)
Company number
07434361
Registered office
Xyz Building
2 Hardman Boulevard
Manchester
England
M3 3AQ
Independent auditor
Saffery LLP
71 Queen Victoria Street
London
EC4V 4BE
Rowan Recruitment Limited
Contents
Page
Strategic report
1 - 5
Directors' report
6 - 7
Independent auditor's report
8 - 11
Income statement
12
Statement of financial position
13
Statement of changes in equity
14
Notes to the financial statements
15 - 25
Rowan Recruitment Limited
Strategic report
For the year ended 31 December 2022
Page 1

The directors present the strategic report for Rowan Recruitment Limited (Rowan, Company) for the year ended 31 December 2022. On 16 June 2021, LCap Group Limited (LCap) acquired a majority share of 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/challenge.  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.
Rowan Recruitment 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 and service 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 to 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.
Rowan Recruitment 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.

Rowan Recruitment 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:

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 £5,035,557 (FY21: £3,200,928), a growth of £1,834,629 or 57%. The business now additionally benefits from the waterfall of opportunities provided by its sister company, Drax Executive Limited.

EBITDA: Adjusted EBITDA (as defined and quantified below) for the year ended 31 December 2022 was £1,771,529 (FY21: £963,724), a growth of £807,805 or 84%.

Headcount: average headcount for the year ending 31 December 2022 was 30 (FY21: 26). The business will further increase its headcount, to leverage the opportunity waterfall as well as expand its geographic territory from the North-West, into London and nationwide, to deliver accelerated growth into FY23.

Cash: was £2,759,908 at 31 December 2022 (FY21: £1,584,864) an increase of £1,175,044.

Rowan Recruitment Limited
Strategic report (continued)
For the year ended 31 December 2022
Page 5
Trading results summary
FY22
FY21
£
£
Revenue
5,035,555
3,200,928
Direct costs
(2,397,857)
1,566,294
Gross margin
2,637,698
1,634,634
Gross margin %
52%
51%
Indirect costs*
(866,171)
(670,910)
Adjusted EBITDA
1,771,527
963,724
*Indirect costs exclude non-recurring items and other administrative expenses totalling £105,358 (FY21: £130,517)
Future prospects and Outlook
The directors are confident Rowan 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 2022 and with the financial position of the Company 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 Insights software sales.

The directors are not aware, at the date of this report, of any likely major changes in the Company's activities in the next year.
Principal risks and uncertainties
The Company'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
Rowan Recruitment Limited
Directors' report
For the year ended 31 December 2022
Page 6

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

Principal activities

The principal activity of the company continued to be that of an executive search and recruitment company.

Directors

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

Paul Waite
Graham Roadnight
Lee Colliss
(Appointed 1 March 2022)
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 company and of the profit or loss of the company 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 company’s transactions and disclose with reasonable accuracy at any time the financial position of the 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 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 company’s auditor 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 company’s auditor is aware of that information.

Small companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.

Rowan Recruitment Limited
Directors' report (continued)
For the year ended 31 December 2022
Page 7
On behalf of the board
Lee Colliss
Director
2 November 2023
Rowan Recruitment Limited
Independent auditor's report
To the members of Rowan Recruitment Limited
Page 8
Opinion

We have audited the financial statements of Rowan Recruitment Limited (the 'company') for the year ended 31 December 2022 which comprise the income statement, the statement of financial position, the statement of changes in equity 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).

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 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 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 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.

Rowan Recruitment Limited
Independent auditor's report (continued)
To the members of Rowan Recruitment Limited
Page 9

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.

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 company and its environment obtained in the course of the audit, we have not identified material misstatements in 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 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 company or to cease operations, or have no realistic alternative but to do so.

Rowan Recruitment Limited
Independent auditor's report (continued)
To the members of Rowan Recruitment Limited
Page 10
Auditor's responsibilities for the audit of the financial statements

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 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 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 company by discussions with directors and by updating our understanding of the sector in which the company operates.

 

Laws and regulations of direct significance in the context of the 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 financial statement disclosures. We reviewed the 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 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.

Rowan Recruitment Limited
Independent auditor's report (continued)
To the members of Rowan Recruitment Limited
Page 11

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 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.

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
Rowan Recruitment Limited
Income statement
For the year ended 31 December 2022
Page 12
2022
2021
£
£
Turnover
5,035,555
3,200,928
Administrative expenses
(3,405,827)
(2,441,220)
Other operating income
-
0
23,188
Operating profit
1,629,728
782,896
Interest receivable and similar income
280
122
Interest payable and similar expenses
(8,346)
(3,782)
Profit before taxation
1,621,662
779,236
Tax on profit
(321,242)
(171,250)
Profit for the financial year
1,300,420
607,986

The income statement has been prepared on the basis that all operations are continuing operations.

Rowan Recruitment Limited
Statement of financial position
As at 31 December 2022
Page 13
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
6
81,216
85,693
Current assets
Debtors
7
1,382,085
810,083
Cash at bank and in hand
2,759,908
1,584,864
4,141,993
2,394,947
Creditors: amounts falling due within one year
8
(1,573,768)
(1,034,548)
Net current assets
2,568,225
1,360,399
Total assets less current liabilities
2,649,441
1,446,092
Creditors: amounts falling due after more than one year
9
(33,186)
(123,664)
Provisions for liabilities
(14,310)
(23,297)
Net assets
2,601,945
1,299,131
Capital and reserves
Called up share capital
11
200
200
Other reserves
112,952
558
Profit and loss reserves
2,488,793
1,298,373
Total equity
2,601,945
1,299,131

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 and are signed on its behalf by:
Lee Colliss
Director
Company Registration No. 07434361 (England and Wales)
Rowan Recruitment Limited
Statement of changes in equity
For the year ended 31 December 2022
Page 14
Share capital
Other reserves
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 January 2021
200
-
0
768,752
768,952
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
-
607,986
607,986
Dividends
-
-
(78,365)
(78,365)
Share based payment
-
558
-
0
558
Balance at 31 December 2021
200
558
1,298,373
1,299,131
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
1,300,420
1,300,420
Dividends
-
-
(110,000)
(110,000)
Share based payment
-
112,394
-
0
112,394
Balance at 31 December 2022
200
112,952
2,488,793
2,601,945
Rowan Recruitment Limited
Notes to the financial statements
For the year ended 31 December 2022
Page 15
1
Accounting policies
Company information

Rowan Recruitment Limited is a private company limited by shares incorporated in England and Wales. The registered office is Xyz Building, 2 Hardman Boulevard, Manchester, England, M3 3AQ.

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 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

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
Turnover

Turnover is stated net of VAT and trade discounts and is recognised when the significant risks and rewards are considered to have been transferred to the client.

 

Turnover from the supply of services represents the value of recruitment services provided under contracts to the extent that there is a right to consideration and is recorded at the fair value of the consideration received or receivable. Where a contract has only been partially completed at the balance sheet date, turnover represents the fair value of the service provided to date based on the stage of completion of the contract activity at the balance sheet date. Where payments are received from customers in advance of services provided, the amounts are recorded as deferred income and included as part of the creditors due within one year.

1.3
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:

Share issue costs
10% straight line
Rowan Recruitment Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 16
1.4
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:

Leasehold improvements and fixtures and fittings
Straight line over 4 years
Computers
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 credited or charged to profit or loss.

1.5
Impairment of fixed assets

At each reporting period end date, the company 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.

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.

1.6
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Rowan Recruitment Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 17
1.7
Financial instruments

The company 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 company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with 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.

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 company after deducting all of its liabilities.

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.

1.8
Equity instruments

Equity instruments issued by the company 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 company.

1.9
Taxation

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

Rowan Recruitment Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 18
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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

1.10
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.

1.11
Retirement benefits

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

1.12
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 equity and recorded in Other reserves.

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.

Rowan Recruitment Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 19
1.13
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 leases asset are consumed.

1.14
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.

1.15
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.

2
Critical accounting judgements and key sources of estimation uncertainty

In the application of the company’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.

Rowan Recruitment Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 20
3
Other operting income

Other operating income is £nil (2021: £23,188) for the current year. The prior year operating income figure relates to grant income from the government to support the business through the COVID-19 pandemic in the form of the Coronavirus Job Retention Scheme and the interest paid on the Coronavirus Business Interruption Loan Scheme.

4
Employees

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

2022
2021
Number
Number
Total
30
26
5
Intangible fixed assets
Share issue costs
£
Cost
At 1 January 2022 and 31 December 2022
22,350
Amortisation and impairment
At 1 January 2022 and 31 December 2022
22,350
Carrying amount
At 31 December 2022
-
0
At 31 December 2021
-
0
Rowan Recruitment Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 21
6
Tangible fixed assets
Plant and machinery etc
£
Cost
At 1 January 2022
172,100
Additions
31,967
At 31 December 2022
204,067
Depreciation and impairment
At 1 January 2022
86,407
Depreciation charged in the year
36,444
At 31 December 2022
122,851
Carrying amount
At 31 December 2022
81,216
At 31 December 2021
85,693
7
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
953,025
481,949
Corporation tax recoverable
48,750
48,750
Other debtors
380,310
279,384
1,382,085
810,083
Rowan Recruitment Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 22
8
Creditors: amounts falling due within one year
2022
2021
£
£
Bank loans
71,429
71,429
Trade creditors
116,949
43,567
Amounts owed to group undertakings
572,398
250,000
Corporation tax
330,228
220,000
Other taxation and social security
231,511
274,146
Other creditors
251,253
175,406
1,573,768
1,034,548

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

 

Included within other creditors at the year end are finance lease obligations of £21,595 (2021: £31,587) secured on the assets to which they relate.

 

Included within other creditors at the year end are pension contributions of £25,236 (2021: £9,099).

9
Creditors: amounts falling due after more than one year
2022
2021
£
£
Bank loans and overdrafts
33,186
104,614
Other creditors
-
0
19,050
33,186
123,664

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

 

Included within other creditors at the year end are finance lease obligations of £nil (2021: £19,050) secured on the assets to which they relate.

Rowan Recruitment Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 23
10
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 parent company LCap Group Limited to nil employees (2021: three). 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 parent company, LCap Group Limited:

Number of share options
Weighted average exercise price
2022
2021
2022
2021
Number
Number
£
£
Outstanding at 1 January 2022
1,500,000
-
0
-
0
-
0
Granted
-
0
1,500,000
-
0
-
0
Outstanding at 31 December 2022
1,500,000
1,500,000
-
0
-
0
Exercisable at 31 December 2022
-
0
-
0
-
0
-
0

The options outstanding at the year end had an exercise price of £0.0000001 each over B1, B2, B3 and R Ordinary shares of £0.0000001 each.

Rowan Recruitment Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
10
Share-based payment transactions (continued)
Page 24

At the year end, the share capital of the parent 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 A Ordinary shares of £0.001 each;

- 100,000,000 B1 Ordinary shares of £0.0000001 each;

- 100,000,000 B2 Ordinary shares of £0.0000001 each;

- 100,000,000 B3 Ordinary shares of £0.0000001 each;

- 2,000,000 R Ordinary shares of £0.0000001 each.

 

During the year, the company recognised total share-based payment expenses of £112,394 (2020: £558) which related to equity settled share based payment transactions. The equity settled share based payments are recognised in other reserves.

 

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

- 500,000 B1 Ordinary shares of £0.0000001 each;

- 500,000 B2 Ordinary shares of £0.0000001 each;

- 500,000 B3 Ordinary shares of £0.0000001 each;

- 2,000,000 R Ordinary shares of £0.0000001 each.

11
Called up share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of 1p each
18,667
18,667
187
187
Deferred Shares of 1p each
1,333
1,333
13
13
20,000
20,000
200
200

The A, B, X, Y and Z Ordinary 1p shares hold the right to attend and vote at general meetings and receive dividends. The Preferred A Ordinary 1p shares and Preferred B Ordinary 1p shares do not hold the right to attend or vote at general meetings or receive dividends, but do hold entitlement to £17 per share on return of capital. The Ordinary Shares give the right to one vote per share on a poll at general meetings and receive dividends. The Deferred Shares do not carry the right to attend or vote at general meetings or receive dividends, but do hold entitlement to £1 per share on return of capital.

 

In the event of return of capital (including on liquidation, capital reduction or otherwise), the assets of the Company remaining after payment of all liabilities will be applied in the following order of priority: firstly in paying to the holders of the deferred shares a sum of £1 and thereafter, in distributing the balance among the holders of the equity shares pro rata to the number of ordinary shares held.

Rowan Recruitment Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 25
12
Reserves
Capital redemption reserve
The nominal value of shares repurchased and still held at the end of the reporting period.
Profit and loss reserves
The cumulative profit and loss net of distributions to owners.
13
Operating lease commitments
Lessee

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

2022
2021
£
£
242,067
364,723
14
Related party transactions

During the year, one of the directors received dividends of £110,000 (2021: £40,000).

 

In the 2021 financial year, the company loaned the sum of £150,000 to a director. At 31 December 2022, the balance remained outstanding. The loan does not accrue interest and shall be repaid upon completion of share sale or on completion of the option granted under an option agreement.

 

During the year, management charges of £464,735 (2021: £250,000) were charged by a fellow group company. At the year end, the amount due from this fellow group company was £572,398 (2021: £250,000).

15
Control

The immediate parent company is LCap Group Limited, a company incorporated in England and Wales.

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