1. Accounting policies
These financial statements have been prepared in accordance with the provisions of Section 1A (Small Entities) of Financial Reporting Standard 102Other accounting policies
General InformationBloom Services Capital is a Private Limited Company incorporated in the United Kingdom under the Companies Act 2006. The registered office is located at 12 Groveland Ct, London EC4M 9EH, UK. The company was incorporated on August 11, 2021. The Company incorporation number is 13559457. This is the Company's first financial year .The Company has extended the current accounting period to the financial year ending on 31st December 2022, which includes 4 months of the previous financial year. -The principal activity of the company is to provide short-term innovative financing solutions to online businesses. -The Company is a wholly-owned subsidiary of Bloom Group S.A., incorporated in the Grand Duchy of Luxembourg.-The company fully owns two subsidiaries: - (i) Bloom Technology Services Romania S.R.L. registered in Cluj Napoca, Romania, - (ii) and Bloom Services Capital 1 Ltd registered at 12 Groveland Ct, London EC4M 9EH, UK. -The Company exercises control over a Special Purpose Vehicle (SPV) Bloom Services Capital II Ltd as per the requirements of FRS 102. The SPV is a separate legal entity. The SPV is primarily involved in the acquisition and management of financial assets. -The Company qualifies as a small group and therefore qualifies for a consolidation exemption under the Companies Act. -The financial statements are prepared under the historical cost convention.-The financial statements are presented in pounds sterling (£), which is the functional currency of the Company.-Going concern: The financial statements have been prepared on a going concern basis as the directors have assessed the company's ability to meet its liabilities as they fall due for a period of at least 12 months from the date of approval of these financial statements.Going Concern basisThe financial statements of Bloom Services Capital have been prepared on a going concern basis, as the directors have assessed the entity's ability to continue as a going concern for at least 12 months from the date of the financial statements.The directors have considered a range of factors, including but not limited to, the entity's cash flow projections, the current economic environment, and the level of funding available to the entity. A-Working CapitalB-Macroeconomic FactorsC-Funding and liquidity A/ Working CapitalThe Company is a wholly-owned subsidiary of Bloom Group SA. This first accounting period covers a 16-month period, from August 11, 2021, to December 31, 2022. The shareholder’s deficit amounts to GBP 672,858 as of December 31st, 2022. This is driven mainly by upfront costs linked to the implementation of the UK operations. The Company started generating revenue in June 2022.The deficit has been funded via intercompany loans provided by the parent company, Bloom Group SA. Bloom Group SA has committed to providing support to the company as required on a continuous basis. B/ Macroeconomic factorsProspects for UK economic performance remain uncertain. The medium and longer-term impacts of the cost-of-living crisis, together with the implications of the UK’s new trading relationships post-Brexit and geopolitical tensions (heightened following the Russian military invasion of Ukraine) are still to be determined. This has resulted in significant cost inflation and therefore increased pressure for the Bank of England to continue to increase base rate from an unprecedented low level, with the latest increase being from 5% to 5.25% in August 2023. All of these factors result in increased pressure on affordability and a heightened risk that merchants may ultimately default on their payments. However, as of the report date there has been no material impact from these macroeconomic factors on the Company’s originated loans or cash flows.C/ Funding and liquidityTo originate its loan, the Company has currently access to three different pools of cash:A securitization arrangement with Bloom Services Capital II (BSC II). BSC II is funded through the issuance of Senior Notes.A credit facility provided by Bloom Group SA used to bridge the funding gaps and to finance the junior tranche of the senior facility.A second credit facility provided by Bloom Group SA used for working capital purposes. The analysis indicates that the company possesses and has access to sufficient funding resources to sustain its primary lending operations, which are instrumental in generating operating cash flows. Based on our business assessment, we anticipate consistent cash flow generation, despite the prevailing macroeconomic conditions.On this basis, the directors believe that Bloom Services Capital has sufficient support and financial resources to meet its liabilities as they fall due.Accounting policiesFinancial AssetsFinancial instruments are recognised under the provisions of Section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instruments Issues' of FRS 102. Financials are initially recognised when the company becomes party to the contractual provisions of the instrument. Basic financial assetsBasic financial assets, which include debtors and cash and bank balances, 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.Financial Liabilities:Basic financial liabilities, including trade and other payables and bank loans, are initially recognized at transaction price adjusted for transaction costs unless the arrangement constitutes a financing transaction, in which the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest.A debt instrument is subsequently amortised at its effective interest rate.Trade payable for goods or services acquired in the ordinary course of business due within one year or less, accounts payable are classified as current liabilities. Amortised costs are calculated based on the undiscounted cash or other consideration expected to be received.If due for more than one year, they are classified as non-current liabilities. These are initially recognised at transaction price and subsequently amortised using effective interest.Investment in SubsidiariesWhen the Company has investments in shares that result in a controlling interest in another entity, the Company measures these investments at cost, in line with the provisions of FRS 102.Interest IncomeThe company recognizes interest income in accordance with the requirements of FRS 102. Interest income is recognized in profit or loss using the effective interest method.Other Fees and IncomeThe company recognizes fees and other incomes which are not part of the effective interest rate, when services are rendered, and obligations are satisfied.Tangible fixed assets and depreciation:Tangible fixed assets are measured at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided at rates calculated to write off the cost of the fixed assets, less their estimated residual value, over their expected useful lives on the following bases: Furniture's and fixtures: 20% Straight LineForeign Currency translation The company is engaged in foreign transactions, which are transactions that are denominated in currencies other than the functional currency of the company. The functional currency of the company is GBP. The company translates foreign currency transactions into GBP using the exchange rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are revalued at the exchange rate prevailing at the balance sheet date. Exchange gains and losses resulting from the revaluation of monetary assets and liabilities are recognized in the profit and loss account. Non-monetary items that are carried at fair value and denominated in foreign currencies are revalued at the exchange rate prevailing at the balance sheet date, with any exchange gains or losses being recognized in the profit and loss account