Company Registration No. 04740661 (England and Wales)
Xcede Limited
Annual report and financial statements
for the year ended 31 December 2022
Xcede Limited
Company information
Directors
Adam Blaney
(Appointed 27 January 2023)
A Marsh
(Appointed 27 January 2023)
Andrew Goodman
(Appointed 27 January 2023)
Stephen Smith
(Appointed 13 April 2023)
Company number
04740661
Registered office
1st Floor
3-8 Carburton Street
London
W1W 5AJ
Independent auditor
Saffery LLP
71 Queen Victoria Street
London
EC4V 4BE
Xcede Limited
Contents
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 9
Statement of comprehensive income
10
Statement of financial position
11
Statement of changes in equity
12
Notes to the financial statements
13 - 26
Xcede Limited
Strategic report
For the year ended 31 December 2022
Page 1
The directors present the strategic report for the year ended 31 December 2022.
Review of business
The Company is a global recruitment specialist operating globally. The Company operates under the brand of Xcede, specialising in temporary and permanent employment agency activities.
The results of the Company for the year, as set out on page 10 show a loss on ordinary activities before tax of £12.1m (2021 – profit of £0.5m). However during the year there was a one off provision against intercompany debtor balances totalling £11.8m, seen in note 4. When excluding this amount the adjusted operating loss for the year is £0.3m.
Business environment
The Company is well positioned to deliver talent inside UK market and via the Group's global reach on the international market. Demand for talent across the areas the business supports remains strong, and the Group is confident that it is properly positioned to continue strong growth.
Strategy
The Company’s focus is continued organic growth in its core brands, with a growth in permanent and contract revenues. The company has the capability to service multiple areas of demand within large clients and supporting these clients will afford strong revenue and profit growth through depth of relationship within such customers.
Key performance indicators
We have made significant progress throughout the period in relation to key elements of our strategy. The Board monitors the progress of the Group by reference to the following KPIs:
EBITDA is adjusted to exclude provisions against intercompany balances.
Xcede Limited
Strategic report (continued)
For the year ended 31 December 2022
Page 2
Going concern
As at 31 December 2022, Xcede Global Holdings Limited, the ultimate parent company of the group, held cash of £1.3m (2021: £1.2m). To partly fund the merger in January 2020, the group (through a subsidiary entity Xcede Group Limited (formerly Techstream IGHB Limited) arranged a term loan of £6.5m of which £3.9m is outstanding at 31 December 2022 (2021: £5.3m). Additionally, the Group has a UK based Invoice Finance Facility with Investec Bank of £15m (2021: £11m). At the end of December 2022, amounts repayable on the Facility totalled £9.7m (2021: £8.3m). The Group’s Loan from Investec Bank is subject to covenants relating to NFI, EBITDA and cash availability which are assessed on a monthly basis.
To assess the reasonableness of the going concern basis of preparation, the Directors have prepared forecasts for the period to December 2025 for the group which the company is part of. These forecasts have been prepared considering the sectors that the group operates, the growth the group is experiencing and the potential uncertainty due to the Ukraine and Middle East wars and the continued cost of living crisis. Post year end, the covenants assigned to the loans were breached, however the Directors are in the process of negotiating revised terms resulting in the breached covenants being waived for a 6-month period. As part of these negotiations, the covenants are being revised to take into account the current economic climate, and terms have been altered in order to continue supporting the group. Additional funding has also been agreed from the parent company to assist with short term liquidity. The Directors continue to closely monitor the group's funding requirements and working closely with their majority shareholders and fund providers to ensure that the group is appropriately funded over the next 12 to 18 months.
On this basis, the Directors have a reasonable expectation that the company will have sufficient cash flow and available resources to continue operating for at least 12 months from the approval date of these financial statements. Accordingly, the Company continues to adopt the going concern basis in preparing its financial statements.
2023 and beyond Financial Results
The Company is exposed to market risk and through the funding requirements to interest and currency risks. These are being evaluated on a continuous basis.
The Directors will continue to monitor the economic environment and assess risk and will implement measures in accordance with the macroeconomic environment coupled with the unique position on the market.
Andrew Goodman
Director
10 November 2023
Xcede Limited
Directors' report
For the year ended 31 December 2022
Page 3
The directors present their annual report and financial statements for the year ended 31 December 2022.
Results and dividends
The results for the year are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
William Jacques
(Resigned 31 March 2023)
Julian Vecchio
(Resigned 14 January 2023)
Paul Hart
(Resigned 8 July 2022)
Adam Blaney
(Appointed 27 January 2023)
A Marsh
(Appointed 27 January 2023)
Andrew Goodman
(Appointed 27 January 2023)
Stephen Smith
(Appointed 13 April 2023)
Auditor
The auditor, Saffery Champness LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Xcede Limited
Directors' report (continued)
For the year ended 31 December 2022
Page 4
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.
On behalf of the board
Andrew Goodman
Director
10 November 2023
Xcede Limited
Directors' responsibilities statement
For the year ended 31 December 2022
Page 5
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:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and 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.
Xcede Limited
Independent auditor's report
To the member of Xcede Limited
Page 6
Opinion
We have audited the financial statements of Xcede Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, 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:
give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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.
Xcede Limited
Independent auditor's report (continued)
To the member of Xcede Limited
Page 7
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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 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:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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.
Xcede Limited
Independent auditor's report (continued)
To the member of Xcede Limited
Page 8
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.
Xcede Limited
Independent auditor's report (continued)
To the member of Xcede Limited
Page 9
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.
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
Jamie Cassell
Senior Statutory Auditor
For and on behalf of Saffery LLP
10 November 2023
Chartered Accountants
Statutory Auditors
71 Queen Victoria Street
London
EC4V 4BE
Xcede Limited
Statement of comprehensive income
For the year ended 31 December 2022
Page 10
2022
2021
Notes
£
£
Turnover
3
39,361,288
15,248,659
Cost of sales
(26,625,758)
(8,375,184)
Gross profit
12,735,530
6,873,475
Administrative expenses
(25,584,729)
(8,468,775)
Other operating income
3
189,068
2,202,201
Operating (loss)/profit
4
(12,660,131)
606,901
Interest payable and similar expenses
9
(249,442)
(69,684)
(Loss)/profit before taxation
(12,909,573)
537,217
Tax on (loss)/profit
10
(472)
(Loss)/profit for the financial year
(12,910,045)
537,217
The income statement has been prepared on the basis that all operations are continuing operations.
Xcede Limited
Statement of financial position
As at 31 December 2022
Page 11
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
11
262,014
357,864
Current assets
Debtors
12
12,327,929
11,281,347
Cash at bank and in hand
89,772
67,697
12,417,701
11,349,044
Creditors: amounts falling due within one year
13
(24,016,600)
(10,133,748)
Net current (liabilities)/assets
(11,598,899)
1,215,296
Total assets less current liabilities
(11,336,885)
1,573,160
Provisions for liabilities
Deferred tax liability
15
42,000
42,000
(42,000)
(42,000)
Net (liabilities)/assets
(11,378,885)
1,531,160
Capital and reserves
Called up share capital
17
213
213
Share premium account
15,002
15,002
Profit and loss reserves
(11,394,100)
1,515,945
Total equity
(11,378,885)
1,531,160
The financial statements were approved by the board of directors and authorised for issue on 10 November 2023 and are signed on its behalf by:
Andrew Goodman
Director
Company Registration No. 04740661
Xcede Limited
Statement of changes in equity
For the year ended 31 December 2022
Page 12
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2021
213
15,002
978,728
993,943
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
-
537,217
537,217
Balance at 31 December 2021
213
15,002
1,515,945
1,531,160
Year ended 31 December 2022:
Loss and total comprehensive income for the year
-
-
(12,910,045)
(12,910,045)
Balance at 31 December 2022
213
15,002
(11,394,100)
(11,378,885)
Xcede Limited
Notes to the financial statements
For the year ended 31 December 2022
Page 13
1
Accounting policies
Company information
Xcede Limited is a private company limited by shares incorporated in England and Wales. The registered office is 1st Floor, 3-8 Carburton Street, London, W1W 5AJ.
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. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
The financial statements of the company are consolidated in the financial statements of Techstream Group Holdings Limited. These consolidated financial statements are available from its registered office, 3rd Floor, The Media Centre, 3-8 Carburton Street, London, W1W 5AJ.
Xcede Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 14
1.2
Going concern
To assess the reasonableness of the going concern basis of preparation, the Directors have prepared forecasts for the period to December 2025 for the group which the company is part of. These forecasts have been prepared considering the sectors that the group operates, the growth the group is experiencing and the potential uncertainty due to the Ukraine and Middle East wars and the continued cost of living crisis. Post year end, the covenants assigned to the loans were breached, however the Directors are in the process of negotiating revised terms resulting in the breached covenants being waived for a 6-month period. As part of these negotiations, the covenants are being revised to take into account the current economic climate, and terms have been altered in order to continue supporting the group. Additional funding has also been agreed from the parent company to assist with short term liquidity. The Directors continue to closely monitor the group and the company's funding requirements and working closely with their majority shareholders and fund providers to ensure that the group and the company is appropriately funded over the next 12 to 18 monthstrue. The ultimate shareholders have provided assurances that they will continue to support the company going forward for a period of not less than 12 months from the signing of these financial statements through not seeking repayment of their loans during this period. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Turnover arising from the placement of permanent candidates is recognised when the company has fulfilled its contractual obligations in accordance with the underlying contracts. Depending on the terms and conditions agreed with the hiring client, this is either on the start date of a candidate's employment, or when a candidate accepts an offer of employment and a start date has been determined.
Turnover arising from temporary placements is recognised over the period that temporary staff are provided. Provision is made for the expected cost of meeting obligations where temporary workers have submitted approved timesheets for the specified contractual period.
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 land and buildings
Over lifetime of lease
Plant and equipment
2 years straight line
Fixtures and fittings
25% reducing balance
Computers
3 years straight line
Xcede Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 15
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 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.
1.6
Cash at bank and in hand
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.
1.7
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.
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.
Xcede Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 16
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 company 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 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.
Xcede Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 17
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 that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. 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 company’s contractual obligations expire or are discharged or cancelled.
1.8
Equity instruments
Equity instruments issued by the company are recorded at the fair value of the consideration received, net of direct issue 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.
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.
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.
Xcede Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
1
Accounting policies (continued)
Page 18
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
Leases
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.
1.13
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.
Xcede Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 19
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Intercompany recoverability
The recoverability of the amounts owed from group entities has been based on the review of the trading activities and forecasts for the next 12 months for the wider group and entities the debt relates to in order to ensure the group lending will be continued and no issues in the ability of the groups liquidity and going concern as a whole.
Credit note provisioning
Credit note provisions in relation to permanent placements that are recognised on acceptance date and are included at the year end have been based on the value of credit notes raised in 2023 for invoices recognised in 2022.
3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by geographical market
United Kingdom
30,422,092
11,854,994
Europe
8,912,706
3,161,932
Rest of World
26,490
231,733
39,361,288
15,248,659
2022
2021
£
£
Other revenue
Management charge receivable
189,068
2,295,209
Xcede Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
3
Turnover and other revenue (continued)
Page 20
4
Operating (loss)/profit
2022
2021
Operating (loss)/profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(121,616)
(19,414)
Depreciation of owned tangible fixed assets
260,373
194,334
Provision against amounts owed by subsidiary undertakings
11,761,250
Operating lease charges
355,149
446,845
Intercompany balance provision
As at 31 December 2022, Xcede Limited had fully provided for intercompany balances of £11,761,250
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 company and its fellow subsidiaries
96,374
185,274
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
138
77
Xcede Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
6
Employees (continued)
Page 21
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
8,691,403
5,473,521
Social security costs
1,112,378
682,461
Pension costs
211,888
95,504
10,015,669
6,251,486
7
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
1,075,768
573,026
Company pension contributions to defined contribution schemes
22,941
16,839
1,098,709
589,865
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2021 - 2).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
538,237
246,666
Company pension contributions to defined contribution schemes
9,000
6,000
8
Key management personell
The remuneration of key management personnel was £1,198,709 (2021-£592,115)
Xcede Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 22
9
Interest payable and similar expenses
2022
2021
£
£
Interest on bank overdrafts and loans
34,830
21,427
Interest on invoice finance arrangements
214,612
48,257
249,442
69,684
10
Taxation
2022
2021
£
£
Current tax
Foreign current tax on profits for the current period
472
The actual charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
(Loss)/profit before taxation
(12,909,573)
537,217
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
(2,452,819)
102,071
Tax effect of expenses that are not deductible in determining taxable profit
2,265,641
15,732
Unutilised tax losses carried forward
151,812
Group relief
(109,991)
Permanent capital allowances in excess of depreciation
31,513
(11,177)
Effect of overseas tax rates
472
Timing difference on pension accrual
3,853
3,365
Taxation charge for the year
472
-
Xcede Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 23
11
Tangible fixed assets
Leasehold land and buildings
Plant and equipment
Fixtures and fittings
Computers
Total
£
£
£
£
£
Cost
At 1 January 2022
88,169
50,592
218,160
770,909
1,127,830
Additions
23,519
58,064
81,583
Transfers
68,916
126,389
195,305
At 31 December 2022
111,688
119,508
218,160
955,362
1,404,718
Depreciation and impairment
At 1 January 2022
80,998
41,165
194,879
452,924
769,966
Depreciation charged in the year
10,911
22,522
16,023
210,917
260,373
Transfers
46,042
66,323
112,365
At 31 December 2022
91,909
109,729
210,902
730,164
1,142,704
Carrying amount
At 31 December 2022
19,779
9,779
7,258
225,198
262,014
At 31 December 2021
7,171
9,427
23,281
317,985
357,864
12
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
5,399,239
2,256,063
Corporation tax recoverable
41,233
279,843
Amounts owed by parent undertakings
3,389,971
7,922,656
Other debtors
88,213
92,767
Prepayments and accrued income
3,409,273
730,018
12,327,929
11,281,347
Xcede Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 24
13
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Invoice discounting
14
4,884,308
1,656,567
Trade creditors
909,360
318,917
Amounts owed to group undertakings
12,878,029
5,574,980
Taxation and social security
1,301,654
458,039
Other creditors
308,987
252,018
Accruals and deferred income
3,734,262
1,873,227
24,016,600
10,133,748
14
Loans and overdrafts
2022
2021
£
£
Bank loans
4,884,308
1,656,567
Payable within one year
4,884,308
1,656,567
Bank loans and overdrafts above represent amounts advanced in respect of an invoice financing agreement. The financing agreement is provided by Investec Bank PLC which is secured against the assets of the entity.
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
42,000
42,000
There were no deferred tax movements in the year.
Xcede Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 25
16
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
211,888
95,504
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
17
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary 'A' shares of 1p each
9,268
9,268
93
93
Ordinary 'B' shares of 1p each
3,132
3,132
31
31
Ordinary 'C' shares of 1p each
1,000
1,000
10
10
Ordinary 'D' shares of 1p each
422
422
3
3
Ordinary 'E' shares of 1p each
7,454
7,454
76
76
21,276
21,276
213
213
The ordinary 'A', 'B', 'C', 'D' and 'E' shares are separate share classes for the purposes of the declaration of dividends. The declaration of a dividend in respect of one class of share shall not compel a dividend at the same rate to be declared in respect of other classes of share.
In all other respects, the 'A', 'B', 'C', 'D' and 'E' shares rank equally.
18
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2022
2021
£
£
Within one year
285,176
305,305
Between two and five years
190,117
475,293
475,293
780,598
Xcede Limited
Notes to the financial statements (continued)
For the year ended 31 December 2022
Page 26
19
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
The company purchased services from entities with common key management personnel totalling £1,290,098. At the yearend, the company owed the entity £nil.
Other information
In accordance with paragraph 33 of FRS 102, disclosures have not been given of transactions entered into with group members that are wholly owned subsidiaries.
20
Ultimate controlling party
The immediate parent of the company is Xcede Group Limited (Company number 12361140) whose registered office is First Floor, 3-8 Carburton Street, London, England, W1W 5AJ. The parent of the smallest and largest group into which Xcede Limited is consolidated is Xcede Global Holdings Limited (Company number 11996176).
In the opinion of the directors, there is no ultimate controlling party.
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