Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2022
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FALCON INDUSTRIAL SERVICES LIMITED
COMPANY INFORMATION
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FALCON INDUSTRIAL SERVICES LIMITED
CONTENTS
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FALCON INDUSTRIAL SERVICES LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present the strategic report for the year ended 31 December 2022.
The Company's principal activities continued to be those of holding investments in subsidiaries and other entities and in real estate investment, while the core business of the Group companies continued to be the support and administrative organization of disputes and litigations, provision of learning courses (CME - Continuing Medical Education Courses), digital services and 360 degrees advice for healthcare professionals. In November 2022, Consulcesi Corporate SA ("CCSA") purchased from its parent company, Falcon Industrial Services Ltd, the investments in several subsidiaries (the “Group Deal”). Afterward, Gyrus Capital purchased from Falcon Industrial Services Limited a minority interest, i.e., 40% of the shareholdings, in CCSA.
At the year ended 31 December 2022, the Group continued to show a positive profit. However, the profit decreased significantly comparing to 2021 which is mostly due to extra expenses relating to group restructure. The total turnover in 2022 comparing to 2021 increased by 13% mainly due to turnover from subsidiaries purchased at the end of fiscal year 2021. The net assets of the group excluding non-controlling interest has increased by 21.7% and includes the net gains on the sale of 40% stake in CCSA amounting to €24m.
The Group's reputation for the type of services provided has enabled it to remain successful in the markets in which it is operating. The Group, therefore, aims to maintain its high quality and good value service to its customers and to invest in internal resources (staff), structure (local offices) and marketing campaigns in order to win new customers (including a new class of Healthcare professional) and increase the market share in both existing and new countries (e.g. Albania, other EU countries), other than for the launch of new business lines (e.g. digital marketing and data management services to B2B clients). Falcon group through Consulcesi Group, is uniquely positioned to continue its strong growth path through multiple value creation levers: consolidation of Legal business in Italy and Europe, improvement of Club value proposition through digitalization of product offered with the enhancement of new services through a new platform (”Club”). Investment in people, through a new organization that permits the group to grow in a strategic way, above all in B2B and marketing innovation. The development of additional value-added services and digital transformation, growth of B2B segment offering leveraging on Consulcesi brand awareness and distinctive competencies and evaluating M&A opportunities in the European market. Through achieving these aims, the Group expects to achieve further profits in the coming years and considers itself to be well placed to achieve growth within the current market. We aim to present a balanced and comprehensive review of the development and performance of the business during the year and its position at the end of it. Our review is consistent with the size and nature of our business and is written in the context of the risks and uncertainties we face.
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FALCON INDUSTRIAL SERVICES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
The Group's primary financial instrument is cash and cash equivalents arising from turnover generated by services provided by the Group companies, partially invested during 2022 in listed and unlisted securities / bonds and Exchange Traded Funds ("ETF").
The turnover of the B2C business lines is mostly generated by services provided for which the payments are received in advance and so the risk of unpaid debtors is close to zero. The trade debtors from the provision of the B2B services are monitored by the treasury department in order to ensure recovery of overdue debts, and our B2B customers are considered to have low risk company profiles. Creditors and costs are mainly of an operative nature, to run the organisation and all its offices worldwide. The Board continually monitors the cash requirements of the Group to ensure that the Group has ready access to the funds that the Board deem necessary at any time during the year. In addition, the Board continually monitors the cash invested in listed and unlisted securities / bonds and ETF, by ensuring that it is limited to a minor part of the total assets and that the portfolio is well balanced under a risk profile. The monitoring and review of future projections by the Board ensures also that there are adequate cash facilities either in house or on the market readily available from the Group’s finance providers to support the Group's cash flow requirements. Main liquidity and cash flow risks are from investing and financing activities not covered by net cash generated from operating activities (considering that lawsuits promoted by the Group companies in favour of their clients may last for more than one year) as well as real estate and securities market fluctuation. The Group is maintaining a significant cash & cash equivalents positive position to prevent any liquidity risk.
The Group at the end of 2022, held cash at bank and in hand amounting to €45,938,714 which is an increase of €28,957,484 compared to 2021 mainly due to the sale of the minority interest in Consulcesi Corporate SA ("CCSA").
In 2022, the amount of CME courses accredited and published on the platform by the Group companies were 231, of which 73 were new courses produced (compared to 307 CME courses accredited and published on the platform in 2021). This decrease reflects the decision to invest only in profitable courses. The Board continually monitors other business statistics (e.g. number of new litigation cases taken on, number of ‘Consulcesi Club’ clients, number of courses subscribed, redemptions) to ensure the development and performance of the business.
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FALCON INDUSTRIAL SERVICES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Who we are and what we do
The Group is one of the most relevant European providers of services to Healthcare Professionals (HCPs) and Healthcare companies, mainly active in Legal and in the Continuing Medical Education businesses (CME), with solid performances and outstanding profitability consistently over last years. Since its foundation, the main shareholder, the directors and the management team have implemented a successful strategy which led to the development of a distinctive positioning in the reference markets and a superior value proposition. The Group is structured as a network company where each entity is responsible for a specific activity of the value chain, facilitating specialization and vertical knowledge development. The Group along its growth path evolved as a 360-degree service provider for physicians, answering HCPs crucial ‘pain points’: to have a reliable support carrying on collective legal actions (“Class Actions”) and to have a digital base platform acting as single point of contact for Continuous Medical Education (CME), Legal protection and other profession related services. The offering is organized in 3 business lines (Legal, Club and B2B), targeting both B2C and B2B segments and presently has its cornerstone in one of the largest HCPs databases in Italy with privacy agreements. The Database is a key asset for the firm, providing a significant advantage in sales operations and in client management activities. The operating model is kept in-house to grant quality and flexibility, exploiting the ‘network model’ and the specialization of the Group companies in terms of commercial activities, production of contents / delivery of services for B2C clients, internal services and production of contents / delivery of services for B2B clients. The Role of the Board The Board’s primary responsibility is to promote the long-term success of the Group by delivering projects that meet the client’s expectations and the shareholders’ targets. This is affected by setting out the Group strategy with the ongoing performance monitoring. The Board (at both Group and local Group companies’ level) holds Board meetings periodically to review the main aspects of the business, including financial reviews and forecasts, resources, internal controls, performance, opportunities and risks. All directors are directly responsible for and involved in all projects with day-to-day management carried out by senior management and must act in the way he/she considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard to key issues including the interests of the stakeholders in both the short and long term. 1. The likely consequence of any decision in the long-term Consulcesi is a one-of-a-kind company with distinctive offering centred on HCPs encompassing Legal, Education and other services. The Company has a unique coverage of the legal market Key Success Factors, turning its business model into a winning competitive advantage guaranteeing also a sustainable and distinctive competitive positioning, effectively representing solid market entry barriers. Legal Italian market is composed of heterogeneous players where the Company mainly competes with specialized class actions providers by providing full focus on class actions, leveraging its commercial strength
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FALCON INDUSTRIAL SERVICES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
and the specifically designed operating model, supporting clients throughout the process offering favourable conditions unleashing economies of scale. The Company is the only market relevant provider fully focused on collective actions for HCPs.
The global continuing medical education (CME) market size reached Eur. 7.35 billion in 2021. Looking forward, the market expectation is to reach Eur. 10.7 billion by 2027, exhibiting a compound annual growth rate (CAGR) of 6.46% during 2022-2027. All European countries show an evolution path towards the E-Learning Methodology. E-Learning presents the highest expected growth leveraging on digitalization significantly accelerated by COVID-19. Consulcesi is uniquely positioned to continue its strong growth path through multiple value creation levers: • Consolidation of Legal business in Italy • Improvement of Club value proposition through the development of additional value-added services • Growth of B2B segment offering leveraging on Consulcesi brand awareness and distinctive competencies • M&A and partnerships initiatives in Italy • Club business international expansion in selected countries • Additional growth opportunities and investments to be pursued on an opportunistic basis 2. The interest of the Group’s employees The Directors (at both Group and local Group companies’ level) understand the importance of the employees to the long-term success of the business, and being closely involved in the day-to-day operations of the business are familiar with each employee and thus able to assess their performance and provide guidance and further training as necessary. The Group aims to recruit and retain motivated and competent people and believe in promotion as reward for performance and dedication, and to demonstrate a clear path for progression, combined with a well-structured and advanced MBO process. The Group has a well-developed intranet allowing the employees to easily access any information that they need, both on a project and corporate basis, and social media channels are developing to enhance communication and employee feedback. 3. The need to foster the Group’s business relationships with suppliers, customers and others The Group has always believed that good business relationships with clients and suppliers, is key to the ongoing success, and the Directors (at both Group and local Group companies’ level) develop close relationships with them to ensure that we fully understand each other’s strategies and objectives and are able to support each other in achieving them. The operating model is based on in-house activities to maximize the client service effectiveness and the process efficiency. The Group has developed over the years a fully dedicated hub to customers care services with superior IT support. 4. The impact of the Group’s operations on the community and environment The Group has developed a high reputation in the community and is keen to maintain it over the time, also through liberalities and promotion of new initiatives. The Group is also committed to protecting the environment. We acknowledge that the pursuit of economic growth and respect for the environment must be closely linked, with sustainable development being an integral part of our business philosophy and processes. We work on the basis that compliance with environmental legislation, and other requirements, is the very
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FALCON INDUSTRIAL SERVICES LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
minimum that will apply to our activities and services and we are committed to continual environmental performance improvement, the prevention of pollution and having a positive impact on the environment.
We work closely with our clients and suppliers, encouraging and educating our employees and supply chain to recognise their responsibilities regarding protecting the environment and achieving our environmental objectives and targets and communicating and consulting with all stakeholders as appropriate. 5. The desirability of the Group maintaining a reputation for high standards of business conduct The Group’s high standards in the way we run the business and deal with all stakeholders, and our commitment to be the best have been the key to the ongoing success. Key to this is the experience and ongoing professionalism and commitment of our employees and we continually strive to make our Company a place where all enjoy their work and have the opportunity to progress. We have a Policy of promoting continual improvement and the setting of quality objectives and improvement programmes within the Group. These objectives address the risks and opportunities within the Group, as determined by Senior Management, and we believe that Quality is critical to the success of our business, and base our approach on the key quality principles of customer focus, leadership, engagement of people, process approach, improvement and relationship management. 6. The need to act fairly as between members of the Group Strategy and decisions by the Board are carefully considered in both the short and long term and the Directors are fully aware of the need to take into account all relevant factors to achieve a fair balance between members of the Group. The overriding objective is to ensure that the Group maintains its reputation for quality and integrity so as to continue as a successful and sustainable business for the long-term benefit of the members.
This report was approved by the board and signed on its behalf.
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FALCON INDUSTRIAL SERVICES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present their report and the financial statements for the year ended 31 December 2022.
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation and minority interests, amounted to €9,261,598 (2021 - €14,092,796).
During the year, the company paid dividends of €16,557,694 (2021: €17,484,827).
The directors who served during the year were:
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FALCON INDUSTRIAL SERVICES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Information regarding the Company's and Group's principal risks and uncertainties is included within the Strategic Report.
The auditors, Simmons Gainsford LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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FALCON INDUSTRIAL SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FALCON INDUSTRIAL SERVICES LIMITED
We have audited the financial statements of Falcon Industrial Services Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2022, which comprise the Consolidated statement of comprehensive income, the Consolidated balance sheet, the Company balance sheet, the Consolidated statement of cash flows, the Consolidated statement of changes in equity, the Company statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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FALCON INDUSTRIAL SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FALCON INDUSTRIAL SERVICES LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
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FALCON INDUSTRIAL SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FALCON INDUSTRIAL SERVICES LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
In order to identify and assess the risks of material misstatements, including fraud and non-compliance with laws and regulations that could be expected to have a material impact on the financial statements, we have considered:
∙the results of our enquiries of management and those charged with governance of their assessment of the risks of fraud and irregularities;
∙the nature of the group, including its management structure and control systems (including the opportunity for management to override such controls);
∙management’s incentives and opportunities for fraudulent manipulation of the financial statements; and
∙the industry and environment in which it operates.
We also considered UK tax and pension legislation and laws and regulations relating to employment and the preparation and presentation of the financial statements such as the Companies Act 2006.
Based on this understanding we identified the following matters as being of significance to the entity:
∙laws and regulations considered to have a direct effect on the financial statements including UK financial reporting standards, Company Law, tax and pension legislation and distributable profits legislation;
∙the timing of the recognition of commercial income;
∙compliance with legislation relating to local employment law;
∙management bias in selecting accounting policies and determining estimates;
∙inappropriate journal entries;
∙recoverability of debtors; and
∙the requirement to impair the intangible assets and the fixed asset investments, and the amount of any such impairment.
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FALCON INDUSTRIAL SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FALCON INDUSTRIAL SERVICES LIMITED (CONTINUED)
We communicated the outcomes of these discussions and enquiries, as well as consideration as to where and how fraud may occur in the entity, to all engagement team members including the auditors of significant components.
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised:
∙enquiries of management and those charged with governance as to whether the entity complies with such laws and regulations;
∙enquiries with the same concerning any actual or potential litigation or claims;
∙discussion with the same regarding any known or suspected instances of non-compliance with laws and regulation and fraud;
∙inspection of relevant legal correspondence;
∙assessment of matters reported to management and the result of the subsequent investigation;
∙obtaining an understanding of the relevant controls during the period;
∙obtaining an understanding of the policies and controls over the recognition of income and testing their implementation during the year;
∙review documentation relating to compliance with the regulations;
∙challenging assumptions made by management in their specific accounting policies and estimates, in particular in relation to costs of the stock;
∙identifying and testing journal entries, in particular any journal entries posted with unusual account combinations or crediting revenue or cash;
∙assessing the recovery of debtors in the period since the balance sheet date and challenging assumptions made by management regarding the recovery of balances which remain outstanding;
∙challenging key assumptions made by management in their assessment of any impairment to the carrying value of the fixed asset investments and intangible assets;
∙reviewing the financial statements for compliance with the relevant disclosure requirements;
∙performing analytical procedures to identify any unusual or unexpected relationships or unexpected movements in account balances which may be indicative of fraud;
∙reviewing the minutes of Board meetings and correspondence with HMRC;
∙evaluating the underlying business reasons for any unusual transactions; and
∙considered the implementation of controls during the year.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' report.
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FALCON INDUSTRIAL SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FALCON INDUSTRIAL SERVICES LIMITED (CONTINUED)
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 Auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditors
14th Floor
33 Cavendish Square
W1G 0PW
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FALCON INDUSTRIAL SERVICES LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
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FALCON INDUSTRIAL SERVICES LIMITED
REGISTERED NUMBER: 03211154
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2022
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FALCON INDUSTRIAL SERVICES LIMITED
REGISTERED NUMBER: 03211154
CONSOLIDATED BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
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FALCON INDUSTRIAL SERVICES LIMITED
REGISTERED NUMBER: 03211154
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2022
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The profit after tax of the parent Company for the year was €121,517,758 (2021: €26,709,373).
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FALCON INDUSTRIAL SERVICES LIMITED
REGISTERED NUMBER: 03211154
COMPANY BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 24 to 48 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
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FALCON INDUSTRIAL SERVICES LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 20
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FALCON INDUSTRIAL SERVICES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
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FALCON INDUSTRIAL SERVICES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
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FALCON INDUSTRIAL SERVICES LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 23
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Falcon Industrial Services Limited is a company limited by shares and registered in England and Wales under registration number 03211154. The registered and principal trading office is 5th Floor North Side, 7/10 Chandos Street, Cavendish Square, London, W1G 9DQ.
2.ACCOUNTING POLICIES
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
In preparing the separate financial statements of the parent company, advantage has been taken of the following disclosure exemptions available in FRS 102:
- The requirement to present a statement of cash flows and related notes - The total amount of key management personnel compensation - Financial instrument disclosures, including categories of financial instruments, items of income, expenses, gains or losses relating to financial instruments, and exposure to and management of financial risks.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases. In accordance with the transitional exemption available in FRS 102, the Group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 31 December 2014.
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.ACCOUNTING POLICIES (CONTINUED)
Functional and presentation currency
Transactions and balances
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.ACCOUNTING POLICIES (CONTINUED)
Revenue represents the gross proceeds on the sale of properties completed during the year. Rendering of services Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied: • the amount of revenue can be measured reliably; • it is probable that the Group will receive the consideration due under the contract; • the stage of completion of the contract at the end of the reporting period can be measured reliably; and • the costs incurred and the costs to complete the contract can be measured reliably.
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.ACCOUNTING POLICIES (CONTINUED)
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight-line basis to the Consolidated statement of comprehensive income over its useful economic life. Other intangible assets Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.ACCOUNTING POLICIES (CONTINUED)
At each balance sheet date, stock is assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised in the Statement of Comprehensive Income.
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.ACCOUNTING POLICIES (CONTINUED)
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Group's Balance sheet when the Group becomes party to the contractual provisions of the instrument.
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 trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.ACCOUNTING POLICIES (CONTINUED)
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.ACCOUNTING POLICIES (CONTINUED)
The group makes estimates and assumptions concerning the future. Actual results may differ from these estimates. 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. The directors consider followings as significant areas of judgments or key sources of estimation uncertainty: Depreciation and amortisation The directors exercise judgement in the determination of the useful economic lives and residual value of all classes of fixed assets. These assets are then depreciated over their useful economic lives to their residual balances. Valuation of investment properties The directors exercise judgement regarding the valuation of investment properties.
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Analysis of turnover by country of destination:
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 33
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 34
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The Corporation Tax rate will increase to 25% for larger companies from 1 April 2023.
The Company has £5,745,454 (2021: £7,931,200) of tax losses carried forward available to offset against future profits in the relevant jurisdiction.
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 36
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 37
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
17.TANGIBLE FIXED ASSETS (CONTINUED)
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 39
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 40
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 41
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
SUBSIDIARY UNDERTAKINGS (CONTINUED)
Page 42
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors considered that the 2022 valuation on an open market value for existing use basis were not significantly different from the acquisition costs of the property.
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 44
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 45
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 46
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Foreign exchange reserve
Other reserves
Profit and loss account
The company has issued a guarantee to its subsidiary Falcon Productions Limited for all of the subsidiary's outstanding liabilities existing at the balance sheet date 31st December 2022. The guarantee is issued in accordance with the exemption from the requirements of Companies Act 2006 relating to the audit of individual accounts by virtue of S479A of Companies Act 2006. The liabilities of Falcon Production Limited at the year end were £7,699 (2021: £1,389,892). These have been included in the Group's consolidated figures.
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FALCON INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The ultimate controlling party is Massimo Tortorella by virtue of his shareholding.
Page 48
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