Company registration number 02609884 (England and Wales)
OUTSOURCE UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
OUTSOURCE UK LIMITED
COMPANY INFORMATION
Directors
Mr N J Dettmar
Mrs V R Parker
Mr P J Clamp
(Appointed 26 July 2022)
Mr M Ewings
(Appointed 5 September 2022)
Secretary
Mr P J Clamp
Company number
02609884
Registered office
Churchward House
Fire Fly Avenue
Swindon
Wiltshire
United Kingdom
SN2 2EY
Auditor
BK Plus Audit Limited
Azzurri House
Walsall Road
Aldridge
Walsall
England
WS9 0RB
OUTSOURCE UK LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 24
OUTSOURCE UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 1 -

The directors present the strategic report for the year ended 31 May 2023.

 

The principle activity of the company during the year continued to be staffing services involving the supply of contract and permanent skilled labour in the technology, change and engineering sectors. The company has continued to expand its service proposition through the provision of employed consultants, compliance and vetting services and private talent pool offering.

 

The period covered by this annual report has been once of wider economic uncertainty, high inflation, and rising interest rates. Our focus for the year was maintaining trading levels and building the foundations for future growth, whilst looking to limit the impact of an increasing cost base and cost of capital

 

The company operates solely in the UK from Swindon (Head Office), Manchester, Birmingham, and London. Since the 31 May 2023 the Birmingham office has been closed in order to consolidate recruitment activities at our primary sites in Manchester and Swindon

 

Fair review of the business

The results for the year under review are shown on pages 8-12 of the financial statements.

 

The Company's trading for the period has remained consistent with the preceding 12-month period, with turnover for the period of £69.8m, and a gross margin of 8.3% resulting in £5.8m of net fees.

 

Wider inflationary pressures mean that we have seen an increase to our cost base of 11% over the preceding 12-month period resulting in a reduction in adjusted (for exceptional items) EBITDA to £412k. Further to this the continued increase in the BoE base rate has led to increased financing cost on both our operational and longer-term facilities.

 

The impact of this is that the Group has moved to a pre-amortisation break-even position. Moving into the next financial year, the focus will be on consolidating our trading position, whilst looking to drive higher levels of productivity and efficiency into the business, in order to offset inflation driven cost increases.

 

 

Principal risks and uncertainties

Potential financial risks that the company could be exposed to are:

 

Credit risk

The risk of payment default by clients is minimised by rigorous credit processes for all potential clients prior to agreeing terms of business; and the ongoing reassessment of current client credit levels.

 

Liquidity and interest rate risk

The Company funds its operation through an invoice discounting facility. The Company has managed to maintain low debtor days to help keep external borrowing to a manageable level. The Directors regularly review funding arrangements and maintain good working relationships with providers.

 

Market risk

The IT and engineering recruitment markets are highly competitive. Potential loss of business to competitors is mitigated by contracting with key clients via preferred supplier agreements and through an enhanced service proposition. The Company has invested in evolving its service proposition to include the provision of Managed Services which has helped it maintain its volumes during recent turbulent times. The Company are members of the association of professional staffing companies (APSCo) and adheres to the APSCo code of conduct.

OUTSOURCE UK LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 2 -
Key performance indicators

The Company operates Key Performance Indicators (KPI's) to measure performance in key activities. This provides management with the data and trend analysis required to make timely and informed decisions. The Company monitors turnover, gross profit margin, EBITDA and operating profit margin.

 

Year End

FY23

FY22

 

 

 

Turnover

£69.8m

£67.9m

Gross Profit

£5.8m

£5.9m

Gross Profit %

8.3%

8.7%

EBITDA

£412k

£1,058k

Operating profit/ (loss)

£308K

£936k

Operating profit/ (loss) %

0.44%

1.38%

On behalf of the board

Mr N J Dettmar
Director
25 January 2024
OUTSOURCE UK LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 3 -

The directors present their annual report and financial statements for the year ended 31 May 2023.

Principal activities

The principal activity of the company continued to be staffing services involving the supply of contract and permanent skilled labour in the technology, change and engineering sectors.

Results and dividends

The results for the year are set out on page 8.

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:

Mr N J Dettmar
Mrs V R Parker
Mr C J Harper
(Resigned 1 June 2022)
Mr A J Bamford
(Resigned 1 June 2022)
Mr P J Clamp
(Appointed 26 July 2022)
Mr M Ewings
(Appointed 5 September 2022)
Auditor

In accordance with the company's articles, a resolution proposing that BK Plus Audit Limited be reappointed as auditor of the company will be put at a General Meeting.

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.

Medium-sized companies exemption

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

On behalf of the board
Mr N J Dettmar
Director
25 January 2024
OUTSOURCE UK LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MAY 2023
- 4 -

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

 

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

OUTSOURCE UK LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF OUTSOURCE UK LIMITED
- 5 -
Opinion

We have audited the financial statements of Outsource UK Limited (the 'company') for the year ended 31 May 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

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:

OUTSOURCE UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF OUTSOURCE UK LIMITED
- 6 -
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:

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.

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 extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

 

From the preliminary of the audit, we ensure our understanding of the entity is up to date. This includes, but is not limited to, current knowledge of their activities, the business and control environments, and their compliance with the applicable legal and regulatory frameworks. This information supports our risk identification and the subsequent design of audit procedures to mitigate those risks; ensuring that the audit evidence obtained is sufficient and appropriate to support our opinion.

 

In response to the risks identified, specific to this entity, we designed procedures which included, but were not limited to:

 

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.

OUTSOURCE UK LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF OUTSOURCE UK LIMITED
- 7 -

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Christopher Hession C.A.
Senior Statutory Auditor
For and on behalf of BK Plus Audit Limited
25 January 2024
Azzurri House
Walsall Road
Aldridge
Walsall
England
WS9 0RB
OUTSOURCE UK LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MAY 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
69,819,717
67,953,616
Cost of sales
(64,005,977)
(62,044,667)
Gross profit
5,813,740
5,908,949
Administrative expenses
(5,505,669)
(4,972,384)
Operating profit
4
308,071
936,565
Interest payable and similar expenses
8
(261,891)
(226,191)
Profit before taxation
46,180
710,374
Tax on profit
9
(4,581)
(78,450)
Profit for the financial year
41,599
631,924

The profit and loss account has been prepared on the basis that all operations are continuing operations.

OUTSOURCE UK LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2023
- 9 -
2023
2022
£
£
Profit for the year
41,599
631,924
Other comprehensive income
-
-
Total comprehensive income for the year
41,599
631,924
OUTSOURCE UK LIMITED
BALANCE SHEET
AS AT
31 MAY 2023
31 May 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
11
1,095,343
1,164,510
Tangible assets
12
70,885
78,858
1,166,228
1,243,368
Current assets
Debtors
13
8,390,821
9,655,324
Cash at bank and in hand
1,523,481
1,488,754
9,914,302
11,144,078
Creditors: amounts falling due within one year
14
(10,861,441)
(12,211,626)
Net current liabilities
(947,139)
(1,067,548)
Total assets less current liabilities
219,089
175,820
Provisions for liabilities
Deferred tax liability
15
11,995
10,325
(11,995)
(10,325)
Net assets
207,094
165,495
Capital and reserves
Called up share capital
17
1,076
1,076
Share premium account
18
49,034
49,034
Other reserves
12,963
12,963
Profit and loss reserves
144,021
102,422
Total equity
207,094
165,495

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true

The financial statements were approved by the board of directors and authorised for issue on 25 January 2024 and are signed on its behalf by:
Mr N J Dettmar
Director
Company registration number 02609884 (England and Wales)
OUTSOURCE UK LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2023
- 11 -
Share capital
Share premium account
Share options reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 June 2021
1,076
49,034
12,963
1,651,612
1,714,685
Year ended 31 May 2022:
Profit and total comprehensive income
-
-
-
631,924
631,924
Dividends
10
-
-
-
(2,181,114)
(2,181,114)
Balance at 31 May 2022
1,076
49,034
12,963
102,422
165,495
Year ended 31 May 2023:
Profit and total comprehensive income
-
-
-
41,599
41,599
Balance at 31 May 2023
1,076
49,034
12,963
144,021
207,094
OUTSOURCE UK LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MAY 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
22
464,986
4,299,209
Interest paid
(261,891)
(226,191)
Income taxes paid
(146,753)
(30,886)
Net cash inflow from operating activities
56,342
4,042,132
Investing activities
Purchase of tangible fixed assets
(22,836)
(22,049)
Proceeds from disposal of tangible fixed assets
721
2,200
Proceeds from disposal of investments
-
0
(654,187)
Repayment of loans
500
(500)
Net cash used in investing activities
(21,615)
(674,536)
Financing activities
Repayment of borrowings
-
0
(386,800)
Repayment of bank loans
-
0
(619,302)
Dividends paid
-
0
(2,181,114)
Net cash used in financing activities
-
(3,187,216)
Net increase in cash and cash equivalents
34,727
180,380
Cash and cash equivalents at beginning of year
1,488,754
1,308,374
Cash and cash equivalents at end of year
1,523,481
1,488,754
OUTSOURCE UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
- 13 -
1
Accounting policies
Company information

Outsource UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is Churchward House, Fire Fly Avenue, Swindon, Wiltshire, United Kingdom, SN2 2EY.

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.

1.2
Going concern

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

1.3
Turnover

Turnover comprises revenue recognised by the company in respect of services supplied during the year, exclusive of Value Added Tax and trade discounts. Income from permanent placements is recognised when employment has commenced, taking into account the agreed clawback period with the customer and income will be appropriately deferred. Income from temporary placements are accounted for on a weekly timesheet basis. Rechargeable expenses represent expenses which are recharged to customers. They are recognised when a related expense in incurred, and when the company has a contractual right to recharge this.

1.4
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 20 years.

 

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

1.5
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost , 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:

Plant and equipment
15% reducing balance
Fixtures and fittings
15% reducing balance
Computers
25% reducing balance
OUTSOURCE UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 14 -

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.

1.6
Impairment of fixed assets

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

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

 

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

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

1.7
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand.

1.8
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 balance sheet 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 and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

OUTSOURCE UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 15 -
Other financial assets

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

Impairment of financial assets

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

 

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

 

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

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the 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.

Other financial liabilities

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.

OUTSOURCE UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 16 -
Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.9
Equity instruments

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

1.10
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 profit and loss account 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.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.11
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.

1.12
Retirement benefits

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

1.13
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.

OUTSOURCE UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 17 -
1.14
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.

1.15

Pensions

The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations.

 

The contributions are recognised as an expense in the statement of comprehensive income when they fall due. Amounts not paid are shown in accruals as a liability in the balance sheet. The assets of the plan are held separately from the company in independently administered funds.

2
Judgements and key sources of estimation uncertainty

The preparation of these financial statements requires management to note judgements and estimates that affect the reported amount of assets and liabilities at the balance sheet date and the reported profits for the year.

Critical judgements

The following judgements and estimates have been made in these financial statements.

Goodwill

The amortisation period of 20 years has been applied in these financial statements and is the best estimate provided by management of the assumed life left of the acquired goodwill.

Useful economic life of assets

Management have provided in these financial statements the estimated residual value and useful economic life of tangible fixed assets.

Share options

The company makes estimates on the fair value of the share options at the exercise date using the Black-Scholes model.

Impact of COVID-19

The Governments response to COVID-19 is constantly evolving whilst they balance factors such as public health and the overall economy.

 

Management have reviewed factors for impairment in light of COVID-19, discount factors and future cash flows are considered to remain unchanged. Therefore, no impairment is considered appropriate.

OUTSOURCE UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 18 -
3
Turnover
2023
2022
£
£
Turnover analysed by class of business
United Kingdom
67,292,655
65,289,726
Rest of Europe
2,228,390
2,483,213
Rest of the World
298,672
180,677
69,819,717
67,953,616
4
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Exchange losses
5,059
4,944
Fees payable to the company's auditor for the audit of the company's financial statements
28,313
47,802
Depreciation of owned tangible fixed assets
22,039
33,417
Loss on disposal of tangible fixed assets
8,051
13,592
Amortisation of intangible assets
69,167
69,167
Operating lease charges
8,827
5,059
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
28,313
47,802
6
Employees

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

2023
2022
Number
Number
Recruitment Consultants & Admin Staff
84
91
PAYE Contractors
69
90
Total
153
181
OUTSOURCE UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
6
Employees
(Continued)
- 19 -

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
3,693,300
3,264,901
Social security costs
309,017
290,934
Pension costs
68,392
75,174
4,070,709
3,631,009
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
781,765
658,379

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2022 - 4).

Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
306,582
330,552
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
261,891
226,191
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
2,911
146,753
Adjustments in respect of prior periods
-
0
(63,473)
Total current tax
2,911
83,280
OUTSOURCE UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
9
Taxation
2023
2022
£
£
(Continued)
- 20 -
Deferred tax
Origination and reversal of timing differences
1,670
(4,830)
Total tax charge
4,581
78,450

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

2023
2022
£
£
Profit before taxation
46,180
710,374
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
8,774
134,971
Tax effect of expenses that are not deductible in determining taxable profit
1,174
840
Group relief
(23,665)
(6,440)
Permanent capital allowances in excess of depreciation
13,372
16,297
Research and development tax credit
-
0
(69,885)
Other non-reversing timing differences
3,256
1,085
Under/(over) provided in prior years
-
0
6,412
Deferred tax movement
1,670
(4,830)
Taxation charge for the year
4,581
78,450
10
Dividends
2023
2022
£
£
Final paid
-
0
2,181,114
OUTSOURCE UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 21 -
11
Intangible fixed assets
Goodwill
£
Cost
At 1 June 2022 and 31 May 2023
2,586,723
Amortisation and impairment
At 1 June 2022
1,422,213
Amortisation charged for the year
69,167
At 31 May 2023
1,491,380
Carrying amount
At 31 May 2023
1,095,343
At 31 May 2022
1,164,510
12
Tangible fixed assets
Plant and equipment
Fixtures and fittings
Computers
Total
£
£
£
£
Cost
At 1 June 2022
6,141
51,784
180,642
238,567
Additions
1,174
-
0
21,662
22,836
Disposals
-
0
-
0
(35,274)
(35,274)
At 31 May 2023
7,315
51,784
167,030
226,129
Depreciation and impairment
At 1 June 2022
4,032
44,150
111,525
159,707
Depreciation charged in the year
434
1,380
20,225
22,039
Eliminated in respect of disposals
-
0
-
0
(26,502)
(26,502)
At 31 May 2023
4,466
45,530
105,248
155,244
Carrying amount
At 31 May 2023
2,849
6,254
61,782
70,885
At 31 May 2022
2,109
7,632
69,117
78,858
OUTSOURCE UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 22 -
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
5,100,339
6,923,911
Amounts owed by group undertakings
880,786
193,296
Other debtors
26,369
9,347
Prepayments and accrued income
2,383,327
2,528,770
8,390,821
9,655,324
14
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
2,129,094
1,802,483
Corporation tax
2,911
146,753
Other taxation and social security
690,920
838,053
Other creditors
3,403,426
3,730,289
Accruals and deferred income
4,635,090
5,694,048
10,861,441
12,211,626

Included within "other creditors" is the invoice discounting liability of £2,916,510 (2022 - £3,496,386). This is secured against the trade debtors.

15
Deferred taxation

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

Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
11,995
10,325
2023
Movements in the year:
£
Liability at 1 June 2022
10,325
Charge to profit or loss
1,670
Liability at 31 May 2023
11,995
OUTSOURCE UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 23 -
16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
68,392
75,174

The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the group for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund amounting to £68,392 (2022: £75,174). Contributions totalling £63,147 (2022: £46,012) were payable to the fund at the balance sheet date.

17
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of £1 each
1,076
1,076
1,076
1,076
18
Reserves

Share Capital

Called up share capital represents the nominal value of shares that have been issued.

 

Share premium

Share premium represents the amount paid for shares issued above the nominal value of the shares.

 

Profit and loss account

The profit and loss account includes all current and prior period retained profit and losses.

 

Share option reserve

The share option reserve includes current and prior period share option charges.

 

 

 

19
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:

2023
2022
£
£
Within one year
253,057
228,895
Between two and five years
231,625
262,742
484,682
491,637
OUTSOURCE UK LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 24 -
20
Ultimate controlling party

The parent company is Newick Holdings Limited.

 

Mr N J Dettmar is the ultimate controlling party.

21
Analysis of changes in net funds
1 June 2022
Cash flows
31 May 2023
£
£
£
Cash at bank and in hand
1,488,754
34,727
1,523,481
22
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
41,599
631,924
Adjustments for:
Taxation charged
4,581
78,450
Finance costs
261,891
226,191
Loss on disposal of tangible fixed assets
8,051
13,592
Amortisation and impairment of intangible assets
69,167
69,167
Depreciation and impairment of tangible fixed assets
22,037
33,417
Movements in working capital:
Decrease in debtors
1,264,003
2,330,290
(Decrease)/increase in creditors
(1,206,343)
916,178
Cash generated from operations
464,986
4,299,209
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