Company registration number 11363308 (England and Wales)
HARROW BIDCO LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
HARROW BIDCO LIMITED
COMPANY INFORMATION
Directors
L H L Batchelor
M Oxley
A J Moffitt
Company number
11363308
Registered office
1-2 Castle Lane
London
SW1E 6DR
Auditor
Grant Thornton UK LLP
30 Finsbury Square
London
EC2A 1AG
HARROW BIDCO LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 6
Directors' responsibilities statement
7
Independent auditor's report
8 - 11
Profit and loss account
12
Statement of comprehensive income
13
Balance sheet
14
Statement of changes in equity
15
Notes to the financial statements
16 - 25
HARROW BIDCO LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 1 -

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

 

The company does not trade and is a member of the Harrow Debtco group. This strategic report refers to the activities of the group which include this company’s activities. However, the financial statements presented in this annual report are those of the company and not the group.

 

FY23 represented a positive year for the group, a year which signalled the end of the COVID pandemic, leading to a modest improvement in consumer confidence, and resulting in employees returning to their offices and driving higher print volumes. Inward investment and restructuring continued with a strong emphasis on customer service, process and systems.

 

The new year heralded the re-branding of the Company operations to Aurora Managed Services, formerly Corona Corporate Solutions. We have been delighted by the response within the market, recognising the momentum shift towards customer and service excellence, a message that has been equally well received across our customer and supplier base.

 

Underpinning our commitment to excellence, the group achieved ISO9001, 14001 and 45001 in year, and commenced its program towards ISO27001. Supplementing this, we invested in a new ERP, launched a suite of new employee tools and benefits, and expanded our office footprint. Demonstrating our social commitments the company also established a charity committee, raising significant funds for its chosen charities.

 

Post year end, in June 2023, the group finalised the refinancing of its debt through a debt for equity conversion between existing lenders Pemberton and HIG which returned the business to more manageable leverage levels. The group benefits from serviceable debt facilities with Pemberton reducing from £114.3m to £50.0m with the lenders also extending additional ACF facilities to the group to support future M&A growth plans. The agreement demonstrates ardent lender support for incredibly exciting group growth plans.

 

Since the completion of the refinancing, in November 2023, the group completed the acquisition of Blue Sky Digital Limited. Founded by the Brewer brothers, Blue Sky Digital has built an enviable reputation within the Wales and South West England region, forging excellent customer relationships and driving significant organic growth. Further M&A opportunities are currently being considered, in line with our strategic goals.

 

 

Fair review of the business
The main activity of the group is the supply of managed print services including the provision of multi-functional devices, related software, services and solutions, office supplies and telephony systems and services.
The results for the year and financial position of the company are shown in these financial statements. Gross profit for the year was £nil (2022 £nil). The company generated a loss before tax and dividends of £13,944,611 (2022 £9,485,750).

Whilst FY23 marked the end of the COVID pandemic, the enduring effect on supply chains continued through most of the year, recovery and normality only returning towards the period end. The lack of stock and high demand resulted in inflationary pressure with product, parts and consumables all seeing significant price increases and impacting retained profitability.

 

The company’s burgeoning reputation and transformation, underpinned by excellent service and strong account management, encouragingly resulted in record organic growth in year and a fall in customer attrition. The organic highlight was undoubtedly the award of the company’s largest ever contract for our Enterprise division, installed and serviced to an excellent standard, and subsequently recognised by the Print IT Awards as the industry Project of the Year.

 

The directors continue to maintain effective and strong relationships with key suppliers whilst internally, continue to place particular focus on cash generation and liquidity enabling measures. With steadfast investor and lender support, resulting in the consensual debt for equity conversion in June 2023, the directors are confident that the group and company have adequate resources to continue operating normally for the foreseeable future and meet all going concern requirements.

HARROW BIDCO LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 2 -
Principal risks and uncertainties

The principal risks and uncertainties facing the group surround the magnitude and pace of post pandemic recovery, combined with the macro-economic stability of the market. The group’s board minimises risk through continuous monitoring and maintaining strong relationships with key customers and suppliers.

Key performance indicators

Whilst the directors review and measure all aspects of the business, including service NPS and call response times, MIF per engineer and first-time fix rates, the directors consider EBITDA and EBITDA % of revenue as the key indicator of success of the business.

The board has confidence in the company's strategy and therein, in its ability to drive organic growth underpinned by improving trading metrics and supplemented by complimentary acquisitive growth.

Going concern

Details of matters relevant to the directors' assessment of the application of the going concern basis are given in note 1.2 to the financial statements.

 

Future developments

To achieve its strategic goals, the group continues both to assess suitable acquisition opportunities and improve operational efficiencies.

Section 172 statement
Section 172 of the Companies Act 2006 requires the directors of a company to act in a way they consider, in good faith, would be most likely to promote the success of the company and its group  for the benefit of its shareholders as a whole and, in doing so, have regard (among other matters) to:
a) the likely consequences of any decisions in the long term;
b) the interests of the group's employees;
c) the need to foster the group's business relationships with suppliers, customers and others;
d) the impact of the group's operations on the community and environment;
e) the desirability of the group maintaining a reputation for high standards of business conduct;
f) the need to act fairly as between shareholders of the company
Further details of how the directors have fulfilled their duties are set out below.
Risk management

The directors have deployed several initiatives across the group to effectively manage risks posed to the business.

These include a dedicated customer care team focussed on ensuring customer satisfaction, and consequently assisting with improved retention and reduced machine and customer attrition. The group have also introduced an Ask Nicely customer survey, ensuring open dialogue with the customer at regular intervals, allowing a continual feedback loop to improve all areas of the business. In measuring responses through NPS, the group take great pride in seeing industry leading results. The group has diversification in its product offering through complementary solutions, services and the launch of our Enterprise offerings, alongside our ICT and Office Supplies capabilities. The directors recognise the importance of a localised service offering to their customers and will, therefore, adopt a Customer focussed methodology when integrating newly acquired businesses.

Business relationships

The group returns value to businesses through providing innovative products and exceptional levels of service to meet our customers’ requirements. The group understands the value of maintaining and developing relationships with its customers and suppliers, as it is these relationships that underpin its current and future growth. With this doctrine, the group’s relationships go from strength to strength as demonstrated by the group’s involvement with the same suppliers and customers for many years.

HARROW BIDCO LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 3 -
Community and environment

The group has completed its second ESG impact report and has embarked on its sustainability journey towards net zero. The directors are passionate in its endeavour to play its part in making the world a better place for us all. Environmentally, the group continues to assess and improve its practices, supply chain, services, and carbon emissions. The group is partnered with innovative companies who are minimising their impact to the environment whilst also increasing its range of recycled products and recycling across the life cycle of its machines.  

The group will strive to better its ESG credentials and for continual improvement.

Employees
The company and group are committed to being responsible employers and make every effort to create a working environment where their employees are actively engaged and part of their success. The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests. The company has embarked on a series of additional initiatives to continually improve and understand employee likes and dislikes, including annual employee engagement surveys and wellbeing surveys and clinics. Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance. Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the group continues and that the appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Shareholders

The company's ultimate shareholder has representation on the board to ensure the company's strategy and objectives are in line with its needs and expectations, and those needs and expectations are regularly communicated to the board.

On behalf of the board

M Oxley
Director
12 February 2024
HARROW BIDCO LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 4 -

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

Principal activities

The principal activity of the company was that of an investment holding company.

Results and dividends

The results for the year are set out on page 12.

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:

L H L Batchelor
M Oxley
A J Moffitt

Going concern

The company is a member of the Harrow Debtco Limited group (“the group”). The company is reliant upon the wider group’s financing facilities. The group meets its day-to-day working capital requirements through its own cash balances and committed banking / funding facilities. In assessing the appropriateness of adopting the going concern basis in the preparation of these financial statements, the directors have reviewed a number of factors, including information provided to them in relation to the group’s trading results, its available resources, the ability of the group to continue to operate within its financial covenants and the group’s latest forecasts and projections, comprising:

 

 

In June 2023 Harrow Midco Limited, an indirect parent company at that time, refinanced its debt structure through a debt for equity conversion between its existing lenders Pemberton and HIG. Harrow Debtco Limited, an indirect parent of the company, has been purchased by a new company formed for the purpose of refinancing, Aurora UK Topco Ltd. The revised group benefit from serviceable debt facilities with Pemberton reducing from £114.3m to £50.0m with the lenders also extending additional facilities to the company to support future acquisition growth plans. Subsequent to the refinancing, all covenants have been waived and the group’s loan agreements are now only subject to liquidity clauses, until August 2024, whereby the group is required to meet specific liquidity thresholds. The directors have also received a letter of financial support from Pemberton covering the going concern assessment period.

 

The agreement and subsequent actions demonstrate ardent lender and investor support for incredibly exciting company growth plans. The directors have satisfied themselves that the company will continue operating, with continued support from lenders and investors. For these reasons, the company continues to adopt the going concern basis in preparing its financial statements.

Financial instruments
Capital management policies

In managing its capital, the group's primary objective is to maintain a sufficient funding base to enable the group to meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve these aims, through new share issues or debt, the group considers not only its short-term position but also its long-term operational and strategic objectives.

HARROW BIDCO LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 5 -
Liquidity risk

Liquidity risk arises from the group management of working capital. It is the risk that the group will encounter difficulty in meeting its financial obligations as they fall due. Refer to Note 1.2 of the financial statements for details of going concern considerations.

 

The group policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected requirements for a period of at least 90 days.

 

Interest rate risk

The group borrows at variable rates of interest. It is therefore exposed to increases in interest rates. The group reviews market forecasts of future interest rates on a regularly basis and would consider the use of hedging instruments to mitigate such risk where appropriate. No hedging arrangements were in force at the balance sheet date.

Foreign currency risk

The group trades exclusively in the UK and all financing is denominated in sterling. The group therefore is not exposed to currency risk.

Credit risk

Credit risk is the risk of financial loss to the group if a customer or a counter party to a financial instrument fails to meet its contractual obligations. The group is principally exposed to credit risk on cash and cash equivalents with banks and financial institutions, and trade receivables. For banks and financial institutions, only independently rated parties with an acceptable rating are utilised.

 

Credit risk in connection with trade receivables is managed by the use of credit control procedures, such as the maintenance of a credit control department, use of credit references and stop limits.

Post reporting date events

Subsequent to 31 March 2023, the shares of the company’s parent undertaking were sold to Aurora UK Topco Limited. There was also a restructuring of the group debt facilities provided by Pemberton, resulting in a reduction of debt facilities from £114.3m to £50m, full covenant resets and the availability of additional debt facilities to support future M&A growth plans.

Auditor

In accordance with the company's articles, a resolution proposing that Grant Thornton UK LLP be reappointed as auditor of the company will be put at a General Meeting.

Strategic report

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of disclosure concerning employment etc of disabled persons and engagement with employees, suppliers, customers and others and future developments of the business.

Statement of disclosure to auditor

The directors confirm that:

HARROW BIDCO LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 6 -
On behalf of the board
M Oxley
Director
12 February 2024
HARROW BIDCO LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MARCH 2023
- 7 -

The directors are responsible for preparing the Strategic Report and Directors’ 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.

HARROW BIDCO LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF HARROW BIDCO LIMITED
- 8 -
Opinion

We have audited the financial statements of Harrow Bidco Limited (the 'company') for the year ended 31 March 2023, which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, 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 FRS 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 qualified opinion.

Conclusions relating to going concern

We are responsible for concluding on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the auditor’s opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the company to cease to continue as a going concern.

 

In our evaluation of the directors’ conclusions, we considered the inherent risks associated with the company’s business model including effects arising from macro-economic uncertainties such as the global cost of living crisis, we assessed and challenged the reasonableness of estimates made by the directors and the related disclosures and analysed how those risks might affect the company’s financial resources or ability to continue operations over the going concern period.

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.

HARROW BIDCO LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF HARROW BIDCO LIMITED
- 9 -

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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matter on which we are required to report under the Companies Act 2006

 

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 and the directors' report.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where 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.

HARROW BIDCO LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF HARROW BIDCO LIMITED
- 10 -

Irregularities, including fraud, are instances of non-compliance with laws and regulations. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:

- identifying and assessing the design and implementation of controls management utilises to prevent and detect fraud;

 

- challenging key assumptions used and judgements made by management in relation to significant accounting estimates;

 

- using data interrogation software to identify and test large or unusual journal entries which may carry a higher risk of fraud;

 

- assessing the extent of compliance with the relevant laws and regulations as part of our audit procedures on the related financial statement item; and

 

- performing audit procedures to conclude on the compliance of disclosures in the financial statements with applicable financial reporting requirements.

- understanding of, and practical experience with audit engagements of a similar nature and complexity through appropriate training and participation;

- knowledge of the industry in which the company operates;

- understanding of relevant legal and regulatory frameworks including 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), the Companies Act 2006, and the relevant tax legislation in the jurisdictions in which the company operates, and the application of the legal and regulatory requirements of these to Harrow Bidco Limited.

HARROW BIDCO LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF HARROW BIDCO LIMITED
- 11 -

 

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 auditor’s report.

Use of our 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.

Marc Summers BSc(Hons) FCA
Senior Statutory Auditor
For and on behalf of Grant Thornton UK LLP
12 February 2024
Chartered Accountants
Statutory Auditor
30 Finsbury Square
London
EC2A 1AG
HARROW BIDCO LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH 2023
- 12 -
2023
2022
Notes
£
£
Administrative expenses
(1,284,000)
38,398
Exceptional costs
3
(201,310)
(279,744)
Operating loss
(1,485,310)
(241,346)
Interest receivable and similar income
6
-
0
353,649
Interest payable and similar expenses
7
(12,459,301)
(9,598,053)
Loss before taxation
(13,944,611)
(9,485,750)
Tax on loss
8
-
0
(152,655)
Loss for the financial year
(13,944,611)
(9,638,405)

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

HARROW BIDCO LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
- 13 -
2023
2022
£
£
Loss for the year
(13,944,611)
(9,638,405)
Other comprehensive income
-
-
Total comprehensive income for the year
(13,944,611)
(9,638,405)
HARROW BIDCO LIMITED
BALANCE SHEET
AS AT
31 MARCH 2023
31 March 2023
- 14 -
2023
2022
Notes
£
£
£
£
Fixed assets
Investments
9
55,133,355
55,133,355
Current assets
Debtors
11
70,172,456
71,374,280
Creditors: amounts falling due within one year
12
(60,813,408)
(50,559,112)
Net current assets
9,359,048
20,815,168
Total assets less current liabilities
64,492,403
75,948,523
Creditors: amounts falling due after more than one year
13
(118,981,700)
(116,493,209)
Net liabilities
(54,489,297)
(40,544,686)
Capital and reserves
Called up share capital
15
1
1
Profit and loss reserves
(54,489,298)
(40,544,687)
Total equity
(54,489,297)
(40,544,686)
The financial statements were approved by the board of directors and authorised for issue on 12 February 2024 and are signed on its behalf by:
M Oxley
Director
Company registration number 11363308 (England and Wales)
HARROW BIDCO LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
- 15 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 April 2021
1
(30,906,282)
(30,906,281)
Year ended 31 March 2022:
Loss and total comprehensive income
-
(9,638,405)
(9,638,405)
Balance at 31 March 2022
1
(40,544,687)
(40,544,686)
Year ended 31 March 2023:
Loss and total comprehensive income
-
(13,944,611)
(13,944,611)
Balance at 31 March 2023
1
(54,489,298)
(54,489,297)
HARROW BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
- 16 -
1
Accounting policies
Company information

Harrow Bidco Limited is a private company limited by shares incorporated in England and Wales. The registered office is 1-2 Castle Lane, London, SW1E 6DR.

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:

 

- Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;

- Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;

- Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;

- Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.

 

Transactions with related parties which are wholly owned subsidiaries of the company's parent have not been disclosed as permitted by section 33 of FRS102.

 

The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

 

Harrow Bidco Limited is a wholly owned subsidiary of Harrow Topco Limited. Harrow Debtco Limited is an intermediate parent company and the results of Harrow Bidco Limited are included in the consolidated financial statements of Harrow Debtco Limited which are available from 1-2 Castle Lane London SW1E 6DR.

HARROW BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 17 -
1.2
Going concern

The company is a member of the Harrow Debtco Limited group (“the group”). The company is reliant upon the wider group’s financing facilities. The group meets its day-to-day working capital requirements through its own cash balances and committed banking / funding facilities. In assessing the appropriateness of adopting the going concern basis in the preparation of these financial statements, the directors have reviewed a number of factors, including information provided to them in relation to the group’s trading results, its available resources, the ability of the group to continue to operate within its financial covenants and the group’s latest forecasts and projections, comprising:true

 

 

In June 2023 Harrow Midco Limited, an indirect parent company at that time, refinanced its debt structure through a debt for equity conversion between its existing lenders Pemberton and HIG. Harrow Debtco Limited, an indirect parent of the company, has been purchased by a new company formed for the purpose of refinancing, Aurora UK Topco Ltd. The revised group benefit from serviceable debt facilities with Pemberton reducing from £114.3m to £50.0m with the lenders also extending additional facilities to the company to support future acquisition growth plans. Subsequent to the refinancing, all covenants have been waived and the group’s loan agreements are now only subject to liquidity clauses, until August 2024, whereby the group is required to meet specific liquidity thresholds. The directors have also received a letter of financial support from Pemberton covering the going concern assessment period.

 

The agreement and subsequent actions demonstrate ardent lender and investor support for incredibly exciting company growth plans. The directors have satisfied themselves that the company will continue operating, with continued support from lenders and investors. For these reasons, the company continues to adopt the going concern basis in preparing its financial statements.

1.3
Fixed asset investments

Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

1.4
Cash and cash equivalents

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.

HARROW BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 18 -
1.5
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ 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.

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.

HARROW BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 19 -
Basic financial liabilities

Basic financial liabilities, including creditors, bank loans and loans from fellow group companies 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

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.

1.6
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.

1.7
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.

HARROW BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 20 -
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.

1.8
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.

1.9
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

2
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.

Carrying value of goodwill and investment in subsidiaries

The determination of whether the carrying value of goodwill and investments in subsidiary undertakings is impaired is a key area of judgement. Having reviewed the matter, the directors have determined that there are no indicators of possible impairment present at the balance sheet date.

HARROW BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 21 -
Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Market rate of interest for intra group loan notes

In estimating the market rate of interest applied to the intra group loan notes the directors have taken into account rates charged by other lenders, the term of the facility and the security provided.

Estimation of loan terms

In estimating the amortised cost of certain loans receivable and payable, an estimate must be made of the timing of cashflows expected to be received and paid.

Useful life of purchased goodwill

The estimated useful life of goodwill is based on assumptions concerning the rate at which purchased goodwill is replaced by internally-generated goodwill after purchase, and includes an assessment of such matters as the life of non-contractual customer relationships and other intangibles purchased that are not separable or based on contractual or legal rights.

3
Exceptional costs
2023
2022
£
£
Refinancing
201,310
-
Legal fees
-
110,000
Professional fees
-
50,000
Project Harrow
-
94,612
Other
-
25,132
201,310
279,744
4
Employees
2023
2022
Number
Number
Total
-
0
-
0

There were no employees other than the directors (2021-none with exception of directors)

5
Auditor's remuneration

Fees for audit and non-audit services have been borne by Aurora Managed Services Limited.

HARROW BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 22 -
6
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest receivable from group companies
-
0
353,649
7
Interest payable and similar expenses
2023
2022
£
£
Interest payable to group undertakings
718,246
594,746
Other interest on financial liabilities
11,741,055
9,003,307
12,459,301
9,598,053
8
Taxation
2023
2022
£
£
Deferred tax
Origination and reversal of timing differences
36,831
-
0
Adjustment in respect of prior periods
(36,831)
152,655
Total deferred tax
-
0
152,655

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

2023
2022
£
£
Loss before taxation
(13,944,611)
(9,485,750)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
(2,649,476)
(1,802,293)
Tax effect of expenses that are not deductible in determining taxable profit
1,150,127
962,506
Tax effect of income not taxable in determining taxable profit
-
0
(4,940)
Effect of change in corporation tax rate
(36,556)
-
0
Group relief
1,383,585
844,727
Deferred tax adjustments in respect of prior years
(36,831)
152,655
Movement in deferred tax not recognised
189,151
-
0
Taxation charge for the year
-
152,655
HARROW BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 23 -
9
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
10
55,133,355
55,133,355
10
Subsidiaries

Details of the company's subsidiaries at 31 March 2023 are as follows:

Name of undertaking
Address
Class of
% Held
shares held
Direct
Indirect
Aurora Managed Services Group Limited
1
Ordinary
100.00
-
Aurora Managed Services Limited
1
Ordinary
-
100.00
Corporate Information & Communication Technology Limited
1
Ordinary
-
100.00
Managed Print Services London Limited
1
Ordinary
-
100.00
Falcon Document Solutions Limited
1
Ordinary
-
100.00
Copylogic Limited
1
Ordinary
-
100.00
J T Property Holdings Limited
1
Ordinary
-
100.00
Classic Business Equipment Limited
1
Ordinary
-
100.00
The London Photocopying Company Limited
1
Ordinary
-
100.00
Digital Copier Systems Eastern Limited
1
Ordinary
-
100.00
Regent Document Solutions Limited
1
Ordinary
-
100.00
Business By Technology Group Limited
1
Ordinary
-
100.00
Business By Technology (Holdings) Limited
1
Ordinary
-
100.00
Eastern Business Systems Limited
1
Ordinary
-
100.00
Technocopy Solutions Limited
1
Ordinary
-
100.00
Technocopy Solutions Holdings Limited
1
Ordinary
-
100.00
CCS Managed Print Services LImited
1
Ordinary
-
100.00

Registered office addresses (all UK unless otherwise indicated):

1
1-2 Castle Lane London SW1E 6DR
11
Debtors
2023
2022
Amounts falling due within one year:
£
£
Amounts owed by group undertakings
70,162,455
71,374,279
Other debtors
10,000
-
0
Prepayments and accrued income
1
1
70,172,456
71,374,280
HARROW BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 24 -
12
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
2,310,000
1,772,632
Amounts owed to group undertakings
51,569,144
48,035,348
Taxation and social security
-
0
46,250
Accruals and deferred income
6,934,264
704,882
60,813,408
50,559,112
13
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
14
118,981,700
116,493,209
14
Loans and overdrafts
2023
2022
£
£
Bank loans
118,981,700
116,493,209
Payable after one year
118,981,700
116,493,209

Loans are secured by charges over the company's assets and those of other members of the group.

Bank loans carry interest rates of between 2.5% and 10.5% over LIBOR until December 2021 and over Sonia thereafter dependent upon the facility and the level of the group's EDITDA. The loans are repayable by bullet repayment in six or seven years from drawdown.

 

There are further committed but undrawn facilities of £2 million.

15
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
1
1
1
1
16
Financial commitments, guarantees and contingent liabilities

The Company has secured group borrowings by creating a fixed and floating charge over its assets. At the year end the amount of borrowings secured is £117.25 million.

HARROW BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 25 -
17
Events after the reporting date

Subsequent to 31 March 2023, the shares of the company’s parent undertaking were sold to Aurora UK Topco Limited. There was also a restructuring of the group debt facilities provided by Pemberton, resulting in a reduction of debt facilities from £114.3m to £50m, full covenant resets and the availability of additional debt facilities to support future M&A growth plans.

18
Related party transactions

Included within other creditors at the year end there was a balance of £2,250,000 owed to H.I.G. Europe Capital Partner II,LP, which was the companies ultimate parent company at the year end.

19
Ultimate controlling party

The company's ultimate parent undertaking is Harrow Topco Limited. Harrow Debtco Limited is an intermediate parent company which prepares consolidated financial statements for the smallest and largest group of which the company is a member. The registered office of both Harrow Topco Limited and Harrow Debtco Limited is 1-2 Castle Lane, London SW1E 6DR.

At the year end, the company's ultimate parent undertaking was H.I.G. Europe Capital Partners II,LP, an entity incorporated in the Cayman Islands.

 

Subsequent to the year end, the company's ultimate parent became of Aurora UK Topco Limited, registered office 1-2 Castle Lane, London SW1E 6DR. There is no ultimate controller of Aurora UK Topco Limited.

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