Company registration number 07978824 (England and Wales)
FEDERAL CAPITAL LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
FEDERAL CAPITAL LIMITED
COMPANY INFORMATION
Directors
Mr M Plumridge
Mr C Angrave
Company number
07978824
Registered office
14a Old Marsh Farm Barns
Welsh Road
Sealand
Flintshire
CH5 2LY
Auditor
Sage & Company Business Advisors Limited
102 Bowen Court
St Asaph Business Park
St Asaph
Denbighshire.
LL17 0JE
FEDERAL CAPITAL LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Profit and loss account
9
Group statement of comprehensive income
10
Group balance sheet
11
Company balance sheet
12
Group statement of changes in equity
13
Company statement of changes in equity
14
Group statement of cash flows
15
Company statement of cash flows
16
Notes to the financial statements
17 - 36
FEDERAL CAPITAL LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 1 -

The Directors present the strategic report for the year ended 31 October 2023.

Principal activities

The principal activity of the company and its group continued to be that of providing lease and loan financing services.

Review of the business

The Directors report the group performance for the reporting period and its financial position at the year end. The group has demonstrated growth from the return to normal trading following the impact of the COVID period.

 

The Directors report that the group was profitable for the reporting period, generating a post-tax profit of £6,911,593 and an overall increase to retained earnings of £6,211,093.

 

Operationally this year, the group has expanded its headcount, developed its head office space, increased it's number of Block Funding partners, expanded it's Block Facility headroom and retained large profits in the group. These all have been achieved in order to increase it's ability to lend to customers and develop market share.

 

During the reporting period the group was proud to support small local charities with donations totalling £17,660 (2022 - £24,935).

Principal risks and uncertainties

The group has a very meticulous approach to its operation and its risk identification. It does suffer some specific finance and operational risk but is also subject to market and economic uncertainties. The principal risks and uncertainties are; over reliance upon a specific market sector, few funding partners, economic uncertainty, regulatory change; and internally, the ability to identify risk in its prospective customers (potential bad debts).

 

The group underwriting department has a detailed and collegiate approach to approval ratings and classification allowing for a strong internal control, to mitigate risks in identifying problematic loan customer agreements.

 

The use of multiple broker partners also negates risk derived from over reliance upon on a specific industry sector, geographical market or type of customer, thus diversifying some risk in customer profile.

 

Another focus was to mitigate market risk and maintain a strong 'own' funding reserve outside of the block funding facilities available. The company funding ratio of block funder usage compared to loan capital held trade debtors is 2023 = 54.86% and 2022 = 40.3%. This not only de-risks the position of the funding partners but prevents an over leveraged position in the group itself.

Other economic factors that do have some impact on the business, such as inflationary pressures and increased interest rates during the period.

 

Lastly, the Directors specifically analyse the industry and regulatory position regularly to identify any potential business risks to be incorporated in future planning or growth structuring.

Future Developments

The group has grown in the reporting period and has plans to develop key areas of the operation in order to support and extend that growth into the future. These include -

 

- the retention of significant amounts of company profits to be made available for loan facilities to customers

- increasing the value and availability of facilities provided by the block funding partners

- increasing the staff headcount to increase the ability to service more customers

 

FEDERAL CAPITAL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 2 -
Key performance indicators

The Directors have highlighted the key performance indicators and management reporting tools below have identified the following position and performance in the period.

 

Turnover has grown from £14,747,463 to £24,959,918.

 

Post Tax profits have grown from £4,466,735 to £6,911,593.

 

Bad debt to Turnover ratio has been 8.71% compared to 8.32% in the prior period.

 

The Balance Sheet total at the period end is £19,652,702.

Other performance indicators

One additional and important operational KPI the business utilises, is the supplier payment policy attributed to all suppliers but specifically to brokers and broker partners. The company continues to implement a quick turnaround on broker commission payments, these are normally paid within 7 days, with the exception of some larger contracted payment periods. This policy has been maintained and continues to support the strong and efficient working relationships the company has with its brokers and customers.

 

The group has grown substantially in terms of operations over the last reporting period. Most importantly the business has added additional skill sets to the team in supporting all of the office functions, this is evidenced by an additional 3 team members joining the business. This is another positive step in the group growth which has continued into the 2023-2024 financial year.

Audit Opinion

Lastly, the Directors note that this is the first accounting period for which the group qualify as a medium sized group entity and more importantly has become subject to audit. This being the first year of the statutory audit process, we recognise the audit report presented by Sage & Company and specifically it's qualified opinion, is based solely upon the unaudited comparative reporting period.

 

The Directors also note the impact of the Prior Period Adjustments disclosed in the financial statements in order to correctly disclose the performance and position at the year end accurately.

On behalf of the board

Mr M Plumridge
Director
31 July 2024
FEDERAL CAPITAL LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 3 -

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

Results and dividends

The results for the year are set out on page 9.

Ordinary dividends were paid amounting to £700,500. The directors do not recommend payment of a further 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 M Plumridge

Mr C Angrave

 

Future developments

Information is not disclosed within the Director's report but within the Strategic Report, in line with s414c (11) Companies Act 2006.

Auditor

Sage & Company Business Advisors Limited were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

Energy and carbon report

As the group has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.

Statement of directors' responsibilities

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 group and company, and of the profit or loss of the group 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 group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

FEDERAL CAPITAL LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 4 -
Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company 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 auditor of the company is aware of that information.

On behalf of the board
Mr M Plumridge
Director
31 July 2024
FEDERAL CAPITAL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF FEDERAL CAPITAL LIMITED
- 5 -

Qualified opinion on financial statements

We have audited the financial statements of Federal Capital Limited (the 'parent company') and the consolidated financial statements (the 'group') for the year ended 31 October 2023 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company 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, except for the effects of the matter described in the Basis for Qualified Opinion paragraph below, the financial statements:

Basis for qualified opinion - Comparative period reporting

This is the first reporting period for which group audited financial statements are required, therefore comparative balances are unaudited. We are unable to satisfy ourselves by alternative means of the accuracy of the balance sheet at that date. The remaining opening balances enter into the determination of the financial performance for the period. We were unable to determine whether adjustments might have been necessary in respect of the profit for the year reported in the income statement.

 

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 group and parent 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 group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

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

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.

FEDERAL CAPITAL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FEDERAL CAPITAL LIMITED
- 6 -

Opinions on other matters prescribed by the Companies Act 2006

Notwithstanding our qualified opinion on the financial statements, in our opinion, based on the work undertaken in the course of our audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their 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 parent 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 parent 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.

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

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows;

FEDERAL CAPITAL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FEDERAL CAPITAL LIMITED
- 7 -

We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

To address the risk of fraud through management bias and override of controls, we:

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

 

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

 

Material misstatements that rise due to fraud can be harder to detect than these that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Other matters which we are required to address

The prior period financial statements were not audited.

FEDERAL CAPITAL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF FEDERAL CAPITAL LIMITED
- 8 -

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.

Mr Christopher Morgans BA ACA
Senior Statutory Auditor
For and on behalf of Sage & Company Business Advisors Limited
31 July 2024
Chartered Accountants
102 Bowen Court
Statutory Auditor
St Asaph Business Park
St Asaph
Denbighshire.
LL17 0JE
FEDERAL CAPITAL LIMITED
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 9 -
2023
2022
as restated
Notes
£
£
Turnover
3
24,959,918
14,747,463
Administrative expenses
(14,182,126)
(8,878,534)
Other operating income
300,540
143,433
Operating profit
4
11,078,332
6,012,362
Interest receivable and similar income
8
9,204
-
0
Interest payable and similar expenses
9
(1,958,582)
(845,775)
Amounts written off investments
10
(30,000)
141,957
Profit before taxation
9,098,954
5,308,544
Tax on profit
11
(2,187,361)
(841,809)
Profit for the financial year
24
6,911,593
4,466,735
Profit for the financial year is all attributable to the owners of the parent company.
FEDERAL CAPITAL LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2023
- 10 -
2023
2022
as restated
£
£
Profit for the year
6,911,593
4,466,735
Other comprehensive income
-
-
Total comprehensive income for the year
6,911,593
4,466,735
Total comprehensive income for the year is all attributable to the owners of the parent company.
FEDERAL CAPITAL LIMITED
GROUP BALANCE SHEET
AS AT
31 OCTOBER 2023
31 October 2023
- 11 -
2023
2022
as restated
Notes
£
£
£
£
Fixed assets
Tangible assets
13
46,656
18,024
Investment property
14
670,000
700,000
716,656
718,024
Current assets
Debtors
17
49,362,088
30,323,369
Cash at bank and in hand
2,166,676
747,747
51,528,764
31,071,116
Creditors: amounts falling due within one year
18
(31,969,308)
(15,475,423)
Net current assets
19,559,456
15,595,693
Total assets less current liabilities
20,276,112
16,313,717
Creditors: amounts falling due after more than one year
19
(583,757)
(2,831,213)
Provisions for liabilities
Deferred tax liability
21
39,653
40,895
(39,653)
(40,895)
Net assets
19,652,702
13,441,609
Capital and reserves
Called up share capital
23
2
2
Profit and loss reserves
24
19,652,700
13,441,607
Total equity
19,652,702
13,441,609
The financial statements were approved by the board of directors and authorised for issue on 31 July 2024 and are signed on its behalf by:
31 July 2024
Mr M Plumridge
Director
Company registration number 07978824 (England and Wales)
FEDERAL CAPITAL LIMITED
COMPANY BALANCE SHEET
AS AT 31 OCTOBER 2023
31 October 2023
- 12 -
2023
2022
as restated
Notes
£
£
£
£
Fixed assets
Tangible assets
13
46,656
18,024
Investment property
14
670,000
700,000
Investments
15
73
73
716,729
718,097
Current assets
Debtors
17
48,956,011
30,139,595
Cash at bank and in hand
1,699,354
326,839
50,655,365
30,466,434
Creditors: amounts falling due within one year
18
(31,911,801)
(15,448,205)
Net current assets
18,743,564
15,018,229
Total assets less current liabilities
19,460,293
15,736,326
Creditors: amounts falling due after more than one year
19
(583,757)
(2,831,213)
Provisions for liabilities
Deferred tax liability
21
39,653
40,895
(39,653)
(40,895)
Net assets
18,836,883
12,864,218
Capital and reserves
Called up share capital
23
2
2
Profit and loss reserves
24
18,836,881
12,864,216
Total equity
18,836,883
12,864,218

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £6,673,165 (2022 - £4,206,507 profit).

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

The financial statements were approved by the board of directors and authorised for issue on 31 July 2024 and are signed on its behalf by:
31 July 2024
Mr M Plumridge
Director
Company registration number 07978824 (England and Wales)
FEDERAL CAPITAL LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2023
- 13 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
As restated for the period ended 31 October 2022:
Balance at 1 November 2021
2
9,405,484
9,405,486
Prior Period Adjustment
-
(208,612)
(208,612)
As restated
2
9,196,872
9,196,874
Year ended 31 October 2022:
Profit and total comprehensive income
-
4,466,735
4,466,735
Dividends
12
-
(222,000)
(222,000)
Balance at 31 October 2022
2
13,441,607
13,441,609
Year ended 31 October 2023:
Profit and total comprehensive income
-
6,911,593
6,911,593
Dividends
12
-
(700,500)
(700,500)
Balance at 31 October 2023
2
19,652,700
19,652,702
FEDERAL CAPITAL LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2023
- 14 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
As restated for the period ended 31 October 2022:
Balance at 1 November 2021
2
9,088,322
9,088,324
Prior Period Adjustment
-
(208,612)
(208,612)
As restated
2
8,879,710
8,879,712
Year ended 31 October 2022:
Profit and total comprehensive income for the year
-
4,206,506
4,206,506
Dividends
12
-
(222,000)
(222,000)
Balance at 31 October 2022
2
12,864,216
12,864,218
Year ended 31 October 2023:
Profit and total comprehensive income
-
6,673,165
6,673,165
Dividends
12
-
(700,500)
(700,500)
Balance at 31 October 2023
2
18,836,881
18,836,883
FEDERAL CAPITAL LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2023
- 15 -
2023
2022
as restated
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
28
(6,726,333)
(9,296,173)
Interest paid
(1,931,218)
(825,041)
Income taxes paid
(1,211,940)
(260,219)
Net cash outflow from operating activities
(9,869,491)
(10,381,433)
Investing activities
Purchase of tangible fixed assets
(36,036)
(12,140)
Interest received
9,204
-
0
Net cash used in investing activities
(26,832)
(12,140)
Financing activities
Repayment of borrowings
(2,194,980)
(1,378,585)
Movement in bank loans
14,210,732
11,240,601
Dividends paid to equity shareholders
(700,500)
(222,000)
Net cash generated from financing activities
11,315,252
9,640,016
Net increase/(decrease) in cash and cash equivalents
1,418,929
(753,557)
Cash and cash equivalents at beginning of year
747,747
1,501,304
Cash and cash equivalents at end of year
2,166,676
747,747
FEDERAL CAPITAL LIMITED
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2023
- 16 -
2023
2022
as restated
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
29
(6,822,930)
(9,301,766)
Interest paid
(1,931,218)
(825,041)
Income taxes paid
(1,161,757)
(238,310)
Net cash outflow from operating activities
(9,915,905)
(10,365,117)
Investing activities
Purchase of tangible fixed assets
(36,036)
(12,140)
Interest received
9,204
-
0
Net cash used in investing activities
(26,832)
(12,140)
Financing activities
Repayment of borrowings
(2,194,980)
(959,963)
Movement in bank loans
14,210,732
11,240,601
Dividends paid to equity shareholders
(700,500)
(222,000)
Net cash generated from financing activities
11,315,252
10,058,638
Net increase/(decrease) in cash and cash equivalents
1,372,515
(318,619)
Cash and cash equivalents at beginning of year
326,839
645,458
Cash and cash equivalents at end of year
1,699,354
326,839
FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
- 17 -
1
Accounting policies
Company information

Federal Capital Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 14a Old Marsh Farm Barns, Welsh Road, Sealand, Flintshire, CH5 2LY.

 

The group consists of Federal Capital Limited (a company limited by shares) and all of its subsidiaries.

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 principal activity of the company and its group continued to be that of providing lease and loan financing services.

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, [modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.

The financial statements report all transactions gross of VAT where applicable.

1.2
Prior period error

During the audit of the financial statements for the period ended 31 October 2023, two transactions were identified as adjustments required in a prior period to accurately reflect current balances. Both transactions are corrections to funding repayments in prior years, one being Directors Loan account transaction and the second being a loan repayment from the company's subsidiary entity,

 

Both transactions above and the impact of the change in the basis of calculation of loan interest revenue recognition (as defined in the turnover accounting policy note) are adjusted in the statements, being disclosed separately in the notes to the statements and on the face of the primary statements for the comparative being restated. This impact is referenced in note 32.

1.3
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 18 -
1.4
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company Federal Capital Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

 

All financial statements are made up to 31 October 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

 

Subsidiaries where the functional currency is anything other than £, then the results and position of the entity are translated using the mid point foreign exchange rate on the last day of the reporting period, into £ and consolidated as such. Any movement on reserves due to the transaction between periods will be recognised as a foreign exchange cost or credit in the subsidiary financial statements.

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.

Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.

 

If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.

 

Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.

1.5
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the group 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.

FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 19 -
1.6
Turnover

Loan and lease incomes are derived from deferred cash inflows, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

 

Interest income and the fair value of the financial instrument is calculated using an amortised cost basis over the term of the lease or loan contract, using it's effective interest rate. The amortisation is calculated using the sum of digits method.

 

During the period the company and its group took the opportunity to update its turnover recognition measurement calculation. The accounting policy remains that the loan and lease income is recognised on an amortised cost basis by effective interest rate over the life of the transaction. Previously the amortised cost calculation, based on the sum of digits was recognised on the contractual repayment dates outlined in the loan or lease agreement. To more accurate reflect the position of the financial instrument at the year end, the amortised cost schedule was changed to be calculated on a daily basis in place of the monthly contract term basis, previously used. The impact of which has been noted in a prior period error (note 32), which illustrates an increase to the prior year's turnover.

1.7
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold improvements
Equally over the term of the lease
Fixtures and fittings
20% Reducing balance depreciation basis
Computers
33% Straight line depreciation basis

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 recognised in the profit and loss account.

1.8
Investment property

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

 

1.9
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

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

FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 20 -

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

 

Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.

 

Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.

 

In the parent company financial statements, investments in associates are accounted for at cost less impairment.

Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

1.10
Impairment of fixed assets

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

 

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

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.

1.11
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.

FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 21 -
1.12
Financial instruments

The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset and 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 group 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 group after deducting all of its liabilities.

FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 22 -
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

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 group's contractual obligations expire or are discharged or cancelled.

1.13
Equity instruments

Equity instruments issued by the group 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 group.

1.14
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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 23 -
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 if, and only if, there is 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.

1.15
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.

1.16
Retirement benefits

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

1.17
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 leased asset are consumed.

1.18

Commission Costs

Commission costs suffered by the business are accounted for in full within 30 days of the invoice date. This is recognised as a separate accounting policy to reflect the short term claw-back clauses on failed loan introductions and in recognition of the short term nature of the transactions. This is a departure from standard accounting policy to spread the cost against the associated income.

2
Judgements and key sources of estimation uncertainty

In the application of the group’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.

FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 24 -
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Loan interest income
24,959,918
14,747,463
2023
2022
£
£
Turnover analysed by geographical market
UK
24,490,215
14,403,127
Ireland
469,703
344,336
24,959,918
14,747,463
2023
2022
£
£
Other revenue
Interest income
9,204
-
4
Operating profit
2023
2022
£
£
Operating profit for the year is stated after charging/(crediting):
Exchange gains
(10,119)
(1,330)
Depreciation of owned tangible fixed assets
7,407
5,998
Operating lease charges
37,293
37,318
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and component auditor:
£
£
For audit services
Audit of the financial statements of the group and company
9,600
-
Audit of the financial statements of the company's subsidiaries (component auditor)
2,100
-
11,700
-
FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 25 -
6
Employees

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

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Office & Administration
17
14
17
14

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
1,209,102
906,579
1,209,102
906,579
Social security costs
145,699
109,961
145,699
109,961
Pension costs
79,008
16,340
79,008
16,340
1,433,809
1,032,880
1,433,809
1,032,880
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
24,588
21,873
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
9,204
-
0
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
9,204
-
FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 26 -
9
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
3,238
4,173
Other interest on financial liabilities
1,955,344
841,602
1,958,582
845,775
10
Amounts written off investments
2023
2022
£
£
Changes in the fair value of investment properties
(30,000)
141,957
11
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
2,021,650
766,279
Adjustments in respect of prior periods
134,283
-
0
Total UK current tax
2,155,933
766,279
Foreign current tax on profits for the current period
32,670
36,916
Total current tax
2,188,603
803,195
Deferred tax
Origination and reversal of timing differences
(1,242)
38,614
Total tax charge
2,187,361
841,809
FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
11
Taxation
(Continued)
- 27 -

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
9,098,954
5,308,544
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
2,274,739
1,008,623
Tax effect of expenses that are not deductible in determining taxable profit
37,310
16,861
Adjustments in respect of prior years
134,282
-
0
Effect of change in corporation tax rate
(222,851)
-
Permanent capital allowances in excess of depreciation
(9,124)
(2,999)
Depreciation on assets not qualifying for tax allowances
1,851
(1,140)
Effect of revaluations of investments
7,500
(26,971)
Other non-reversing timing differences
-
0
41,226
Other permanent differences
(1,242)
-
0
Effect of overseas tax rates
(35,104)
(19,541)
Tax impact of Prior period error correction carried back
-
0
(174,250)
Taxation charge
2,187,361
841,809
12
Dividends
2023
2022
Recognised as distributions to equity holders:
£
£
Interim paid
700,500
222,000
FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 28 -
13
Tangible fixed assets
Group
Leasehold improvements
Fixtures and fittings
Computers
Total
£
£
£
£
Cost
At 1 November 2022
-
0
39,809
15,679
55,488
Additions
19,336
2,198
14,502
36,036
At 31 October 2023
19,336
42,007
30,181
91,524
Depreciation and impairment
At 1 November 2022
-
0
27,489
9,973
37,462
Depreciation charged in the year
-
0
2,538
4,868
7,406
At 31 October 2023
-
0
30,027
14,841
44,868
Carrying amount
At 31 October 2023
19,336
11,980
15,340
46,656
At 31 October 2022
-
0
12,318
5,706
18,024
Company
Leasehold improvements
Fixtures and fittings
Computers
Total
£
£
£
£
Cost
At 1 November 2022
-
0
25,121
15,679
40,800
Additions
19,336
2,198
14,502
36,036
At 31 October 2023
19,336
27,319
30,181
76,836
Depreciation and impairment
At 1 November 2022
-
0
12,801
9,973
22,774
Depreciation charged in the year
-
0
2,538
4,868
7,406
At 31 October 2023
-
0
15,339
14,841
30,180
Carrying amount
At 31 October 2023
19,336
11,980
15,340
46,656
At 31 October 2022
-
0
12,318
5,706
18,024
FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 29 -
14
Investment property
Group
Company
2023
2023
£
£
Fair value
At 1 November 2022
700,000
700,000
Net gains or losses through fair value adjustments
(30,000)
(30,000)
At 31 October 2023
670,000
670,000

Investment property comprises a residential property located on the island of Anglesey. The fair value of the investment property has been arrived at on the basis of a valuation carried out by Validus Property Consultants Limited, who are not connected with the company. The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties. The original cost of the property was £558,043, there is no accumulated depreciation charged.

15
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
16
-
0
-
0
73
73
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 November 2022 and 31 October 2023
73
Carrying amount
At 31 October 2023
73
At 31 October 2022
73
16
Subsidiaries

Details of the company's subsidiaries at 31 October 2023 are as follows (all of which, have been consolidated into these group financial statements) -

Name of undertaking
Address
Class of
% Held
shares held
Direct
Federal Capital Ireland
Ireland
Ordinary
100.00

Registered office address:

Fitzwilliam Business Centre, 26 Upper Pembroke Street. Dublin 2
FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 30 -
17
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
47,302,921
29,377,381
46,449,534
28,629,786
Amounts owed by group undertakings
-
-
447,517
563,821
Other debtors
1,717,054
944,197
1,717,054
944,197
Prepayments and accrued income
30,826
1,791
30,619
1,791
49,050,801
30,323,369
48,644,724
30,139,595
Amounts falling due after more than one year:
Trade debtors
311,287
-
0
311,287
-
0
Total debtors
49,362,088
30,323,369
48,956,011
30,139,595

Trade debtors as listed above are pledged as security against Block Funding creditors as defined in note 18.

18
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans
20
26,166,505
11,903,297
26,166,505
11,903,297
Trade creditors
421,057
259,457
421,057
259,457
Corporation tax payable
1,755,668
779,005
1,760,455
766,279
Other taxation and social security
47,293
65,564
47,293
65,564
Other creditors
3,497,810
2,442,734
3,497,810
2,442,734
Accruals and deferred income
80,975
25,366
18,681
10,874
31,969,308
15,475,423
31,911,801
15,448,205

The short-term Block Funding facilities included in bank loans to the value of £26,124,962 (2022 - £ 11,853,777) are each secured by fixed charges over grouped components of the trade debtors ledger, being the underlying loan debtors funded by the respective facilities. All facilities are due in less than 12 months, with the respective facilities being secured under the following charges -

 

Renaissance Asset Finance Limited - Secured by Fixed charge dated 26 June 2023

Investec Asset Finance Plc - Secured by Fixed charge dated 11 March 2019

Hampshire Trust Bank Plc - Secured by Fixed charge dated 17 September 2018

Conister Bank Limited - Secured by dated 16 April 2018

Aldermore Bank Plc - Secured by Fixed charge dated 7 April 2017.

 

Included within Other Creditors are Directors' Loan accounts held in the sum of £1,463,796 (2022 - £2,219,979) upon which market rates of interest are charged.

FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 31 -
19
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
20
83,757
136,233
83,757
136,233
Other borrowings
20
-
0
2,194,980
-
0
2,194,980
Other creditors
500,000
500,000
500,000
500,000
583,757
2,831,213
583,757
2,831,213

Bank loans in the sum of £135,298 ) (2022 - £185,753) are secured by a fixed and floating charge dated 14 April 2020 in the name of DBW Investments 10 Limited, for and on behalf of the Development Bank of Wales. £83,757 (2022 - £136,223) of this balance is disclosed as long term bank loans.

20
Loans and overdrafts
Group
Company
2023
2022
2023
2022
£
£
£
£
Bank loans
26,250,262
12,039,530
26,250,262
12,039,530
Other loans
-
0
2,194,980
-
0
2,194,980
26,250,262
14,234,510
26,250,262
14,234,510
Payable within one year
26,166,505
11,903,297
26,166,505
11,903,297
Payable after one year
83,757
2,331,213
83,757
2,331,213
21
Deferred taxation

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

Liabilities
Liabilities
2023
2022
Group
£
£
Accelerated capital allowances
11,664
5,406
Revaluations
27,989
35,489
39,653
40,895
FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
21
Deferred taxation
(Continued)
- 32 -
Liabilities
Liabilities
2023
2022
Company
£
£
Accelerated capital allowances
11,664
5,406
Revaluations
27,989
35,489
39,653
40,895
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 1 November 2022
40,895
40,895
Credit to profit or loss
(1,242)
(1,242)
Liability at 31 October 2023
39,653
39,653
22
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
79,008
16,340

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

23
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of 10p each
20
20
2
2

Share capital is composed of 20 shares of 10p nominal value each. There are held as 10 Ordinary A shares, 2 Ordinary B shares, 7 Ordinary C shares and 1 Ordinary A share.

24
Reserves

The profit and loss reserve account contains £111,957 (2022 - £141,957) in relation to Fair Value Gains in the revaluation of an Investment property held in the business, this is £83,968 (2022 - £106,468) when net of deferred taxation. The movement represents the revaluation undertaken in the period.

 

The closing value of £111,957 is not available for distribution as the gain has not crystalised.

FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 33 -
25
Related party transactions

The Directors have provided personal guarantees on behalf of the company. Any credit Director's loan account balance and personal assets (to specific stated values) are pledged to support any shortfall in recovery of any of the secured block facility funders defined in the charge security disclosure above.

26
Directors' transactions

Dividends totalling £612,500 (2022 - £222,000) were paid in the year in respect of shares held by the company's directors.

 

As defined in note 18, the Directors also held funds on loan to the company during the accounting period, interest was charged at a rate of 5% on qualifying parts of these loans, This interest charge totalled £70,506 (2022 - £39,100).

27
Controlling party

The ultimate controlling party is Mr M Plumridge by virtue of his majority shareholding.

28
Cash absorbed by group operations
2023
2022
£
£
Profit for the year after tax
6,911,593
4,466,735
Adjustments for:
Taxation charged
2,187,361
841,809
Finance costs
1,958,582
845,775
Investment income
(9,204)
-
0
Fair value loss/(gain) on investment properties
30,000
(141,957)
Depreciation and impairment of tangible fixed assets
7,406
5,998
Movements in working capital:
Increase in debtors
(19,038,719)
(14,957,122)
Increase in creditors
1,226,648
559,695
Cash absorbed by operations
(6,726,333)
(8,379,067)
FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 34 -
29
Cash absorbed by operations - company
2023
2022
£
£
Profit for the year after tax
6,673,165
4,206,506
Adjustments for:
Taxation charged
2,154,691
804,893
Finance costs
1,958,582
845,775
Investment income
(9,204)
-
0
Fair value loss/(gain) on investment properties
30,000
(141,957)
Depreciation and impairment of tangible fixed assets
7,406
5,998
Movements in working capital:
Increase in debtors
(18,816,416)
(14,664,839)
Increase in creditors
1,178,846
558,964
Cash absorbed by operations
(6,822,930)
(8,384,660)
30
Analysis of changes in net debt - group
1 November 2022
Cash flows
31 October 2023
£
£
£
Cash at bank and in hand
747,747
1,418,929
2,166,676
Borrowings excluding overdrafts
(14,234,510)
(12,015,752)
(26,250,262)
(13,486,763)
(10,596,823)
(24,083,586)
31
Analysis of changes in net debt - company
1 November 2022
Cash flows
31 October 2023
£
£
£
Cash at bank and in hand
326,839
1,372,515
1,699,354
Borrowings excluding overdrafts
(14,234,510)
(12,015,752)
(26,250,262)
(13,907,671)
(10,643,237)
(24,550,908)
32
Prior period adjustment
FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
32
Prior period adjustment
(Continued)
- 35 -
Reconciliation of changes in equity - group
1 November
31 October
2021
2022
£
£
Adjustments to prior year
Intercompany loan account & transaction fees
(133,612)
(135,355)
Director's loan account write back
(75,000)
(75,000)
Loan interest revenue recognition change
208,612
917,106
Total adjustments
-
706,751
Equity as previously reported
9,405,484
12,734,858
Equity as adjusted
9,405,484
13,441,609
Analysis of the effect upon equity
Profit and loss reserves
(208,612)
706,751
(208,612)
706,751
Reconciliation of changes in profit for the previous financial period
2022
£
Adjustments to prior year
Intercompany loan account & transaction fees
(1,743)
Loan interest revenue recognition change
917,106
Total adjustments
915,363
Profit as previously reported
3,551,372
Profit as adjusted
4,466,735
FEDERAL CAPITAL LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
32
Prior period adjustment
(Continued)
- 36 -
Reconciliation of changes in equity - company
1 November
31 October
2021
2022
£
£
Adjustments to prior year
Intercompany loan account & transaction fees
(133,612)
(135,355)
Director's loan account write back
(75,000)
(75,000)
Adjustment to Loan interest recognition
-
917,106
Total adjustments
(208,612)
706,751
Equity as previously reported
9,088,324
12,157,467
Equity as adjusted
8,879,712
12,864,218
Analysis of the effect upon equity
Profit and loss reserves
(208,612)
706,751
(208,612)
706,751
Reconciliation of changes in profit for the previous financial period
2022
£
Adjustments to prior year
Intercompany loan account & transaction fees
(1,743)
Adjustment to Loan interest recognition
917,106
Total adjustments
915,363
Profit as previously reported
3,291,143
Profit as adjusted
4,206,506
2023-10-312022-11-01falseCCH SoftwareCCH Accounts Production 2024.100falsefalse07978824bus:Consolidated2022-11-012023-10-31079788242022-11-012023-10-3107978824bus:RegisteredOffice2022-11-012023-10-31079788242023-10-3107978824bus:Consolidated2021-11-012022-10-31079788242021-11-012022-10-3107978824bus:Consolidated2023-10-3107978824bus:Consolidated2022-10-31079788242022-10-3107978824core:LeaseholdImprovementsbus:Consolidated2023-10-3107978824core:FurnitureFittingsbus:Consolidated2023-10-3107978824core:ComputerEquipmentbus:Consolidated2023-10-3107978824core:LeaseholdImprovementsbus:Consolidated2022-10-3107978824core:FurnitureFittingsbus:Consolidated2022-10-3107978824core:ComputerEquipmentbus:Consolidated2022-10-3107978824core:LeaseholdImprovements2023-10-3107978824core:FurnitureFittings2023-10-3107978824core:ComputerEquipment2023-10-3107978824core:LeaseholdImprovements2022-10-3107978824core:FurnitureFittings2022-10-3107978824core:ComputerEquipment2022-10-3107978824core:ShareCapitalbus:Consolidated2023-10-3107978824core:ShareCapitalbus:Consolidated2022-10-3107978824core:ShareCapital2023-10-3107978824core:ShareCapital2022-10-3107978824core:RetainedEarningsAccumulatedLosses2023-10-3107978824core:ShareCapitalbus:Consolidated2021-10-31079788242021-10-3107978824core:RetainedEarningsAccumulatedLossesbus:Consolidated2022-10-3107978824core:RetainedEarningsAccumulatedLossesbus:Consolidated2023-10-3107978824core:ShareCapital2021-10-3107978824core:RetainedEarningsAccumulatedLosses2021-10-3107978824core:RetainedEarningsAccumulatedLosses2022-10-3107978824core:LeaseholdImprovements2022-11-012023-10-3107978824core:FurnitureFittings2022-11-012023-10-3107978824core:ComputerEquipment2022-11-012023-10-3107978824core:UKTaxbus:Consolidated2022-11-012023-10-3107978824core:UKTaxbus:Consolidated2021-11-012022-10-3107978824core:ForeignTaxbus:Consolidated2022-11-012023-10-3107978824core:ForeignTaxbus:Consolidated2021-11-012022-10-3107978824bus:Consolidated12022-11-012023-10-3107978824bus:Consolidated12021-11-012022-10-3107978824bus:Consolidated22022-11-012023-10-3107978824bus:Consolidated22021-11-012022-10-3107978824bus:Consolidated32022-11-012023-10-3107978824bus:Consolidated32021-11-012022-10-3107978824core:LeaseholdImprovementsbus:Consolidated2022-10-3107978824core:FurnitureFittingsbus:Consolidated2022-10-3107978824core:ComputerEquipmentbus:Consolidated2022-10-3107978824bus:Consolidated2022-10-3107978824core:LeaseholdImprovements2022-10-3107978824core:FurnitureFittings2022-10-3107978824core:ComputerEquipment2022-10-31079788242022-10-3107978824core:LeaseholdImprovementsbus:Consolidated2022-11-012023-10-3107978824core:FurnitureFittingsbus:Consolidated2022-11-012023-10-3107978824core:ComputerEquipmentbus:Consolidated2022-11-012023-10-3107978824core:Non-currentFinancialInstrumentsbus:Consolidated2023-10-3107978824core:Non-currentFinancialInstrumentsbus:Consolidated2022-10-3107978824core:Non-currentFinancialInstruments2023-10-3107978824core:Non-currentFinancialInstruments2022-10-3107978824core:CurrentFinancialInstruments2023-10-3107978824core:CurrentFinancialInstruments2022-10-3107978824core:CurrentFinancialInstrumentsbus:Consolidated2023-10-3107978824core:CurrentFinancialInstrumentsbus:Consolidated2022-10-3107978824core:WithinOneYearbus:Consolidated2023-10-3107978824core:WithinOneYearbus:Consolidated2022-10-3107978824core:CurrentFinancialInstrumentscore:WithinOneYear2023-10-3107978824core:CurrentFinancialInstrumentscore:WithinOneYear2022-10-3107978824core:Non-currentFinancialInstrumentscore:AfterOneYearbus:Consolidated2023-10-3107978824core:Non-currentFinancialInstrumentscore:AfterOneYearbus:Consolidated2022-10-3107978824core:Non-currentFinancialInstrumentscore:AfterOneYear2023-10-3107978824core:Non-currentFinancialInstrumentscore:AfterOneYear2022-10-3107978824core:CurrentFinancialInstrumentscore:WithinOneYearbus:Consolidated2023-10-3107978824core:CurrentFinancialInstrumentscore:WithinOneYearbus:Consolidated2022-10-3107978824core:Non-currentFinancialInstrumentscore:AfterOneYearbus:Consolidated12023-10-3107978824core:Non-currentFinancialInstrumentscore:AfterOneYearbus:Consolidated12022-10-3107978824core:Non-currentFinancialInstrumentscore:AfterOneYear22023-10-3107978824core:Non-currentFinancialInstrumentscore:AfterOneYear22022-10-3107978824bus:PrivateLimitedCompanyLtd2022-11-012023-10-3107978824bus:FRS1022022-11-012023-10-3107978824bus:Audited2022-11-012023-10-3107978824bus:ConsolidatedGroupCompanyAccounts2022-11-012023-10-3107978824bus:FullAccounts2022-11-012023-10-31xbrli:purexbrli:sharesiso4217:GBP