Company Registration No. 05690737 (England and Wales)
ROUTETRADER LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
LB GROUP
1 Vicarage Lane
Stratford
London
E15 4HF
ROUTETRADER LIMITED
COMPANY INFORMATION
Directors
Mr M Ryan
Boost&Co Limited
Industrial Lending 1
Mr P B Schreuder
(Appointed 1 August 2022)
Company number
05690737
Registered office
Thomas House
Eccleston Square
London
SW1V 1PX
Auditor
LB Group Limited (Stratford)
1 Vicarage Lane
Stratford
London
E15 4HF
ROUTETRADER LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 27
ROUTETRADER LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2022
- 1 -

The directors present the strategic report for the year ended 31 October 2022.

Fair review of the business

The principal activity of the company is to provide a Software-as-a-Service (SaaS) technology platform, which operates payment and risk management infrastructure, as well as (embedded) financing for service providers in the international telecommunications industry. The company provides, maintains and hosts this technology for many of the world’s leading telecommunications companies. The company is headquartered and operates out of London.

Principal risks and uncertainties

 

Financing extended to customers

The company provides (embedded) invoice financing to selected customers who are approved by the company’s internal credit committee. The company mitigates any credit exposure through purchasing insurance on the approved tier 1 debtors of its customers.

 

Exchange rate risk

Trade in the international telecommunications industry is predominantly carried out in US dollars. As such our gross margin is earned in US dollars and the financial statements have been presented in US dollars in order to mitigate an exchange rate risk from converting the financial statements into Sterling.

 

Brexit and Covid

Whilst Covid-19 has had a huge impact on the global economy and Brexit has caused regional uncertainty, management does not perceive these as significant risks to the business and there has been no notable impact. The business has been shielded from these events by maintaining a global customer base and delivering software and financing services via a virtual software platform.

Development and performance

During the financial year up to October 2022, management sourced fresh external financing to support the (embedded) financing of the global tier 1 telecommunications industry and to build out its SaaS technology platform. This new capital has been beneficial for the company in supporting some of the world’s leading telecommunications companies and growing its global presence.

 

Towards the end of the reporting period the company decided to terminate its Least Cost Routing (LCR) business unit and focus solely on its SaaS technology platform as well as its (embedded) financing offering to the global telecommunications industry. It is anticipated that there will be strong focus on the expansion of these service offerings during the next financial years.

 

ROUTETRADER LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 2 -
Other information and explanations

 

Financial Performance

The turnover for the year ending October 2022 covered by this strategic report and financial statements was US$64m (previous period to October 2021: US$56m).

 

The operating profit for the year to October 2022 is US$0.5m (previous period to October 2021: US$9.8m loss) and represents a period where new senior management was brought in with a focus on quality of revenues as well as profitability. As a result, during the reporting period, the legacy LCR business was closed, the SaaS business refocused and the (embedded) financing business launched. Management forecast the transformation of the business to continue during the next financial years with strong growth in its SaaS platform business, as well as the (embedded) financing business, expected. It is anticipated the cost base will remain largely flat whilst margins are increased, underlining the scalability of both businesses.

 

Capital Structure

The company’s ordinary shares continue to be 100% owned by two Luxembourg financing vehicles, Industrial Lending 1 SA (82%) and IL2 (2018) SA (18%), which are managed by London based asset management firm Boost & Co.

 

Other Information

The Board would like to thank the employees for their continued commitment and support to the company. Both executive and non-executive members of the Board encourage employee participation in the management and direction of the company. The company values diversity of thought and experience and believe that our inclusive and collaborative culture contributes to our success.

 

 

On behalf of the board

Mr P B Schreuder
Director
7 August 2024
ROUTETRADER LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 OCTOBER 2022
- 3 -

The directors present their annual report and financial statements for the year ended 31 October 2022.

Principal activities

The principal activity of the company is to provide a Software-as-a-Service (SaaS) technology platform, which operates payment and risk management infrastructure, as well as (embedded) financing for service providers in the international telecommunications industry.

Results and dividends

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

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Mr C Chapman
(Resigned 13 May 2022)
Mr M Ryan
Boost&Co Limited
Industrial Lending 1
Mr P B Schreuder
(Appointed 1 August 2022)
Auditor

In accordance with the company's articles, a resolution proposing that LB Group Limited (Stratford) be reappointed as auditor of the company will be put at a General Meeting.

Energy and carbon report

As the company 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 disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

On behalf of the board
Mr P B Schreuder
Director
7 August 2024
ROUTETRADER LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 OCTOBER 2022
- 4 -

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

 

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

 

 

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

ROUTETRADER LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ROUTETRADER LIMITED
- 5 -

Adverse opinion

We have audited the financial statements of Routetrader Limited (the 'company') for the year ended 31 October 2022 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion, because of the omission of the information mentioned in the Basis for adverse opinion section of our report, the financial statements do not give a true and fair view of the financial position of the company as at 31 October 2022, and of its financial performance and its cash flows for the year then ended in accordance with United Kingdom Generally Accepted Accounting Practice and the requirements of the Companies Act 2006.

Basis for adverse opinion

The company does not appear to have sufficient cash resources in order to meet liabilities as they fall due for 12 months from the date of approval of these financial statements. According to the budgets and liquidity forecasts provided to us, Routetrader Limited will require substantial additional funds in the future from external sources to be able to meet its obligations. This is due to management confirming that the ultimate parent company are not willing to provide guarantees that they will continue to supply the necessary funds for the period of at least 12 months from the date of the approval of the financial statements. However, the company is currently waiting for an investor to close its investment, which has been confirmed by this investor recently. As a result the company is therefore still confident that they will be able to raise the necessary funds and that the company will be able to meet liabilities as they fall due. For this reason, management believes that the Company will continue as a going concern and therefore have sought to prepare its financial statements as of 31 October 2022 according to the going concern principle.

As of the date of our audit report, the outcome of these fund-raising efforts by the company is uncertain, which raises significant doubt about the Company's ability to continue as a going concern and whether the going concern principle is still applicable for the preparation of the Company's financial statements. The financial statements as of 31 October 2022 that were presented to us do not reflect this significant doubt and therefore do not present a true and fair view of the Company's assets and financial position as of 31 October 2022 in accordance with the Companies Act 2006.

 

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

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.

 

As described in the basis for adverse opinion section of our report, there is insufficient evidence to support management's assessment that the company is a going concern. We have concluded that the other information is materially misstated for the same reason with respect to the going concern status of the company.

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

Opinions on other matters prescribed by the Companies Act 2006

Because of the significance of the matter described in the basis for adverse opinion section of our report, in our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

As a result of the matters described in the basis for adverse opinion section of our report, in the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have identified material misstatements in the strategic report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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:

 

•    the engagement partner ensured that the engagement team collectively had the appropriate     competence, capabilities and skills to identify or recognise non-compliance with applicable laws;

•    we identified the laws and regulations applicable to the company through discussions with directors and    key management and from our knowledge of the wider commercial sector;

•    we focused on specific laws and regulations which we considered may have a direct material effect on the     financial statements or operations of the company, including Companies Act 2006, data protection,    intellectual     property and anti-bribery;

•    we assessed the extent of compliance with the laws and regulations identified above through making    enquiries of management and inspecting legal correspondence and post balance sheet events; and

•    identified laws and regulations were communicated within the audit team regularly and the team remained     alert to instance of non-compliance through the audit.

ROUTETRADER LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ROUTETRADER 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:

 

•    making enquiries of management as to where they considered there was susceptibility to fraud,         and ensuring that instances of historical fraud were identified and sufficient controls were in place to     suspect and detect possible fraud issues.

 

 

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

 

•    performed analytical procedures to identify any unusual or unexpected relationships;

•    tested journal entries to identify unusual transactions;

•    assessed whether judgements and assumptions made in determining the accounting estimates were     indicative of potential bias;

•    tested a significant amount of transactions across a variety of key customers and suppliers; and

•    investigated the rationale behind significant or unusual transactions.

 

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

 

•    agreeing financial statement disclosures to underlying supporting documentation;

•    enquiring of management as to actual and potential litigation and claims; and

•    reviewing correspondence with the company’s legal advisors.

 

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 directors and other management and the inspection of regulatory and legal correspondence, if any.

 

Material misstatements that arise due to fraud can be harder to detect than those 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.

 

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.

Richard Lane
Senior Statutory Auditor
For and on behalf of LB Group Limited (Stratford)
7 August 2024
Chartered Accountants
Statutory Auditor
1 Vicarage Lane
Stratford
London
E15 4HF
ROUTETRADER LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 OCTOBER 2022
- 8 -
2022
2021
Notes
$
$
Turnover
3
64,268,805
56,455,146
Cost of sales
(64,657,995)
(56,710,029)
Gross loss
(389,190)
(254,883)
Administrative expenses
(2,037,711)
(2,598,453)
Exceptional items
4
2,948,304
(6,988,973)
Operating profit/(loss)
6
521,403
(9,842,309)
Interest receivable and similar income
9
(10)
-
0
Interest payable and similar expenses
10
(2,383,727)
(2,657,366)
Loss before taxation
(1,862,334)
(12,499,675)
Tax on loss
11
-
0
42,798
Loss for the financial year
(1,862,334)
(12,456,877)

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

ROUTETRADER LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2022
- 9 -
2022
2021
$
$
Loss for the year
(1,862,334)
(12,456,877)
Other comprehensive income
-
-
Total comprehensive income for the year
(1,862,334)
(12,456,877)
ROUTETRADER LIMITED
BALANCE SHEET
AS AT 31 OCTOBER 2022
31 October 2022
- 10 -
2022
2021
Notes
$
$
$
$
Fixed assets
Intangible assets
12
164,489
230,615
Tangible assets
13
143,976
180,997
308,465
411,612
Current assets
Debtors
15
1,380,393
4,961,142
Cash at bank and in hand
704,707
822,054
2,085,100
5,783,196
Creditors: amounts falling due within one year
16
(4,467,929)
(3,614,221)
Net current (liabilities)/assets
(2,382,829)
2,168,975
Total assets less current liabilities
(2,074,364)
2,580,587
Creditors: amounts falling due after more than one year
17
(14,484,424)
(17,277,041)
Net liabilities
(16,558,788)
(14,696,454)
Capital and reserves
Called up share capital
21
1,933,523
1,933,523
Share premium account
21,444,886
21,444,886
Profit and loss reserves
(39,937,197)
(38,074,863)
Total equity
(16,558,788)
(14,696,454)
The financial statements were approved by the board of directors and authorised for issue on 7 August 2024 and are signed on its behalf by:
Mr P B Schreuder
Director
Company registration number 05690737 (England and Wales)
ROUTETRADER LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2022
- 11 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
$
$
$
$
Balance at 1 November 2020
1,933,520
21,444,886
(25,617,986)
(2,239,580)
Year ended 31 October 2021:
Loss and total comprehensive income
-
-
(12,456,877)
(12,456,877)
Issue of share capital
21
3
-
0
-
3
Balance at 31 October 2021
1,933,523
21,444,886
(38,074,863)
(14,696,454)
Year ended 31 October 2022:
Loss and total comprehensive income
-
-
(1,862,334)
(1,862,334)
Balance at 31 October 2022
1,933,523
21,444,886
(39,937,197)
(16,558,788)
ROUTETRADER LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2022
- 12 -
2022
2021
Notes
$
$
$
$
Cash flows from operating activities
Cash generated from/(absorbed by) operations
25
2,100,189
(3,693,328)
Interest paid
(2,383,727)
(2,657,366)
Income taxes refunded
-
0
42,798
Net cash outflow from operating activities
(283,538)
(6,307,896)
Investing activities
Purchase of intangible assets
-
0
(198,402)
Purchase of tangible fixed assets
(4,114)
(176,785)
Proceeds from disposal of tangible fixed assets
(224)
-
0
Interest received
(10)
-
0
Net cash used in investing activities
(4,348)
(375,187)
Financing activities
Proceeds from issue of shares
-
0
3
Proceeds from new bank loans
850,000
6,858,159
Repayment of bank loans
(694,313)
(918,483)
Repayment of derivatives
20,095
(20,095)
Payment of finance leases obligations
(5,243)
(11,791)
Net cash generated from financing activities
170,539
5,907,793
Net decrease in cash and cash equivalents
(117,347)
(775,290)
Cash and cash equivalents at beginning of year
822,054
1,597,344
Cash and cash equivalents at end of year
704,707
822,054
ROUTETRADER LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2022
- 13 -
1
Accounting policies
Company information

Routetrader Limited is a private company limited by shares incorporated in England and Wales. The registered office is Thomas House, Eccleston Square, London, SW1V 1PX.

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 US Dollars, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest $.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

1.2
Going concern

These financial statements are prepared on the going concern basis. The directors have a reasonable expectation that the company will continue in operational existence for the foreseeable future. The company launched an exciting new service offering of providing (embedded) financing to the global tier 1 telecommunications industry. As part of this new offering to its current and future clients, the company attracted new financing. This supports the funding from the main shareholder in the business to ensure that the exciting new opportunities are able to be fulfilled. This also forms the basis for an expected investment from a new US based investor this quarter.

 

However, the directors are aware of the required continued support by its main shareholder for the time being. This support is backed by a facility suitable and relative in order to provide sufficient cashflow to the business and to ensure its ability to continue as a going concern.

1.3
Turnover

The turnover shown in the profit and loss account represents amounts receivable during the period, exclusive of Value Added Tax, in respect of the company's own trading floor plus charges for rendering the company's software platform services.

Revenue from contracts for rendering of professional services is recognised at the end of each month after the provision of services in that month.

1.4
Research and development expenditure

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

1.5
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

ROUTETRADER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
1
Accounting policies
(Continued)
- 14 -

Amortisation 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:

Development costs
3 - 5 years straight line
1.6
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:

Fixtures and fittings
33% straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

1.7
Impairment of fixed assets

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

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

 

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

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

1.8
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.

ROUTETRADER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
1
Accounting policies
(Continued)
- 15 -
1.9
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

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

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.

ROUTETRADER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
1
Accounting policies
(Continued)
- 16 -
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 company’s contractual obligations expire or are discharged or cancelled.

1.10
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.

1.11
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.

ROUTETRADER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
1
Accounting policies
(Continued)
- 17 -
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.

1.12
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.

1.13
Retirement benefits

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

1.14
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

ROUTETRADER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
1
Accounting policies
(Continued)
- 18 -
1.15
Foreign exchange

Transactions in currencies other than USD 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.

 

The functional currency of the company is that of USD. Any costs within the year which were not in the functional currency of USD, were translated at the exchange rate on the day they occurred.

 

Notable adjustments in translated balances include share premium and share capital converted at the historical rates to which they relate. Opening profit and loss reserves, non current assets and liabilities brought forward are recorded at the prevailing rate of the previous period end. As there is no change between presentational and functional currency in regards to these financial statements, there is no foreign exchange reserve.

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.

Bad debts

The company assess bad debt in relation to historical debtors on an ongoing basis. Provisions are made on all debts which there is no insurance coverage and the probability of recovery of outstanding amounts is considered low.

Net realisable value of development costs and tangible fixed assets

The company continually review and assess the net realisable value of all development and tangible assets including their ongoing existence in relation to the business operations. Impairment and removal of any historical assets or nil value assets is undertaken on a yearly basis by the directors of the company.

3
Turnover and other revenue
2022
2021
$
$
Turnover analysed by class of business
Sales of goods
64,118,880
56,419,897
Rendering of services
149,925
35,249
64,268,805
56,455,146
ROUTETRADER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
3
Turnover and other revenue
(Continued)
- 19 -
2022
2021
$
$
Turnover analysed by geographical market
UK
813,740
726,943
US
57,630,507
47,496,626
ROW
5,824,558
8,231,577
64,268,805
56,455,146
2022
2021
$
$
Other revenue
Interest income
(10)
-
4
Exceptional items
2022
2021
$
$
Expenditure
Exceptional - Bad debt write off
-
6,988,973
Exceptional - Foreign exchange profit on loan movements
(2,948,304)
-
(2,948,304)
6,988,973
5
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
$
$
For audit services
Audit of the financial statements of the company
39,305
40,944
6
Operating profit/(loss)
2022
2021
Operating profit/(loss) for the year is stated after charging/(crediting):
$
$
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
(478,541)
844,971
Depreciation of owned tangible fixed assets
41,359
120
Depreciation of tangible fixed assets held under finance leases
-
5,112
(Profit)/loss on disposal of tangible fixed assets
-
8,899
Amortisation of intangible assets
66,126
83,287
(Profit)/loss on disposal of intangible assets
-
120,836
Operating lease charges
214,220
276,231
ROUTETRADER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 20 -
7
Employees

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

2022
2021
Number
Number
Sales
5
4
Operations
5
5
Management
2
2
Total
12
11

Their aggregate remuneration comprised:

2022
2021
$
$
Wages and salaries
1,297,313
1,348,879
Social security costs
148,425
151,494
Pension costs
108,008
115,564
1,553,746
1,615,937
8
Directors' remuneration
2022
2021
$
$
Remuneration for qualifying services
440,265
389,508
Company pension contributions to defined contribution schemes
46,167
48,689
486,432
438,197
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
$
$
Remuneration for qualifying services
440,265
389,508
ROUTETRADER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 21 -
9
Interest receivable and similar income
2022
2021
$
$
Interest income
Interest on bank deposits
(10)
-
0
2022
2021
Investment income includes the following:
$
$
Interest on financial assets not measured at fair value through profit or loss
(10)
-
0
10
Interest payable and similar expenses
2022
2021
$
$
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
16,584
23,434
Non-utilisation fees
550,925
956,706
567,509
980,140
Other finance costs:
Interest on finance leases and hire purchase contracts
126
1,075
Other interest
1,816,092
1,676,151
2,383,727
2,657,366
ROUTETRADER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 22 -
11
Taxation
2022
2021
$
$
Current tax
UK corporation tax on profits for the current period
-
0
(42,798)

The actual charge/(credit) 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:

2022
2021
$
$
Loss before taxation
(1,862,334)
(12,499,675)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
(353,843)
(2,374,938)
Unutilised tax losses carried forward
353,843
2,374,938
Research and development tax credit
-
0
(42,798)
Taxation charge/(credit) for the year
-
(42,798)

On 1st April 2023, the headline rate of corporation tax in the UK has increased to 25%.

12
Intangible fixed assets
Development costs
$
Cost
At 1 November 2021 and 31 October 2022
498,745
Amortisation and impairment
At 1 November 2021
268,130
Amortisation charged for the year
66,126
At 31 October 2022
334,256
Carrying amount
At 31 October 2022
164,489
At 31 October 2021
230,615
ROUTETRADER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 23 -
13
Tangible fixed assets
Fixtures and fittings
$
Cost
At 1 November 2021
212,724
Additions
4,114
Disposals
(1,276)
At 31 October 2022
215,562
Depreciation and impairment
At 1 November 2021
31,727
Depreciation charged in the year
41,359
Eliminated in respect of disposals
(1,500)
At 31 October 2022
71,586
Carrying amount
At 31 October 2022
143,976
At 31 October 2021
180,997
14
Financial instruments
2022
2021
$
$
Carrying amount of financial assets
Instruments measured at fair value through profit or loss
-
20,095
15
Debtors
2022
2021
Amounts falling due within one year:
$
$
Trade debtors
168,217
3,612,500
Derivative financial instruments
-
20,095
Other debtors
1,212,176
1,277,953
Prepayments and accrued income
-
0
50,594
1,380,393
4,961,142
ROUTETRADER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 24 -
16
Creditors: amounts falling due within one year
2022
2021
Notes
$
$
Obligations under finance leases
19
-
0
5,243
Trade creditors
2,967,990
1,834,697
Taxation and social security
41,289
45,826
Other creditors
1,313,305
1,371,740
Accruals and deferred income
145,345
356,715
4,467,929
3,614,221
17
Creditors: amounts falling due after more than one year
2022
2021
Notes
$
$
Bank loans and overdrafts
18
14,484,424
17,277,041
18
Loans and overdrafts
2022
2021
$
$
Bank loans
14,484,424
17,277,041
Payable after one year
14,484,424
17,277,041

Lloyds Bank Plc has a first fixed charge created on 17 May 2018 on each of the items comprised within the deposits and all such respective rights to the repayment thereof as the depositer may have under the terms upon which the deposit was made and the provisions hereinbefore contained as a continuing security for the payment to the bank of the secured obligations to the intent that the security hereby constituted shall be a continuing security. This charge was satisfied on 9 September 2021.

 

Industrial Lending 1 has a fixed and floating charge created on 26 April 2017 on all present and future patents, trade marks, service marks, trade names, designs, copyrights, inventions, topographical or similar rights, confidential information and know-hoe and any interest in these rights, whether or not registered, including all applications and rights to apply for registration and all fees, royalties and other rights derived from, or incidental to, these rights.

 

The loan facility from Industrial Lending 1 is used by the company to factor applicable customers trading facilities. The interest on the loan facility is at a competitive arms length rate in respect of each advance and the facility is secured on the warrants to purchase shares of the company and is repayable in three monthly installments following the date at which the lender or borrower serves notice for repayment.

 

Industrial Lending 2 has a fixed and floating charge created on 23 September 2020 on all property and undertaking of the company including all present and future patents, trade-marks, service marks, trade names, designs, copyrights, inventions, topographical or similar rights, confidential information and know-how and any interest in any of these rights, whether nor not registered, including applications and rights to apply for registration and all fees, royalties and other rights derived from, or incidental to, these rights. Part of the property was released on the 1 February 2021 and a two new charges created on 25 May 2021 and 3 February 2022.

 

ROUTETRADER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 25 -
19
Finance lease obligations
2022
2021
Future minimum lease payments due under finance leases:
$
$
Within one year
-
0
5,243
20
Retirement benefit schemes
2022
2021
Defined contribution schemes
$
$
Charge to profit or loss in respect of defined contribution schemes
108,008
115,564

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

21
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
$
$
Issued and fully paid
Ordinary of 1p each
157,995,420
157,995,420
1,933,520
1,933,520
Ordinary B of 1p each
250
250
3
3
157,995,670
157,995,670
1,933,523
1,933,523

Number of shares in issue are shown in GBP at a value of £0.01 per share.

 

The Ordinary B shares were created for the incentivisation of management.

22
Events after the reporting date

On 2 November 2022, the company entered into a fixed and floating charge with Pactum Securities SA over all assets of the business.

 

ROUTETRADER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 26 -
23
Related party transactions
Remuneration of key management personnel

The remuneration of key management personnel is as follows.

2022
2021
$
$
Aggregate compensation
440,265
389,508
2022
2021
Amounts due to related parties
$
$
Entities with control, joint control or significant influence over the company
14,484,424
16,283,588
24
Ultimate controlling party

The ultimate controlling party was Industrial Lending 1 due to the majority shareholding in both the current period and prior year.

25
Cash generated from/(absorbed by) operations
2022
2021
$
$
Loss for the year after tax
(1,862,334)
(12,456,877)
Adjustments for:
Exceptional - currency gains
(2,948,304)
-
0
Taxation charged/(credited)
-
0
(42,798)
Finance costs
2,383,727
2,657,366
Investment income
10
-
0
(Gain)/loss on disposal of tangible fixed assets
-
8,899
(Gain)/loss on disposal of intangible assets
-
120,836
Amortisation and impairment of intangible assets
66,126
47,393
Depreciation and impairment of tangible fixed assets
41,359
8,758
Movements in working capital:
Decrease in debtors
3,560,654
5,739,125
Increase in creditors
858,951
223,970
Cash generated from/(absorbed by) operations
2,100,189
(3,693,328)
ROUTETRADER LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2022
- 27 -
26
Analysis of changes in net debt
1 November 2021
Cash flows
31 October 2022
$
$
$
Cash at bank and in hand
822,054
(117,347)
704,707
Borrowings excluding overdrafts
(17,277,041)
2,792,617
(14,484,424)
Obligations under finance leases
(5,243)
5,243
-
(16,460,230)
2,680,513
(13,779,717)
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