The directors present the strategic report for the year ended 31 December 2023.
The group emerged from 2021, post COVID in a strong position to commence the trading year on a positive note. The industry itself returned to near normal conditions in 2022 and clients were more positive and pro-active in their attitude to the enforcement industry as a whole. In 2023 the group continues to focus on its core activity, being debt recovery and enforcement services, principally to Local Authorities.
As reported in the groups statement of comprehensive income on page 10. These figures show a marked increase on the previous year’s performance which underlines the success of the Board’s decisions and strategic planning for developing the company’s market share of the enforcement recovery industry.
The management team continue to work closely with the client base to ensure the service we are delivering is in line with the clients aims and goals, in this way we continue to maintain primary service provider status. This approach also helps with the day to day operations and management of our own resources.
We continue with the robust system and process approach that has allowed the group to develop its growth potential. We have maintained our funding strategy to staffing levels and CapEx expenditure to ensure we are correctly positioned for current contracts and those new business areas we are targeting. The board of directors have formally reviewed and documented the the principal risks facing the business on a monthly basis for the past 12 months.
The principal risks and uncertainties facing the group are as follows
Economic Position - The group has emerged stronger and better, analysis of our performance shows the group achieved its aim not only from trading figures but from client feedback in comparison with our competitors. The marketplace continues to evolve with acquisitions and mergers, but the trading forecast is very positive with best-ever year figures being produced.
Competitor pressure – As mentioned above the market continues to evolve but remains as competitive as ever. The group is delighted with its performance during the year and is in an excellent position to not only maintain its market position but to substantial increase its presence.
Key personnel – The group retained all key operating personnel and managed to recruit some new members of staff to strategic roles. Management continues to seek to ensure that key personnel are appropriately remunerated to ensure that good performance is recognised.
The company has continued to evolve its practices and procedures by embracing another effect of the pandemic, the Working From Home (WFH) culture which has developed in both its own work force and that of its clients. Our hybrid system featuring a combination of home and office working fits well with the reduced face to face meetings required by our clients. The company continues to make use of zoom and team meetings has seen us reduce travelling expenses, fuel costs, help improve our green credentials and increase performance by reducing unproductive travelling time. This approach is opening up a whole different marketplace of staff resources whilst allowing for continued development of our service offering to clients.
Management use a range of performance measures to monitor and manage the business. The KPIs used to determine the progress and performance of the group are set out below:
Turnover
Turnover amounts to £27,422,149 (2022 - £25,752,909)
Gross profit margin
The group's gross profit margin totals 60.9% (2022 – 60.1%)
Financial position at the reporting date
The balance sheet shows that the group's net assets for the period totals £17,363,704 (2022 - £13,855,483).
The group invested £324,607 (2022 - £360,444) in fixed assets.
With the effects of the pandemic almost behind us now, the client base has returned to near normal operating conditions and the group has posted record performance figures. The board believe that the group is in an excellent position to develop its market share and establish a very strong trading position for years to come.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
No preference dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
In accordance with the company's articles, a resolution proposing that Verallo be reappointed as auditor of the group will be put at a General Meeting.
We have audited the financial statements of Newlyn Group Holding Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise 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 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).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and 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:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
The objectives of our audit, in respect to fraud, are: to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and its management.
Our approach was as follows:
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussion with the directors and other management (as required by auditing standards), the policies and procedures regarding compliance with laws and regulations;
We considered the legal and regulatory frameworks directly applicable to the financial statements reporting framework (FRS 102 and the Companies Act 2006) and the relevant tax compliance regulations in the UK;
We considered the nature of the industry, the control environment and business performance, including the key drivers for management’s remuneration;
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit;
We considered the procedures and controls that the group has established to address risks identified, or that otherwise prevent, deter and detect fraud; and how senior management monitors those programmes and controls.
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Where the risk was considered to be higher, we performed audit procedures to address each identified fraud risk. These procedures included: testing manual journals; reviewing the financial statement disclosures and testing to supporting documentation; performing analytical procedures; and enquiring of management, and were designed to provide reasonable assurance that the financial statements were free from fraud or error.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/Our-Work/Audit/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Auditors-responsibilities-for-audit/Description-of-auditors-responsibilities-for-audit.aspx. This description forms part of our auditor’s report.
Use of 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.
EBITDA
The earnings before interest, tax, depreciation and amortisation totals £11,590,385 (2022 - £11,241,828)
The notes on pages 17 to 38 form part of these financial statements.
The notes on pages 17 to 38 form part of these financial statements.
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 £6,608,795 (2022 - £2,492,594 profit).
The notes on pages 17 to 38 form part of these financial statements.
The notes on pages 17 to 38 form part of these financial statements.
The notes on pages 17 to 38 form part of these financial statements.
The notes on pages 17 to 38 form part of these financial statements.
Newlyn Group Holding Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales, company registration no. 11145797. The registered office is Century House, Wargrave Road, Henley-on-Thames, RG9 2LT.
The group consists of Newlyn Group Holding Ltd and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: The disclosure requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b), 11.48(c), 12.26, 12.27, 12.29(a), 12.29(b), and 12.29A;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Newlyn Group Holding Ltd 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 December 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.
Newlyn Plc and Newlyn Contact Centre Services Limited have been included in the group financial statements using the purchase method of accounting. Accordingly, the group profit and loss account and statement of cash flows include the results and cash flows of Newlyn Plc and Newlyn Contact Centre Services Limited for the period from its acquisition on 10 April 2018. The purchase consideration has been allocated to the assets and liabilities on the basis of fair value at the date of acquisition.
The financial statements for the group and company have been prepared on a going concern basis, which assumes the company will continue in operational existence, and will be able to meet its liabilities as they fall due, for a period of at least twelve months from the date of approval of the financial statements.
In reaching this conclusion the directors have considered the support provided to the company by its trading subsidiaries, to provide sufficient funds to enable the company to meet it's liabilities as they fall due.
The directors have a reasonable expectation that the group and company has adequate resources to continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover represents revenue earned (excluding value added tax) under contracts to provide professional services from bailiff and related activities.
Bailiff service income is recognised on remittance of fees to the clients' debtors, as it is only at this point that the economic benefits are guaranteed to flow to the group.
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.
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.
At each reporting period end date, the group 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.
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.
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, 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.
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.
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.
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.
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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
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.
The tax expense represents the sum of the tax currently payable and deferred 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.
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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
In assessing whether there have been any indicators of impairment of assets, the directors have considered both external and internal sources of information such as market conditions, counterparty credit ratings and experience of recoverability. There have been no material indicators of impairments identified during the current financial year other than in respect of bad and doubtful trade debtor balances recognised in the financial statements.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Directors assess the recoverability of receivables on a monthly basis, through the review of the ageing profile of the current debtors, along with past knowledge of the client and recoverability. At the year end, it was concluded by the directors that no provision would be required. A 1% bad debt provision would give rise to a £12,082 impact on the financial statements.
The group depreciates tangible assets over their estimated useful lives. The estimation of the useful life of assets is based on historic performance as well as expectations about future use and therefore requires estimates and assumptions to be applied by management. The actual lives of these assets can vary depending on a variety of factors, including technological innovation, product life cycles and maintenance programs.
Judgement is applied by management when determining the residual values for tangible fixed assets. When determining the residual value management aim to assess the amount that the group would currently obtain for the disposal of the asset, if it were already of the condition expected at the end of its useful economic life. Where possible this is done with reference to external market prices.
Within the contractual agreements between Newlyn PLC and the local councils, there is potential for a contractual obligation to provide added value services.
The agreements do not specify a cash value, therefore the directors estimate the cost of the obligations, based upon previous experiences with the customer and the anticipated cost over the life of the agreement. Any amendment to the provision is made through the profit and loss on an annual basis.
An amount of £524,452 (2022 - £492,283) has been included in the financial statements in relation to the added value.
Management are aware that the risk of litigation against the company is high in the sector they operate in. As such, they employ the use of legal professionals to ensure accurate estimation of the potential exposure they may face in relation to such legal proceedings.
An amount of £54,739 (2022 - £54,739) has been included in the financial statements in relation to the legal provision.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
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:
As of 1 April 2023 the corporation tax rate in the UK increased to 25% (rather than remaining at 19% as previously enacted). The 25% main rate of corporation tax and marginal relief will be relevant for any asset sales or timing differences expected to reverse on or after 1 April 2023.
Details of the company's subsidiaries at 31 December 2023 are as follows:
As permitted by the reduced disclosure framework within FRS 102, the company has taken advantage of the exemption from disclosing the carrying amount of certain classes of financial instruments, denoted by 'n/a' above.
Included within trade debtors is an amount of £5,480,930 (2022 - £5,015,371), that relates to designated client money (note 16).
The bank holds a £50,000 bond against the client money by way of security.
Included within trade creditors is an amount of £5,480,930 (2022 - £5,015,371) that relates to designated client money (note 15).
On 1 February 2023, Newlyn Group Holding Limited entered into a new loan agreement with National Westminster Bank PLC, for the principal amount of £20,005,000. The loan is repaid in quarterly instalments with the final instalment due in March 2027.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
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.
Ordinary A Shares
Any profits which the Company decides to distribute in respect of any financial year will be distributed amongst the holders of the A Shares. Dividends will be distributed to those holders of A Shares in proportion to the number of fully paid up A Shares held by them respectively and will accrued on a daily basis.
On any return of capital or assets including on a liquidation or a capital reduction, any capital or assets of the Company remaining for distribution among the Shareholders after the payment of the Company's liabilities will be applied first, in paying to the holders of the Preference Shares an amount up to but not exceeding £14,719,613.40 in aggregate (the Preference Amount) pro rata in proportion to the number of fully paid up Preference Shares held by them respectively, and second if the aggregate proceeds available for distribution (including the Preference Amount) do not exceed £20,200,000 (the Hurdle), in paying to the holders of the A Shares any amount in excess of the Preference Amount (the Preference Excess Amount) pro rata in proportion to the number of fully paid up A Shares held by them respectively; or if the aggregate proceeds available for distribution (including the Preference Amount) exceed the Hurdle, in paying to the holders of the A Shares the A Share Excess Amount (as defined in the articles) pro rata in proportion to the number of fully paid up A Shares held by them respectively.
Each A Share will have one vote per share. In the event that, Pursuant to the Investment Agreement (as defined in the articles) the Founder Representative (as defined in the articles) serves an Underperformance Notice (as defined in the articles) and the Founder Representative exercises on behalf of the Founders (as defined in the articles) their right to enhanced voting rights then the voting rights conferred on the A Shares shall represent 90% of the voting rights conferred on all Shares (and, if relevant, interests shall be split inter se in proportion to the number of A Shares held by each Founder) after the application of this voting enhancement.
The A Ordinary Shares are redeemable.
Ordinary B Shares
The B Ordinary Shares shall not participate in any dividend.
On any return of capital or assets including on a liquidation or a capital reduction, any capital or assets of the Company remaining for distribution among the Shareholders after the payment of the Company's liabilities will be applied first, in paying to the holders of the Preference Shares an amount up to but not exceeding £14,719,613.40 in aggregate (the Preference Amount) pro rata in proportion to the number of fully paid up Preference Shares held by them respectively, and second if the aggregate proceeds available for distribution (including the Preference Amount) do not exceed £20,200,000 (the Hurdle), in paying to the holders of the A Shares any amount in excess of the Preference Amount (the Preference Excess Amount) pro rata in proportion to the number of fully paid up A Shares held by them respectively; or if the aggregate proceeds available for distribution (including the Preference Amount) exceed the Hurdle, in paying to the holders of the A Shares the A Share Excess Amount (as defined in the articles) pro rata in proportion to the number of fully paid up A Shares held by them respectively and the B Shares an amount equal to the Preference Excess Amount less the A Share Excess Amount pro rata in proportion to the number of fully paid up B Shares held by them respectively.
Each B Share will have one vote per share.
The B Ordinary Shares are redeemable.
Preference Shares
Dividends
The Preference Shares shall not participate in any dividend.
Capital
On any return of capital or assets including on a liquidation or a capital reduction, any capital or assets of the Company remaining for distribution among the Shareholders after the payment of the Company's liabilities will be applied first, in paying to the holders of the Preference Shares an amount up to but not exceeding £14,719,613.40 in aggregate pro rata in proportion to the number of fully paid up Preference Shares held by them respectively.
Voting
The holders of the Preference Shares may receive notice of, attend and speak, but not vote, at any general meeting of the Company.
Redemption
The Preference Shares are non-redeemable.
The Profit and loss account represents cumulative profits or losses, net of dividends paid and other adjustments.
Due to the nature of the business, the group is subject to small claims litigation from time to time. At the year end there are no known cases which would have a material impact on the financial statements.
On 1 February 2023, Newlyn Group Holding Limited entered into a new loan agreement with National Westminster Bank PLC, for the principal amount of £20,005,000, the loan is secured by an unlimited Intercompany Composite Guarantee by Newlyn Group Holding Limited, Newlyn PLC and Newlyn Contact Centre Services Limited. A charge over the shares of Newlyn PLC and, Newlyn Contact Centre Services Limited and a fixed and floating charge with a negative pledge, over the assets of Newlyn Contact Centre Services Limited.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The company is exempt under FRS 102 s33.1A from disclosing any transaction with wholly owned Group companies.
During the year the group entered into transactions with three companies related by virtue of mutual directors. In total sales of £38,425 (2022 - £2,918) and purchases of £187,237 (2022 - £164,038) were made to these entities. At the year end the company owed its related parties £nil (2022 - £Nil).