Kocho Group Holdings Limited
Registered number: 13168305
Annual Report
For the year ended 31 March 2023
|
KOCHO GROUP HOLDINGS LIMITED
COMPANY INFORMATION
|
KOCHO GROUP HOLDINGS LIMITED
CONTENTS
|
|
|
|
|
|
Independent Auditor's Report
|
|
Consolidated Statement of Comprehensive Income
|
|
Consolidated Statement of Financial Position
|
|
Company Statement of Financial Position
|
|
Consolidated Statement of Changes in Equity
|
|
Company Statement of Changes in Equity
|
|
Consolidated Statement of Cash Flows
|
|
Notes to the Financial Statements
|
|
|
KOCHO GROUP HOLDINGS LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The directors present their report and consolidated financial statements for Kocho Group Holdings Limited ("the Company") for the year ended 31 March 2023 ("FY23"). In preparing this Strategic Report, the directors have complied with s414C of the Companies Act 2006.
The Strategic Report below is a consolidated report for Kocho Group Holdings Limited ("the Group") and all its subsidiary undertakings (as listed in note 14), and all references to the Group below should be interpreted as references to the undertakings included in the consolidation.
The prior period comparatives are for the 14 month period ended 31 March 2022, as the Company was incorporated on 29 January 2021 and therefore the prior period comparatives are not directly comparable with the current year.
The principal activity of the Group during the year was a provider of cloud transformation, cyber security, data analytics and managed services to midmarket Corporate and larger Enterprise clients.
The results of the Group for the year ended 31 March 2023 show turnover of £39.3m (14 month period ended 31 March 2022: £35.3m), gross profit of £12.8m (14 month period ended 31 March 2022: gross profit of £13.3m), adjusted EBITDA (earnings before interest, taxation, depreciation, amortisation, and other costs which management have deemed to be non-recurring) of £1.9m (14 month period ended 31 March 2022: £5.3m) and a loss before taxation of £9.3m (14 month period ended 31 March 2022: loss before taxation of £4.9). The Group has net assets of £6.9m (2022: net assets of £16.1m). The acquisition of Mobliciti Ltd during the year, contributed £4.6m of the groups turnover and £1.5m of gross profit.
The impact of multiple acquisitions as explained below, in a short period, with a predictable period of increased costs has led to a significant reduction in EBITDA and increased the net loss before taxation, however the group has taken significant steps post year end to eliminate duplicated costs arising from these acquisitions as explained below which will drive both of these numbers up.
On 3 March 2021 Kocho Group Holdings Ltd received funding from the existing debt and equity providers of Kocho Holdings Ltd to acquire (via its wholly owned subsidiary, Kocho Midco Ltd) 100% of Kocho Holdings Ltd including all its subsidiaries. As part of this transaction, the Group acquired The Pryniantdau Ltd Group.
The trading entity of the Pryniantdau Ltd Group is ThirdSpace Ltd, a cyber security services provider to Enterprise clients, specialising in Identity Access Management, Customer Identity Access Management and Mobility and Security solutions. It provides a combination of bespoke solutions for clients as well as a fully managed service for clients’ security operations.
In April 2022, the Group officially rebranded to become Kocho, being Japanese for butterfly and a symbol of transformation. This represents an exciting new stage in the Group’s development, complementing the Group’s cloud transformation and managed services experience, with deep technical expertise in identity management and cyber security. The change in name to Kocho marks the final stage of the integration of companies acquired by Kocho Holdings Ltd.
The Group remains focused on supplementing its organic growth with selective, complementary acquisitions. As further demonstration of this strategy, on 30 September 2022, the Group acquired Mobliciti Holdings Ltd, a UK based managed services provider specialising in enterprise mobility, security and wireless connectivity solutions.
|
KOCHO GROUP HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Business review (continued)
This adds strategic mobile management and security capabilities to Kocho’s growing service portfolio, allowing customers of both organisations to benefit from an end-to-end range of best-in-class services that will further accelerate their digital transformation programmes. With a strong specialism in the legal sector, Mobliciti’s mobile security expertise complements and enhances Kocho’s existing services capabilities, which have been designed to enable mid-size and enterprise organisations to transform their business models through the adoption and round-the-clock management of cyber security, identity management and cloud-based services.
Following this key strategic acquisition, the Group now employs over 250 staff.
To support this growth, the Group opened a new office in Cardiff in September 2022, and in October 2022 the Group established an office in Cape Town, South Africa, via a newly incorporated subsidiary, Kocho SA (Pty) Ltd. The South African office enables the Group to attract local talent and create new, cost effective roles to support our DevOps and 24/7 client support, while increasing gross margin.
Non-organic growth (being growth obtained through acquisitions rather than increasing revenue within its current infrastructure) has also progressed following the end of the reporting year with the acquisition of Mobliciti Ltd on 30 September 2022 at which time the Group secured a Revolving Credit Facility from Santander to fund the ongoing working capital requirements of the enlarged group.
Principal risks and uncertainties
|
The management of the business and the execution of the Group’s strategy are subject to several risks. The process of risk acceptance and management is addressed through a framework of policies, procedures and internal control. Compliance with regulation, legal and ethical standards is a high priority of the Group’s executive management team.
The key business risks and uncertainties affecting the Group are considered to relate to poor economic conditions, the associated risk of non payment by customers and the business’ reliance on its valuable strategic partnership with Microsoft. These risks are partly mitigated inherently by the essential nature of the services provided by the Group and the stability provided by customer contracts that span 1-3 years. In addition, the risks are further managed by strong account management, a robust commercial approval process for new contracts and renewals of existing contracts, combined with strong credit control and vetting procedures.
Liquidity risk is managed by closely monitoring the cash flow generation of the Group and cash headroom, and this is monitored by the directors on a regular basis. Trade debtors are managed in respect of credit and there is a policy to minimise any risk by assessing new clients’ credit risk and monitoring credit worthiness. At the balance sheet date, there was no significant considerations of credit risk. The Group’s finance facilities are held in Sterling and the Group does not enter into any hedging arrangements.
Financial key performance indicators
|
The Group’s main key performance indicator is earnings before interest, taxation, depreciation, amortisation, and other costs which management have deemed to be non-recurring (adjusted EBITDA). In the year ended 31 March 2023, the Group achieved adjusted EBITDA of £1.9m (14 month period ended 31 March 2022: £5.3m), representing a reduction of 58% (14 month period ended 31 March 2022: 89% growth). This has been calculated after adding back expenses that are in the opinion of the directors, either exceptional costs/income or expenses/income that do not relate to the trade of the Group’s entities. These amounts are £2.1m (14 month period ended 31 March 2022: £1.0m) in the year ended 31 March 2023 and relate to M&A and integration costs, BGF monitoring fees and rebranding.
|
KOCHO GROUP HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The Group is experiencing high demand for its services and rapid growth through the acceleration of digital transformation and increased adoption of cloud related and cyber security services by its current and target clients. The directors expect this growth in demand to continue in the foreseeable future and therefore anticipate strong growth in future years.
This report was approved by the board and signed on its behalf by:
|
KOCHO GROUP HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The directors present their report and the audited consolidated financial statements for the year ended 31 March 2023.
The principal activity of the Group during the year was a provider of cloud transformation, cyber security, data analytics and IT managed services.
The principal activity of the Company is that of a holding company.
The prior period comparatives are for the 14 month period ended 31 March 2022, as the Company was incorporated on 29 January 2021 and therefore the prior period comparatives are not directly comparable with the current year.
The loss for the year, after taxation, amounted to £9,270,274 (14 month period ended 31 March 2022: loss of £5,467,825).
The directors do not recommend the payment of a dividend for the year (14 month period ended 31 March 2022: £nil).
The directors who served during the year and up to the date of this report were:
R Best (resigned 22 May 2023)
|
R Bradley (resigned 6 September 2023)
|
N B Coughlan (resigned 19 December 2023)
|
|
|
|
M I Nunny (resigned 28 February 2024)
|
R Gentleman (appointed 6 September 2023, resigned 31 October 2023)
|
R J Pugh (appointed 28 February 2024)
|
KOCHO GROUP HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Directors' responsibilities statement
|
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
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 the Group and to 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Group has net current assets and is cash generative on an operating basis and the detailed forecasts prepared by the directors confirm that it is expected to remain so over at least for the next 12 months from the date of FS signing.
The Group meets its day-to-day working capital requirements through its bank facilities and shareholder loans – these were refinanced on 19 December 2023 and are disclosed in note 19 and 20. The current economic conditions continue to create uncertainty over (a) the level of demand for the Group’s products, and (b) the availability of bank finance for the foreseeable future. The group’s forecasts and projections, taking account of a severe but plausible change in trading performance, show that the group should be able to operate within the level of its new facilities. The Group has sufficient cash headroom to support its projected growth and, together with ongoing discussions with the group's external backers to fund future growth, the directors forecasts and oversight mean they are confident that obligations can be met as they fall due. The Group therefore continues to adopt the going concern basis in preparing its financial statements.
|
KOCHO GROUP HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Economic impact of global events
|
UK businesses are currently facing many uncertainties such as the consequences of Brexit, Covid 19, environmental sustainability and geopolitical events such as the Russian invasion of Ukraine. These uncertainties have contributed to an environment where there exists a range of issues and risks, including inflation, rising interest rates, labour shortages, disrupted supply chains and new ways of working.
The directors have carried out an assessment of the potential impact of these uncertainties on the business, including the impact of mitigation measures, and have concluded that the greatest impact on the business is expected to be from the economic ripple effect on the global economy. The directors have taken account of these potential impacts in their going concern assessment.
The Company and the Group continues to work with its partners to minimise any impacts of these events and maximise the realisation of any opportunities they may provide to the business.
Qualifying third party indemnity provisions
|
The directors benefit from a qualifying indemnity provision in the form permitted by the Section 234 of the Companies Act 2006 in respect of certain third party actions against directors. No claim or notice of claim in respect of these indemnities has been received in the year. The qualifying indemnity provision was in force throughout the financial year and up to the date of approval of the Directors' Report.
Matters covered in the Group Strategic Report
|
As permitted by Paragraph 1A of Schedule 7 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 certain matters which are required to be disclosed in the Directors' Report have been omitted as they are included in the Strategic Report on pages 1 to 3. These matters relate to business review, principal risks and uncertainties and future developments.
Provision of information to auditor
|
Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the directors are aware, there is no relevant audit information of which the Company and the Group's auditor is unaware, and
∙the directors have taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditor is aware of that information.
|
KOCHO GROUP HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Post balance sheet events
|
On 19th December 2023, the Group successfully completed a refinancing arrangement that significantly improves its cash flow position. See notes 18-20 for more information.
The directors believe that this refinancing arrangement is beneficial for the Group, providing not only immediate liquidity but also the capacity to support future growth and investment opportunities.
As part of the event the Thirdspace Vendor loan note remained the same value, but previous owners of the loan were bought out by BGF and the existing directors.
A New loan note was issued by the directors for £3m, and with these funds the existing Santander loan was repaid for £1.5m.
A new Santander RCF facility was made available, allowing for £2m in funds to be drawn down at any point and, after deal fees extracted at source, this provided an additional £1,122,440 in cash available for the Group.
A new bank loan from Santander was provided for £1,000,000. and is covered by a fixed and floating charge covering all property and undertaking of the Group. The loans interest and portion of its capital are repayable quarterly until the final repayment date of 31 December 2025 and bears interest at 4.75% + SONIA per annum.
This post-year-end event does not affect the amounts reported in the financial statements for the year ended 31 March 2023, but it is considered significant for users' understanding of the financial position and liquidity of the Group as of the date of approval of the financial statements.
This report was approved by the board and signed on its behalf by:
|
KOCHO GROUP HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF KOCHO GROUP HOLDINGS LIMITED
Opinion
We have audited the financial statements of Kocho Group Holdings Limited (the ‘parent Company’) and its subsidiaries (the 'Group') for the year ended 31 March 2023 which comprise Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Changes in Equity, the Consolidated Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
∙give a true and fair view of the state of the Group's and the parent Company’s affairs as at 31 March 2023 and of the Group's loss for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
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's and the 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 the 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.
|
KOCHO GROUP HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF KOCHO GROUP HOLDINGS LIMITED
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 the 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.
Matters on which we are required to report by exception
In 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 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.
|
KOCHO GROUP HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF KOCHO GROUP HOLDINGS LIMITED
Responsibilities of Directors
As explained more fully in the Directors' Responsibilities Statement set out on page 5, 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 Group's and 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 intend either to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
Based on our understanding of the Group and the parent Company and their industry, we considered that non-compliance with the following laws and regulations might have a material effect on the financial statements: employment regulation, health and safety regulation and anti-money laundering regulation.
To help us identify instances of non-compliance with these laws and regulations, and in identifying and assessing the risks of material misstatement in respect to non-compliance, our procedures included, but were not limited to:
∙Inquiring of management and, where appropriate, those charged with governance, as to whether the Group and the parent Company is in compliance with laws and regulations, and discussing their policies and procedures regarding compliance with laws and regulations;
∙Inspecting correspondence, if any, with relevant licensing or regulatory authorities;
∙Communicating identified laws and regulations to the engagement team and remaining alert to any indications of non-compliance throughout our audit; and
∙Considering the risk of acts by the Group and the parent Company which were contrary to applicable laws and regulations, including fraud.
We also considered those laws and regulations that have a direct effect on the preparation of the financial statements, such as tax legislation, pension legislation, the Companies Act 2006.
|
KOCHO GROUP HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF KOCHO GROUP HOLDINGS LIMITED
In addition, we evaluated the directors' and management’s incentives and opportunities for fraudulent manipulation of the financial statements, including the risk of management override of controls, and determined that the principal risks related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates, in particular in relation to, revenue recognition (which we pinpointed to the cut-off assertion), and significant one-off or unusual transactions.
Our audit procedures in relation to fraud included but were not limited to:
∙Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;
∙Gaining an understanding of the internal controls established to mitigate risks related to fraud;
∙Discussing amongst the engagement team the risks of fraud; and
∙Addressing the risks of fraud through management override of controls by performing journal entry testing.
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of the audit 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.
Sameena Fonseca (Senior Statutory Auditor)
for and on behalf of Forvis Mazars LLP
Chartered Accountants and Statutory Auditor
30 Old Bailey
London
EC4M 7AU
Date: 21 August 2024
|
KOCHO GROUP HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
|
|
As restated*
Period ended
31 March
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest receivable and similar income
|
|
|
|
Interest payable and similar expenses
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the financial year/period
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
Total comprehensive income for the year/period
|
|
|
|
Loss for the year/period attributable to:
|
|
|
|
Owners of the parent Company
|
|
|
|
|
|
|
|
*See note 2.4 for the prior period restatement.
The Consolidated Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.
|
The notes on pages 20 to 56 form part of these financial statements.
|
|
KOCHO GROUP HOLDINGS LIMITED
REGISTERED NUMBER: 13168305
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debtors: amounts falling due within one year
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
Creditors: amounts falling due within one year
|
|
|
|
|
|
Net current (liabilities)/assets
|
|
|
|
|
|
Total assets less current liabilities
|
|
|
|
|
|
Creditors: amounts falling due after more than one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KOCHO GROUP HOLDINGS LIMITED
REGISTERED NUMBER: 13168305
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 MARCH 2023
*See note 2.4 for the prior period restatement.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 20 to 56 form part of these financial statements.
|
KOCHO GROUP HOLDINGS LIMITED
REGISTERED NUMBER: 13168305
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debtors: amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
Creditors: amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
Total assets less current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Creditors: amounts falling due after more than one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The profit after tax of the parent company for the year was £1,937,206 (14 month period ended 31 March 2022: profit after tax of £1,928,853).
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 20 to 56 form part of these financial statements.
|
KOCHO GROUP HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
|
|
|
Equity attributable to owners of parent Company
|
|
|
|
|
|
|
At incorporation on 29 January 2021
|
|
|
|
|
Comprehensive loss for the period
|
|
|
|
|
Loss for the period (as restated - note 2.4, 27)
|
|
|
|
|
Other comprehensive loss for the period
|
|
|
|
|
Total comprehensive loss for the period
|
|
|
|
|
Contributions by and distributions to owners
|
|
|
|
|
Shares issued during the period
|
|
|
|
|
Total transactions with owners
|
|
|
|
|
|
|
|
|
|
At 1 April 2022 (as previously stated)
|
|
|
|
|
Prior period adjustment (note 2.4, 27)
|
|
|
|
|
At 1 April 2022 (as restated)
|
|
|
|
|
Comprehensive loss for the year
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss for the year
|
|
|
|
|
Total comprehensive loss for the year
|
|
|
|
|
Total transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 20 to 56 form part of these financial statements.
|
|
KOCHO GROUP HOLDINGS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
|
|
|
|
|
|
|
|
At incorporation on 29 January 2021
|
|
|
|
Comprehensive income for the period
|
|
|
|
|
|
|
|
Other comprehensive income for the period
|
|
|
|
Total comprehensive income for the period
|
|
|
|
Contributions by and distributions to owners
|
|
|
|
Shares issued during the period
|
|
|
|
Total transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income for the year
|
|
|
|
|
|
|
|
Other comprehensive income for the year
|
|
|
|
Total comprehensive income for the year
|
|
|
|
Total transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 20 to 56 form part of these financial statements.
|
|
KOCHO GROUP HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
Cash flows from operating activities
|
|
|
Loss for the financial year/period
|
|
|
|
|
|
Amortisation of intangible assets (restated see note 12)
|
|
|
Depreciation of tangible fixed assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporation tax received/(paid)
|
|
|
Net cash generated from operating activities
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
Purchase of intangible assets
|
|
|
Purchase of tangible fixed assets
|
|
|
|
|
|
Consideration paid net of cash received as part of acquisition
|
|
|
Net cash used in investing activities
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
Repayment of finance leases
|
|
|
|
|
|
|
|
|
|
|
|
Net cash from financing activities
|
|
|
|
KOCHO GROUP HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
|
|
|
Net (decrease)/increase in cash and cash equivalents
|
|
|
Cash and cash equivalents at beginning of year
|
|
|
Cash and cash equivalents at the end of year/period
|
|
|
Cash and cash equivalents at the end of year/period comprise:
|
|
|
|
|
|
|
|
|
|
|
|
*See note 2.4 for the prior period restatement.
The notes on pages 20 to 56 form part of these financial statements.
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Kocho Group Holdings Limited (formerly known as Challenger 55 Limited) is a private company limited by shares incorporated in England and Wales. The registered office is Waverley House 4th Floor, 7-12 Noel Street, London, England, W1F 8GQ.
The principal activity of the Group during the year was a provider of cloud transformation, cyber security, data analytics and IT managed services.
The principal activity of the Company is that of a holding company.
The prior period comparatives are for the 14 month period ended 31 March 2022, as the Company was incorporated on 29 January 2021.
2.Accounting policies
|
|
Basis of preparation of financial statements
|
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The Company is a qualifying entity for the purposes of FRS 102 and has elected to take the exemption under FRS 102, para 1.12 (b) not to present the Company Statement of Cash Flows.
The financial statements have been presented in Pounds Sterling and are rounded to the nearest pound as this is the currency of the primary economic environment in which the Group operates.
The following principal accounting policies have been applied:
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
In accordance with the transitional exemption available in FRS 102, the Group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 29 January 2021.
Where the group has established employee benefit trusts (‘EBT’) or employee share ownership plans (‘ESOP’) and is the sponsoring entity, notwithstanding the legal duties of the trustees, the group considers that it has ‘de facto’ control of such entities. Such arrangements are accounted for as assets and liabilities of the sponsoring company and included in the consolidated financial statements as appropriate. The company’s equity instruments held by the EBT or ESOP are accounted for as if they were the company’s own equity and are treated as treasury shares. No gain or loss is recognised in profit or loss or other comprehensive income on the purchase, sale or cancellation of the company’s own equity held by either the EBT or ESOP.
The Group has net current assets and is cash generative on an operating basis and the detailed forecasts prepared by the directors confirm that it is expected to remain so over at least for the next 12 months from the date of FS signing.
The Group meets its day-to-day working capital requirements through its bank facilities and shareholder loans – these were refinanced in December 2023 and are disclosed in note 19 and 20. The current economic conditions continue to create uncertainty over (a) the level of demand for the Group’s products, and (b) the availability of bank finance for the foreseeable future. The group’s forecasts and projections, taking account of a severe but plausible change in trading performance, show that the group should be able to operate within the level of its new facilities. The Group has sufficient cash headroom to support its projected growth and, together with ongoing discussions with the group's external backers to fund future growth, the directors forecasts and oversight mean they are confident that obligations can be met as they fall due. The Group therefore continues to adopt the going concern basis in preparing its financial statements.
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
During the year ended 31 March 2023, the Company reassessed it’s application of business combination and the purchase method of accounting applied in 2022. This exercise identified that the fair value of assets and liabilities acquired needed to be revised.
As a result, the Company has made the following adjustments (see note 27).
1. Restatement of Goodwill and recognition of Customer Contracts
Goodwill of £53,964,742 was recognized on acquisition in 2022. This has now been restated to £53,934,680 million as a result of;
I. Changes to the book value of net assets acquired and total purchase consideration.
II. Recognised customer contracts of £0.08 million as a separate intangible asset as these meet the intangible assets recognition criteria of FRS 102 and are separable and arise from contractual or other legal rights. A related deferred tax liability was also recognised.
2. Disclosure of Restatement
This adjustment has been retrospectively applied to the financial statements of the comparative period presented in these financial statements. Comparative figures for the prior period have been restated within the Intangible note 12.
The adjustment resulting from management's assessment has been made in the financial statements for the year ended 31 March 2023, with restatements applied retrospectively as required by FRS 102. Management has reviewed the impact of this adjustment and concluded that it enhances the accuracy and reliability of the Company's financial reporting.
Refer to note 12 for the restated intangible assets and note 27 for the restated business combinations note.
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
|
|
Foreign currency translation
|
Functional and presentation currency
The Company's functional and presentation currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated Statement of Comprehensive Income except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated Statement of Comprehensive Income within 'finance income or costs'. All other foreign exchange gains and losses are presented in the Consolidated Statement of Comprehensive Income within 'administrative expenses'.
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
The Group provides 3 different types of services:
Managed Services
Managed Services are sold as an annual (or longer) contract, and revenues are spread over the life of the contract and recognised in equal monthly amounts. Where the contract also provides for ad hoc services to be provided as and when they are required, the revenue arising on such services is recognised in the period the service is provided, based on the number of days worked in the month and the daily rates agreed with the customer.
Software
Software is recognised either in full on delivery of software, where such software is provided on the basis of a perpetual licence and there are no further conditions of supply beyond delivery, or where the software is sold on a subscription basis, revenue is spread over the life of the subscription and recognised in equal monthly amounts.
Professional Services
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent it is probable that the expenses will be recovered.
|
|
Operating leases: the Group as lessee
|
Rentals paid under operating leases are charged to the Consolidated Statement of Comprehensive Income on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
|
|
Leased assets: the Group as lessee
|
Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the Company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the Consolidated Statement of Comprehensive Income so as to produce a constant periodic rate of charge on the net obligation outstanding in each year.
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.
|
|
Interest receivable and similar income
|
Interest receivable and similar income is recognised in the Consolidated Statement of Comprehensive Income using the effective interest method.
|
|
Interest payable and similar expenses
|
Interest payable and similar expenses are charged to the Consolidated Statement of Comprehensive Income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are capitalised to loans in the Statement of Financial Position.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in the Consolidated Statement of Comprehensive Income when they fall due. Amounts not paid are shown in other creditors as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Group in independently administered funds.
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
|
|
Current and deferred taxation
|
The tax expense for the year comprises current and deferred tax. Tax is recognised in the Consolidated Statement of Comprehensive Income except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company and the Group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
|
|
One off/exceptional items
|
The Group classifies certain one-off charges or credits that have a material impact on the Group’s financial results as ‘exceptional items’. These are disclosed separately to provide further understanding of the financial performance of the Group and relate to M&A and integration costs, BGF monitoring fees, rebranding, etc.
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer's interest in the fair value of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the Statement of Comprehensive Income over its useful economic life, which is ten years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
Other intangible assets
Recognition of intangible assets separately from goodwill is only required where they meet the recognition criteria, are separable and arise from contractual or other legal rights.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
Amortisation is charged to administrative expenses in the Consolidated Statement of Comprehensive Income.
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Business combinations are accounted for by applying the purchase method.
The cost of a business combination is the fair value of the consideration given, liabilities incurred or assumed and of equity instruments issued plus the costs directly attributable to the business combination. Where control is achieved in stages the cost is the consideration at the date of each transaction.
Contingent consideration is initially recognised at an estimated amount where the consideration is probable and can be measured reliably. Where (i) the contingent consideration is not considered probable or cannot be reliably measured but subsequently becomes probable and measurable or (ii) contingent consideration previously measured is adjusted, the amounts are recognised as an adjustment to the cost of the business combination.
On acquisition of a business, fair values are attributed to the identifiable assets, liabilities and contingent liabilities unless the fair value cannot be measured reliably, in which case the value is incorporated in goodwill. Intangible assets are only recognised separately from goodwill where they are separable and arise from contractual or other legal rights. Where the fair value of contingent liabilities cannot be reliably measured they are disclosed on the same basis as other contingent liabilities.
Goodwill recognised represents the excess of the fair value and directly attributable costs of the purchase consideration over the fair values to the group’s interest in the identifiable net assets, liabilities and contingent liabilities acquired.
On acquisition, goodwill is allocated to cash-generating units (‘CGU’s’) that are expected to benefit from the combination. Goodwill is amortised over its expected useful life which is estimated to be ten years. Goodwill is assessed for impairment when there are indicators of impairment and any impairment is charged to the income statement. No reversals of impairment are recognised
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
|
|
Tangible fixed assets (continued)
|
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
|
|
|
|
Land and buildings leasehold
|
|
Over term of lease to break date of 5 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Consolidated Statement of Comprehensive Income.
Depreciation is charged to administrative expenses in the Consolidated Statement of Comprehensive Income.
|
|
Impairment of non financial 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 the Consolidated Statement of Comprehensive Income, 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 the Consolidated Statement of Comprehensive Income, 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.
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Investments in subsidiaries are measured at cost less accumulated impairment.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in the Consolidated Statement of Comprehensive Income.
|
|
Debtors: amounts falling due within one year
|
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
|
|
Cash and cash equivalents
|
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the Consolidated Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
|
|
Financial instruments (continued)
|
case of a small company, or a public benefit entity concessionary loan.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated Statement of Comprehensive Income.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the reporting date.
Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is an 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.
Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the Group.
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
Judgements in applying accounting policies and key sources of estimation uncertainty
|
In applying the Group's accounting policies, the directors are required to make judgements, estimates and assumptions in determining the carrying amounts of assets and liabilities. The directors' judgements, estimates and assumptions are based on the best and most reliable evidence available at the time when the decisions are made, and are based on historical experience and other factors that are considered to be applicable. Due to the inherent subjectivity involved in making such judgements, estimates and assumptions, the actual results and outcomes may differ.
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, if the revision affects only that period, or in the year of the revision and future years, if the revision affects both current and future periods.
3.1 Critical judgements in applying the company's accounting policies
The critical judgements that the directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the statutory financial statements are discussed below.
(i) Assessing indicators of impairment of investments and goodwill
Annually, the Group considers whether intangible assets and/or goodwill are impaired. Where an indication of impairment is identified the estimation of recoverable value requires estimation of the recoverable value of the cash– generating units (CGUs). This requires estimation of the cash flows from the CGUs and also selection of appropriate discount rates in order to calculate the net present value of those cash flows. The recoverable amount of the CGU is a source of significant estimation uncertainty and determining this involves the use of significant assumptions.
In assessing whether there have been any indicators of impairment of investments and goodwill, the directors have considered both external and internal sources of information such as market conditions and future performance of the subsidiaries. There have been indicators of impairment but no impairment identified during the current financial year.
(ii) Treatment of preference shares classified as equity
Preference shares have been analysed carefully to determine if they contain features that cause the instrument not to meet the definition of an equity instrument. The classification of preference shares depends on the terms and rights attached to the shares with regards to redemption and dividends. Preference shares required to be converted into a fixed number of ordinary shares on a fixed date, or on the occurrence of an event that is certain to occur, should be classified as equity.
The absence of the terms stated below indicates that the preference shares may be classified as equity:
∙they carry fixed dividend rights where there is a contractual obligation to deliver cash
∙they provide for mandatory redemption by the issuer for a fixed or determinable amount at a fixed or determinable future date
∙they give the holder the right to require the issuer to redeem the instrument at or after a particular date for a fixed or determinable amount.
3.2 Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
3.Judgements in applying accounting policies (continued)
(ii) Recoverability of debtors
The Company establishes a provision for debtors that are estimated not to be recoverable. When assessing recoverability the directors have considered factors such as the aging of the debtors, past experience of recoverability, and the credit profile of individual or groups of customers.
|
|
|
An analysis of turnover by class of business is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Analysis of turnover by country of destination:
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
|
|
The operating loss is stated after charging:
|
|
|
|
|
|
|
As restated*
Period ended
31 March
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of tangible fixed assets
|
|
|
|
Amortisation of intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of trade receivables
|
|
|
|
*See note 2.4 for the prior period restatement.
|
|
Fees payable to the group's auditor for the audit of the Group's annual financial statements
|
|
|
|
Fees payable to the Group's auditor in respect of:
|
|
|
|
|
|
|
|
|
|
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
|
|
Staff costs, including directors' remuneration, were as follows:
|
|
|
|
|
|
|
|
|
|
Period
ended
31 March
2022
|
|
Period
ended
31 March
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of defined contribution scheme
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The average monthly number of employees, including the directors, during the year/period was as follows:
|
|
During the year and the 14 month period ended 31 March 2022, all directors were remunerated by other group companies for their services to the Group as a whole.
The Company has no other employees (14 month period ended 31 March 2022: nil).
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
|
|
|
|
Group contributions to defined contribution pension schemes
|
|
|
|
|
|
|
|
|
|
|
|
During the year retirement benefits were accruing to 5 directors (14 month period ended 31 March 2022: 3) in respect of defined contribution pension schemes.
|
|
The highest paid director received remuneration of £184,800(14 month period ended 31 March 2022: £188,800).
|
|
The value of the Group's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £4,675 (14 month period ended 31 March 2022: £nil).
|
|
The Key Management Personnel are deemed to be the directors.
|
|
Interest receivable and similar income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other interest receivable
|
|
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
Interest payable and similar expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loan interest payable
|
|
|
|
Finance leases and hire purchase contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As restated*
Period ended
31 March
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax on losses for the year/period
|
|
|
|
Adjustments in respect of previous periods
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Origination and reversal of timing differences
|
|
|
|
|
|
|
|
|
|
|
|
Total tax (credit)/charge for the year/period
|
|
|
|
*See note 2.4 for the prior period restatement.
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
11.Taxation (continued)
|
Factors affecting tax (credit)/charge for the year/period
|
|
The tax assessed for the year is higher than (14 month period ended 31 March 2022: higher than) the standard rate of corporation tax in the UK of19% (14 month period ended 31 March 2022: 19%). The differences are explained below:
|
|
|
|
|
|
|
As restated*
Period ended
31 March
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before tax multiplied by standard rate of corporation tax in the UK of 19% (14 month period ended 31 March 2022: 19%)
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to tax charge in respect of prior periods of group companies
|
|
|
|
Deferred tax asset not recognised
|
|
|
|
|
|
|
|
Total tax (credit)/charge for the year/period
|
|
|
|
*See note 2.4 for the prior period restatement.
|
|
Factors that may affect future tax charges
|
The UK Government announced in the 2021 budget that from 1 April 2023, the rate of corporation tax in the United Kingdom have increased from 19% to 25%. Companies with profits of £50,000 or less will continue to be taxed at 19%, which is a new small profits rate. Where taxable profits are between £50,000 and £250,000, the higher 25% rate will apply but with a marginal relief applying as profits increase.
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2022 (as previously stated)
|
|
|
|
|
|
|
Prior period adjustment
(Note 2.4, 27)
|
|
|
|
|
|
|
At 1 April 2022 (as restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2022 (as restated)
|
|
|
|
|
|
|
Prior period adjustment
(Note 2.4, 27)
|
|
|
|
|
|
|
At 1 April 2022 (as restated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2022 (as restated)
|
|
|
|
|
|
|
Goodwill additions of £3,975,430 (2022: £53,934,680) and customer contract additions of £397,000 (2022: £80,000) relate to the purchase of Mobliciti Holdings Limited (please see note 27).
The Company has no intangible assets (2022: £nil).
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
|
Land and building Leasehold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The net book value of land and buildings may be further analysed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
13.Tangible fixed assets (continued)
|
Finance leases
The net book value of other tangible fixed assets includes £53,974 (2022: £131,076) in respect of assets held under finance leases or hire purchase contracts. The depreciation charge in respect of such assets amounted to £77,102 for the year ended 31 March 2023 (14 month period ended 31 March 2022: £7).
The Company has no tangible fixed assets.
|
|
|
Investments in subsidiary companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the year there was a group acquisition of Mobliciti Holdings Limited and Kocho SA (Pty) Limited. Please refer to note 28.
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
|
|
The following were subsidiary undertakings of the Company:
|
|
|
|
|
|
|
|
|
Waverley House 4th Floor, 7-12 Noel Street, London, Westminster, United Kingdom, W1F 8GQ
|
|
|
|
|
|
Waverley House 4th Floor, 7-12 Noel Street, London, Westminster, England, W1F 8GQ
|
|
|
|
|
|
Waverly House 4th Floor, 7-12 Noel Street, London, England, W1F 8GQ
|
|
|
|
|
The Internet Group Limited*
|
Waverly House 4th Floor, 7-12 Noel Street, London, England, W1F 8GQ
|
|
|
|
|
Internet Adventure Limited*
|
Waverly House 4th Floor, 7-12 Noel Street, London, England, W1F 8GQ
|
|
|
|
|
|
Waverly House 4th Floor, 7-12 Noel Street, London, England, W1F 8GQ
|
|
|
|
|
|
Waverly House 4th Floor, 7-12 Noel Street, London, England, W1F 8GQ
|
|
|
|
|
Managing Maintenance Resources Holdings Limited*
|
Waverly House 4th Floor, 7-12 Noel Street, London, England, W1F 8GQ
|
|
|
|
|
|
Waverly House 4th Floor, 7-12 Noel Street, London, England, W1F 8GQ
|
Information Technology managers
|
|
|
|
|
Waverly House 4th Floor, 7-12 Noel Street, London, England, W1F 8GQ
|
|
|
|
|
|
Waverly House 4th Floor, 7-12 Noel Street, London, England, W1F 8GQ
|
|
|
|
|
|
Waverly House 4th Floor, 7-12 Noel Street, London, England, W1F 8GQ
|
|
|
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Subsidiary undertakings (continued)
|
|
Waverly House 4th Floor, 7-12 Noel Street, London, England, W1F 8GQ
|
|
|
|
|
Mobliciti Holdings Limited*
|
Waverly House 4th Floor, 7-12 Noel Street, London, England, W1F 8GQ
|
|
|
|
|
|
Waverly House 4th Floor, 7-12 Noel Street, London, England, W1F 8GQ
|
|
|
|
|
|
Waterford House, No. 2 Waterford Place, Century City, Cape Town, South Africa, 7441
|
Information technology managers
|
|
|
|
*These entities are held indirectly by Kocho Group Holdings Limited.
Kocho Group Holdings Limited provides parental guarantee to all its subsidiaries (excluding Kocho Group Limited and Kocho SA (Pty) Limited) where the subsidiaries are entitled to an exemption from audit under section 479A of the Companies Act 2006 and members have not required the those subsidiaries to obtain an audit for the year in question in accordance with section 476 of the Companies Act 2006.
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Subsidiary undertakings (continued)
|
|
The aggregate of the share capital and reserves as at 31 March 2023 and the profit or loss for the year ended on that date for the subsidiary undertakings were as follows:
|
|
|
Aggregate of share capital and reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Internet Group Limited
|
|
|
|
Internet Adventure Limited
|
|
|
|
|
|
|
|
|
|
|
|
Managing Maintenance Resources Holdings Limited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobliciti Holdings Limited*
|
|
|
|
|
|
|
|
|
|
|
|
*The profit/(loss) presented represents the post acquisition results only.
|
|
Work in progress (goods to be sold)
|
|
|
|
|
|
|
|
The difference between purchase price or production cost of stocks and their replacement cost is not material.
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
Debtors: amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts owed by group undertakings
|
|
|
|
|
|
|
|
|
|
|
|
Prepayments and accrued income
|
|
|
|
|
|
Deferred taxation (note 23)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade debtors are stated net of provisions of £327,827 (2022: £153,145).
Amounts owed by group undertakings includes loans which are unsecured, interest bearing and have no fixed repayment date.
*See note 2.4 for the prior period restatement.
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
Creditors: Amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank loans (note 19 and 20)
|
|
|
|
|
|
Other loans (note 19 and 20)
|
|
|
|
|
|
|
|
|
|
|
|
Amounts owed to group undertakings
|
|
|
|
|
|
|
|
|
|
|
|
Other taxation and social security
|
|
|
|
|
|
Obligations under finance lease and hire purchase contracts
|
|
|
|
|
|
|
|
|
|
|
|
Accruals and deferred income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts owed to group undertakings includes loans which are unsecured, interest free and have no fixed repayment date.
Santander UK plc holds a fixed and floating charge covering all the property or undertaking of the Company. The charge also contains a negative pledge.
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
Creditors: Amounts falling due after more than one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations under finance leases and hire purchase contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in bank loans is an amount of £3,242,112 (2022: £4,131,452). The balance is relating to a loan provided by Santander UK plc, and is covered by a fixed and floating charge covering all property and undertaking of the Group. The loans are repayable quarterly until the repayment date of 31 March 2026 and bears interest at 4.0% + SONIA (2022: 4.0% + SONIA) per annum.
Included in bank loans is an amount of £8,400,000 (2022: £8,400,000). The balance is relating to a loan provided by Santander UK plc, and is covered by a fixed and floating charge covering all property and undertaking of the Company. The loans are fully repayable on the repayment date of 31 March 2026 and bears interest at 4.25% + SONIA (2022: 4.25% + SONIA) per annum for tranche B.
Also included within the other loans is the revolving credit facility of £3,500,000 (14 month period ended 31 March 2022: £nil) that is provided by Silverstone and is secured over the assets of the Group. The facility is fully repayable on 3 February 2026 and bears interest at 1.40%.
The Group has entered into a deed of surety with Santander UK plc for the payment and discharge over the senior debt facility of Kocho Holdings Limited to Santander UK plc amounting to £14 million (2022: £14 million) with an expiration date of 31 March 2026.
Included within the other loans are amounts of £24,808,148 due under the terms of the loan note agreements. The loan notes represent amounts due under the terms of the loan note agreements. The loan notes are unsecured, bear interest at the rate of 2% (2022: 2%) per quarter and will compound on each interest payment date. The repayments are due in four equal instalments on 30 June 2027, 31 December 2027, 30 June 2028 and 31 December 2028. Included within the loan notes at year end is £208,081 (2022: £285,520) that relates to prepayment of deal fees and the loan balance above includes accrued interest of £3,853,998 (2022: £1,881,424). During the year ended 31 March 2023, the Company accrued interest of £2,064,903 (14 month period ended 31 March 2022: £1,881,424). As part of the refinancing in December 2023, the Thirdspace Vendor loan note remained the same value and term, but previous owners of the loan were bought out by BGF and the existing directors.
Included within the other loans are amounts of £1,140,578 (2022: £440,000) due under the terms of the vendor loan note agreements. The loan notes are unsecured, bear interest at 8% (2022: 8%) interest annually and repayment is due on 3 March 2024. Accrued interest of £143,672 (14 month period ended 31 March 2022: £117,035) for the year ended 31 March 2023 is included.
On 19th December 2023, the Group successfully completed a refinancing arrangement that significantly improves its cash flow position. The directors believe that this refinancing arrangement is beneficial for the Group, providing not only immediate liquidity but also the capacity to support future growth and investment opportunities.
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
Creditors: Amounts falling due after more than one year (continued)
|
In addition to the above, a new shareholder loan was obtained for £3,000,000, bearing interest of 12% annually that fully rolls up with the balance due 50% on 31 December 2026 and 50% due on 31 December 2027. With these funds, the existing Santander loan was repaid by £1.5m.
A new bank loan from Santander was provided for £1,000,000. and is covered by a fixed and floating charge covering all property and undertaking of the Group. The loans interest and portion of its capital are repayable quarterly until the final repayment date of 31 December 2025 and bears interest at 4.75% + SONIA per annum.
A new Santander loan revolving credit facility was made available, allowing for £2m in funds to be drawn down.
|
Amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due 2-5 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due after more than 5 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2023, the group breached a loan covenant with Santander, resulting in the bank loans being classified as amounts falling due within one year. A waiver letter was subsequently obtained from Santander waiving the immediate settlement of the loan.
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
Hire purchase and finance leases
|
|
Minimum lease payments under hire purchase fall due as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company has no hire purchase and finance leases (2022: £nil).
|
|
|
|
|
|
|
|
Financial assets measured at amortised cost
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at amortised cost
|
|
|
|
|
|
Financial assets that are debt instruments measured at amortised cost comprise cash at bank and in hand, amounts owed by group undertakings, trade debtors and other debtors.
|
|
Financial liabilities measured at amortised cost comprise bank overdrafts, other loans, bank loans, trade creditors, other creditors, accruals and amounts owed to group undertakings.
*See note 2.4 for the prior period restatement.
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
|
|
As restated*
31 March 2022
|
|
|
|
|
|
|
|
|
|
At beginning of year/period
|
|
|
|
Charged to the Consolidated Statement of Comprehensive Income
|
|
|
|
Arising on business combinations
|
|
|
|
|
|
|
|
*See note 2.4 for the prior period restatement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At beginning of year/period
|
|
|
|
Charged to the Consolidated Statement of Comprehensive Income
|
|
|
|
|
|
|
|
The deferred taxation balance is made up as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated capital allowances
|
|
|
|
|
|
Tax losses carried forward
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
|
Allotted, called up and fully paid
|
|
|
|
|
|
|
|
|
|
21,514,074 (2022: 21,514,074) Preference shares of £1.00 each
|
|
|
|
|
39,519 (2022: 39,519) A Ordinary shares of £1.00 each
|
|
|
|
|
2,326 (2022: 2,326) B Ordinary shares of £1.00 each
|
|
|
|
|
2,000 (2022: 3,336) C Ordinary shares of £1.00 each
|
|
|
|
|
24,141 (2022: 22,805) D Ordinary shares of £1.00 each
|
|
|
|
|
20,000 (2022: 20,000) E Ordinary shares of £0.0001each
|
|
|
|
|
32,014 (2022: 32,014) Ordinary shares of £1.00 each
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All classes of ordinary shares entitle each holder to one voting right and no right to fixed income.
The preference shares do not entitle the holder to receive notice, attend, speak or vote at any general meetings and do not entitle the holder to receive or vote on any written resolutions. The shares are entitled to a preference dividend of 2% per quarter. Each share is entitled to its issue price plus any unpaid accrued interest on a return of capital, liquidation, capital reduction of winding up of the Company, in accordance with article 3.2 of the Company's article of association.
On 21 September 2022 the Company cancelled 1,336 C Ordinary shares and issued 1,336 D Ordinary shares with a nominal value of £1 at par each.
The Group has an Employee Benefit Trust ("EBT") in place, of which, Georgios Georgiou and Desmond Lekerman are trustees. The total number of shares held as at 31 March 2023 was 3,981 £1 ordinary D shares (2022: 4,305 £1 ordinary D shares).
|
Profit and loss account
This reserve represents the cumulative profits and losses.
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
|
Consolidated analysis of net debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On acquisition of subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
Prior period business combinations
|
See note 2.4 for explanation of prior period adjustment
Restatement of Goodwill and recognition of Customer Contracts
Goodwill has now been restated to £53,934,680 million as a result of:
I. Changes to the book value of net assets acquired and total purchase consideration. The company has increased the purchase consideration by £12.4 million (to gross up to recognize external debt) and reduced the book value of creditors due within one year by £11.3m and debtors £1.1m resulting in a decrease of goodwill by £30,062.
II. Recognised customer contracts of £80,000 as a separate intangible asset as these meet the recognition criteria of FRS 102 and are separable or arise from contractual or other legal rights.
Amortisation of goodwill remains at 10 years and customer contracts will be amortised over 1-3 years. Consequently amortisation charged in the 14 month period ended 31 March 2022 is £5,842,923 for goodwill (restated from £5,846,180) and for customer contracts £28,889. Deferred tax will also be amortised in line with customer contract.
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
27.Prior period business combinations (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due after more than 1 year
|
|
|
|
|
|
|
|
|
|
Total identifiable net assets/(liabilities)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total purchase consideration
|
|
|
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Goodwill relates to the acquisition of Mobliciti Holdings Limited, including its wholly owned subsidiary, Mobliciti Ltd, on 29 September 2022. The Group acquired 100% of the voting equity and share capital of Mobliciti Holdings Limited, for a consideration of £5,550,000.
|
Recognised amounts of identifiable assets acquired and liabilities assumed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible - customer contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepayments and other assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Identifiable net assets
|
|
|
|
|
|
|
|
Total purchase consideration
|
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
28.Business combinations (continued)
|
The results of Mobliciti Holdings Limited and Mobliciti Ltd combined since acquisition are as follows
|
|
|
|
|
Current period since acquisition
|
|
|
|
|
|
|
|
|
|
Profit for the period since acquisition
|
|
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £453,925 (14 month period ended 31 March 2022: £416,614). Contributions totalling £98,173 (2022: £18,567) were payable to the fund at the Statement of Financial Position date.
|
Commitments under operating leases
|
|
At 31 March 2023 the Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Later than 1 year and not later than 5 years
|
|
|
|
|
|
|
|
|
|
|
|
The Company had no commitments under non-cancellable operating leases at the reporting date.
|
|
Related party transactions
|
|
The Group has taken advantage of the exemption permitted by section 33 Related party disclosure, not to provide disclosures of transactions entered into with other wholly owned members of the Group.
During the year ended 31 March 2023 the Group paid £50,803 (14 month period ended 31 March 2022: £54,636) for monitoring fees to Business Growth Fund, a shareholder of Kocho Group Holdings Ltd, the ultimate controlling party. The amounts outstanding as at the year end was £49,664 (2022: £nil).
|
|
KOCHO GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
|
Post balance sheet events
|
On 19th December 2023, the Group successfully completed a refinancing arrangement that significantly improves its cash flow position. See notes 18-20 for more information.
The directors believe that this refinancing arrangement is beneficial for the Group, providing not only immediate liquidity but also the capacity to support future growth and investment opportunities.
This post-year-end event does not affect the amounts reported in the financial statements for the year ended 31 March 2023, but it is considered significant for users' understanding of the financial position and liquidity of the Group as of the date of approval of the financial statements.
The ultimate controlling parties are Bgf Gp Limited, by virtue of their 39.52% holding in Kocho Group Holdings Limited, and D Lekerman. The registered office of Bgf Gp Limited is 13-15 York Buildings, London, United Kingdom, WC2N 6JU.
|