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REGISTERED NUMBER: 12195761 (England and Wales)












GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

FOR

SMARTSOURCING GROUP LIMITED

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)






CONTENTS OF THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023




Page

Company Information 1

Group Strategic Report 2

Report of the Directors 5

Report of the Independent Auditors 6

Consolidated Income Statement 9

Consolidated Other Comprehensive Income 10

Consolidated Balance Sheet 11

Company Balance Sheet 12

Consolidated Statement of Changes in Equity 13

Company Statement of Changes in Equity 14

Consolidated Cash Flow Statement 15

Notes to the Consolidated Cash Flow Statement 16

Notes to the Consolidated Financial Statements 17


SMARTSOURCING GROUP LIMITED

COMPANY INFORMATION
FOR THE YEAR ENDED 31 DECEMBER 2023







DIRECTORS: A R Martin
Ms J M Hall





REGISTERED OFFICE: Tanglewood
90-92 Vicarage Hill
South Benfleet
Essex
SS7 1PE





REGISTERED NUMBER: 12195761 (England and Wales)





AUDITORS: Goldwyns Limited
Statutory Auditors and Chartered Accountants
Rutland House
90-92 Baxter Avenue
Southend on Sea
Essex
SS2 6HZ

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

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

SmartSourcing Group Limited was incorporated as a holding company to enable the existing SmartSourcing management team to buy out the shareholders not actively involved in the business. The directors believe that this will enable the business to further motivate and retain its key personnel to build on the historic success.

On 6 March 2020 the company acquired the entire share capital of SmartSourcing Limited in exchange for a consideration comprising ordinary shares to the remaining shareholders, and cash and redeemable preference shares to the outgoing shareholders.

The redeemable preference shares comprise 2,839,898 non-voting shares of £1 each with a fixed 1% dividend coupon. They are capable of earlier redemptions at the Chairman's (A R Martin) discretion but no later than 6 March 2030. They also could not be redeemed until the company's loan facility with HSBC Plc had been paid in full.

During the year ended 31 December 2023, the company has continued its preference share obligations with three quarterly repayments during the period, with a view to early redemption.

The group enjoys very strong relationships with its clients and service providers. It intends to continue to manage its affairs on a prudent basis and to preserve a strong asset base.

REVIEW OF BUSINESS
The company is a pure holding company that does not trade on its own account. It has a single trading subsidiary, SmartSourcing Limited, and hence these comments reflect the trading activities of SmartSourcing Limited.

For accounting purposes, these accounts include consolidated accounts for the group. These reflect various accounting adjustments that are required by accounting standards that do not impact on the cash that is generated by the business.

In summary, the group results for the year are as follows:

Turnover £24,080,364

Operating profit of the subsidiary £181,242
Parent company costs (£80,290 )
Goodwill amortisation (£284,661 )
Consolidated loss before tax (£183,711 )

The UK experienced a continuation of the economic downturn of 2023 impacting both public and private sector. The market has lacked confidence both economically and politically, stifling growth and opportunity in both the permanent and contract areas of the recruitment sector. Many client organisations have resorted to reducing headcount to cut costs or meet reduced budgets.

Political instability with the expectation of an imminent election in 2024 had a severe impact on public sector clients, resulting in limited opportunity for new project work. Many projects were cut or reduced and 2023 saw more contractors on the market, with rates reducing as supply exceeded demand.

Clients in the permanent sector this year have more heavily relied on their internal recruiters during 2023 as a preference over agency support, minimising external spend. This has stifled opportunity.

Although demand for consultancy services was also reduced, there were some opportunities for long term assignments during 2023.

Our strategy is to continue to expand our client base and look to grow both agency and consultancy business as the market picks up during 2024 and 2025. Compared to our competitors our reputation in the market remains strong and we aim to excel in our service levels, supplying high quality contract and permanent resource in both the public and private sector. Additionally, we review all current business costs to ensure spending can be reduced wherever possible, without adverse impact on our service or business.

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023


SmartSourcing have continued to be successful on the major public sector frameworks such as Gcloud, NCS and DSP and remain a top performing supplier to public sector, well positioned once growth returns.

SHARE CAPITAL AND SHAREHOLDERS' FUNDS
As explained above, the management buyout was largely financed by issuing preference shares to the outgoing shareholders. Whilst the company anticipates that it will be in a position to redeem the preference shares over the next few years, it has limited obligations to do so.

As can be seen from the balance sheet on page 11, Shareholders' funds are reported at a figure of £1,351,413, whilst the preference shares have to be included within creditors for accounting purposes. When the preference shares and resultant reserves are taken into account, the total funds available to the ordinary and preference shareholders aggregate to £2,831,712.

PRINCIPAL RISKS AND UNCERTAINTIES
The management of the business and the successful execution of the group's strategy are subject to a number of key risks:
- political uncertainty
- economic downturn;
- high interest rates; and
- IR35 remains a risk to the industry as legislation targets the fee payer in the event of an investigation.

SECTION 172(1) STATEMENT
SmartSourcing Group Limited: Stakeholder engagement
As the board of directors at SmartSourcing Group Limited we have a legal responsibility under section 172 of the Companies Act 2006 to act in the way we consider in good faith to promote the group's success for the benefit of its members as a whole and to have regard to the long-term effect of our decisions on the group and its stakeholders. This statement addresses the ways in which we as a board support this responsibility.

Promoting the company's success for its members
SmartSourcing Limited, founded in 2002, set up as a dynamic and innovative recruitment agency specialising in the provision of freelance contractors, independent consultants, fixed term and permanent resource across ICT, digital, project and programme management and functional business disciplines. In 2018 we expanded into consultancy services provision and since have successfully delivered many managed service projects.

Our industry knowledge and inhouse IT capability enabled our investment in our own bespoke technology which uniquely supports our operation increasing productivity. We are building a new look recruitment system using the latest technologies for greater functionality and to futureproof our inhouse capability, remaining leading edge.

SmartSourcing operate in both the public and private sector supporting our clients all over the UK from our Midlands based national recruitment centre. We are proud to support the Social Value Act providing employment in an area of high unemployment.

In 2021 we have established our Carbon Neutral plan which is now visible on our website and continue to promote this approach working with our third-party Supplier for ongoing support and guidance.

The directors run the business with considerable professionalism, honesty and integrity and our staff are all highly experienced and supportive of our service lead approach. It is notable that unlike others in our market we experience an exceptionally low rate of attrition.

The board at SmartSourcing continue to make decisions based on long term objectives and our enviable reputation in the market shows that we have become a trusted supplier synonymous with professionalism, honesty and integrity


SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

ENGAGEMENT WITH EMPLOYEES
SmartSourcing benefit from a highly skilled recruitment and business development team with significant years of working in our industry. We also have our own inhouse IT capability which enables us to further develop our own recruitment system as needs evolve. Our highly skilled accounts team are highly commended for our fast and efficient payment services to all our contractors. Recruitment and retention of staff is therefore a critical business activity. We help to engage with team members by:

- good levels of remuneration, job security, and rewarding performance with bonuses at all levels;
- providing training and career development support;
- issuing EMI options to all existing staff members; and
- ensuring that staff from each department are present and involved in all management meetings and are consulted for significant decisions.

ENGAGEMENT WITH SUPPLIERS, CUSTOMERS AND OTHERS
Our customers and suppliers
We pride ourselves on our exceptional knowledge of the market, our delivery capability and our focus on the highest levels of customer service. The SmartSourcing team build strong supportive relationships with our contractors, consultants and clients and much of our business has evolved from recommendations. We aim to be different, more service lead in our approach and our reputation in the market for our excellent customer service, honesty and integrity shows that this is recognised.

Our community
SmartSourcing are proud to be an SME who takes care of our staff offering job security, a supportive environment, a rewarding career and remuneration package. We are committed to the Social Value Act offering employment in an area of high unemployment and as a company taking part in supporting both local and national charities such as donations to the local hospice, crisis supporting the homeless, dementia, MS and many more.

Our planet
Smartsourcing have been awarded ISO 14001 and are proud to consider the environment in all that we do. Our aim is to store our records electronically and to only print if essential. Our paper is recycled and our waste is securely shredded and disposed of by suppliers who also carry the environmental accreditation. Meetings wherever possible are carried out through video conferencing in order to lower our carbon footprint. We are also proud to have in place a Carbon Neutral Plan, partnering with Positive Planet to meet our ongoing obligations.

RESEARCH AND DEVELOPMENT
SmartSourcing continues to invest in our bespoke, E-resourcing technologies and systems to increase our capabilities and market edge and underpin accreditation to ISO 9001 (Quality), ISO 14001 (Environmental) and ISO 27001 (Information Security Management). We have also increased our Cyber Essentials status to Cyber Essentials Plus.

ON BEHALF OF THE BOARD:





Ms J M Hall - Director


29 August 2024

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 DECEMBER 2023

The directors present their report with the financial statements of the company and the group for the year ended 31 December 2023.

DIVIDENDS
No dividends will be distributed for the year ended 31 December 2023.

DIRECTORS
The directors shown below have held office during the whole of the period from 1 January 2023 to the date of this report.

A R Martin
Ms J M Hall

STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Group Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and 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 and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

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

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS
The auditors, Goldwyns Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:





Ms J M Hall - Director


29 August 2024

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
SMARTSOURCING GROUP LIMITED

Opinion
We have audited the financial statements of SmartSourcing Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the Consolidated Income Statement, Consolidated Other Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, 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 Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:
-give a true and fair view of the state of the group's and of the parent company affairs as at 31 December 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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

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.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether 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 Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
SMARTSOURCING GROUP LIMITED


Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors.

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

Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities set out on page five, 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 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 either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditors' 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 a Report of the Auditors 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.

In order to address the risks of misstatements in respect of irregularities, including fraud, we have:

- obtained an understanding of the key laws and regulations applicable to the company, including the Companies Act 2006 and applicable taxation legislation;
- assessed the company's own internal controls and systems for the prevention and detection of irregularities and particularly the control environment within which they operate;
- determined a materiality level and audit approach sufficient to identify most irregularities, including fraud, that may occur;
- considered our own involvement in the preparation of the company's statutory financial statements and taxation returns;
- conducted audit verification work, on a sample basis, on the key audit areas and risks we have identified; and
- reflected on the outcome of our work, and the likelihood that conclusions drawn may be indicative of other areas of potential irregularity.

We therefore consider our audit approach has been sufficient to detect material irregularities, including fraud.

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 Report of the Auditors.

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF
SMARTSOURCING GROUP LIMITED


Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors 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.




S T Blundell FCA (Senior Statutory Auditor)
for and on behalf of Goldwyns Limited
Statutory Auditors and Chartered Accountants
Rutland House
90-92 Baxter Avenue
Southend on Sea
Essex
SS2 6HZ

29 August 2024

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

CONSOLIDATED
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023

2023 2022
Notes £    £   

TURNOVER 3 24,080,364 24,695,572

Cost of sales 22,125,979 22,270,395
GROSS PROFIT 1,954,385 2,425,177

Administrative expenses 1,964,990 2,091,374
OPERATING (LOSS)/PROFIT 5 (10,605 ) 333,803

Interest receivable and similar income 152 -
(10,453 ) 333,803

Interest payable and similar expenses 6 173,258 184,283
(LOSS)/PROFIT BEFORE TAXATION (183,711 ) 149,520

Tax on (loss)/profit 7 59,074 111,000
(LOSS)/PROFIT FOR THE FINANCIAL
YEAR

(242,785

)

38,520
(Loss)/profit attributable to:
Owners of the parent (242,785 ) 38,520

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

CONSOLIDATED
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023

2023 2022
Notes £    £   

(LOSS)/PROFIT FOR THE YEAR (242,785 ) 38,520


OTHER COMPREHENSIVE INCOME
Share option costs recognised (71,700 ) 33,000
Income tax relating to other
comprehensive income

17,930

(8,250

)
OTHER COMPREHENSIVE INCOME
FOR THE YEAR, NET OF INCOME TAX

(53,770

)

24,750
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR

(296,555

)

63,270

Total comprehensive income attributable to:
Owners of the parent (296,555 ) 63,270

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

CONSOLIDATED BALANCE SHEET
31 DECEMBER 2023

2023 2022
Notes £    £    £    £   
FIXED ASSETS
Intangible assets 9 1,758,522 2,043,183
Tangible assets 10 7,111 7,520
Investments 11 - -
1,765,633 2,050,703

CURRENT ASSETS
Debtors 12 2,740,882 2,993,568
Cash at bank and in hand 159,562 64,047
2,900,444 3,057,615
CREDITORS
Amounts falling due within one year 13 2,497,058 2,013,092
NET CURRENT ASSETS 403,386 1,044,523
TOTAL ASSETS LESS CURRENT
LIABILITIES

2,169,019

3,095,226

CREDITORS
Amounts falling due after more than one
year

14

817,606

1,447,258

CAPITAL AND RESERVES
Called up share capital 17 101,797 101,797
Other reserves 18 143,419 291,296
Share option reserve 18 20,400 74,170
Retained earnings 18 1,085,797 1,180,705
SHAREHOLDERS' FUNDS 1,351,413 1,647,968
2,169,019 3,095,226

The financial statements were approved by the Board of Directors and authorised for issue on 29 August 2024 and were signed on its behalf by:





Ms J M Hall - Director


SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

COMPANY BALANCE SHEET
31 DECEMBER 2023

2023 2022
Notes £    £    £    £   
FIXED ASSETS
Intangible assets 9 - -
Tangible assets 10 - -
Investments 11 4,705,485 4,705,485
4,705,485 4,705,485

CURRENT ASSETS
Cash at bank 106 16

CREDITORS
Amounts falling due within one year 13 3,178,335 2,396,603
NET CURRENT LIABILITIES (3,178,229 ) (2,396,587 )
TOTAL ASSETS LESS CURRENT
LIABILITIES

1,527,256

2,308,898

CREDITORS
Amounts falling due after more than one
year

14

817,606

1,447,258

CAPITAL AND RESERVES
Called up share capital 17 101,797 101,797
Other reserves 18 143,419 291,296
Share option reserve 18 20,400 74,170
Retained earnings 18 444,034 394,377
SHAREHOLDERS' FUNDS 709,650 861,640
1,527,256 2,308,898

Company's (loss)/profit for the financial
year

(98,220

)

36,468

The financial statements were approved by the Board of Directors and authorised for issue on 29 August 2024 and were signed on its behalf by:





Ms J M Hall - Director


SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023

Called up Share
share Retained Other option Total
capital earnings reserves reserve equity
£    £    £    £    £   
Balance at 1 January 2022 101,797 977,259 456,222 49,420 1,584,698

Changes in equity
Total comprehensive income - 203,446 (164,926 ) 24,750 63,270
Balance at 31 December 2022 101,797 1,180,705 291,296 74,170 1,647,968

Changes in equity
Total comprehensive income - (94,908 ) (147,877 ) (53,770 ) (296,555 )
Balance at 31 December 2023 101,797 1,085,797 143,419 20,400 1,351,413

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023

Called up Share
share Retained Other option Total
capital earnings reserves reserve equity
£    £    £    £    £   
Balance at 1 January 2022 101,797 192,983 456,222 49,420 800,422

Changes in equity
Total comprehensive income - 201,394 (164,926 ) 24,750 61,218
Balance at 31 December 2022 101,797 394,377 291,296 74,170 861,640

Changes in equity
Total comprehensive income - 49,657 (147,877 ) (53,770 ) (151,990 )
Balance at 31 December 2023 101,797 444,034 143,419 20,400 709,650

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023

2023 2022
Notes £    £   
Cash flows from operating activities
Cash generated from operations 1 665,007 (95,107 )
Interest paid (24,198 ) (3,544 )
Tax paid (121,483 ) (228,096 )
Net cash from operating activities 519,326 (326,747 )

Cash flows from investing activities
Purchase of tangible fixed assets (3,566 ) (7,203 )
Interest received 152 -
Net cash from investing activities (3,414 ) (7,203 )

Cash flows from financing activities
Preference shares redeemed (420,397 ) (826,390 )
Net cash from financing activities (420,397 ) (826,390 )

Increase/(decrease) in cash and cash equivalents 95,515 (1,160,340 )
Cash and cash equivalents at
beginning of year

2

64,047

1,224,387

Cash and cash equivalents at end of
year

2

159,562

64,047

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023

1. RECONCILIATION OF (LOSS)/PROFIT BEFORE TAXATION TO CASH GENERATED FROM
OPERATIONS
2023 2022
£    £   
(Loss)/profit before taxation (183,711 ) 149,520
Depreciation charges 288,636 288,363
Non-cash costs (71,700 ) 33,000
Finance costs 173,258 184,283
Finance income (152 ) -
206,331 655,166
Decrease/(increase) in trade and other debtors 252,686 (312,130 )
Increase/(decrease) in trade and other creditors 205,990 (438,143 )
Cash generated from operations 665,007 (95,107 )

2. CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 December 2023
31/12/23 1/1/23
£    £   
Cash and cash equivalents 159,562 64,047
Year ended 31 December 2022
31/12/22 1/1/22
£    £   
Cash and cash equivalents 64,047 1,224,387


3. ANALYSIS OF CHANGES IN NET DEBT

At 1/1/23 Cash flow At 31/12/23
£    £    £   
Net cash
Cash at bank and in hand 64,047 95,515 159,562
64,047 95,515 159,562
Debt
Debts falling due within 1 year (129,280 ) (389,994 ) (519,274 )
Debts falling due after 1 year (1,447,258 ) 629,652 (817,606 )
(1,576,538 ) 239,658 (1,336,880 )
Total (1,512,491 ) 335,173 (1,177,318 )

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1. STATUTORY INFORMATION

SmartSourcing Group Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the General Information page.

2. ACCOUNTING POLICIES

Basis of preparing the financial statements
These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Basis of consolidation
The group accounts consolidate the affairs of SmartSourcing Limited since acquisition on 6 March 2020. The subsidiary accounts have been included in the group figures under the acquisition method of accounting.

SmartSourcing Limited own 100% of E-SmartSourcing Limited (company number: 05622845), but due to the immaterial nature of E-SmartSourcing Limited, the financial figures are not included within the group accounts.

Turnover
Turnover represents the value of services provided to the extent that there is a right to consideration and is recorded at the value of the consideration due. Partially completed services are recognised on a proportion of the total expected consideration at completion.

Goodwill
Goodwill, being the amount paid in connection with the acquisition of a business in 2020, is being amortised evenly over its estimated useful life of ten years.

Intangible assets
Acquired intellectual property rights are recognised on the balance sheet as intangible assets at cost, and are amortised evenly over their estimated useful life of five years.

Tangible fixed assets
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.
Office equipment - 33.33% on cost

Foreign currencies
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Preference shares
On 6 March 2020 the company issued 1% preference shares with annual redemption instalments and a 10-year maximum life. In accordance with FRS 102, these have been recognised as a financial liability and interest cost in the company's accounts, based on a comparable 5% amortised cost profile. The initial discount on creation was recognised as a capital contribution reserve, which is being unwound over the life of the liability.

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2023

2. ACCOUNTING POLICIES - continued

Share option reserve
The company operates an approved enterprise management incentive scheme - further details of which can be found in the notes.

The fair value of that scheme is calculated based upon the underlying subsidiary's most recent trading results, the parent company's outstanding finance liabilities and an updated view on the timescale, and likely quantum, of exercise of those options.

The value of those options has been recognised as a separate Share option reserve, net of estimated tax reliefs arising upon exercise.

3. TURNOVER

The turnover and loss (2022 - profit) before taxation are attributable to the one principal activity of the group.

An analysis of turnover by class of business is given below:

2023 2022
£    £   
Contract fees 23,878,467 24,267,115
Permanent placement fees 201,897 428,457
24,080,364 24,695,572

4. EMPLOYEES AND DIRECTORS
2023 2022
£    £   
Wages and salaries 1,189,547 1,292,903
Social security costs 144,293 156,804
Other pension costs 55,466 52,044
1,389,306 1,501,751

The average number of employees during the year was as follows:
2023 2022

Directors 5 2
Administration 22 26
27 28

2023 2022
£    £   
Directors' remuneration 124,751 139,522
Directors' pension contributions to money purchase schemes 5,346 5,090

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes 1 1

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2023

5. OPERATING (LOSS)/PROFIT

The operating loss (2022 - operating profit) is stated after charging:

2023 2022
£    £   
Other operating leases 16,332 16,117
Depreciation - owned assets 3,975 3,702
Goodwill amortisation 284,661 284,661
Auditors' remuneration - audit fees 8,250 8,000
Auditors' remuneration - tax compliance services 1,530 1,430
Auditors' remuneration - taxation advisory services - 1,820
Auditors' remuneration - other non-audit services 1,000 1,000

6. INTEREST PAYABLE AND SIMILAR EXPENSES
2023 2022
£    £   
Discounting interest 24,198 3,544
Preference share amortisation 149,060 180,739
173,258 184,283

7. TAXATION

Analysis of the tax charge
The tax charge on the loss for the year was as follows:
2023 2022
£    £   
Current tax:
UK corporation tax 41,144 119,250

Deferred tax 17,930 (8,250 )
Tax on (loss)/profit 59,074 111,000

Reconciliation of total tax charge included in profit and loss
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

2023 2022
£    £   
(Loss)/profit before tax (183,711 ) 149,520
(Loss)/profit multiplied by the standard rate of corporation tax in the
UK of 25 % (2022 - 19 %)

(45,928

)

28,409

Effects of:
Expenses not deductible for tax purposes 105,002 82,591
Total tax charge 59,074 111,000

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2023

7. TAXATION - continued

Tax effects relating to effects of other comprehensive income

2023
Gross Tax Net
£    £    £   
Share option costs recognised (71,700 ) 17,930 (53,770 )

2022
Gross Tax Net
£    £    £   
Share option costs recognised 33,000 (8,250 ) 24,750

8. INDIVIDUAL INCOME STATEMENT

As permitted by Section 408 of the Companies Act 2006, the Income Statement of the parent company is not presented as part of these financial statements.


9. INTANGIBLE FIXED ASSETS

Group
Patents
and
Goodwill licences Totals
£    £    £   
COST
At 1 January 2023
and 31 December 2023 2,846,612 125,000 2,971,612
AMORTISATION
At 1 January 2023 803,429 125,000 928,429
Amortisation for year 284,661 - 284,661
At 31 December 2023 1,088,090 125,000 1,213,090
NET BOOK VALUE
At 31 December 2023 1,758,522 - 1,758,522
At 31 December 2022 2,043,183 - 2,043,183

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2023

10. TANGIBLE FIXED ASSETS

Group
Office
equipment
£   
COST
At 1 January 2023 84,630
Additions 3,566
At 31 December 2023 88,196
DEPRECIATION
At 1 January 2023 77,110
Charge for year 3,975
At 31 December 2023 81,085
NET BOOK VALUE
At 31 December 2023 7,111
At 31 December 2022 7,520

11. FIXED ASSET INVESTMENTS

Company
Shares in
group
undertakings
£   
COST
At 1 January 2023
and 31 December 2023 4,705,485
NET BOOK VALUE
At 31 December 2023 4,705,485
At 31 December 2022 4,705,485

The group or the company's investments at the Balance Sheet date in the share capital of companies include the following:

Subsidiary

SmartSourcing Limited
Registered office: Tanglewood,90-92 Vicarage Hill,South Benfleet, Essex, SS7 1PE
Nature of business: Specialist recruitment and consultancy
%
Class of shares: holding
Ordinary 100.00

The company acquired the entire issued share capital of SmartSourcing Limited on 6 March 2020. In accordance with section 615 of Companies Act 2006, the acquisition of SmartSourcing Limited has been recognised at its nominal value, with merger relief being claimed.


SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2023

12. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Group
2023 2022
£    £   
Trade debtors 2,620,840 2,961,436
Other debtors 3,336 5,630
VAT 72,604 -
Prepayments 44,102 26,502
2,740,882 2,993,568

At 31 December 2023 £1,267,582 (2022 - £1,480,311) of the trade debtor balance was subject to financing agreements by HSBC Invoice Finance (UK) Limited. Cash advances made against these agreements are included separately under creditors.

13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Group Company
2023 2022 2023 2022
£    £    £    £   
Preference shares (see note 15) 519,274 129,280 519,274 129,280
Trade creditors 1,716,624 1,403,857 - -
Amounts owed to group undertakings - - 2,507,501 2,084,084
Tax 38,911 119,250 - -
Social security and other taxes 43,363 54,289 - -
VAT - 16,193 - -
Other creditors 159 159 - -
Invoice discounting advances - 71,341 - -
Accrued expenses 178,727 218,723 151,560 183,239
2,497,058 2,013,092 3,178,335 2,396,603

14. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE
YEAR

Group Company
2023 2022 2023 2022
£    £    £    £   
Preference shares (see note 15) 817,606 1,447,258 817,606 1,447,258

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2023

15. LOANS

An analysis of the maturity of loans is given below:

Group Company
2023 2022 2023 2022
£    £    £    £   
Amounts falling due within one year or on demand:
Preference shares 519,274 129,280 519,274 129,280
Amounts falling due between one and two years:
Preference shares 714,175 722,175 714,175 722,175
Amounts falling due between two and five years:
Preference shares 103,431 725,083 103,431 725,083

Further details on the treatment of the preference shares are included in note 17.

16. SECURED DEBTS

The following secured debts are included within creditors:

Group
2023 2022
£    £   
Invoice discounting advances - 71,341

The group has granted a fixed charge and a floating charge to HSBC Invoice Finance (UK) Limited and HSBC UK Bank plc. The group has also assigned its rights under its contract with HSBC Invoice Finance (UK) Limited to HSBC Bank plc as security for all of its debts and liabilities owed to HSBC UK Bank plc.

SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2023

17. CALLED UP SHARE CAPITAL

Details of shares shown as equity are as follows:

Allotted, issued and fully paid:
Number: Class: Nominal 2023 2022
value: £ £
19,500 Ordinary A £1 19,500 19,500
82,297 Ordinary B £1 82,297 82,297
101,797 101,797
Details of shares shown as liabilities are as follows:

Allotted, issued and fully paid:
Number: Class: Nominal 2023 2022
value: £ £
1,637,908 Preference shares £1 1,637,908 2,039,906

On 6 March 2020 the company issued £2,839,898 1% preference shares which shall redeem in full no later than 6 March 2030. The company is also obligated to redeem up to 709,975 shares on each anniversary of the full repayment of its bank debt, at the Chairman's (A R Martin) discretion. The preference shares carry a right to a fixed dividend of 1% per annum.

During the year the company redeemed 401,998 preference shares (2022 - 799,992).

The preference shares have therefore been recognised as a financial liability on an amortised cost profile, in accordance with notes 2 and 15.

18. RESERVES

Group
Share
Retained Other option
earnings reserves reserve Totals
£    £    £    £   

At 1 January 2023 1,180,705 291,296 74,170 1,546,171
Deficit for the year (242,785 ) (242,785 )
Amortisation unwinding 147,877 (147,877 ) - -
Expense recognised - - (53,770 ) (53,770 )
At 31 December 2023 1,085,797 143,419 20,400 1,249,616

Company
Share
Retained Other option
earnings reserves reserve Totals
£    £    £    £   

At 1 January 2023 394,377 291,296 74,170 759,843
Deficit for the year (98,220 ) (98,220 )
Amortisation unwinding 147,877 (147,877 ) - -
Expense recognised - - (53,770 ) (53,770 )
At 31 December 2023 444,034 143,419 20,400 607,853


SMARTSOURCING GROUP LIMITED (REGISTERED NUMBER: 12195761)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2023

19. PENSION COMMITMENTS

During the period the group made contributions of £55,466 (2022 - £52,044) to stakeholder pension schemes. At the balance sheet date there were contributions amounting to £159 outstanding (2022 - £159).

20. RELATED PARTY DISCLOSURES

During the period the group total compensation to key management personnel (including directors) amounted to £387,414 (2022 - £412,982).

21. ULTIMATE CONTROLLING PARTY

There is no ultimate controlling party.

22. APPROVED ENTERPRISE MANAGEMENT INCENTIVE (EMI) SCHEME

An approved EMI scheme was introduced in November 2020 in which 98,203 £1 options were granted to encourage a pro-active environment for the participation of key management in share ownership.

The options can only be exercised on a exit event, apart from one employee who can also exercise their options on cessation of employment with the company. All the options cannot be exercised on or after the tenth anniversary of the grant date.

At the balance sheet date the group measured the fair value of the options at £27,200 (2022 - £98,900).

Since the year end, SmartSourcing Group Limited has been implementing the grant of a further EMI share option to current employees for 5,100 ordinary C shares.