Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2023
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SARAH TOPCO LIMITED
COMPANY INFORMATION
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SARAH TOPCO LIMITED
CONTENTS
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SARAH TOPCO LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present their report for the year ended 31 December 2023 of Sarah Topco Limited, and its subsidiaries, trading as Systal Technologies (‘Systal’).
Systal is a global, market leading, managed network and security services provider focused on providing excellent customer service and bespoke solutions. Systal’s network and security operating centres around the World, manage and monitor network performance around the clock, 365 days a year, to a wide range of global businesses. The Group looks after over 200,000 assets in more than 70 countries for 240 enterprise level customers.
Systal’s investment in infrastructure and its geographical network of 28 locations has established the platform to deliver its value-add solutions and cyber security services. In support of its US customer base and rising demand for managed network, cyber security and cloud services, in early 2024, Systal opened a new operating centre in Tampa, Florida. Revenue in the year was £69.9m (2022: £74.8m) reflecting the expiry of revenue commitments in the early part of the year. Gross margins in the year were unchanged at 30% (2022: 29%) as the Group adjusted its cost base for long term growth. Underlying Ebitda (earnings before interest, tax, depreciation and amortisation), a key performance indicator of the cash generation of the company, increased by 2,143% to £3.8m (2022: loss £185k as restated) reflecting improved overhead control and more efficiency in tooling and infrastructure.
Sarah Topco Limited’s balance sheet and financing benefits, during periods of high inflation and significantly increased interest rates, from having a limited exposure to third party borrowing. Day to day activities are financed through cash reserves and an invoice financing facility, which is secured on amounts due from customers. Cash interest of £0.4m in the year was covered by underlying ebitda 9.25 times over. Cash balances increased due to strong cash flow in the by £0.7m from £1.3m to £2.0m at 31 December 2023.
The acquisition of the Systal Group of companies in 2021 by Sarah Topco Limited, resulted in non-cash annual charges of £10.3m (2022: £10.1m) to the income statement. Goodwill of £48.4m arose on acquisition, which is amortised over a 10 year period resulting in an annual non-cash charge of £4.8m (2022: £4.8m). As part of the acquisition, Sarah Topco Limited allotted £53.0m of loan notes to its owners on which non-cash interest accrues and the charge to the income statement in 2023 was £5.5m (2022: £5.3m).
The Board reviewed the principle risks and uncertainties of the Group and concluded that there were no significant changes. The Group’s principle risks are its competitors, customer concentration, staff retention and cyber security. Training and developing staff, strategic actions to win new business and application of the latest software combined with targeted on-line learning sought to manage these risks during the year.
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SARAH TOPCO LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Employee Engagement
Sarah Topco Limited is fully committed to keeping employees informed of matters which affect them, the Company and its subsidiaries in the short term and the long term. This information is disseminated in a variety of ways and frequencies depending on the nature and importance of the information. This includes but is not limited to: • Weekly operational management meetings • Quarterly town hall meetings hosted by the CEO • Lunch and learn sessions • Internal social media updates of business activities and contract awards •Email announcements on strategic decisions Other Stakeholders Central to the Group’s success are relationships with its key stakeholders such as customers, suppliers, shareholders and local communities. Interactions include, but are not limited to: • Frequent customer meetings to review service quality, performance, delivery and future business requirements • Periodic supplier meetings to discuss issues, performance and ongoing requirements • Regular interaction with local universities and colleges to facilitate future opportunities or apprenticeships •Support for local charities and institutions , often led through local employee initiatives and supported by the Group. The Group seeks to operate within high standards of business conduct and regularly reviews industry best practice to deliver a sustainable business with high standards in respect of environmental and regulatory issues.
Our employees are Systal’s most important asset and the Board would like to thank them for their huge contribution to the growth and development of Systal over the last year. Systal continues its strategy to support controlled growth, improve margins and to deliver strong cash flow.
Our focus on new business and partnerships together with the launch of our network operating centre in Tampa, Florida, which is already seeing positive demand for its transformational skills, underpinned by extended commitments from long term customer relationships, supports Systal’s ambition to substantially grow revenue, run rate ebitda and its return to shareholders.
This report was approved by the board and signed on its behalf.
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SARAH TOPCO LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present their report and the financial statements for the year ended 31 December 2023.
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.
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 judgments 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 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 loss for the year, after taxation, amounted to £10,459,201 (2022 - loss £13,930,626).
The directors who served during the year were:
The company has chosen in accordance with Companies Act 2006, s.414C(11) to set out the company's
strategic report information required by Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch.7 to be contained in the Directors' report. It has been done so in respect of future developments.
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SARAH TOPCO LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
No further disclosure is given in this Report in relation to the Streamlined Energy & Carbon Reporting as the
company is exempt from disclosure as a low energy user.
There have been no significant events affecting the Group since the year end.
The auditors, Anderson Anderson & Brown Audit LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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SARAH TOPCO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SARAH TOPCO LIMITED
We have audited the financial statements of Sarah Topco Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2023, which comprise the Group Statement of Comprehensive Income, the Group and Company Balance Sheets, the Group Statement of Cash Flows, the Group and Company Statement of Changes in Equity and the related notes, 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).
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 United Kingdom, including the Financial Reporting Council'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.
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 or 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.
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SARAH TOPCO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SARAH TOPCO LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group 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 Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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SARAH TOPCO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SARAH TOPCO LIMITED (CONTINUED)
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 Auditors' 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 Group financial statements.
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. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
•completing a risk-assessment process during our planning for this audit that specifically considered the risk of fraud;
•enquiry of management about the company's policies, procedures and related controls regarding compliance with laws and regulations and if there are any known instances of non-compliance; •examining supporting documents for all material balances, transactions and disclosures; •enquiry of management, about litigations and claims and inspection of relevant correspondence •evaluation of the selection and application of accounting policies related to subjective measurements and complex transactions; •analytical procedures to identify any unusual or unexpected relationships; •specific audit testing on and review of areas that could be subject to management override of controls and potential bias, most notably around the key judgments and estimates, including the amounts recoverable on contracts, deprecation of fixed assets, carrying value of accruals and revenue recognition; •considering management override of controls outside of the normal operating cycles including testing the appropriateness of journal entries recorded in the general ledger and other adjustments made in the preparation of the financial statements including evaluating the business rationale of significant transactions, outside the normal course of business. We design our procedures so as to obtain sufficient appropriate audit evidence that the financial statements are not materially misstated due to non-compliance with laws and regulations or due to fraud or error. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations - this responsibility lies with management with the oversight of the directors. Based on our understanding of the company and industry, discussions with management and directors we identified financial reporting standards and Companies Act 2006 as having a direct effect on the amounts and disclosures in the financial statements. As part of the engagement team discussion about how and where the company's financial statements may be materially misstated due to fraud, we did not identify any areas with an increased risk of fraud. Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements of the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). The potential effects of inherent limitations are particularly significant in the case of misstatement resulting from fraud because fraud may involve sophisticated and carefully organized schemes designed to conceal it, including deliberate failure to record transactions, collusion or intentional misrepresentations being made to us.
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 Auditors' Report.
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SARAH TOPCO LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SARAH TOPCO LIMITED (CONTINUED)
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 Auditors' 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.
for and on behalf of
Statutory Auditors
133 Finnieston Street
G3 8HB
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SARAH TOPCO LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
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SARAH TOPCO LIMITED
REGISTERED NUMBER: 13215701
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 16 to 40 form part of these financial statements.
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SARAH TOPCO LIMITED
REGISTERED NUMBER: 13215701
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 16 to 40 form part of these financial statements.
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SARAH TOPCO LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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SARAH TOPCO LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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SARAH TOPCO LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
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SARAH TOPCO LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2023
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Sarah Topco Limited ("the company") is a private limited company domiciled and incorporated in England and Wales. The registered office is 47 Queen Anne Street, Marylebone, London, United Kingdom, W1G 9JG.
The group consists of Sarah Topco Limited and all of its subsidiaries. The principal activity of the company is that of a holding company.
2.Accounting policies
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 judgment in applying the Group's accounting policies.
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 following principal accounting policies have been applied:
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 Balance Sheet, 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. All financial statements are made up to 31 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group. All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
The directors note the net liabilities position of the group as at 31 December 2023. This is as a result of the interest accruing on long term finance and on the non- cash impact of amortisation of goodwill on consolidation. The interest and corresponding loan notes are not due for repayment until 3 March 2027.
The group depends on its existing bank facilities to meet its day to day working capital requirements. The group expects to be able to operate within these facilities for the whole of the foreseeable future. Additionally, whilst these facilities are reviewed annually, the Directors are not aware of any circumstances that may adversely affect them being renewed. The Directors have considered their budgets and cashflow forecasts for the next 12 months from the date of signing the financial statements. Having reviewed the projections, the Directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors believe it is appropriate to prepare the financial statements on a going concern basis. .
Functional and presentation currency
Transactions and balances
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
The preparation of the financial statements requires management to make judgements, estimates
and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The key source of estimation uncertainty that has a significant effect on the amounts recognised in the financial statements is the value of the amounts recoverable on contracts.
Grant income is measured at the fair value of the asset received or receivable. Grant income
received in the year has been recognised by the company using the accruals method. The grant income is recognised in income on a systematic basis over the periods in which the company recognises the related costs for which the grant is intended to compensate.
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Goodwill
Other intangible assets
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:
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.
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:
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 profit or loss.
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Rentals payable under hire purchase contracts are charged against the resultant creditor with any
interest element being charged against income as the charges arise.
Leases of assets that transfer substantially all the risks and rewards incidental to ownership are
classified as finance leases. Finance leases are capitalised at commencement of the lease as assets at the fair value of the leased asset or, if lower, the present value of the minimum lease payments calculated using the interest rate implicit in the lease. Where the implicit rate cannot be determined the company’s incremental borrowing rate is used. Incremental direct costs, incurred in negotiating and arranging the lease, are included in the cost of the asset. Assets are depreciated over the shorter of the lease term and the estimated useful life of the asset. Assets are assessed for impairment at each reporting date. The capital element of lease obligations is recorded as a liability on inception of the arrangement. Lease payments are apportioned between capital repayment and finance charge, using the effective interest rate method, to produce a constant rate of charge on the balance of the capital repayments outstanding.
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Amounts recoverable on contracts results when the risks and rewards of ownership have passed for
the provision of IT goods and services. For projects spanning the year end, amounts recoverable on contract arises based on the percentage of completion on the project.
Deferred income results when payments have been received prior to the risks and rewards of
ownership passing.
Loans are measured initially at fair value, net of transactions costs, and are measured subsequently
at amortised cost using the effective interest method. Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
The financial statements have been restated to incorporate the additional costs of operations
incurred in Argentina and the movement on deferred tax. In last year’s accounts, the Argentina costs were not charged to the profit & loss as they were thought to be recoverable against an associate entity Systal Technology Argentina. These costs however, should have been reflected as the group’s own costs as they are not rechargeable. The accounting impact of this means the brought forward reserves are decreased by the amount of the costs equating to £1,877,042. The deferred tax impact from including the above costs has resulted in last year's closing position changing from (£448,333) to £20,927 which is a movement of £469,260. This has been reflected in the current year to re-state the opening deferred tax position and align the brought forward reserves with the movement.
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Analysis of turnover by country of destination:
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The Company has no employees other than the directors.
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
During the year retirement benefits were accruing to 3 Directors (2022 - 3) in respect of defined contribution pension schemes.
The Directors consider themselves as the key management personnel of the company so no further disclosure required.
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
There were no factors that may affect future tax charges.
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
10.Taxation (continued)
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The net book value of assets held under hire purchase contracts as at 31 December 2023 was £101,021 (2022: £156,254).
There are no tangible fixed assets held within the Parent company.
The investment within the company represents the investment held in Sarah Midco 1 Ltd.
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 31
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Subsidiary undertakings (continued)
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Subsidiary undertakings (continued)
Page 33
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Subsidiary undertakings (continued)
Page 34
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The loan notes recognised comprise of two loan note instruments, where each of them are secured and carry a coupon of 10% (A Loan notes only) and 6% (Bridging Loan notes only) of interest which will compound daily. The loan notes were initially recognised at cost (£2,075,180 and £35,783 giving a total of £2,110,962) and the accumulated interest to date of £487,905 has been charged through the profit and loss. The total value amounts to £2,798,361. The rollover loan notes are part of call options issued by management to Sarah Topco Ltd and Sarah Topco Ltd grants put options to management as a £2,075,180 rollover loan note. These rollover loan notes will incur 10% compound interest per annum coupon rate. The intercompany loan for £35,783 represents a share subscription and is advanced down from Sarah Topco Ltd (Parent company) to Sarah Midco 1 Ltd (direct subsidiary company) and will incur a 10% compound interest per annum coupon rate.
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 36
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The loan notes recognised comprise of three loan note instruments, where each of them are secured and carry a coupon of 10% (A Loan notes only) and 6% (Bridging Loan notes only) of interest which will compound daily. The loan notes were initially recognised at cost (£5,000,000, £32,964,216 and £20,000,000 which amounts to £57,964,216) and the accumulated interest to date (£15,270,168) has been charged through the profit and loss.The total value amounts to £68,234,384. The loans are secured over certain assets of the Group. Inflexion Private Equity Ltd held fixed charges over all land and intellectual property and floating charges covering property.
One loan note of £5,000,000 was repaid in March 2022. The remaining balance represents two further loan notes, A loan notes and Bridging loan notes, and are considered non-qualifying corporate bonds in the hands of the relevant note holders and accrue compounded interest at 10% per month. The company will have the option to settle rolled up interest via the issue of payment in kind ("PIK") notes with investor consent. The redemption date on both of these loan notes is 03 March 2027.
Hire purchase contracts are secured against the assets which the liability relates. Finance leases are secured against the assets which the liability relates.
The invoice discounting and credit card facility is secured by a floating charge over the assets, debtors books and undertakings of Systal Technology Solutions Limited by Virgin Money PLC.
Page 37
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Page 38
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
As referenced under accounting policy 2.26 there was a prior year adjustment in respect of the financial
year ending 31 December 2022 for additional costs in Argentina and the impact of including these costs on the deferred tax position. The impact of this means the brought forward opening reserves have changed by £1,407,782 from the original financial statements which is made up of £1,877,042 costs and £469,260 deferred tax movement. The profit and loss for the prior year has been reduced from £493,621 operating profit to a restated operating loss of £1,383,421 and movements on the tax line of £469,260. The brought forward reserves and the net assets have also reduced by the amount of £1,407,782.
The group contributes to a defined contribution scheme on behalf of certain directors and employees.
The contributions amounted to £3,722,251 (2022: £2,265,607). At the year end there was £323,191 (2022: £1,362,646) to be collected by the pension scheme providers.
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SARAH TOPCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The balance owed to the Directors within the group as at year-ended 31 December 2023 is £1,676,466 (2022: £1,675,000). The amounts due to Director 1 is £176,642 (2022: £175,000), Director 2 is £750,000 (2022: £750,000) and Director 3 is £749,825 (2022: £750,000).
The company has taken advantage of disclosure exemptions available under Section 33 of FRS 102
whereby it has not disclosed transactions entered into with any member of the same wholly-owned group. Transactions between group entities which have been eliminated on consolidation are not disclosed within the financial statements.
Page 40
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