The directors present the strategic report for the year ended 31 December 2023.
The financial year of 2023 has proved to be one the most challenging in the history of the Discover International Group since its move to an exclusive focus to life sciences recruitment eight years ago. The global high inflationary environment that emerged in late 2022 carried over into the full financial year of 2023, as of at the point of writing in mid-2024 there have been minimal signs of any tangible recovery. The two founding Board members and the Non-Executive Chairman have over forty years global life sciences recruiting experience, and all agreed that 2023 was possibly the most challenging year in life sciences recruitment over the last two decades.
Because of increased production costs and higher costs of capital, pharmaceutical, biotech, medical device and clinical research companies cut their research and development budgets which impacted the volume of clinical trials through to reduced budgets in core drug and device approval segments such as regulatory affairs and quality assurance. The resultant impact for the Group was quite a steep decline in new job flow and candidate demand compared to both FY 2021 and FY 2022 which inevitably impacted the revenues and profits in 2023. Due to the ongoing success of the Group and outstanding trading years in FY 2021 and FY 2022 the Group continued to invest in new headcount, enlarged infrastructure and enhanced technology tools. This rapid investment and expansion in the twenty-four-month period prior to FY 2023 meant that a material decrease in Net Fee Income would significantly impact the underlying profitability of the Group despite some cost subsequent reductions in FY 2023. Despite the significantly harder economic conditions, the Group did still turn a profit.
The average headcount year-on-year from FY 2022 to FY 2023 increased from 88 to 107 (21.6%). However, over the course of 2023, headcount reduced steadily. This was largely due to significant hiring in late 2022 when the market conditions were much better. Productivity metrics reduced in FY 2023 and led to a fall in headcount throughout the year.
The management of the business and the execution of the Group’s strategy are subject to a number of risks. The key risks are acknowledged below.
Credit Risk – The business has a good client mix and many of our clients are larger and more established companies. Trade receivables exposure is spread across a large number of clients and there is no material concentration risk on any particular client.
Liquidity Risk – The Group’s liquidity risk is managed and secured through a factoring facility in the UK provided by the Group’s bankers, and invoice discounting facility in the US. The factoring facility has been replaced with an Invoice Discounting facility in the UK in August 2023.
Cashflow Risk – Cash is monitored closely by the Board of Directors. A significant risk relates to commission payments to consultants. This risk is mitigated by ensuring payments are only made when invoices have been sent and paid 1 month in arrears. In many cases, the business has already recovered the debt before paying commission. Corporation tax also poses a risk but cash is managed to factor these payments and the cashflow models give good visibility of cash requirements.
Foreign Exchange Risk – The Group is exposed to risk of currency fluctuations. This is mitigated by the continuous monitoring of the cash flow position, alongside performance and currency markets. The Group looks to reduce this exposure by using a broker for all currency trades and proactively assesses hedging options to give cash flow certainty in the future.
Market Risk – The Group is exposed to changing economic and market conditions. The Board meets regularly and reviews operational and cash management. In a market downturn the regularity of these meetings increases. Given the sector’s historic resilience during recessions and the pandemic, we are confident the Group is robust to withstand any downturns in external market conditions.
The net result for FY 2023 at the Group level was £23.03m in Sales Turnover, £11.96min Net Fee Income (69.6% fees for Permanent introductions and 30.4% for Contract Gross Profit), £717k in EBITDA and £571k in Profit Before Tax. This compares to an FY 2022 Group result of £25.23m in Sales Turnover, £13.70m in Net Fee Income (75.5% fees for Permanent introductions and 24.5% for Contract Gross Profit), £3.82m in EBITDA and £3.73m in Profit Before Tax.
In summary Group Net Fee Income dropped by £1.73m in FY2023 (12.6%) over FY2022 and EBITDA dropped by £3.10m in FY 2023 (81.2%) over FY 2022. The European business grew Net Fee Income by £612k in FY2023 (31.3%) with growth on both the Permanent & Contract Net Fee Income. The North America Contract business experienced marginal declines in FY2023 over FY2022 but it was the North America Permanent Net Fee Income that declined significantly. In FY 2022 North America Permanent Net Fee Income was 61.2% of the Group total Net Fee Income and in FY 2023 this reduced to 48.2% of the Group total Net Fee Income.
The Discover Group continues to have a strong balance sheet and significant liquidity headroom. The Group had a net asset position of £3.35m on the balance sheet at the year-end 2023, down 10.4% from 2022 where the position was £3.74m.
The Group was impacted by a significantly underperforming loss making fourth quarter which materially pulled down the overall Group FY2023 profits. There is always a seasonal challenge in Q4 each year due to national holidays, but the Board identified a need to evaluate the business in closer detail. On that basis the Board ran a series of fourth quarter meetings and strategy days to redefine the focus, the operating model and leadership. These meetings ran through into late January 2024.
The net conclusions of those sessions were to undertake some further costs reductions mainly in North America and arrive at a FY 2024 forecast of £24m in Sales Turnover, £12m Net Fee Income (flat on prior year) and £2m EBITDA in part down to a moderate reduction in fee earners. The positive aspect of navigating the Group through the turbulent market has been cash management and the Group’s cash position has remained flat, still retaining considerable cash reserves and invoice discounting headroom. The current trading pattern assumes a potential ten to fifteen percentage reduction on the final FY2024 budget, but the Group has positioned itself very well to take advantage of an economic upturn.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Ordinary dividends were paid amounting to £647,324 (2022: £2,115,529). The directors do not recommend payment of a further dividend.
The group maintains insurance policies on behalf of all the directors against liability arising from negligence, breach of duty and breach of trust in relation to the group.
The auditor, Moore Kingston Smith LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
We have audited the financial statements of Discover International Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the Group Profit And Loss Account, the Group Statement of Comprehensive Income, the Group Balance Sheet, the Company Balance Sheet, the Group Statement of Changes in Equity, the Company Statement of Changes in Equity, the Group Statement of Cash Flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group's and 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 parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's or the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Explanation as to what extent the audit was considered capable of detecting irregularities, including
fraud
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.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of noncompliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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 for no purpose other than to draw to the attention of the company’s members those matters we are required to include in an auditor's report addressed to them. To the fullest extent permitted by law, we do not accept or assume responsibility to any party 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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £649,476 (2022 - £3,374,214 profit).
Discover International Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Northern & Shell Building, 10 Lower Thames Street, London, EC3R 6EN.
The group consists of Discover International Holdings Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
Discover International Holdings Limited meets the definition of a qualifying entity under FRS 102 and has therefore taken advantage of the disclosure exemptions available to it in respect of its separate financial statements, which are presented alongside the consolidated financial statements. Exemptions have been taken in relation to financial instruments, presentation of a cash flow statement and remuneration of key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Discover International Holdings Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover represents fees earned, excluding VAT, from the placement of permanent candidates in the year and from temporary contractors supplied in the year.
Income from the placement of permanent candidates is recognised when the candidate has accepted the position for both UK and European placements, and when the candidate starts the position for USA placements.
Revenue from contractors is recognised as the service is provided.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The UK corporation tax rate changed from 19% to 25% on 1 April 2023. Therefore, the tax rate used in the tax reconciliation is a blended rate of 23.5% to reflect 3 months at 19% and 9 months at 25%.
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 31 December 2023 are as follows:
Two of the group's subsidiaries, Discover People International Ltd and Discover International Inc. operate invoice discounting facilities, included above. There is a fixed and floating charge over the assets of Discover People International Ltd in respect of its facility, and a security charge over the assets of Discover International Inc. in respect of its facility.
Other borrowings relate to a loan from a director who resigned during the previous year. For more information please refer to note 23.
As part of a share buy-back, loan notes of total value £893,557 were issued during 2022. Principal repayments in the year amounted to £319,204 (2022: £105,167). Interest accrues on the outstanding principal amount at 2% per annum and the amount charged to profit and loss in the year is £12,847 (2022: £11,363). The loan notes are due for full repayment by July 2025. The loan is secured over all assets of the group.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
All shares carry equal voting and dividend rights, with the exception of Ordinary E shares which do not have any voting rights.
During the prior year, 28 Ordinary shares and 100 Ordinary C shares were cancelled as part of a share buy back. Subsequently, the remaining 272 shares of £1 each were sub-divided into 27,200 shares of £0.01 each. Following the sub-division, there was a change of share designation - moving 3,600 shares from Ordinary to Ordinary B, 3,600 shares from Ordinary to Ordinary A, and 10,000 shares from Ordinary D to Ordinary A. Finally, 1,432 Ordinary E shares were issued to give a final shareholding at 31 December 2022 of 28,632.
Ordinary A shares have full rights with respect to voting, dividends and distributions.
Ordinary B shares have full rights with respect to voting, dividends and distributions.
Ordinary E shares have full rights with respect to dividends and distributions only.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The group has taken advantage of the exemption in The Financial Reporting Standard applicable in the UK and Republic of Ireland ("FRS 102") from the requirement to disclose transactions with wholly owned group companies on the grounds that consolidated financial statements are prepared by the ultimate parent company.
At the balance sheet date, the group owed £81,333 (2022: £13,194) to Discover International S.A DE C.V., a company which is a related party by way of a director's shareholding. Additionally, during the year, the group recorded £484,402 (2022: £126,588) of expenditure relating to recharged services from the same company.
Dividends totalling £242,923 (2022: £857,079) were paid to Langton Corporation Limited a company owned by one of the directors.
Dividends totalling £404,401 (2022: £1,100,433) were paid to Isola Corporation Limited a company owned by one of the directors.
Dividends totalling £nil (2022: £140,000) were paid to Lolarae Limited a company owned by a former director, who resigned during the prior year. Additionally, during the prior year, 128 shares were repurchased and cancelled from the same individual. The total consideration for the purchase of these shares was £1,253,418. The consideration was charged directly to reserves in line with company law. The company owes the same individual £468,655 (2022: £788,390) at the balance sheet date. This loan is reflected as "other loans" in the financial statements and is split between the amount payable in 12 months from the balance sheet date, and the amount payable in more than 12 months. The loan carries interest at 2% per annum.