Company registration number 04746912 (England and Wales)
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
ANNUAL REPORT AND UNAUDITED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
COMPANY INFORMATION
Directors
Capita Corporate Director Limited
M W Lansdown
(Appointed 2 May 2023)
Secretary
Capita Group Secretary Limited
Company number
04746912
Registered office
65 Gresham Street
London, England
EC2V 7NQ
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
CONTENTS
Page
Strategic report
1 - 6
Directors' report
7 - 8
Income statement
9
Balance sheet
10 - 11
Statement of changes in equity
12
Notes to the financial statements
13 - 21
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The Directors present their Strategic report and financial statements for the year ended 31 December 2023.
Capita Justice & Secure Services Holdings Limited ('the Company') is a wholly owned subsidiary (indirectly held) of Capita plc. Capita plc, along with all its subsidiaries' is hereafter referred to as 'the Group'.
Principal activities
The principal activity of the Company continued to be that of being a holding and investment company. On 31 July 2023, the Company sold its investment in PageOne Communications Limited to Thorgreen Holdings Limited and investment in Capita IB Solutions (Ireland) Limited to Adv Finance Holding Limited. Further on 1 October 2023, the Company sold its investment in Capita Secure Information Solutions Limited to Capita Business Services Ltd, a fellow group company, as a part of Group restructuring. Following the aforesaid disposal and liquidation of remaining direct subsidiaries, the Directors intend to liquidate the Company and therefore have prepared the financial statements on the basis that the Company is no longer a going concern.
Review of the business
As shown in the Company’s income statement on page 9, the Company's profit before tax has increased from £17,333,319 in 2022 to £42,131,578 in 2023 mainly due to the gain on disposal of its investment in subsidiaries recognised during the year.
The balance sheet on pages 10 to 11 of the financial statements shows the Company's financial position at the year end. Net assets have increased from £31,238,610 in 2022 to £72,424,589 in 2023 on account of profits earned by the Company during the year. Details of amounts owed by/to its parent Company and fellow subsidiary undertakings are shown in notes 11 and 12 to the financial statements.
The Company has not identified any key performance indicators due to the nature of its operations as a holding company and as described in the principal activities above.
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Principal risks and uncertainties
The Company is exposed to a wide range of risks that, should they materialise, could have a detrimental impact on financial performance, reputation or operational resilience. The Company’s risk management framework provides a consistent approach to the identification, assessment, monitoring and reporting of risks and opportunities. The risk management process is based on risk registers and risk reporting at the established risk governance committees. Key risks are documented in the risk registers and have assigned risk owners who review them regularly, and report on them at least quarterly, as part of the risk reporting process. The strength of existing controls is evaluated to determine whether any further mitigating actions are needed to manage the risk level to within the risk appetite set by the Board.
As a holding company, majority of Company’s assets consists of investments in subsidiary companies, accordingly principal risks of the Company relate to its inability to recover the carrying value of its investments due to adverse conditions in markets where its subsidiaries operate.
The principal risks for the Company are:
Financial stability
Maintain financial stability and achieve financial targets.
Cyber security
Protect our systems, networks and programs from unauthorised use and access.
ESG
Comply with regulatory and contractual requirements to drive a purpose driven organisation with the right focus on governance.
Data governance and data privacy
Manage our data effectively (both clients and Capita) as a strategic asset across the organisation.
As a subsidiary of Capita plc, the Company is subject to controls and risk governance techniques applied across all the Group's businesses. Details of the specific risk assessments and mitigating actions are outlined on pages 57-63 of the Group's 2023 Annual Report.
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Section 172 statement
Capita plc's section 172 statement applies to its Divisions and the Company to the extent it relates to the Company's activities. Common policies and practices are applied across the Group through divisional management teams and a common governance framework. The following disclosure describes how the Directors have regard to the matters set out in section 172(1)(a) to (f) and forms the Directors' statement as required under section 414CZA of the Companies Act 2006.
Further details of the Group's approach to each stakeholder are provided in Capita plc's section 172 statement on pages 45, 46 and 47 of Capita plc's 2023 Annual Report.
Our People
Why they are important
They deliver our business strategy; they support the organisation to build a values-based culture; and they deliver our products and services ensuring client satisfaction.
What matters to them
Flexible working; learning and development opportunities leading to career progression; fair pay and benefits as a reward for performance; and two-way communication and feedback.
How we engaged
People surveys
Regular all-employee communications
Employee director on the Capita plc Board
Employee focus groups and network groups
Workforce engagement on remuneration
Regular ‘breakfast’ sessions with the Executive Committee for our colleagues
Topics of engagement
Creating an inclusive workplace
Health and wellbeing
Speak Up policy
Directors’ remuneration
Acting on survey feedback
The career path framework
The redundancy consultation programme announced in November 2023
Outcomes and actions
The 2023 employee survey showed key indices had either improved or remained steady with a five-point increase in the eNPS compared with 2022. 63% of colleagues who responded felt proud to work at Capita. We are developing and delivering a range of action plans, including ensuring our leaders feel confidence in, and ownership of Capita’s strategy, plans and successes, developing inclusive opportunities for internal career mobility.
In December 2023, the Board agreed that while the appointment of employee directors had been successful, it was appropriate for the Board to consider a wider level of engagement with colleagues, including site visits arranged for individual directors to meet with local management and colleagues at Capita’s businesses. In addition, the Board has appointed Nneka Abulokwe as the designated non-executive director to engage with colleagues. Adolfo Hernandez, our new CEO, has also commenced a series of breakfast sessions to meet with colleagues of differing seniority and at different locations throughout the Group. Janine Goodchild stepped down from the Board as an employee director on 31 December 2023.
The UK real living wage increase was applied from 1 April 2023. At the end of 2023, we took the difficult decision to withdraw from the UK’s real living wage. Since 2020, the Group has increased the salaries of our lowest earners by 22% and the 2024 real living wage increase of 10.1% was not something we could commit to given the need for Capita to remain cost competitive and reflecting the fact that this is not a cost we are able to pass on to clients.
The global career path framework which defines career levels, career job content, and reward framework within Capita was launched during the year.
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
In October 2023, Capita was recognised by Forbes, as being one of the top companies for women, ranking at number 18 out of 400 global companies on their list.
We continued to promote our Speak Up policy throughout the organisation.
Risks to stakeholder relationship
Our ability to recruit due to the national and global labour market demand for resources
Our ability to retain and develop people, impacting our quality of service and our financial performance
Our ability to evolve our culture and practices in line with our responsible business agenda
Key metrics
Voluntary attrition, employee NPS, employee engagement Index and people survey completion level.
Clients and customers
Why they are important
They are recipients of Capita’s services; and Capita’s reputation depends on consistent and timely delivery of the services they need from us.
What matters to them
High-quality service delivery; delivery of transformation projects within agreed timeframes; and responsible and sustainable business credentials.
How we engaged
Client meetings and surveys
Regular meetings with government stakeholders and annual review with the Cabinet Office
Through our customer advisory boards
Through our senior client partner programme giving an experienced single point of contact for key clients and customers
Introductory meetings and correspondence with the new CEO and new interim CEO, Capita Public Service
Topics of engagement
Current service delivery
Transition and mobilisation of services
Capita’s digital transformation capabilities
Possible future services
Co-creation of client value propositions
The cyber incident
Ongoing benefits of hybrid working on client services
Outcomes and actions
Feedback provided to business units to address any issues raised; client value proposition teams supporting divisions with co-creation ideas; direct customer and sector feedback; and senior client partner programme undertaking client-focused growth sprints to build understanding of client issues and ideas to help address them.
Risks to stakeholder relationship
Loss of business by not providing the services that our clients and customers want
Damage to reputation by not delivering to the requirements of our clients and customers
Loss of customers for our clients
Key metrics
Customer NPS; specific feedback on client engagements.
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
Suppliers and Partners
Why they are important
They share our values and help us deliver our purpose; maintain high standards in our supply chain; and achieve social, economic and environmental benefits aligned to the Social Value Act. Our suppliers and partners provide additional expertise, skill and technology, elevating our offering.
What matters to them
Payments made within agreed payment terms; clear and fair procurement process; building lasting commercial relationships; and working inclusively with all types of business.
How we engaged
Supplier meetings throughout source to procure process
Regular reviews with suppliers
Supplier questionnaires and risk assessments
Topics of engagement
Outcomes and actions
Our supplier charter, which is available on our website, remains at the core of strengthening our commitments and sets out how we conduct business in an open, honest and transparent manner, and what we expect of our suppliers. This year, it was refreshed and relaunched.
To understand Capita’s Scope 3 carbon footprint, a supplier engagement programme was also undertaken with suppliers accounting for £1bn annual spend (over 50% of the supply chain by spend) to ask them to disclose their carbon emissions to CDP.
During 2023, 99% of our suppliers were paid within 60 days.
Risks to stakeholder relationship
Key metrics
99% of supplier payments within agreed terms; SME spend allocation; and supplier diversity profile.
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -
Society
Why they are important
Capita is a provider of key services to government impacting a large proportion of the population.
What matters to them
Social mobility; youth skills and jobs; digital inclusion; diversity and inclusion; climate change; business ethics; accreditations and benchmarking; and cost of living crisis.
How we engaged
Membership of non-governmental organisations
Charitable and community partnerships
External accreditations and benchmarking
Working with clients, suppliers and the Cabinet Office
Topics of engagement
Youth employment
Workplace inequalities
Diversity & inclusion
Climate change
Outcomes and actions
Youth and employability programme such as Social Shifters; ranked 18 on the Forbes Global list of top employers for women; a 5% reduction in our gender pay gap (compared with 2022); awarded Employer’s Network for Equality and Inclusion; achieved a silver Tidemark and an A CDP (Carbon Disclosure Project) score as well as a silver medal in EcoVadis for Capita plc.
Risks to stakeholder relationship
Key metrics
Community investment, workforce diversity and ethnicity data, including pay gaps.
M W Lansdown
Director
11 September 2024
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
The Directors present their Directors' Report and Financial statements for the year ended 31 December 2023.
Results and dividends
The results for the year are set out on page 9.
No dividend was proposed or paid during the year (2022: £nil).
Directors
The Directors who held office during the year and up to the reporting date were as follows:
Capita Corporate Director Limited
J Cowan
(Resigned 2 May 2023)
M W Lansdown
(Appointed 2 May 2023)
Qualifying third party indemnity provisions
The Company has granted an indemnity to the directors of the Company against liability in respect of proceedings brought by third parties, subject to the conditions set out in the Companies Act 2006. Such qualifying third-party indemnity provisions remains in force as at the date of approving the directors' report.
Post balance sheet date events
There are no significant events which have occurred after the reporting period.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Strategic report, the Directors’ report 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 they have elected to prepare the financial statements in accordance with United Kingdom ('UK') accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 101 Reduced Disclosure Framework.
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 of its profit or loss 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 estimates that are reasonable and prudent;
state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
as explained in the note 1.1 of the financial statements, the Directors do not believe the going concern basis to be appropriate and these financial statements are not prepared on that basis.
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 enable them to ensure that the financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
Strategic report
In accordance with s414c(11) of the Companies Act 2006, the Company has set out certain information in its Strategic report that is otherwise required to be disclosed in the Directors' report. This includes information regarding results and activities and a description of the principal risks and uncertainties facing the Company.
On behalf of the board
M W Lansdown
Director
11 September 2024
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Administrative income
3,614,604
3,020,780
Investment income
4
41,933,147
13,000,000
Impairments
5
(7,436,482)
(146,525)
Net finance income
6
4,020,309
1,459,064
Profit before tax
42,131,578
17,333,319
Income tax charge
7
(945,599)
(276,884)
Profit and total comprehensive income for the year
41,185,979
17,056,435
The income statement is prepared on the basis that the Company has ceased all its operations.
The notes and information on pages 13 to 21 form an integral part of these financial statements.
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
Non-current assets
Investments in subsidiaries
8
83,592,808
-
83,592,808
Current assets
Financial assets
10
3,000,000
Trade and other receivables
11
71,947,727
102,496,780
Investments in subsidiaries
8
3
74,947,730
102,496,780
Total assets
74,947,730
186,089,588
Current liabilities
Trade and other payables
12
14,550
154,565,239
Provisions
13
1,286,108
Income tax payable
1,222,483
285,739
Total liabilities
2,523,141
154,850,978
Net assets
72,424,589
31,238,610
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
BALANCE SHEET (CONTINUED)
AS AT
31 DECEMBER 2023
31 December 2023
2023
2022
Notes
£
£
- 11 -
Capital and reserves
Issued share capital
14
1
30,700
Share premium
510,000
Capital redemption reserve
6,223
Retained earnings
72,424,588
30,691,687
Total equity
72,424,589
31,238,610
The notes and information on pages 13 to 21 form an integral part of these financial statements.
For the financial year ended 31 December 2023, the Company was entitled to exemption from audit under section 479A of the Companies Act 2006 relating to subsidiary companies.
The Directors acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements.
The members have not required the Company to obtain an audit of its financial statements for the year in question in accordance with section 476 of the Companies Act 2006.
These financial statements were approved by the board of directors and authorised for issue on
11 September 2024
11 September 2024
and are signed on its behalf by:
M W Lansdown
Director
Company registration number 04746912 (England and Wales)
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
Share capital
Share premium
Capital redemption reserve
Retained earnings
Total equity
£
£
£
£
£
At 1 January 2022
30,700
510,000
6,223
13,635,252
14,182,175
Profit for the year
-
-
-
17,056,435
17,056,435
At 31 December 2022
30,700
510,000
6,223
30,691,687
31,238,610
Profit for the year
-
-
-
41,185,979
41,185,979
Transactions with owners:
Reduction in share capital, share premium and capital redemption reserve
(30,699)
(510,000)
(6,223)
546,922
-
At 31 December 2023
1
72,424,588
72,424,589
Share capital
The balance classified as share capital is the nominal proceeds on issue of the Company's equity share capital, comprising 1 ordinary share of £1 each.
Share premium
The amount paid to the Company by shareholders, in cash or other consideration, over and above the nominal value of the shares issued to them less issuance costs.
Capital redemption reserve
The Company can redeem shares by repaying the market value to the shareholder, whereupon the shares are cancelled. Redemption must be from distributable profits. The capital redemption reserve represents the nominal value of the shares redeemed.
Retained earnings
Net profits accumulated in the Company after dividends are paid.
On 25 October 2023, the Company reduced its ordinary share capital to 1 ordinary share of £1 nominal value through the cancellation of 30,699 ordinary shares of £1 each, share premium was reduced from £510,000 to nil and capital redemption reserve was reduced from £6,223 to nil during the same period, with a corresponding impact to retained earnings.
The notes and information on pages 13 to 21 form an integral part of these financial statements.
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
1
Accounting policies
1.1
Basis of preparation
Capita Justice & Secure Services Holdings Limited is a company incorporated, registered and domiciled in the United Kingdom.
In determining the appropriate basis of preparation for the annual report and financial statements for the year ended 31 December 2023, the Company’s Directors (‘the Directors’) are required to consider whether the Company can continue in operational existence for the foreseeable future, being a period of at least 12 months following the approval of these accounts.
The principal activity of the Company ceased in 2023 when the Company disposed of its investment in subsidiaries and the remaining subsidiaries were put into liquidation. The Directors have therefore prepared the financial statements on the basis that the Company is no longer a going concern. The financial statements have been prepared on a breakup basis as at 31 December 2023.
The financial statements have been prepared on a breakup basis as at 31 December 2023. As a consequence, the Directors have considered the adjustments required to prepare the financial statement on a breakup basis. The expected realisable and settlement values for current assets and liabilities are not considered to be materially different from their carrying value at the balance sheet date. Therefore, the Directors have considered that no further adjustments are required as a result of preparing the financial statements on a breakup basis.
1.2
Compliance with accounting standards
The Company has applied FRS101 – Reduced Disclosure Framework in the preparation of its financial statements.
The Company has prepared and presented these financial statements by applying the recognition, measurement and disclosure requirements of international accounting standards in conformity with the requirements of the Companies Act 2006.
The Company's ultimate parent company, Capita plc, includes the Company in its consolidated statements. The consolidated financial statements are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and with UK-adopted International Financial Reporting Standards ('IFRSs') and the Disclosure and the Transparency Rules of the UK's Financial Conduct Authority. They are available to the public and may be obtained from Capita plc’s website on https://www.capita.com/investors.
In these financial statements, the Company has applied the disclosure exemptions available under FRS 101 in respect of the following disclosures:
A cash flow statement and related notes;
Comparative period reconciliations for share capital;
Disclosures in respect of transactions with wholly owned subsidiaries;
Disclosures in respect of capital management;
The effects of new but not yet effective IFRSs; and
Disclosures in respect of the compensation of key management personnel.
Since the consolidated financial statements of Capita plc include equivalent disclosures, the Company has also taken the disclosure exemptions under FRS 101 available in respect of the following disclosure:
Certain disclosures required by IAS 36 in respect of the impairment of investment in subsidiaries; and
Certain disclosures required by IFRS 7 and certain disclosure exemptions as permitted by IFRS 13 Fair value measurement.
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.3
Change in accounting policies
The Company has adopted the new amendments to standards detailed below but they do not have a material effect on the Company's financial statements.
New amendments or interpretations | |
IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts | |
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) | |
Definition of Accounting Estimates (Amendments to IAS 8) | |
Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) | |
International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12) | |
1.4
Investments
The Company has investments in subsidiaries.
Investments in subsidiaries are initially recorded at cost. Subsequently they are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable.
At each balance sheet date, the Company assesses whether there are indicators to reverse the previously recognised impairment loss. The reversals of impairment are only recognised where there has been a change in the estimates used to determine the investment’s recoverable amount since the last impairment loss was recognised.
1.5
Financial instruments
Investments and other financial instruments
Classification
The Company classifies its financial instruments in the following measurement categories:
The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash flows.
Recognition and derecognition
At initial recognition, the Company measures a financial instrument at its fair value plus, in the case of a financial instrument not at FVPL, transaction costs that are directly attributable to the acquisition of the financial instrument. Transaction costs of financial instruments carried at FVPL are expensed in the income statement.
Purchases and sales of financial instruments are recognised on their trade date (i.e., the date the Company commits to purchase or sell the instrument). Financial instruments are derecognised when the rights to receive/pay cash flows from the financial instrument have expired or have been transferred such that the Company has transferred substantially all risks and rewards of ownership.
Impairment
The Company assesses, on a forward-looking basis, the expected credit losses associated with its financial instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Financial instruments (continued)
Trade and other receivables
The trade and other receivables have been measured and presented at their expected realisable values.
Trade and other payables
The trade and other payables have been measured and presented at their expected settlement values.
1.6
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax assets and unused tax losses can be utilised, except where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
1.7
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation arising from past events, it is probable that cash will be paid to settle it, and the amount can be estimated reliably.
If the effect of the time value of money is material, provisions are discounted using the yield on government bonds which have a similar timing and currency of cash flows to the provision being discounted. Where required adjustments are made to the yields to reflect the risks specific to the cash flows being discounted. The unwinding of the discount is recognised as a financing cost in the income statement.
The value of the provision is determined based on assumptions and estimates in relation to the amount, timing and likelihood of actual cash flows, which are dependent on future events. Where no reliable basis of estimation can be made, no provision is recorded. However, contingent liabilities disclosures are given when there is a greater than remote probability of outflow of economic benefits.
On an ongoing basis, management monitor provisions and their accurate estimation when compared to final outcomes.
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
1.8
Foreign exchange
Monetary assets and liabilities denominated in foreign currencies are translated into British pounds sterling at the rates of exchange ruling at the balance sheet date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Transactions in foreign currencies are recorded at the rate of exchange ruling at the date of the transaction. All foreign exchanges gains/losses are recognised in the income statement.
1.9
Group accounts
The financial statements present information about the Company as an individual company and not about its Group. The Company has not prepared Group accounts because it is fully exempt from the requirement to do so by section 400 of the Companies Act 2006 since it is a subsidiary company of Capita plc, a company incorporated in England and Wales, and is included in the consolidated financial statements of that company.
2
Significant accounting judgements, estimates and assumptions
The preparation of financial statements in accordance with generally accepted accounting principles requires the Directors to make judgements and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements and the reported income and expense during the presented periods. Although these judgements and assumptions are based on the Directors’ best knowledge of the amount, events or actions, actual results may differ.
No significant judgements, estimates and assumptions have been used in the preparation of these financial statements.
3
Profit before tax
2023
2022
Profit before tax for the year is stated after charging/(crediting)
£
£
Expense from foreign exchange differences
93,314
Write back of intercompany receivables/payables
(3,707,918)
(4,464,796)
Business disposal costs
3,184,293
1,442,234
Business disposal costs are incurred in relation to the disposal of investment in subsidiaries namely PageOne Communications Limited and Capita (IB) Solutions (Ireland) Limited. Disposal costs incurred are included in net profit on disposal of investments in note 4.
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
4
Investment income
2023
2022
£
£
Dividend income from shares in subsidiary companies
13,100,831
13,000,000
Net profit on disposal of investments
28,832,316
-
41,933,147
13,000,000
During the year, the Company has received dividends in specie from The G2G3 Group Limited (£178,690) and Liberty Printers (AR and RF Reddin) Limited (£5,922,141) in advance of its liquidation and PageOne Communications Limited (£2,500,000) and Capita (IB) Solutions (Ireland) Limited (£4,500,000) in advance of its disposal. These were settled via amounts due from Capita plc.
Refer to note 8 for details on net profit on disposal of investments.
5
Impairments
2023
2022
£
£
Impairment of investments in subsidiaries (refer to note 8)
7,436,482
146,525
7,436,482
146,525
6
Net finance income
2023
2022
£
£
Interest income
Interest receivable from Group companies
4,020,309
1,459,064
Total net finance income
4,020,309
1,459,064
7
Income tax
The major components of income tax charge are:
2023
2022
£
£
Current tax
UK corporation tax
945,599
276,884
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
7
Income tax
The major components of income tax charge are:
(Continued)
- 18 -
The charge for the year can be reconciled to the profit per the income statement as follows:
2023
2022
£
£
Profit before taxation
42,131,578
17,333,319
Expected tax charge based on the weighted average Corporation Tax rate of 23.52% (2022: 19.00%)
9,909,578
3,293,331
Expenses not deductible for tax purpose
2,359,512
(546,447)
Non-taxable income
(11,323,491)
(2,470,000)
Total adjustments
(8,963,979)
(3,016,447)
Total tax charge reported in the income statement
945,599
276,884
A change to the main UK corporation tax rate was substantively enacted on 24 May 2021. The rate applicable from 1 April 2023 increases from 19% to 25%.
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
8
Investments
Subsidiaries
£
Cost
At 1 January 2023
115,015,213
Derecognition ■
(16,774,367)
Disposals ◄
(77,555,027)
At 31 December 2023
20,685,819
Impairment
At 1 January 2023
31,422,405
Impairment charges ◙
7,436,482
Derecognition ■
(16,774,367)
Disposals ◄
(1,398,704)
At 31 December 2023
20,685,816
Net book value
At 31 December 2023
3
At 31 December 2022
83,592,808
■ The Company has derecognised its investment of £16,774,367 in Barrachd Limited following its dissolution in accordance with the wider Group restructuring plan. There is no impact on the income statement in the current year or the net book value of the investments as a result of this derecognition.
◄ During the year, the Company has sold its investments in PageOne Communications Limited to Thorgreen Holdings Limited and Capita (IB) Solutions (Ireland) Limited to Adv Finance Holding Limited. The gain on disposal of these investments has been recognised in the income statement.
Further, the Company sold its investment in Capita Secure Information Solutions Limited to Capita Business Services Ltd, a fellow Group company, as a part of Group restructuring.
◙ In advance of their liquidation, the Company impaired its investments in The G2G3 Group Ltd by £178,689 and Liberty Printers (AR and RF Reddin) Limited by £5,859,091. Further, ahead of its disposal, the Company impaired its investment in Capita Secure Information Solutions Limited by £1,398,702. The impairment charge is offset by dividends received from these subsidiaries.
9
List of Subsidiaries
Details of the company's subsidiaries at 31 December 2023 are as follows:
Name of company
Registered office
Class of
% Held
shares held
Direct
The G2G3 Group Limited
Atria One, 144 Morrison Street, Edinburgh, EH3 8EX
Ordinary
100.00
Liberty Printers (AR and RF Reddin) Limited
1 More London Place, London, SE1 2AF
Ordinary
100.00
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
10
Financial assets
Current
2023
2022
£
£
Deferred consideration
3,000,000
3,000,000
-
Deferred consideration receivable relates to disposal of investment in subsidiary Pageone Communications Limited.
11
Trade and other receivables
Current
2023
2022
£
£
Amounts due from Group companies
71,947,727
102,496,780
71,947,727
102,496,780
Amount due from ultimate parent company is chargeable to interest which is charged as per the prevailing Bank of England rates.
12
Trade and other payables
Current
2023
2022
£
£
Amount due to Group companies
14,550
154,565,239
14,550
154,565,239
Amount due to Group companies are repayable on demand.
13
Provisions
2023
2022
£
£
Current
1,286,108
-
1,286,108
CAPITA JUSTICE & SECURE SERVICES HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
13
Provisions
(Continued)
- 21 -
Business exit provision
£
At 1 January 2023
Additions made during the year
2,501,907
Utilised during the year
(1,215,799)
At 31 December 2023
1,286,108
The business exit provision relates to the cost of exiting businesses through disposal or closure including professional fees related to business exits and the costs of separating the businesses being disposed.
14
Share capital
2023
2022
2023
2022
Number
Number
£
£
Allotted, called up and fully paid
Ordinary shares of £1 each
At 1 January and 31 December
1
30,700
1
30,700
On 25 October 2023, the Company reduced its ordinary share capital to 1 ordinary share of £1 nominal value through the cancellation of 30,699 ordinary shares of £1 each with a corresponding impact to retained earnings.
15
Employees
There were no employees during the current year (2022: nil).
16
Directors' remuneration
All directors are paid by other companies within the Capita Group. The Company has not paid any fees or other remuneration to the Group based Directors related to the directorship role they provided to the Company as a part of their Group-wide executive management role. The Company has estimated that allocation of the qualifying services that these Group based Directors provided to the Company is inconsequential.
17
Controlling party
The Company's immediate parent company is Capita Business Services Ltd, a company incorporated in England and Wales.
The Company's ultimate parent company is Capita plc, a company incorporated in England and Wales. The financial statements of Capita plc are available from the registered office at 65 Gresham Street, London, United Kingdom, EC2V 7NQ.
18
Post balance sheet date events
There are no significant events which have occurred after the reporting period.
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