Company Registration No. 13556131 (England and Wales)
Project Panda Topco Limited
Annual report and
group financial statements
for the year ended 31 December 2023
Project Panda Topco Limited
Company information
Directors
Hannah Haigh
Stephen Herniman
Anton Round
Raymond Stenton
Philip Frame
Glenn Timms
(Appointed 19 May 2023)
Company number
13556131
Registered office
Irongate House
30 Dukes Place
London
EC31 7LP
Independent auditor
Saffery LLP
71 Queen Victoria Street
London
EC4V 4BE
Project Panda Topco Limited
Contents
Page
Strategic report
1 - 4
Directors' report
5 - 7
Independent auditor's report
8 - 11
Group income statement
12
Group statement of comprehensive income
13
Group statement of financial position
14 - 15
Group statement of changes in equity
16
Group statement of cash flows
17
Notes to the group financial statements
18 - 53
Parent company statement of financial position
54
Parent company statement of changes in equity
55
Notes to the parent company financial statements
56
Project Panda Topco Limited
Strategic report
For the year ended 31 December 2023
1

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

Review of the business

The company was formed in 2021 as the ultimate parent company to facilitate the management buyout of Meet Group Limited supported by new institutional investment from Northedge Capital.

The principal activity of the group continues to be that of specialist recruitment consultants providing both interim (contract) and permanent staff within the Life Sciences industry.

The group currently employs over 150 staff across hubs in New York, San Francisco, San Diego, London and Berlin.

Successful developments and achievements in a challenging period include:

 

A full breakdown of the 2023 performance can be seen under “Key Performance Indicators” below.

Future developments

Whilst current market conditions remain challenging, the group forecasts a continuation of the GP growth pattern seen in recent periods. The group does not expect to have further offices in the short term, instead increasing headcount in existing locations and taking advantage of the high-quality talent currently available in the industry.

Project Panda Topco Limited
Strategic report (continued)
For the year ended 31 December 2023
2
Key performance indicators

The group’s key performance indicators are turnover, gross profit/net fee income, operating profit and EBITDA. The Directors provide below a summary of these key performance indicators as well as adjusted results for 2023. Due to the previous period being a long, first period of account under IFRS requirements, a comparative with the prior year will not be meaningful although an adjusted EBITDA of £1.4m does reflect a relatively pleasing performance considering the challenging wider economic backdrop.

For life sciences specifically, as investment into Biotech has significantly reduced, clients have been far more considered in their hiring plans hence the average spend per client has decreased when compared to 2022. Whilst contract has continued to grow, the permanent part of the business has suffered from this downturn and management acted accordingly to reduce headcount and mitigate this net fee income drop.

Whilst acknowledging an EBITDA decrease from the prior period, this has had minimal impact on key judgements held within this set of accounts e.g. management are of the opinion that no goodwill impairment is requirement. This is primarily due to the internal restructuring that has taken place, the relative resurgence of the life sciences industry and improving wider economic conditions which has provided the backdrop for a robust set of forecasts which show strong growth moving forward.

 

 

Audited

Audited Post Acquisition

KPI’s

12m period ended Dec-23

16m period ended Dec-22 (as restated)

 

£m

£m

Turnover

63.4

88.1

Gross Profit (NFI)

25.5

43.2

Operating Profit

(1.0)

2.8

- Depreciation and Amortisation

3.4

4.2

- Share Based payment expense

(0.5)

0.5

- Transaction Costs (Legal & Professional)

-

2.7

- Interest on Loan note treated as salary

0.9

1.2

- Unrealised FX

(0.5)

1.3

- IFRS 16 Adoption

(1.7)

(1.3)

- Bank Charges (Interest Payable)

-

(0.1)

- One-off HR Costs

0.5

-

- Non-recurring Professional Fees

0.3

0.5

Adjusted EBITDA

1.4

11.8

Project Panda Topco Limited
Strategic report (continued)
For the year ended 31 December 2023
3
Principal risks and uncertainties

The group operates within multiple currencies and is, therefore, exposed to foreign exchange risk. However, this exposure is monitored by continually reviewing foreign exchange rates, and any conversions are done at the smallest spread available.

The group have bank accounts in all currencies in which we transact, and all contractors are paid and billed in the same currency to create a natural hedge.

After the transaction in September 2021, the majority of the debt provided by HSBC was redenominated into USD (from GBP) hence creating a further hedge against foreign exchange movements.

The group are also exposed to interest rate risk having a debt facility which is linked to SONIA. In order to mitigate this risk, the group have taken out an Interest Rate Cap with HSBC.

Liquidity

With economic uncertainty continuing to have macro-economic consequences throughout the duration of the reporting period, there was a risk that clients may have held on to cash longer than usual hence leading to a cash-flow squeeze as we continue to pay our contractors in a timely manner. This expected downturn, however, did not materialise. After the transaction in September 2021, the group now holds a £4m RCF facility with HSBC which is not being utilised and remains in a strong cash position as we continue to trade as efficiently as possible.

Section 172(1) statement
The directors consider, both individually and together that they have acted in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amonts other matters) to:
The likely consequences of any decision in the long term

The directors prepare a long term business plan to guide decision making and against which actual results are regularly reviewed. The group reviews its strategy in detail each year.

The interests of the group's employees

The group is committed to providing the support, time and resources to enhance both the personal and professional interests of Meet’s employees. At a human level, we've partnered with LifeWorks, a global EAP (Employee Assistance Program), to provide everyone at Meet with 24/7 confidential support on any challenges they might face in their professional or personal lives at no cost. This also includes access to a range of benefits that support health and wellbeing.

Meet are committed to creating opportunities for their employees to move their career forward. This is demonstrated by delivering in access of 3000 hours of training (a blend of both internal and external programs) to our employees that is tailored to their tenure in the business and their personalised development plans aligned with the business needs and their own ambitions.

The need to foster group's business relationships with suppliers, customers and others

Meet are committed to creating and building relationships with suppliers and customers where our purpose aligns with having a positive impact on the world of global health. Meet takes pride in developing relationships with those who take an ethical, sustainable, and impactful approach to their operations. All our offices partner with local, rather than global suppliers where possible and are committed to having open, honest and regular communication to ensure there is alignment in approach.

Project Panda Topco Limited
Strategic report (continued)
For the year ended 31 December 2023
4
The impact of the group's operations on the community and the environment

Whilst Meet are naturally passionate about people, our environmental, social and governance efforts go beyond that. Our infrastructure is centred around sustainability. Protecting the environment and maintaining it for our children and future generations motivates us to do what we can both in our operations and being proactive in our relationships with our suppliers and customers. Meet have partnered with Positive Planet to build a Net Zero strategy and in the past 12 months have been awarded Carbon Neutral status.

The directors actively support local communities where Meet are based, by encouraging its staff to take time to support causes close to them. The past year has seen over 350 days committed to supporting community efforts.

The desirability of the group maintaining a reputation for high standards of business conduct

Our values at Meet drive our business conduct. We have a wide range of policies, training and resources that ensure we have the highest standards when it comes to how we deal with our customers, suppliers, and each other. We employ a dedicated team to manage and evolve our approach to maintaining these standards including gaining advice from subject matter experts in the areas of employment, cyber and data law.

 

On behalf of the board

Hannah Haigh
Director
12 July 2024
Project Panda Topco Limited
Directors' report
For the year ended 31 December 2023
5

The directors present their annual report and financial statements for the year ended 31 December 2023.

Principal activities

The principal activity of the Company is a holding Company, and the principal activity of the Group is to be a specialist recruitment consultant providing both interim (contract) and permanent staff within the life sciences industry.

Results and dividends

The results for the year are set out on page 12.

No ordinary dividends were paid. The directors do not recommend payment of a further dividend.

No preference dividends were paid. The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Hannah Haigh
Stephen Herniman
Anton Round
Raymond Stenton
Philip Frame
Glenn Timms
(Appointed 19 May 2023)
Auditor

Saffery LLP have expressed their willingness to remain in office.

Energy and carbon report

Under the Companies Act 2006, regulation 2(2)(b)(iii), the group is exempt from reporting its carbon emissions due to the fact that neither the parent company nor any of its subsidiaries meet the reporting requirements at an individual level.

Project Panda Topco Limited
Directors' report (continued)
For the year ended 31 December 2023
6
Statement of directors' responsibilities

The directors are responsible for preparing the annual 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 the directors have elected to prepare the group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom and have also chosen to prepare the parent company financial statements in accordance with Financial Reporting Standard (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 the profit or loss of the company for that period.

 

In preparing the group financial statements, International Accounting Standard 1 requires that directors:

 

 

In preparing the parent company financial statements, the directors are required to:

 

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 also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of disclosure to auditor

Each director in office at the date of approval of this annual report confirms that:

 

 

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

Project Panda Topco Limited
Directors' report (continued)
For the year ended 31 December 2023
7
On behalf of the board
Hannah Haigh
Director
12 July 2024
Project Panda Topco Limited
Independent auditor's report
To the members of Project Panda Topco Limited
8
Opinion

We have audited the financial statements of Project Panda Topco Limited (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2023 which comprise the group income statement, the group statement of comprehensive income, the group and parent company statement of financial position, the group and parent company statement of changes in equity, the group statement of cash flows and the group and parent company notes to the financial statements, including significant accounting policies.

 

The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and UK adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).

In our opinion:

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.

Project Panda Topco Limited
Independent auditor's report (continued)
To the members of Project Panda Topco Limited
9

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

 

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:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and 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:

 

Responsibilities of directors

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 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 parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the group and parent company 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.

Project Panda Topco Limited
Independent auditor's report (continued)
To the members of Project Panda Topco Limited
10

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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.

 

Identifying and assessing risks related to irregularities:

We assessed the susceptibility of the group and parent company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the group and parent company by discussions with directors and by updating our understanding of the sector in which the group and parent company operates.

 

Laws and regulations of direct significance in the context of the group and parent company include The Companies Act 2006 and UK Tax legislation, as well as the equivalent in the United States and Germany. Off-payroll working regulations are also relevant across all jurisdictions.

 

Audit response to risks identified

We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of group and parent company financial statement disclosures. We reviewed the parent company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the parent company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.

During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. 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.

A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Project Panda Topco Limited
Independent auditor's report (continued)
To the members of Project Panda Topco Limited
11
Richard Collis (Senior Statutory Auditor)
For and on behalf of Saffery LLP
12 July 2024
Chartered Accountants
Statutory Auditor
71 Queen Victoria Street
London
EC4V 4BE
Project Panda Topco Limited
Group income statement
For the year ended 31 December 2023
12
Year
Period
ended
ended
31 December
31 December
2023
2022
as restated
Notes
£
£
Revenue
4
63,422,289
88,126,874
Cost of sales
(37,900,279)
(44,843,874)
Gross profit
25,522,010
43,283,000
Administrative expenses
(26,537,463)
(40,507,778)
Operating (loss)/profit
5
(1,015,453)
2,775,222
Finance costs
9
(2,733,809)
(4,023,618)
Other gains and losses
10
(247,265)
443,307
Loss before taxation
(3,996,527)
(805,089)
Income tax income
11
406,476
291,059
Loss for the year
(3,590,051)
(514,030)
Profit for the financial year is all attributable to the owners of the parent company.
Project Panda Topco Limited
Group statement of comprehensive income
For the year ended 31 December 2023
13
Year
Period
ended
ended
31 December
31 December
2023
2022
as restated
£
£
Loss for the year
(3,590,051)
(514,030)
Other comprehensive income:
Items that will not be reclassified to profit or loss
Currency translation differences
(441,825)
574,105
Total comprehensive income for the year
(4,031,876)
60,075
Total comprehensive income for the year is all attributable to the owners of the parent company.
Project Panda Topco Limited
Group statement of financial position
As at 31 December 2023
14
2023
2022
as restated
Notes
£
£
Non-current assets
Goodwill
12
27,121,877
27,121,877
Intangible assets
12
9,410,267
11,058,867
Property, plant and equipment
13
1,196,750
2,685,434
37,728,894
40,866,178
Current assets
Trade and other receivables
16
9,348,160
11,042,993
Current tax recoverable
534,178
459,753
Cash and cash equivalents
6,042,829
6,363,558
Derivative financial instruments
285,348
532,613
16,210,515
18,398,917
Current liabilities
Trade and other payables
19
7,333,957
6,647,104
Borrowings
18
520,000
520,372
Lease liabilities
21
1,144,468
1,684,947
8,998,425
8,852,423
Net current assets
7,212,090
9,546,494
Non-current liabilities
Borrowings
18
48,177,057
47,561,997
Lease liabilities
21
47,193
888,725
Deferred tax liabilities
20
271,617
996,954
Liability for share based payments
24
-
0
488,003
48,495,867
49,935,679
Net (liabilities)/assets
(3,554,883)
476,993
Equity
Called up share capital
26
1,122
1,122
Share premium account
25
234,047
234,047
Currency translation reserve
132,282
574,107
Retained earnings
(3,922,334)
(332,283)
Total equity
(3,554,883)
476,993
Project Panda Topco Limited
Group statement of financial position (continued)
As at 31 December 2023
15
The financial statements were approved by the board of directors and authorised for issue on 12 July 2024 and are signed on its behalf by:
Stephen Herniman
Director
Company registration number 13556131 (England and Wales)
Project Panda Topco Limited
Group statement of changes in equity
For the year ended 31 December 2023
16
Share capital
Share premium account
Currency translation reserve
Retained earnings
Total
Notes
£
£
£
£
£
As restated for the period ended 31 December 2022:
Balance at 9 August 2021
-
0
-
0
-
-
-
Loss for the period
-
-
-
(514,030)
(514,030)
Other comprehensive income:
Currency translation differences
-
-
574,107
-
574,107
Total comprehensive income
-
-
574,107
(514,030)
60,077
Transactions with owners:
Issue of share capital
26
1,122
234,047
-
-
235,169
Reserves transfer
-
-
-
181,747
181,747
Balance at 31 December 2022
1,122
234,047
574,107
(332,283)
476,993
Year ended 31 December 2023:
Loss for the year
-
-
-
(3,590,051)
(3,590,051)
Other comprehensive income:
Currency translation differences
-
-
(441,825)
-
(441,825)
Total comprehensive income
-
-
(441,825)
(3,590,051)
(4,031,876)
Balance at 31 December 2023
1,122
234,047
132,282
(3,922,334)
(3,554,883)
Project Panda Topco Limited
Group statement of cash flows
For the year ended 31 December 2023
17
2023
2022
as restated
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
33
3,756,940
8,720,504
Interest paid
(1,056,821)
(973,141)
Income taxes paid
(393,053)
(4,291,958)
Net cash inflow from operating activities
2,307,066
3,455,405
Investing activities
Net cash paid from business combinations
-
0
(30,127,593)
Purchase of property, plant and equipment
(17,885)
(380,109)
Net cash used in investing activities
(17,885)
(30,507,702)
Financing activities
Proceeds from issue of shares
-
0
1,122
Proceeds from borrowings
-
0
34,524,000
Repayment of bank loans
(433,620)
(141,069)
Payment of lease liabilities
(1,741,949)
(1,319,466)
Net cash (used in)/generated from financing activities
(2,175,569)
33,064,587
Net increase in cash and cash equivalents
113,612
6,012,290
Cash and cash equivalents at beginning of year
6,363,558
-
0
Effect of foreign exchange rates
(434,341)
351,268
Cash and cash equivalents at end of year
6,042,829
6,363,558
Project Panda Topco Limited
Notes to the group financial statements
For the year ended 31 December 2023
18
1
Accounting policies
Company information

Project Panda Topco Limited (“the company”) is a private limited company incorporated in England and Wales. The registered office is Irongate House, 30 Dukes Place, London, EC3A 7LP. The group consists of Project Panda Topco Limited and all of its subsidiaries.

 

The Company's principal activities and nature of its operations are disclosed in the Director's Report.

 

The prior period represented 8 September 2021 - 31 December 2022 following incorporation in order to align with the trading subsidiaries. The current year represents the full 12 months to 31 December 2023 and so is not wholly comparable.

 

The principal accounting policies adopted are set out below.

1.1
Accounting convention

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.

 

The Group has adopted the early amendments to IAS 1: Non-current liabilities with covenants issued in October 2022.

The financial statements are prepared in sterling, which is the functional currency of the group. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention except where IFRS requires fair value measurement. The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been applied consistently, unless otherwise stated.

 

As permitted by FRS 101, the Company has taken advantage of the following disclosure exemptions from the requirements of IFRS:

 

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
19
1.2
Business combinations

The consideration transferred for the acquisition of a subsidiary comprises the:

 

 

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date.

 

The excess of the:

 

1.3
Basis of consolidation

Subsidiaries are all entities over which the group has control. The group controls an entity where the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

 

The acquisition method of accounting is used to account for business combinations by the group. Profit or loss and other comprehensive income of the subsidiaries acquired or disposed of during the year are recognised from the effected date of acquisition, or up to the effective date of disposal, as applicable.

 

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. Accounting policies of subsidiaries have been aligned where necessary to ensure consistency with the policies adopted by the group.

1.4
Going concern

The directors have at the time of approving the financial statements, a reasonable expectation that the truegroup 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.

 

The directors have forecast profit and loss, financial position and cash flows up to 31 December 2025. In the opinion of the directors, there are no key assumptions in deriving these forecasts in which a reasonably possible change could result in a material uncertainty over going concern. Loss before tax for the year ended 31 December 2023 was £4.0m and cash at bank was £6.0m. As set out in note 18, bank loans are not due for repayment until 2027. On the basis of the matters above, directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
20
1.5
Revenue

Revenue from contracts with customers is recognised at an amount that reflects the consideration to which the Group is expected to be entitled in exchange for transferring services to a customer. For each contract with a customer, the Group:

 

 

At contract inception, an assessment is completed to identify the performance obligations in each contract. Performance obligations in a contract are services that are distinct, or part of a series of distinct goods and services that are substantially the same and have the same pattern or transfer to the customer.

 

Turnover is measured at the fair value of the consideration received or receivable at the point in time and represents amounts receivable for services provided in the normal course of business, net of discounts, VAT and other sales- related taxes.

 

Performance obligation identification

Although the specific services and method of delivery vary based on the terms of each contract, management has identified the main performance obligations present in the Group's contracts with customers.

 

The group satisfies its performance obligations upon completion of the services as outlined in the contracts and in providing permanent and temporary candidates into the third party entity.

 

Turnover arising from the placement of permanent candidates, is recognised at the point in time the candidate commences full-time employment. Turnover arising from temporary contractor placements, is recognised in the month of the work being performed by the contractor through the duration of the placement. Turnover arising from the RPO (Recruitment Process Outsourcing agreement) is recognised on a monthly basis with regards to the monthly fee invoiced and subsequently recognised when a hire is made.

 

Management have concluded that the services provided are not distinct i.e. the client is not able to benefit from the services on their own and the Group will not be able to fulfil its promise by transferring these separately - i.e. all of the services are significantly affected by each other. Therefore there is considered to be one performance obligation and the total transaction price is allocated to this performance obligation.

Once the invoices have been raised, these have standard credit terms for trade receivables are 30-60 days from invoice date, although certain credit terms are contract specific.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
21

Transaction price determination

After identifying the performance obligations, the Group determines the amount of consideration it expects to be entitled to for providing the services under the contracts based on the consideration specified in the customer arrangement.

 

The revenue recognised from a permanent placement is typically based on a percentage of the candidate's remuneration package. The turnover arising from temporary placements is typically based on a percentage of the placement's hourly rate less employment taxes. Turnover arising from the RPO (Recruitment Process Outsourcing agreement) is recognised on an agreed monthly fee and subsequently an additional fee is raised when a hire is made.

 

As the majority of the Group's contracts are for a term of 12 months or less, the Group is not required to adjust the promised amount of consideration for effects of a significant financing component. All amounts are allocated for the transaction price as all performance obligations would be satisfied at the point of invoice.

 

In some cases, the customer is entitled to a rebate percentage of the fee if the candidate's employment comes to an end within the first few weeks of the contract.

1.6
Goodwill

Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less impairment losses.

 

The gain on a bargain purchase is recognised in profit or loss in the period of the acquisition.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not subsequently reversed.

1.7
Intangible assets other than goodwill

Separately acquired intangible assets

Intangible assets with finite useful lives that are acquired separately are carried at cost, less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis based on the estimated useful lives of the assets. The estimated useful life and amortisation method are reviewed at the end of each year and the effect of any changes in estimates are recorded prospectively.

 

Other intangibles acquired as part of a business combination

Intangible assets acquired as part of a business combination (which includes customer relationships, brand names and software) are measured at fair value at the acquisition date. They have a finite useful life and are amortised on a straight-line basis over their estimated useful life, except for brand names. These are reviewed for impairment annually or more frequently if circumstances indicate that the assets may be impaired.

 

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
22

Amortisation methods and periods

 

The Group amortises intangible assets with a finite useful life, using the straight-line method over the following periods:

Customer relationships 12 years straight line

Order Book 2 years straight line

Brand 10 years straight line

 

Capitalised development expenditure is initially recognised at cost and subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

1.8
Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold improvements
100% straight line
Fixtures and fittings
25% reducing balance
Computers
33% straight line
Right-of-use assets
Over the life of the lease

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 income statement.

 

Right-of-use assets

All leases are accounted for by recognising a right-of-use asset and a lease liability.

 

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the Company's incremental borrowing rate on commencement of the lease is used.

 

Identifying leases

The Group accounts for a contract, or a portion of a contract, as a lease when it conveys the right to use an asset for a period of time in exchange for consideration. Leases are those contracts that satisfy the following criteria:

 

(a) There is an identified asset;

(b) The Group obtains substantially all the economic benefits from use of the asset; and

(c) The Group has the right to direct use of the asset.

 

The Group considers whether the supplier has substantive substitution rights. If the supplier does have those rights, the contract is not identified as giving rise to a lease.

 

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
23

In determining whether the Group obtains substantially all the economic benefits from use of the asset, the Group considers only economic benefits that rise use of the asset, not those incidental to legal ownership or other potential benefits.

 

In determining whether the Group has the right to direct use of the asset, the Group considers whether it directs how and for what purpose the asset is used throughout the period of use. If there are no significant decisions to be made because they are pre-determined due to the nature of the asset, the Group considers whether it was involved in the design of the asset in a way that predetermined how and for what purpose the asset will be used throughout the period of use. If the contract or portion of a contract does not satisfy these criteria, the Group applies other applicable IFRSs rather than IFRS 16.

 

On initial recognition, the carrying value of the lease liability also includes:

 

Right of use assets re initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

 

Subsequently, lease liabilities increase as a right of the interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right of use assets are depreciated on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.

1.9
Non-current investments

Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the parent company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
24
1.10
Impairment of tangible and intangible assets

If any indication that non-current assets have suffered an impairment loss exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). 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 Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in 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.

1.11
Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.12
Financial assets

Financial assets are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

 

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss.

 

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price as disclosed in the section 'Revenue recognition'.

 

 

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
25

For purposes of subsequent measurement, financial assets are classified in two categories:

 

 

The Group's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows, which will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. All other assets are classified and measured at fair value through profit or loss.

 

All Group financial assets, other than cash and cash equivalents and derivatives, are classified and measured at 'amortised cost'. The amortised cost of a financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest rate method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance. Interest income is recognised using the effective interest rate method for financial assets subsequently measured at amortised cost. For financial assets other than purchased or originated credit-impaired financial assets, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired.

Impairment of financial assets

Where there has not been a significant increase in exposure to credit risk since initial recognition, a lifetime credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of the expected credit loss recognised is adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables.

 

For trade receivables the Group applies a simplified approach in calculating expected credit losses ("ECLs"). Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. This is further enhanced with specific provisions where this is deemed appropriate by management.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 to 90 days.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
26
1.13
Financial liabilities

The group recognises financial debt when the group becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

Other financial liabilities

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Derecognition of financial liabilities

Financial liabilities are derecognised when, and only when, the group’s obligations are discharged, cancelled, or they expire.

 

Trade and other payables

Trade and other payables represent liabilities for services provided to the Group prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

 

Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Borrowings are derecognised when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.

1.14
Equity instruments

Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the Group.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
27
1.15
Derivatives

Derivatives, including forward foreign exchange contracts are financial assets at fair value through profit or loss. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value at each reporting date. Changes in the fair value of derivatives are recognised in profit or loss unless hedge accounting is applied. Hedge accounting is not applied as the technical requirements of IFRS 9 Financial Instruments are not met.

 

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are classified as current.

 

The categorisation of fair value measurements between the different levels of the fair value hierarchy set out in IFRS 13 Fair Value Measurement depends on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement.

 

The three levels are:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: Inputs other than quotes prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3: Inputs for assets and liabilities that are not based on observable market data.

1.16
Taxation

The income tax expense or credit for the period is the tax payable or receivable on the current period's taxable income, based on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
28

Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

 

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Group is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

 

Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

 

Current tax and deferred tax for the period

Current tax and deferred tax for the period Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

 

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Company's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non- current.

 

A liability is classified as current when: it is either expected to be settled in the Company's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

 

Deferred tax assets and liabilities are always classified as non-current.

1.17
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

 

Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees' services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.

 

Post-employment obligations

The Group operates a defined contribution pension plan. For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due.

 

Long term employment benefits

The manager loan notes and preference shares issued on the acquisition have interest charged which are treated as remuneration cost to the employees of the Group. These obligations are measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period, using the effective interest rate method.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
29
1.18
Share-based payments

Cash-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the instruments granted using the Monte Carlo model. The fair value determined at the grant date is expensed on a straight- line basis over the period of service of key management vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to non-current liabilities.

 

The Company participates in a share-based payment arrangement granted to its management by its ultimate parent Company. The Company has elected to recognise and measure its share-based payment expense on the basis of a reasonable allocation of the expense for the Group recognised in its consolidated accounts.

 

The expense in relation to options over the parent Company's shares granted to employees of the Company is recognised by the Company as a capital contribution and presented as an increase in the parent's investment in that subsidiary.

1.19
Leases

A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, where the interest rate implicit in the lease cannot be readily determined the lease payments are discounted using the Group's incremental borrowing rate ("IBR"). The lease term is estimated as the non-cancellable period of a lease, plus any option to extend or terminate the lease which is expected to be exercised.

The lease liability is measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the future lease payments or lease term. When a lease liability is remeasured, an adjustment is made to the corresponding right-of-use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.

1.20
Foreign exchange

In preparing the financial statements of each Group Company, transactions in currencies other than each of the Company's functional currency are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in foreign currency are retranslated at the rates prevailing at each reporting date.

 

Non-monetary items carried at fair value and denominated in foreign currency are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items measured at historical cost in a foreign currency are retranslated.

 

Exchange differences are recognised in profit or loss in the period in which they arise.

For the presentation purposes of these consolidated financial statements, assets and liabilities of foreign operations of the Group are translated at the exchange rates prevailing at the end of the reporting period.

1.21

Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Group, on or before the end of the reporting period but not distributed at the end of the reporting period.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
30
2
Adoption of new and revised standards and changes in accounting policies
Standards which are in issue but not yet effective

At the date of authorisation of these financial statements, the following standards and interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective:

Amendments to IFRS 16
Lease Liability in a Sale and Leaseback - effective on or after 1 January 2024
Amendments to IAS 7 and IFRS 7
Supplier Finance Arrangements - effective on or after 1 January 2024

The directors are evaluating the impact that these standards will have on the financial statements of Project Panda Topco and are satisfied that these will not have a material impact. The Classification of Liabilities as Current or Non-Current, Non-Current Liabilities with Covenants: amendments to IAS 1 (effective on or after 1 January 2024) have been early adopted.

At the date of authorisation of these financial statements, the following standards and interpretations relevant to the Group and which have not been applied in these financial statements, have not been endorsed for use in the UK and will not be adopted until such time as endorsement is confirmed.

 

The directors are evaluating the impact that these standards will have on the financial statements of Project Panda Topco Limited and is not expecting there to be a material impact, other than the significant presentation changes as a result of IFRS 18 – Presentation and Disclosure in Financial Statements.

3
Critical accounting estimates and judgements

In the application of the company’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, 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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

Critical judgements
Fair value on acquisition of Meet Group Limited

The fair value of the intangible assets acquired in the acquisition of Meet Group Limited involved using valuation techniques and the estimation of future cash flows to be generated over a number of years. This requires a combination of assumptions including growth and brand reputation. The use of discount rates is a judgement, the details of the fair value of the intangible assets acquired are in note 12; customer relations acquired have been discounted at 21.1%, order book discounted at 11.7% and brand discounted at 21.1%. These are a judgemental area and have been considered to be aligned with the market participant return.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
3
Critical accounting estimates and judgements (continued)
31
Amortisation of intangibles

The assessment of the useful economic lives and the method of amortising intangible assets requires judgement. Amortisation is charged to profit or loss based on the useful economic life selected, which requires an estimation of the period and profile over which the company expects to consume the future economic benefits embodied in the assets. At 31 December 2023 the carrying value of intangible assets was £36,532,144 and amortisation of £1,648,600 was charged in the period.

Loss allowance on trade receivables

For trade receivables and contract assets, the Group applies a simplified approach in calculating expected credit losses ("ECLs"). The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each subsidiary. See note 16 for the carrying amount of trade receivables and the allowance for expected credit losses.

Revenue from contracts with customers

In connection with the recognition of revenue, the Group makes significant judgments mainly with regards to the identification of performance obligations, the allocation of consideration to each separately identifiable performance obligation.

Share-based payments

Share-based payments are valued at the date of grant using a Monte Carlo pricing model. The key judgements relate to the inputs to the pricing model which include share price volatility, historical and expected dividends and expected future performance of the entity to which the award relates. See note 23 for further details.

 

Goodwill impairment

The group determines whether goodwill is impaired on an annual basis. This requires an estimate of the value in use of the cash-generating unit to which goodwill is allocated.

 

In assessing the value in use, the estimated cash flows expected to arise from cash-generating units are discounted to their present value.

 

Further details of the impairment review carried out by the directors are given in note 12.

Key sources of estimation uncertainty
Valuation of derivative financial instruments

The categorisation of fair value measurements between the different levels of the fair value hierarchy set out in IFRS 13 Fair Value Measurement depends on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement.

 

The three levels are:

 

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: Inputs other than quotes prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3: Inputs for assets and liabilities that are not based on observable market data.

 

The entity entered into a number of Derivative assets contracts to manage the foreign exchange risk of the HSBC bank loan between the USD and GBP amounts. Derivative assets contracts for the purchase of USD are classified as Level 2 instruments. At the period end date the derivative asset contract was £285,348. See note 16.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
32
4
Revenue
Year ended
Period ended
2023
2022
£
£
As restated
Revenue analysed by class of business
Permanent placement fees
16,571,928
32,324,913
Standard contractor fees
46,850,361
55,801,961
63,422,289
88,126,874
Year ended
Period ended
2023
2022
£
£
Revenue analysed by geographical market
United Kingdom
20,283,680
31,483,102
USA
41,582,870
54,735,704
Europe
1,555,739
1,908,068
63,422,289
88,126,874

The Group aggregate revenue recognised from contracts with customers is split into categories that depict the nature of the revenue and the cash flows of the Group and are in line with IFRS 15 paragraph 114.

5
Operating (loss)/profit
Year ended
Period ended
2023
2022
Operating (loss)/profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(473,038)
1,300,441
Depreciation of property, plant and equipment
1,757,372
1,605,968
Amortisation of intangible assets (included within administrative expenses)
1,648,600
2,604,133
Share-based payments
(488,003)
488,131
Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
33
6
Auditor's remuneration
Year ended
Period ended
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
30,000
20,000
Audit of the financial statements of the company's subsidiaries
69,500
58,000
99,500
78,000
For other services
Tax services
7,500
7,000
Other services
9,000
8,000
Total non-audit fees
16,500
15,000
7
Employees

The average monthly number of persons (including directors) employed by the group during the year was:

Year ended
Period ended
2023
2022
Number
Number
Directors
5
3
Administrative staff
222
213
Total
227
216

Their aggregate remuneration comprised:

Year ended
Period ended
2023
2022
£
£
Wages and salaries
17,674,827
22,993,525
Social security costs
1,577,715
1,937,894
Pension costs
60,847
67,000
19,313,389
24,998,419
Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
34
8
Directors' remuneration
Year ended
Period ended
2023
2022
£
£
Remuneration for qualifying services
888,313
1,496,801
Company pension contributions to defined contribution schemes
9,642
11,094
Cash-settled share based payment
(319,353)
319,353
578,602
1,827,248
Remuneration disclosed above includes the following amounts paid to the highest paid director:
Year ended
Period ended
2023
2022
£
£
Remuneration for qualifying services
298,461
565,281
Cash settled share-based payment
(136,150)
136,150

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2023: 3). The directors are paid for their services through a 100% subsidiary located in England and Wales.

9
Finance costs
Year ended
Period ended
2023
2022
£
£
Interest on bank overdrafts and loans
1,078,501
1,108,179
Interest on lease liabilities
101,447
148,499
Other interest payable
1,553,861
2,766,940
Total interest expense
2,733,809
4,023,618
10
Other gains and losses
Year ended
Period ended
2023
2022
£
£
Change in value of financial assets at fair value through profit or loss
(247,265)
443,307
Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
35
11
Income tax expense
Year ended
Period ended
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
-
0
(291,059)
Foreign taxes and reliefs
318,861
-
0
318,861
(291,059)
Deferred tax
Origination and reversal of temporary differences
(562,790)
-
0
Adjustment in respect of prior periods
(162,547)
-
0
(725,337)
-
0
Total tax (credit)
(406,476)
(291,059)

The charge for the year can be reconciled to the loss per the income statement as follows:

Year ended
Period ended
2023
2022
£
£
Loss before taxation
(3,996,527)
(805,089)
Expected tax credit based on a corporation tax rate of 23.52% (2022: 19.00%)
(939,983)
(152,967)
Effect of expenses not deductible in determining taxable profit
1,034,378
1,875,668
Income not taxable
(89,393)
-
Change in unrecognised deferred tax assets
46,464
-
Adjustment in respect of prior years
-
(5,910)
Permanent capital allowances in excess of depreciation
1,810
(3,601)
Other permanent differences
-
(406,354)
Effect of overseas tax rates
168,900
524,292
Deferred tax adjustments in respect of prior years
(162,547)
-
Remeasurement of deferred tax for changes in tax rates
(466,105)
(2,242,341)
Movement in deferred tax not recognised
-
(19,749)
Other tax adjustments
-
139,903
Taxation credit for the year
(406,476)
(291,059)
Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
36
12
Intangible assets
Goodwill
Customer relationships
Order book
Brand
Total
£
£
£
£
£
Cost or valuation
Additions
27,121,877
8,640,000
1,827,000
3,196,000
40,784,877
At 31 December 2022
27,121,877
8,640,000
1,827,000
3,196,000
40,784,877
At 31 December 2023
27,121,877
8,640,000
1,827,000
3,196,000
40,784,877
Amortisation and impairment
Charge for the year
-
0
960,000
1,218,000
426,133
2,604,133
At 31 December 2022
-
0
960,000
1,218,000
426,133
2,604,133
Charge for the year
-
0
720,000
609,000
319,600
1,648,600
At 31 December 2023
-
0
1,680,000
1,827,000
745,733
4,252,733
Carrying amount
At 31 December 2023
27,121,877
6,960,000
-
2,450,267
36,532,144
At 31 December 2022
27,121,877
7,680,000
609,000
2,769,867
38,180,744
Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
12
Intangible assets (continued)
37

Amortisation charged is included in administrative expenses in the statement of comprehensive income.

 

The directors believe that there is a single cash-generating unit and have allocated all assets of the business, including goodwill, to this cash-generating unit. The cash-generating unit is assessed annually for impairment based on the carrying amounts of those assets at 31 December each year. The directors assess the recoverable amount of the assets of the cash-generating unit by calculating its value in use. The key assumptions in calculating value in use are future growth rates and the discount rate.

 

Forecast cash flows for the purposes of calculating value in use are based on detailed forecasts up to 31 December 2025, after which cash flows are calculated by reference to growth rates. The detailed forecast cash flows are ambitious and assume a constant growth rate (30% from 2026 following a period of high growth in 2025 to bring the group back up to pre-2023 performance levels) based on current discussions around value creation and the investment cycle of the group. Subsequent extrapolated cash flows are based continuing growth of 30% to year 5 based on the current investment cycle thereafter continuing in perpetuity at a lower rate of 2%. These growth rates, whilst ambitious are expected by directors to be achievable on the assumption the industry bounces back in 2025. The forecast execution risk has been factored into the company specific risk factor used when determining the discount rate.

 

A discount rate of 17.5% has been calculated by directors. This was calculated using a weighted average calculation. The directors are comfortable with the forecasts and estimates used, however are aware that the should the company risk factor be increased there would be an impairment to goodwill. It should be noted that the 17.5% discount rate is applying the higher of the range proposed by management as the deemed company specific risk.

 

Using a discount rate of 17.5% there is headroom of £2.6m, should the company specific risk factor be increased by one percentage point, this would lead to a discount rate of 18.4% which would result in a material impairment to goodwill

 

Company

The Company had no intangible assets in the period.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
38
13
Property, plant and equipment
Leasehold improvements
Fixtures and fittings
Computers
Right-of-use assets
Total
£
£
£
£
£
Cost
Additions
96,046
34,365
455,817
2,165,205
2,751,433
Business combinations
-
0
-
0
144,399
1,464,787
1,609,186
Foreign currency adjustments
-
0
-
0
11,589
174,168
185,757
At 31 December 2022
96,046
34,365
611,805
3,804,160
4,546,376
Additions
-
0
-
0
17,885
293,135
311,020
Foreign currency adjustments
(2,231)
(1,503)
(19,057)
(95,643)
(118,434)
At 31 December 2023
93,815
32,862
610,633
4,001,652
4,738,962
Accumulated depreciation and impairment
At 9 August 2021
4
232
205,820
-
0
206,056
Charge for the year
32,548
4,489
150,559
1,418,372
1,605,968
Foreign currency adjustments
-
0
-
0
-
0
48,918
48,918
At 31 December 2022
32,552
4,721
356,379
1,467,290
1,860,942
Charge for the year
51,698
7,589
133,516
1,564,569
1,757,372
Foreign currency adjustments
(1,079)
(705)
(12,518)
(61,800)
(76,102)
At 31 December 2023
83,171
11,605
477,377
2,970,059
3,542,212
Carrying amount
At 31 December 2023
10,644
21,257
133,256
1,031,593
1,196,750
At 31 December 2022
63,494
29,644
255,426
2,336,870
2,685,434
14
Investments
Current
Non-current
2023
2022
2023
2022
£
£
£
£
Investments in subsidiaries
-
0
-
0
1,392,567
1,880,600
Fair value of financial assets carried at amortised cost

Except as detailed below the directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.

Investment in subsidiary undertakings

Details of the company's principal operating subsidiaries are included in note 15.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
14
Investments (continued)
39
Movements in non-current investments
Shares in subsidiaries
£
Cost or valuation
At 1 January 2023
1,880,600
Other movements
(488,033)
At 31 December 2023
1,392,567
Carrying amount
At 31 December 2023
1,392,567
At 31 December 2022
1,880,600
15
Subsidiaries

Details of the company's subsidiaries at 31 December 2023 are as follows:

Name of undertaking
Registered office
Class of
shares held
% Held
Direct
Voting
Project Panda Bidco Limited
Irongate House, 30 Dukes Place, London, EC3A 7HX
Ordinary
100
-
Meet Recruitment Limited
Irongate House, 30 Dukes Place, London, EC3A 7HX
Ordinary
0
100
Meet Recruitment Inc
408 Broadway, Floor 4, New York, NY10013
Ordinary
0
100
Meet Personalberatung GmbH
Trogerstraße 23, 81675, Munchen
Ordinary
0
100
Meet Group Limited
Irongate House, 30 Dukes Place, London, EC3A 7HX
Ordinary
0
100
Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
40
16
Trade and other receivables
2023
2022
£
£
as restated
Trade receivables
7,451,988
9,417,316
Provision for bad and doubtful debts
(364,828)
(210,000)
7,087,160
9,207,316
Contract assets (note 17)
1,104,959
876,509
VAT recoverable
196,543
4,600
Other receivables
496,475
562,704
Prepayments and accrued income
463,023
391,864
9,348,160
11,042,993

Standard credit terms for trade receivables are 30-60 days from invoice date, although certain credit terms are contract specific. The average credit period for sales is 53 days, and no interest is charged on trade receivables. Trade receivables are stated after an expected credit loss allowance of £364,828 (2022: £210,000). There are no trade receivables that fall due after more than one year.

 

In February 2022, Project Panda Bidco Limited purchased a Derivative asset contract for £89,306. The derivative asset contracts have been used to manage the foreign exchange risk of the HSBC bank loan between the USD and GBP amount. Hedge accounting is not applied as the technical requirements of IFRS 9 Financial Instruments are not met. Gains and losses on these derivatives are recorded in the entity's income statement within other gains and losses. At the reporting date, a £247,265 loss (2022: £443,307 gain) was recognised in the profit and loss in relation to derivate asset contracts. Derivative financial instruments for the purchase of Dollars are classified as Level 2 instruments and are fair valued based on inputs which are observable for the derivatives, but which are not quoted prices included within Level 1. The fair value at the reporting date was £285,348 (2022: £532,613).

 

The Company had no derivatives in the period.

17
Contracts with customers
2023
2022
2022
Year end
Period end
Period start
(as restated)
£
£
£
Contracts in progress
Contract assets
1,104,959
876,509
-
Contract liabilities
(28,432)
(450,339)
-

An explanation of the effect of the timing of the satisfaction of performance obligations and payments on the amount of contract assets is given in the accounting policies above. No impairments of contract assets have been charged in the year and the directors believe that any provisions for expected credit losses would be immaterial.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
17
Contracts with customers (continued)
41

Contract assets relate to revenue recognised in respect of services provided during the period for which no invoice had been raised at the balance sheet date.

 

Contract liabilities relate to invoices raised for which the service had not been provided in the period, therefore revenue not to be recognised in the period.

18
Borrowings
Current
Non-current
2023
2022
2023
2022
£
£
£
£
Borrowings held at amortised cost:
Bank loans
520,000
520,372
12,934,952
13,873,754
Redeemable preference shares
-
-
1,418,256
1,477,194
Loans from related parties
-
-
33,823,849
32,211,049
520,000
520,372
48,177,057
47,561,997

On 3 September 2021, the following loans were drawn down:

 

HSBC Bank loans were drawn down which consist of Term A,B and a revolving credit facility. On the 8 September 2021, both Terms A and B were part exchanged into US Dollar loans.

 

 

Both the term A and B loans are subject to a cashflow cover, adjusted leverage, minimum cash and minimum EBITDA covenant which are assessed on a quarterly basis. Due to current economic conditions impacting the life sciences sector it has been agreed with HSBC that the next cash flow covenant will be 31 March 2025 and the adjustment leverage covenant will be 31 December 2024.

 

Secured Manager Loan notes of £8,090,368 were drawn down to certain Vendors as part of the consideration of Meet Group Limited, these loans are due for repayment in September 2027. The effective interest rate calculated is 4.6% per annum.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
18
Borrowings (continued)
42

Secured investor loan notes were drawn down of £21,524,000 net of issue costs owed to North Edge Capital Fund III LP and North Edge Co Investment III LP. The loans are due for repayment in September 2027 with an effective rate of interest calculated at 8.4% (2022: 7.3%). The effective rate of interest was adjusted in the year to take into account a change in the expected life of the liability, therefore increasing the period over which the costs were to be spread. This facility is secured by North Edge Capital LLP and contain fixed and floating charges over the assets of the company.

 

All loans mature within 5 years of the year end date.

 

The redeemable preference shares represent 1,675,842 fully paid 8% cumulative redeemable preference shares. The shares are entitled to dividends at the rate of 8% per annum. Since the shares are mandatorily redeemable at the earlier of a share sale, listing or wind up or 30 September 2027, they are recognised as liabilities and recognised at amortised cost at an effective interest rate of 4.6%.

19
Trade and other payables
2023
2022
£
£
as restated
Trade payables
2,635,081
1,964,503
Contract liabilities (note 17)
28,432
450,339
Accruals
1,615,110
2,120,791
Social security and other taxation
211,331
210,668
Other payables
2,844,003
1,900,803
7,333,957
6,647,104
20
Deferred taxation
2023
2022
£
£
Deferred tax liabilities
2,364,854
2,791,164
Deferred tax assets
(2,093,237)
(1,794,210)
271,617
996,954

The following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current and prior reporting period.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
20
Deferred taxation (continued)
43
ACAs
Tax losses
Revaluations
Spare 1
Total
£
£
£
£
£
Balance as at 9 August 2021
-
-
-
-
-
0
Deferred tax movements in prior year
Charge/(credit) to profit or loss
26,447
(1,774,616)
(19,594)
2,764,717
996,954
Liability at 1 January 2023
26,447
-
0
-
0
2,764,717
2,791,164
Asset at 1 January 2023
-
0
(1,774,616)
(19,594)
-
(1,794,210)
Deferred tax movements in current year
Charge/(credit) to profit or loss
(14,160)
(291,659)
(7,368)
(412,150)
(725,337)
Liability at 31 December 2023
12,287
-
0
-
0
2,352,567
2,364,854
Asset at 31 December 2023
-
0
(2,066,275)
(26,962)
-
(2,093,237)
21
Lease liabilities
2023
2022
Maturity analysis
£
£
Within one year
1,144,468
1,684,947
In two to five years
47,193
888,725
Total liabilities
1,191,661
2,573,672

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

2023
2022
£
£
Current liabilities
1,144,468
1,684,947
Non-current liabilities
47,193
888,725
1,191,661
2,573,672
2023
2022
Amounts recognised in profit or loss include the following:
£
£
Interest on lease liabilities
101,447
148,499
Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
21
Lease liabilities (continued)
44

The rates of interest implicit in the Group's property lease arrangements are not readily determinable and the weighted average incremental borrowing rate applied in calculating the lease liability is 4.97%. The fair value of the Group's lease obligation is approximately equal to their carrying amount.

22
Provisions for liabilities

During the year, a provision of £206,405 was recognised within other payables in relation to an onerous contract.

 

The contract was entered into prior to the year end for a set number of licences of which, following the reduction in headcount, is no longer being fully utilised. The contract is non-cancellable and non-negotiable; therefore, a provision has been recognised for the element considered to be onerous, which equates to the cost of the licences held surplus to requirement based on forecasted headcount.

23
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
60,847
67,000

The group operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
45
24
Share-based payments
Equity instruments other than share options

The C1 and C2 shares were awarded to key management personnel in the prior year for consideration of £234k. The value of these shares will be realised either through an Exit event, defined as a disposal or listing, or upon the employee leaving, with the value received dependent upon the category of leaver.

 

These met the definition of a cash-settled share based payment arrangement, and as such have been valued under the Monte-Carlo model over a 3 year vesting period, which is in line with the leaver clauses.

 

The following table shows the value of the cash-settled share based payment arrangement as at the prior and current year end:

 

Year end

 

31 December 2023

 

31 December 2022

Valuation model

 

Monte Carlo

 

Monte Carlo

Time to exercise (years)

 

3.7

 

2.7

Opening equity value (£'000)

 

1,498

 

36,866

Expected volatility (%)

 

37.00%

 

37.00%

Expected dividend yield (%)

 

0.00%

 

0.00%

Risk free rate

 

3.35%

 

3.58%

 

 

 

 

 

Fair value of C1 class (£)

 

-

 

1,792,000

Fair value of C2 class (£)

 

-

 

66,000

Number of C1 Shares

 

250,000

 

250,000

Number of C2 Shares

 

150,000

 

150,000

Fair value per C1 Share (£)

 

-

 

7.17

Fair value per C2 Share (£)

 

-

 

0.44

 

 

As at 31 December 2023, the value of the cash-settled share based payment was determined to be £nil. Therefore the liability recognised in the prior year of £488k was released in the consolidated statement of profit and loss and comprehensive income under administrative expenses.

2023
2022
£
£
Liabilities
Liabilities arising from share-based payment transactions
-
0
488,003
Expenses
Related to cash settled share based payments
(488,003)
488,131
25
Share premium account
2023
2022
£
£
At the beginning of the year
234,047
-
0
Issue of new shares
-
234,047
At the end of the year
234,047
234,047
Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
46
26
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of 0.1p each
502,741
502,741
503
503
Ordinary B1 shares of 0.1p each
209,307
209,307
209
209
Ordinary B2 shares of 0.1p each
37,952
37,952
38
38
Ordinary C1 shares of 0.1p each
230,000
230,000
230
230
Ordinary C2 shares of 0.1p each
142,000
142,000
142
142
1,122,000
1,122,000
1,122
1,122

The A Ordinary shares entitle the holder to one vote for each share held and an entitlement to any profits available for distribution, which will be distributed among the holders of A shares, BI shares, B2 shares, and Cl shares. The B preference shares have no voting rights and an entitlement to a fixed cumulative preferential net dividend and are redeemable. The B1, B2 and CI Ordinary shares entitle to one vote for each share held, entitlement to any profits available for distribution to be distributed amongst the holders of A shares, BI shares, B2 shares and CI shares. The B1, B2 and Cl Ordinary shares are not redeemable. The C2 Ordinary shares have no voting rights, no entitlement to any profits available for distribution and are not redeemable.

27
Other reserves

Share premium

Consideration received for shares issued above their nominal value net of transaction costs.

 

Foreign currency translation reserve

Represents the cumulative translation differences of the Group results from functional currency to the presentational currency used in the financial statements.

 

Retained earnings

Cumulative profit and loss net of distributions to owners.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
47
28
Capital risk management

The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.

 

Market risk

 

Foreign currency risk

The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations.

 

Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the Group's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.

 

The majority of cash inflows and outflows in entities having a functional currency other than the reporting currency of the Company are in their respective functional currency. The Company considers these risks to be relatively limited. However, one of the subsidiaries entered into a derivative asset contract to manage the foreign exchange risk of the HSBC bank loan between the USD and GBP amount. This derivative asset contract is still open at 31 December 2023. Hedge accounting has not been applied and the contract was held at fair value through profit or loss.

 

Sensitivity

As the Group operates internationally, it is exposed to currency risks as a result of potential exchange rate fluctuations.

 

Foreign exchange risk arises on financial instruments that are denominated in foreign currencies. The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure of the Group's financial instruments recorded in its statement of financial position.

 

The impact of a +10% appreciation in GBP against Group currencies on earnings before income tax for 2023 is the following:

 

 

Impact on EBIT

 

2023

2022

 

£'000's

£'000's

GBP/USD Exchange rate increase

(77)

(726)

GBP/EUR Exchange rate increase

-

(18)

 

 

 

Price risk

 

The Group is not exposed to any significant price risk.

 

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The group are exposed to interest rate risk having a debt facility which is linked to SONIA. In order to mitigate this risk, the group have taken out an Interest Rate Cap with HSBC on the USD loan.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
28
Capital risk management (continued)
48

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group's principal financial assets consist of cash and trade accounts receivable which represent the Group's exposure to credit risk in relation to financial assets.

 

The Group does not require collateral or other security from customers for trade accounts receivable; however, credit is extended following an evaluation of creditworthiness. In addition, the Group performs ongoing credit reviews of all its customers and establishes an allowance for expected credit losses when amounts within accounts are determined to be uncollectible.

The Group is protected against any concentration of credit risk through its diverse range of customers and geographical diversity. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements.

 

The credit risk in respect of cash is limited as the counterparties are banks with high credit ratings assigned by international credit-rating agencies.

 

Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
49
29
Liquidity risk

Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.

 

The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.

 

Remaining contractual maturities

The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

< 1 year
1 – 5 years
Total
£
£
£
At 31 December 2022
Trade and other payables
6,654,104
-
6,654,104
Loans and borrowings
520,372
47,566,997
48,087,369
Lease liabilities
1,684,947
888,725
2,573,672
8,859,423
48,455,722
57,315,145
At 31 December 2023
Trade and other payables
7,127,554
-
7,127,554
Loans and borrowings
520,000
48,804,294
49,324,294
Lease liabilities
1,144,468
47,193
1,191,661
8,792,022
48,851,487
57,643,509
30
Fair value of financial assets and liabilities

The directors consider that the carrying amounts of financial instruments carried at amortised cost in the financial statements approximate to their fair values.

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
30
Fair value of financial assets and liabilities (continued)
50

The following table details the Group's assets and liabilities, measured or disclosed at fair value, using three-level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:

 

Level 1: Quoted prices in active markets for identical items

Level 2: Observable direct or indirect inputs other than Level 1 inputs; and

Level 3: Unobservable inputs, thus not derived from market data:

 

 

 

Level 1

Level 2

Level 3

Total

At 31 December 2022

 

 

 

 

Derivative

-

532,613

-

532,613

Total

-

532,613

-

532,613

At 31 December 2023

 

 

 

 

Derivative

-

285,348

-

285,348

Total

-

285,348

-

285,348

 

31
Related party transactions
Remuneration of key management personnel

The remuneration of key management personnel, including directors, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.

2023
2022
£
£
Short-term employee benefits
1,086,383
1,786,467
Share-based payments
(319,353)
319,353
767,030
2,105,820
Other transactions with related parties

During the period, charges were made between 100% owned subsidiaries as follows:

Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
31
Related party transactions (continued)
51
Management charges
2023
2022
£
£
Management charges
2,379,469
2,344,585
Shared services costs
1,540,436
1,291,380
Transaction costs
-
1,107,991
3,919,905
4,743,956

These transactions and balances were eliminated from the Group results in the consolidation.

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due to related parties
£
£
Other related parties
34,324,936
32,211,049

Transactions with related parties are unsecured and are repayable on demand and relate to Secured Manager Loan Notes and Secured Investor Loan Notes. For more details, see note 18.

32
Controlling party
The directors do not consider there to be a ultimate controlling party.
33
Cash generated from operations
2023
2022
£
£
Loss for the year before income tax
(3,996,527)
(805,089)
Adjustments for:
Finance costs
2,733,809
4,023,618
Amortisation and impairment of intangible assets
1,648,600
2,604,133
Depreciation and impairment of property, plant and equipment
1,757,372
1,605,968
Foreign exchange impact on borrowings
(527,232)
2,424,516
Other gains and losses
247,265
(443,307)
Cash settled share based payment expense
(488,033)
488,033
Movements in working capital:
Decrease/(increase) in trade and other receivables
1,694,833
(4,477,115)
Increase in trade and other payables
686,853
3,299,748
Cash generated from operations
3,756,940
8,720,505
Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
52
34
Prior period adjustment
Changes to the statement of financial position
At 31 December 2022
Previously reported
Adjustment
As restated
£
£
£
Current assets
Debtors due within one year
11,804,308
231,051
12,035,359
Creditors due within one year
Other payables
(6,463,801)
(183,303)
(6,647,104)
Net assets
429,245
47,748
476,993
Capital and reserves
Retained earnings
(380,031)
47,748
(332,283)
Total equity
429,245
47,748
476,993
Changes to the income statement
Period ended 31 December 2022
Previously reported
Adjustment
As restated
£
£
£
Revenue
87,895,823
231,051
88,126,874
Cost of sales
(44,660,571)
(183,303)
(44,843,874)
Loss for the financial period
(561,778)
47,748
(514,030)
Reconciliation of changes in equity
9 August
31 December
2021
2022
Notes
£
£
Equity as previously reported
-
429,245
Adjustments to prior year
Contractor income and costs cut-off treatment
-
47,748
Equity as adjusted
-
476,993
Analysis of the effect upon equity
Retained earnings
-
47,748
Project Panda Topco Limited
Notes to the group financial statements (continued)
For the year ended 31 December 2023
34
Prior period adjustment (continued)
53
Reconciliation of changes in loss for the previous financial period
2022
Notes
£
Loss as previously reported
(561,778)
Adjustments to prior year
Contractor income and costs cut-off treatment
47,748
Loss as adjusted
(514,030)
Notes to reconciliation
Customer income and costs cut-off treatment

A prior year adjustment has been made to reflect contractor income and related costs which should have been accrued at the end of the prior year in Meet Recruitment Limited.. Historically this has not been adjusted for as the net impact of missing accruals for the current and prior year have not been material. Due to the reduction in turnover in 2023 compared to 2022, the resulting error is now material and has been adjusted for.

Project Panda Topco Limited
Company statement of financial position
As at 31 December 2023
31 December 2023
54
2023
2022
as restated
Notes
£
£
£
£
Non-current assets
Investments
14
1,392,567
1,880,600
Current assets
Trade and other receivables
35
246,222
250,067
Current liabilities
36
(391,666)
(223,018)
Net current (liabilities)/assets
(145,444)
27,049
Total assets less current liabilities
1,247,123
1,907,649
Non-current liabilities
36
(1,418,256)
(1,965,197)
Net liabilities
(171,133)
(57,548)
Equity
Called up share capital
1,122
1,122
Share premium account
234,047
234,047
Retained earnings
(406,302)
(292,717)
Total equity
(171,133)
(57,548)

As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s loss for the year was £239,735 (2022: £292,717).

The financial statements were approved by the board of directors and authorised for issue on 12 July 2024 and are signed on its behalf by:
12 July 2024
Stephen Herniman
Director
Company registration number 13556131 (England and Wales)
Project Panda Topco Limited
Company statement of changes in equity
For the year ended 31 December 2023
55
Share capital
Share premium account
Retained earnings
Total
Notes
£
£
£
£
Balance at 9 August 2021
-
0
-
0
-
0
-
Period ended 31 December 2022:
Loss and total comprehensive income
-
-
(292,717)
(292,717)
Transactions with owners:
Issue of share capital
1,122
234,047
-
235,169
Balance at 31 December 2022
1,122
234,047
(292,717)
(57,548)
Year ended 31 December 2023:
Loss and total comprehensive income
-
-
(113,585)
(113,585)
Balance at 31 December 2023
1,122
234,047
(406,302)
(171,133)
Project Panda Topco Limited
Company statement of changes in equity (continued)
For the year ended 31 December 2023
56
35
Trade and other receivables
2023
2022
£
£
VAT recoverable
-
4,600
Amounts owed by fellow group undertakings
1,141
1,141
Other receivables
234,096
234,097
Prepayments and accrued income
10,985
10,229
246,222
250,067
36
Liabilities
Current
Non-current
2023
2022
2023
2022
Notes
£
£
£
£
Borrowings
37
-
0
-
0
1,418,256
1,477,194
Trade and other payables
38
391,666
223,018
-
-
Liability for share based payments
-
-
-
0
488,003
391,666
223,018
1,418,256
1,965,197
37
Borrowings
Non-current
2023
2022
£
£
Borrowings held at amortised cost:
Redeemable preference shares
1,418,256
1,477,194
The redeemable preference shares represent 1,675,842 fully paid 8% cumulative redeemable preference shares. The shares are entitled to dividends at the rate of 8% per annum. Since the shares are mandatorily redeemable at the earlier of a share sale, listing or wind up or 30 September 2027, they are recognised as liabilities and recognised at amortised cost at an effective interest rate of 4.6%.
38
Trade and other payables
2023
2022
£
£
Amounts owed to fellow group undertakings
61,286
41,239
Other payables
330,380
181,779
391,666
223,018
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