The directors present the strategic report for the year ended 31 December 2023.
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:
Contractor numbers increasing 13% across the year
Over 4,300 contractor timesheets processed across the year
Almost 500 clients invoiced throughout calendar year 2023
GP from RPO (Recruitment Process Outsourcing) contracts exceeding £1.2m
Global Average Perm Placement fee increasing by 4% from 2022 to 2023
A full breakdown of the 2023 performance can be seen under “Key Performance Indicators” below.
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.
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 |
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.
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 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.
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.
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
The directors present their annual report and financial statements for the year ended 31 December 2023.
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.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Saffery LLP have expressed their willingness to remain in office.
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.
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).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The 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:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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.
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.
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 (“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.
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 consideration transferred for the acquisition of a subsidiary comprises the:
fair values of the assets transferred;
liabilities incurred to the former owners of the acquired business;
equity interests issued by the Group;
fair value of any asset or liability resulting from a contingent consideration arrangement;
and fair value of any pre-existing equity interest in the subsidiary.
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:
consideration transferred;
amount of any non-controlling interest in the acquired entity; and
acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain purchase. Acquisition-related costs are expensed as incurred.
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.
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.
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.
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.
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:
amounts expected to be payable under any residual value guarantee;
the exercise price of any purchase option granted in favour of the Group if it is reasonably certain to assess that option;
any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.
Right of use assets re initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:
lease payments made at or before commencement of the lease;
initial direct costs incurred; and
the amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset.
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.
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.
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.
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, 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.
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.
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.
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.
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.
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.
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.
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.
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:
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.
Lack of Exchangeability (Amendments to IAS 21) - Effective on or after 1 January 2025
IFRS 18 - Presentation and Disclosure in Financial Statements - Effective on or after 1 January 2027
IFRS 19 - Subsidiaries without Public Accountability: Disclosures - Effective on or after 1 January 2027
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.
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.
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.
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.
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 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.
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.
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.
The average monthly number of persons (including directors) employed by the group during the year was:
Their aggregate remuneration comprised:
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.
The charge for the year can be reconciled to the loss per the income statement as follows:
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.
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.
Details of the company's principal operating subsidiaries are included in note 15.
Details of the company's subsidiaries at 31 December 2023 are as follows:
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.
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.
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.
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.
The £0.6m and $2.8m Term A loans mature after 5 years and capital and interest payments are due every 6 months. The interest is calculated over a 3 month period at a rate of 4% over SONIA (GBP) and SOFR (USD).
The £2.4m and $11m Term B loans mature after 6 years with interest added to the outstanding balances every 3 months. The interest is calculated at a rate of 4.5% over SONIA (GBP) and SOFR (USD).
The £4m revolving credit facility was not utilised in the period, interest was charged at 1.4% for the facility for the current period. These facilities are secured by a fixed and floating charge over the assets of the Company.
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.
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%.
The following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current and prior reporting period.
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:
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.
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.
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.
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.
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.
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.
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.
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.
The directors consider that the carrying amounts of financial instruments carried at amortised cost in the financial statements approximate to their fair values.
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 |
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.
During the period, charges were made between 100% owned subsidiaries as follows:
These transactions and balances were eliminated from the Group results in the consolidation.
The following amounts were outstanding at the reporting end date:
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.
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.
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).