Company Registration No. 10369607 (England and Wales)
Zodeq Ltd
Financial statements
for the year ended 31 December 2023
Pages for filing with the registrar
Zodeq Ltd
Contents
Page
Balance sheet
3
Notes to the financial statements
4 - 11
Zodeq Ltd
Strategic report
For the year ended 31 December 2023
1

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

Principal activities

The principal activity of the company and group continued to be the provision of finance and back-office support solutions by way of lending to SME customers.

Review of the business

During the year ended 31 December 2023, the company recorded a profit before tax of £105k (2022: £1.3m). 2023 included exceptional group costs in relation to management of the entity and costs associated with implementation of the new private warehouse securitisation facility of £1.6m (2022: nil). Pre-exceptional costs the trading profits were £1.7m representing a 32% increase on 2022 (£1.3m).

During the year the company has recognised a bad debt charge of £494k (2022: £859k). As at the balance sheet date, the company recognised a bad debt provision of £1.4m (2022: £1.1m). Given the historical loss rates of the business (net capital losses below 1.5% over the last three years) the board and management are satisfied that the bad debt provision provided is sufficient at 2.58% of the net receivable (2022: 2.58%) despite the macro-economic uncertainty across the UK SME landscape.

At the year end of 31 December 2023, the company has a gross receivable of £59m representing a growth of £13m (29%) since the prior year (2022: £45m (23% prior year growth)) whilst continuing to generate an appropriate risk adjusted return on new origination.

During the year the group has continued to invest in a proprietary platform combining speciality finance risk expertise with the power of data driven decision-making technology. Developed exclusively within the group using 10 years of SME lending data and operational experience the platform allows informed and fast decision making at scale with end-to-end support on risk. The system has been fully operational within the group since Q2 2022 and has significantly enhanced lead generation and risk management through access to key credit information and automation, dramatically increased operational efficiency and real-time granular reporting. Zodeq have supported the creation of this platform through group management charges

In December 2023, Zodeq alongside Praetura Commercial Finance refinanced the back-to-back facilities with RBSIF to secure the long-term funding of the group via a private warehouse facility with Barclays. The business met the credit threshold and all other conditions regarding robustness of operational processes, credit underwriting and data integrity through an extensive due diligence process.

The group has the infrastructure and senior funding lines to grow significantly over the next three to five years through a combination of further organic growth, strategic acquisitions and investment in incremental sales teams.

Principal risks and uncertainties

Despite the wider economic challenges, Zodeq has demonstrated both resilience and increasing levels of activity, laying a solid foundation for future growth.

We recognise that a principal risk within the business is that of client or customer fraud. We are satisfied that we have robust processes in place in terms of underwriting and day-to-day management of clients and debtors to minimise our exposure to such events. Our bad debt outcomes, year on year, demonstrate our effective management of these risks.

The Group's focus on strong risk management, strategic investment, and operational efficiency will continue to drive its success in the sector.

As part of PDS Group, Zodeq has significant growth expectations over the next 5 years, leveraging the investment in talent, technology and the scalable senior funding facilities now in place.

On 12 July 2024 Praetura Debt Services completed the purchase of the remaining shares in Zodeq Holdings and now owns 100% of Zodeq Ltd and Zodeq Holdings Ltd.

Zodeq Ltd
Strategic report (continued)
For the year ended 31 December 2023
2

On behalf of the board

Paul Cooney
Director
16 September 2024
2024-09-16
Zodeq Ltd
Balance sheet
As at 31 December 2023
31 December 2023
3
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
4
147,917
-
0
Tangible assets
5
17,418
22,142
165,335
22,142
Current assets
Debtors
6
7,174,036
32,741,519
Cash at bank and in hand
2,740,792
885,611
9,914,828
33,627,130
Creditors: amounts falling due within one year
7
(8,254,383)
(32,035,442)
Net current assets
1,660,445
1,591,688
Total assets less current liabilities
1,825,780
1,613,830
Provisions for liabilities
(2,753)
(2,451)
Net assets
1,823,027
1,611,379
Capital and reserves
Called up share capital
9
10
10
Profit and loss reserves
1,823,017
1,611,369
Total equity
1,823,027
1,611,379

The directors of the company have elected not to include a copy of the profit and loss account within the financial statements.true

These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the board of directors and authorised for issue on 16 September 2024 and are signed on its behalf by:
Paul Cooney
Director
Company Registration No. 10369607
Zodeq Ltd
Notes to the financial statements
For the year ended 31 December 2023
4
1
Accounting policies
Company information

Zodeq Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 3 The Exchange, St. John Street, Chester, CH1 1DA.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

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

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

1.2
Turnover

Revenue is derived from the company's ordinary activities and represents commissions, discounts and other charges to the client, net of value added tax.

 

Revenue from the provision of services is recognised at the point the service has been performed. Revenue including factoring changes, factor discounted disbursements and from the provision of invoice discounting is recognised in the period to which the discounting took place.

1.3
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation 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:

Capitalised loan book
Over 6 years
1.4
Tangible fixed assets

Tangible fixed assets 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
6 years straight line
Computer equipment
3 years straight line
Office equipment
5 years straight line
Zodeq Ltd
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
5

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 credited or charged to profit or loss.

1.5
Cash and cash equivalents

Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.6
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

1.7
Equity instruments

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

1.8
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Zodeq Ltd
Notes to the financial statements (continued)
For the year ended 31 December 2023
1
Accounting policies (continued)
6
Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’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 liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.9
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.10
Retirement benefits

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

1.11

Invoice factoring

Amounts due in respect of invoice factoring are separately disclosed as current liabilities. The client operates under the terms and condition of an invoice finance agreement. The client can draw down on a percentage of approved sales invoices. The management and collection of trade debtors is carried out by the company but the risk of uncollectable debt remains with the client up to the limit of the facility.

 

On 20 December 2023, Zodeq refinanced its back-to-back funding facility with RBS Invoice Finance into a combined group facility with the related entities Praetura Commercial Finance and Praetura Invoice Finance. This combined private warehouse facility with Barclays provides the group with a platform for growth through an increased facility limit and secured two year term.

1.12

Change in accounting estimate

For the year ended 31 December 2023, the directors had modified the rate at which they provided for bad debts to reflect the actual and historical run rate. As a result, the bad debt provision at 31 December 2023 was £486,439 lower than it would have been using the old estimate.

Zodeq Ltd
Notes to the financial statements (continued)
For the year ended 31 December 2023
7
2
Critical accounting judgements and key sources of estimation uncertainty

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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Bad debt provision

The directors make provisions for doubtful debts based on an assessment of the historic average rate of recoverability of debtors. Provisions are also applied to debtors where events or changes in circumstances indicate that the carrying amounts may not be recoverable. The directors specifically analyse historical bad debts, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of the provision for doubtful debts.

3
Employees

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

2023
2022
Number
Number
Total
34
25
Zodeq Ltd
Notes to the financial statements (continued)
For the year ended 31 December 2023
8
4
Intangible fixed assets
Capitalised loan book
£
Cost
At 1 January 2023
-
0
Additions
150,000
At 31 December 2023
150,000
Amortisation and impairment
At 1 January 2023
-
0
Amortisation charged for the year
2,083
At 31 December 2023
2,083
Carrying amount
At 31 December 2023
147,917
At 31 December 2022
-
0
5
Tangible fixed assets
Leasehold improvements
Computer equipment
Office equipment
Total
£
£
£
£
Cost
At 1 January 2023
679
44,051
10,195
54,925
Additions
-
0
7,810
-
0
7,810
At 31 December 2023
679
51,861
10,195
62,735
Depreciation and impairment
At 1 January 2023
522
24,589
7,672
32,783
Depreciation charged in the year
108
10,894
1,532
12,534
At 31 December 2023
630
35,483
9,204
45,317
Carrying amount
At 31 December 2023
49
16,378
991
17,418
At 31 December 2022
157
19,462
2,523
22,142
Zodeq Ltd
Notes to the financial statements (continued)
For the year ended 31 December 2023
9
6
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
2,820,004
32,353,314
Amounts owed by group undertakings
3,231,407
-
0
Other debtors
901,607
318,368
6,953,018
32,671,682
Deferred tax asset
221,018
69,837
7,174,036
32,741,519
7
Creditors: amounts falling due within one year
2023
2022
£
£
Bank loans
-
0
25,811,924
Trade creditors
122,690
81,481
Corporation tax
43,799
377,469
Other taxation and social security
476,007
418,721
Other creditors
7,611,887
5,345,847
8,254,383
32,035,442

The company has a fixed and floating charge over the assets of the company dated 28 April 2017 in favour of Aldermore Bank PLC, satisfied on 3 February 2023.

 

The company has a fixed and floating charge over the assets of the company dated 7 December 2021 in favour of Quay Street Trading Limited, satisfied on 5 October 2022.

 

The company has a fixed and floating charge over the assets of the company dated 23 September 2022 in favour of Zodeq LoanCo Limited.

 

The company has a fixed and floating charge over the assets of the company dated 23 September 2022 in favour of RBS Invoice Finance Limited.

 

The company had a fixed and floating charge over the assets of the company dated 23 June 2023 in favour of Ruby Recruitment Limited, satisfied on the same day.

 

The company has a fixed and floating charge over the assets of the company dated 29 June 2023 in favour of Xander Recruitment Group Limited, satisfied on the same day.

Zodeq Ltd
Notes to the financial statements (continued)
For the year ended 31 December 2023
10
8
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Balances:
£
£
£
£
Accelerated capital allowances
2,753
2,451
-
-
Short term timing difference
-
-
221,018
69,837
2,753
2,451
221,018
69,837
9
Called up share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of £1 each
10
10
10
10
10
Audit report information

As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:

The auditor's report was unqualified.

Senior Statutory Auditor:
Diane Petit-Laurent FCA
Statutory Auditors:
Saffery LLP
Date of audit report:
16 September 2024
11
Related party transactions
Transactions with related parties

During the year the company entered into the following transactions with related parties:

Interest charges
Management charges
2023
2022
2023
2022
£
£
£
£
Entities with control, joint control or significant influence over the company
-
(18,986)
(251,519)
(168,986)
Entities over which the shareholders have significant influence
(451,943)
(523,534)
-
(186,930)
Zodeq Ltd
Notes to the financial statements (continued)
For the year ended 31 December 2023
11
Related party transactions (continued)
11

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due to related parties
£
£
Entities over which the shareholders have significant influence
5,169,972
4,991,182
12
Parent company

The immediate parent undertaking is Zodeq Holdings Limited. Both of which have a registered address of 3 The Exchange, St. John Street, Chester, United Kingdom, CH1 1DA.

 

At the reporting date, the ultimate parent company was Praetura Group Limited, a company registered in England and Wales.

 

On 12 July 2024 PDS Lending Limited became the ultimate parent company after acquiring 100% of the shares of Praetura Debt Services Holding Ltd.

 

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