REGISTERED NUMBER: |
STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
FOR |
BPO COLLECTIONS LIMITED |
REGISTERED NUMBER: |
STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
FOR |
BPO COLLECTIONS LIMITED |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
CONTENTS OF THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
Page |
Company Information | 1 |
Strategic Report | 2 |
Report of the Directors | 3 |
Report of the Independent Auditors | 5 |
Statement of Profit or Loss | 9 |
Statement of Profit or Loss and Other Comprehensive Income |
10 |
Statement of Financial Position | 11 |
Statement of Changes in Equity | 12 |
Statement of Cash Flows | 13 |
Notes to the Financial Statements | 14 |
BPO COLLECTIONS LIMITED |
COMPANY INFORMATION |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
DIRECTORS: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
SENIOR STATUTORY AUDITOR: |
AUDITORS: |
Chartered Accountants & Registered Auditors |
26 Portland Road |
Kilmarnock |
Ayrshire |
KA1 2EB |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
The directors present their strategic report for the year ended 31 December 2023. |
REVIEW OF BUSINESS |
The directors are please with the performance of the company for the period ended 31 December 2023 and look forward to continued growth in the coming year. |
The key financial figures for the period are: |
2023 | 2022 (15 months) |
Turnover | £10,025,464 | £10,760,677 |
Profit before tax | £1,625,459 | £238,204 |
PRINCIPAL RISKS AND UNCERTAINTIES |
Competitive Risks |
The company is not reliant on any single customer but has a number of key contracts which have been won through a competitive tendering process. Maintenance of these contracts and the successful tendering for new contracts is key to the ongoing success of the company. |
Data protection |
The nature of the business, handling personal information for individuals, means that data security and compliance with GDPR is paramount to the success of the business. As such the director ensure that all reasonable steps are taken to ensure not only compliance with all applicable laws and regulations but that it is part of the underlying culture within the company. |
ON BEHALF OF THE BOARD: |
27 September 2024 |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
The directors present their report with the financial statements of the company for the year ended 31 December 2023. |
DIVIDENDS |
No dividends will be distributed for the year ended 31 December 2023. |
DIRECTORS |
The directors shown below have held office during the whole of the period from 1 January 2023 to the date of this report. |
Other changes in directors holding office are as follows: |
STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Strategic Report, the Report of the Directors 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 financial statements in accordance with UK-adopted international accounting standards. 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 these financial statements, the directors are required to: |
- | select suitable accounting policies and then apply them consistently; |
- | make judgements and accounting estimates that are reasonable and prudent; |
- | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
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 AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
AUDITORS |
The auditors, Henry Brown & Co, will be proposed for re-appointment at the forthcoming Annual General Meeting. |
ON BEHALF OF THE BOARD: |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
BPO COLLECTIONS LIMITED |
Opinion |
We have audited the financial statements of BPO Collections Limited (the 'company') for the year ended 31 December 2023 which comprise the Statement of Profit or Loss, the Statement of Profit or Loss and Other Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of Cash Flows and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the UK. |
In our opinion the financial statements: |
- | give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the year then ended; |
- | have been properly prepared in accordance with IFRSs as adopted by the UK; and |
- | have been prepared in accordance with the requirements of the Companies Act 2006. |
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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the 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. |
Material uncertainty 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 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 in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors 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. |
In connection with our audit of the financial statements, 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 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 the audit: |
- | the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
BPO COLLECTIONS LIMITED |
Matters on which we are required to report by exception |
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors. |
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: |
- | adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
- | the 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. |
Responsibilities of directors |
As explained more fully in the Statement of Directors' Responsibilities set out on page three, 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 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 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 company or to cease operations, or have no realistic alternative but to do so. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
BPO COLLECTIONS LIMITED |
Auditors' responsibilities for the audit of the financial statements |
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors 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. |
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
In identifying and assessing risks of material misstatement in respect to irregularities, including fraud and non-compliance with laws & regulations, we considered the following: |
-Enquiries of management, including obtaining and reviewing supporting documentation, concerning the Company's policies and procedures relating to: |
- identifying, evaluating and complying with laws and regulations. |
- whether they were aware of any instances of non-compliance. |
As with all audits performed under ISAs (UK), performance of procedures to respond to the risk of the management override of controls We obtained an understanding of the legal and regulatory frameworks in which the Company operates, focussing on those laws which had a direct effect on the material balances and disclosures in the Company's financial statements. Key laws & regulations considered in this context are: |
- Companies Act 2006 |
- International Financial Reporting Standards (IFRS) as issued by the International Financial Reporting Standards Board (IASB) and adopted by the European Union. |
In addition, we considered other laws & regulations that do not have a direct effect on the financial statements, but compliance is necessary for the continued operations of the Company, or to avoid a material penalty. |
Our procedures to respond to the risks identified included the following: |
- Reviewing the financial statement disclosures, and testing to supporting documentation. |
- Enquiring of management concerning any actual or potential litigation or claims. |
- Reviewing minutes of meetings of those charged with governance, and correspondence with HMRC. |
In the assessment of the risk of fraud through management override of controls, we have tested the appropriateness of journal entries, assessed whether the judgements made in the Company making accounting estimates are indicative of a potential management bias, and evaluated the business rationale of any significant transactions that are outside the normal course of business. |
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
BPO COLLECTIONS LIMITED |
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 a Report of the Auditors 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. |
for and on behalf of |
Chartered Accountants & Registered Auditors |
26 Portland Road |
Kilmarnock |
Ayrshire |
KA1 2EB |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
STATEMENT OF PROFIT OR LOSS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
PERIOD |
1/10/21 |
YEAR ENDED | TO |
31/12/23 | 31/12/22 |
Notes | £ | £ |
CONTINUING OPERATIONS |
Revenue |
Cost of sales | ( |
) | ( |
) |
GROSS PROFIT |
Other operating income | 4 |
Administrative expenses | ( |
) | ( |
) |
OPERATING PROFIT |
Finance costs | 6 | (16,441 | ) | (26,417 | ) |
PROFIT BEFORE INCOME TAX | 7 |
Income tax | 9 | ( |
) |
PROFIT FOR THE YEAR |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
PERIOD |
1/10/21 |
YEAR ENDED | TO |
31/12/23 | 31/12/22 |
£ | £ |
PROFIT FOR THE YEAR |
OTHER COMPREHENSIVE INCOME | - | - |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
STATEMENT OF FINANCIAL POSITION |
31 DECEMBER 2023 |
2023 | 2022 |
Notes | £ | £ |
ASSETS |
NON-CURRENT ASSETS |
Owned |
Property, plant and equipment | 13 |
Right-of-use |
Property, plant and equipment | 13, 21 |
Investments | 14 | 150,001 | - |
CURRENT ASSETS |
Trade and other receivables | 15 |
Cash and cash equivalents | 16 |
TOTAL ASSETS |
EQUITY |
SHAREHOLDERS' EQUITY |
Called up share capital | 17 |
Retained earnings | 18 |
TOTAL EQUITY |
LIABILITIES |
NON-CURRENT LIABILITIES |
Financial liabilities - borrowings |
Interest bearing loans and borrowings | 20 |
Deferred tax | 23 | 21,669 | 21,669 |
CURRENT LIABILITIES |
Trade and other payables | 19 |
Financial liabilities - borrowings |
Interest bearing loans and borrowings | 20 |
Tax payable |
TOTAL LIABILITIES |
TOTAL EQUITY AND LIABILITIES |
The financial statements were approved by the Board of Directors and authorised for issue on |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
STATEMENT OF CHANGES IN EQUITY |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Balance at 1 October 2021 |
Changes in equity |
Total comprehensive income | - |
Balance at 31 December 2022 |
Changes in equity |
Total comprehensive income | - |
Balance at 31 December 2023 |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
STATEMENT OF CASH FLOWS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
PERIOD |
1/10/21 |
YEAR ENDED | TO |
31/12/23 | 31/12/22 |
£ | £ |
Cash flows from operating activities |
Cash generated from operations | 28 |
Interest paid | ( |
) | ( |
) |
Lease interest paid | (15,609 | ) | (24,686 | ) |
Tax paid | ( |
) | ( |
) |
Net cash from operating activities |
Cash flows from investing activities |
Purchase of tangible fixed assets | ( |
) | ( |
) |
Purchase of fixed asset investments | (150,001 | ) | - |
Sale of tangible fixed assets |
Net cash from investing activities | ( |
) | ( |
) |
Cash flows from financing activities |
Loan repayments in year | ( |
) | ( |
) |
Payment of lease liabilities | ( |
) | ( |
) |
Amount introduced by directors | 1,032 | 2,250 |
Amount withdrawn by directors | - | (25,298 | ) |
Net cash from financing activities | ( |
) | ( |
) |
(Decrease)/increase in cash and cash equivalents | ( |
) |
Cash and cash equivalents at beginning of year |
29 |
3,508,061 |
Cash and cash equivalents at end of year | 29 |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
1. | STATUTORY INFORMATION |
BPO Collections Limited is a |
The presentation currency of the financial statements is the Pound Sterling (£). |
These financial statements relate to a single company. |
On May 2, 2019, the Company was acquired by Everyday People Financial Inc. ("EP Financial"), a Company registered in Canada. The purchase price was paid by issuing 20,000,000 EP Financial's common shares. EP Financial has accounted the purchase of BPO per IFRS 3 - Business Combinations. The assets and liabilities of BPO have been valued at fair value and the difference is recognized in goodwill in EP Financial's books. EP Financial has included the Company in its consolidated accounts. |
On October 31, 2023, the Company acquired 100% of the issued and outstanding shares of Everyday People Financial Solutions Limited ("EPFS") (formerly Arvato Financial Solutions Limited). EPFS primarily focuses on providing financial and collection management services in the United Kingdom. The Company has presented these financial statements on a standalone basis, excluding EPFS. |
2. | ACCOUNTING POLICIES |
Basis of preparation |
These financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. |
These financial statements have been prepared on the historical cost basis, with the exception of cash and certain financial instruments, which are measured at amortized cost and fair value [note 16]. The financial statements are prepared in British pounds, which is the Company's functional currency, and all amounts are rounded to the nearest pound, except when otherwise indicated. |
Preparation of consolidated financial statements |
The financial statements contain information about BPO Collections Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its subsidiary undertaking are included by full consolidation in the consolidated financial statements of its parent, Everyday People Revenue Cycle Management, Suite 450,11150 Jasper Avenue Edmonton, Alberta, Canada, T5K 0CY. |
Revenue recognition |
The Company's revenue is comprised of collection services for debt recovery for the Company's clients. |
Collection services revenue is recognized at the point in time when the Company collects and receives the funds from customers on behalf of their clients. In determining the transaction price for the collection services, the Company considers the effects of clients' contracts and is typically part of a tender pricing process based on success rates. |
Cash and cash equivalents |
Cash and cash equivalents comprise cash and bank balances. |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Property, plant and equipment |
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of property, plant and equipment includes the cost of materials and direct labor and any other costs directly attributable to bringing the assets to a working condition for their intended use, including borrowing costs. |
Depreciation is calculated over the depreciable amount, which is the cost of the asset, less its residual value. Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of the assets or reducing balance, as follows: |
Furniture & fixtures | Straight-line | 6 years |
Computer equipment | Straight-line | 6 years |
Improvements to property | Straight-line | 20 years |
Computer software | Straight-line | 3 years to 10 years |
Motor vehicles | Reducing balance | 25% |
An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statements of loss and comprehensive loss when the asset is derecognized. The residual values, useful lives and methods of depreciation of property and equipment are reviewed at each financial year-end and adjusted prospectively, if appropriate. |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Financial instruments |
Financial instruments are measured at fair value on initial recognition of the instrument. The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Company's business model for managing them. With the exception of trade receivables that do not contain a significant financing component, the Company initially measures a financial asset at its fair value including related transaction costs. Trade receivables that do not contain a significant financing component are measured at the transaction price determined under IFRS 15, Revenue from Contracts with Customers. In order for a financial asset to be classified and measured at amortized 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, which is the Company's business model. This assessment is referred to as the SPPI test and is performed at an instrument level. All financial liabilities are recognized initially at fair value, and in the case of loans and borrowings and payables, net of directly attributable transaction costs. |
Measurement in subsequent periods depends on whether the financial instrument has been classified as: (i) financial asset at fair value through profit or loss, (ii) financial assets at fair value through other comprehensive income, (iii) financial assets at amortized cost, (iv) financial liabilities at fair value through profit or loss, or (v) financial liabilities at amortized cost. |
Financial assets at amortized cost (debt instruments) |
Financial assets at amortized cost are non-derivative financial assets which are classified as such if the following conditions are met: (i) the financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows, and (ii) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate ("EIR") method, less any impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in interest income in the statements of loss and comprehensive loss. Any losses arising from impairment are recognized in the statements of loss and comprehensive loss. |
Financial liabilities at amortized cost |
Financial liabilities at amortized cost generally include interest-bearing loans and borrowings. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. Gains and losses are recognized in the statements of loss and comprehensive loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. Transaction costs are combined with the fair value of the financial liability on initial recognition and amortized using the EIR method. |
Financial liabilities at fair value through profit or loss ("FVTPL") |
A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or if it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss. |
Derecognition of financial instruments |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
A financial asset is derecognized when the rights to receive cash flows from the asset have expired, the Company transfers its contractual rights to receive cash flows without retaining control or substantially all the risks and rewards of ownership of the asset, or the Company enters into a pass-through arrangement. A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires. When an existing liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially different, such an exchange or substantial modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statements of loss and comprehensive loss. Transaction costs related to the original financial liability are expensed in the event of an exchange or substantial modification, or if the terms of a modification are not substantially different, the transaction costs related to the original financial liability are combined with the new carrying amount, and amortized over the new term of the financial liability using the EIR method. |
Impairment of financial instruments |
For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Company 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. |
The Company considers a financial asset in default when contractual payments are 120 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows. |
Offsetting of financial instruments |
Financial assets and financial liabilities are offset and the net amount is reported in the statements of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously. |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Taxation |
Income tax expense comprises current and deferred income tax. Current tax and deferred income tax are recognized in profit or loss except to the extent that they relate to a business combination, or items recognized directly in equity or in other comprehensive loss. Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or substantively enacted at the reporting date, and any adjustments to tax payable in respect of previous years. Taxable earnings differ from earnings as reported in the statements of loss and comprehensive loss because of items of income or expense that are taxable or deductible in years other than the current reporting period or items that are never taxable or deductible. |
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax liabilities are not recognized for taxable temporary differences arising on the initial recognition of goodwill or an asset or liability in a transaction that is not part of a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss or in respect of taxable temporary differences associated with investments in subsidiaries, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the tax laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. |
A deferred tax asset is recognized for unused tax losses and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which they can be utilized, except when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit of loss. In respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against with the temporary differences can be utilized. The carrying amount of deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered |
Research and development |
Expenditure on research and development is written off in the year in which it is incurred. |
Foreign currencies |
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result. |
Functional and presentation currency |
The Company determines its functional currency based on the currency of the primary economic environment in which it operates. The Company's functional and presentation currency is the British pound ("GBP"). |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Leases |
The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange of consideration. |
a) The Company as a lessee |
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. |
b) Right-of-use assets |
The Company recognizes right-of-use assets at the commencement of the lease (i.e., the date the underlying asset is available for use). The right-of-use assets are initially recognized at the present value of the lease payments. Right-of-use assets are measured at cost, lease any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. |
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. |
c) Lease liabilities |
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivables, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. |
Variable lease payments that do not depend on an index or a rate are recognized as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs. |
In calculating the present value of lease payments, the Company uses the interest rate implicit in the lease at the lease commencement. If the interest rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate at the lease commencements. After the commencement date, the amount of lease liabilities is increased to reflect accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. |
d) Short-term leases and leases of low-value assets |
The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low value. The Company considers any lease up to £1,700 per month as low value lease. Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term. |
e) The Company as a lessor |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in the statement of profit and loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amounts of the lease asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned. |
Employee benefit costs |
The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to the income statement in the period to which they relate. |
The costs of short-term employee benefits including holiday pay are recognised as a liability and an expense. |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Summary of significant accounting policies |
Fair value measurements |
The fair value of financial instruments that are actively traded in organized financial markets is determined by reference to quoted market bid prices at the close of business on the reporting date. For investments and all other financial instruments where there is no active market, fair value is determined using valuation techniques. Such techniques include using arm's-length market transactions, reference to the current fair value of another instrument that is substantially the same, a discounted cash flow analysis or other valuation models. |
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: |
- Level 1 - quoted (unadjusted) market prices in active markets for identical assets or liabilities. |
- Level 2 - valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable. |
- Level 3 - valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. |
Government grants and assistance |
Government grants are recognized at their fair value in the period when there is reasonable assurance that the conditions attaching to the grant will be met and that the grant will be received. Grants are recognized as income over the periods necessary to match them with the related costs that they are intended to compensate. When the grant relates to an asset, it is recognized as income over the useful life of the depreciable asset. |
Cash and cash equivalents |
Cash and cash equivalents comprise cash and bank balances. |
Impairment of non-financial assets |
The Company assesses at each reporting date, whether there is an indication that its non-financial assets may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an assets or CGU's fair value less costs of disposal and its value in use. |
Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. |
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. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators. |
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased. If such indication exists, the Company estimates the assets or CGU's recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase. |
Earnings per share |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2. | ACCOUNTING POLICIES - continued |
Earnings per share is calculated by dividing the net earnings attributable to equity holders of the Company by the weighted average number of common shares outstanding during the period. Potential common shares (convertible securities such as convertible debentures, options and warrants) are only included in the computation of diluted earnings per share when their conversion decreases earnings per share or increases loss per share. Potential common shares that are converted during the period are included in diluted earnings per share only until the conversion date and from that date in basic earnings per share. |
Provisions |
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as a finance cost. |
Customer funds and customer payables |
BPO collects payments in various customer specific bank accounts on behalf of its customers. The funds belong to the clients and are not available for operating use by BPO. Customers are invoiced at various intervals and paid accordingly. The source of payments received are not always known and may include overpayments. The funds from overpayments remain in the customer specific bank account until they can be traced and applied to the correct account or refunded. |
New and amended standards and interpretations |
The Company applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or after January 1, 2023 (unless otherwise stated). The Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. |
Definition of Accounting Estimates - Amendments to IAS 8 |
The amendments to IAS 8 clarify the distinction between changes in accounting estimates, changes in accounting policies and the correction of errors. They also clarify how entities use measurement techniques and inputs to develop accounting estimates. The amendments had no impact on the Company's financial statements. |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
3. | CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY |
The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions about future events that affect the application of policies and the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of the assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. |
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and further periods if the review affects both current and future periods. Critical accounting judgments are made in respect of accounting policies that have been identified as being complex or involving subjective judgments or assessments. Critical accounting estimates include the following: |
Judgment on Impairment of non-financial assets |
Assessment of impairment triggers are based on management's judgement of whether there are sufficient internal and external factors that would indicate an asset or cash generating unit ("CGU") is impaired, or any indicators of impairment reversal. The determination of the Company's CGUs is also based on management's judgement and is an assessment of the smallest group of assets that generate cash inflows independently of other assets. |
The Company's estimate of the recoverable amount for the purpose of impairment testing requires management to make assumptions regarding future cash flows before taxes. Future cash flows are estimated based on budgets and a terminal value calculated by discounting the final year in perpetuity. The future cash flows are then discounted to their present value using an appropriate discount rate. |
The Company at the end of each reporting period assesses the recoverability of values assigned to property and equipment after considering potential impairment indicated by such factors as significant changes in technological, market, economic or legal environment, business and market trends, future prospects, current market value and other economic factors. If there is any indication its review of recoverability, management estimates either the value in use or fair value less costs to sell. Actual results could differ significantly from these estimates. |
Estimate of useful life of property and equipment |
Estimated useful lives of property and equipment are based on management's judgment and experience. When management identifies that the actual useful lives for these assets differ materially from the estimates used to calculate depreciation and amortization, that change is adjusted prospectively. Due to the significant amount of property and equipment of the Company, variations between actual and estimated useful lives could impact operating results both positively and negatively. Asset lives, depreciation and amortization methods, and residual values are reviewed at the end of each reporting period. |
Estimate of the incremental borrowing rate for leases |
In cases where the Company cannot readily determine the interest rate implicit in the lease, the Company uses its incremental borrowing rate ("IBR") to measure lease liabilities. The IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Company 'would have to pay', which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease. |
The Company estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates. |
Estimate of income taxes |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
Significant judgement is required to determine the tax provision. The tax rates and tax laws used to compute income tax are those that are enacted or substantively enacted at the reporting date in the country where the Company operates and generates taxable income. |
The calculation of current and deferred income taxes requires the Company to make estimates and assumptions and to exercise judgment regarding carrying values of assets and liabilities that are subject to accounting estimates inherent in those balances, the interpretation of income tax legislation across various jurisdictions, expectations about future operating results, the timing of reversal of temporary differences and possible audits of income tax filings by the tax authorities. |
Changes or differences in underlying estimates or assumptions may result in changes to the current or deferred income tax balances on the statements of financial position, a charge or credit to income tax expense in the statements of loss and other comprehensive loss and may result in cash payments or receipts. |
All income, capital and commodity tax filings are subject to audits and reassessments. Changes in interpretations or judgments may result in a change in the Company's income, capital or commodity tax provisions in the future. The amount of such change cannot be reasonably estimated. |
4. | OTHER OPERATING INCOME |
Other income consist of the following: |
December 31, 2023 (£) | December 31, 2022 (£) |
Overpayment income | 68,620 | - |
Kickstart scheme | 2,500 | 71,304 |
Other income | 49,717 | 5,104 |
120,837 | 76,408 |
In prior years, the Company received overpayments of their sales invoices from clients for which were recorded as other income in the statement of profit and comprehensive profit for the year ended December 31, 2023. |
5. | EMPLOYEES AND DIRECTORS |
PERIOD |
1/10/21 |
YEAR ENDED | TO |
31/12/23 | 31/12/22 |
£ | £ |
Wages and salaries |
Social security costs |
Other pension costs |
The average number of employees during the year was as follows: |
PERIOD |
1/10/21 |
YEAR ENDED | TO |
31/12/23 | 31/12/22 |
Directors | 4 | 4 |
Key management personnel | 5 | 5 |
Call centre operatives | 113 | 99 |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
5. | EMPLOYEES AND DIRECTORS - continued |
PERIOD |
1/10/21 |
YEAR ENDED | TO |
31/12/23 | 31/12/22 |
£ | £ |
Directors' remuneration |
Directors' pension contributions to money purchase schemes |
The number of directors to whom retirement benefits were accruing was as follows: |
Money purchase schemes |
Information regarding the highest paid director is as follows: |
PERIOD |
1/10/21 |
YEAR ENDED | TO |
31/12/23 | 31/12/22 |
£ | £ |
Emoluments etc |
Pension contributions to money purchase schemes |
6. | NET FINANCE COSTS |
PERIOD |
1/10/21 |
YEAR ENDED | TO |
31/12/23 | 31/12/22 |
£ | £ |
Finance costs: |
Bank loan interest | 832 | 1,731 |
Leasing | 15,609 | 24,686 |
16,441 | 26,417 |
7. | PROFIT BEFORE INCOME TAX |
The profit before income tax is stated after charging/(crediting): |
PERIOD |
1/10/21 |
YEAR ENDED | TO |
31/12/23 | 31/12/22 |
£ | £ |
Cost of inventories recognised as expense |
Leases | 32,575 | - |
Depreciation - owned assets |
Depreciation - assets on hire purchase contracts or finance leases |
Foreign exchange differences | ( |
) |
8. | AUDITORS' REMUNERATION |
During the year, the Company paid fees to the Company's auditors for the audit of the Company's financial statement totalling £10,766 (December 31, 2022 - £8,665). |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
9. | INCOME TAX |
Analysis of tax (income)/expense |
PERIOD |
1/10/21 |
YEAR ENDED | TO |
31/12/23 | 31/12/22 |
£ | £ |
Current tax: |
Tax |
Overprovision from prior years | (99,614 | ) | - |
Total tax (income)/expense in statement of profit or loss | ( |
) |
Factors affecting the tax expense |
The tax assessed for the year is lower (2022 - higher) than the standard rate of corporation tax in the UK. The difference is explained below: |
PERIOD |
1/10/21 |
YEAR ENDED | TO |
31/12/23 | 31/12/22 |
£ | £ |
Profit before income tax |
Profit multiplied by the standard rate of corporation tax in the UK of |
Effects of: |
Other temporary differences | 6,448 | 86,246 |
Disallowed expenditure | 6,082 | - |
Group loss relief | (394,838 | ) | - |
Overprovision in previous year | (99,614 | ) | - |
Tax (income)/expense | ( |
) |
10. | INTEREST EXPENSES AND OTHER FINANCING COSTS |
Classification | 2023 | 2022 |
£ | £ |
Interest on lease liabilities | Interest and bank charges | 15,608 | 24,686 |
Bank charges | Interest and bank charges | 140,422 | 177,245 |
Interest on debt and borrowings | Interest and bank charges | 832 | 1,731 |
156,862 | 203,662 |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
11. | COMMITMENTS |
Operating lease commitments |
The Company has entered into one lease commitment for various IT equipment for its UK facilities, for which monthly lease payments are recorded as an expense. |
December 31, 2023 (£) | December 31, 2022 (£) |
Within one year | 33,253 | 18,373 |
After one year but not more than five years | - | 14,880 |
More than five years | - | - |
33,253 | 33,253 |
12. | COMPARATIVE FIGURES |
Certain comparative figures have been reclassified to conform to the presentation adopted in the current year. The Company does not believe these changes to have a material impact on the financial statements. |
The reclassifications for the comparative year ended September 30, 2023 period were as follows: |
- Renamed other expenses to other operating expenses. |
13. | PROPERTY, PLANT AND EQUIPMENT |
Improvements |
Long | to | Plant and |
leasehold | property | machinery |
£ | £ | £ |
COST |
At 1 January 2023 |
Additions |
Disposals |
At 31 December 2023 |
DEPRECIATION |
At 1 January 2023 |
Charge for year |
Eliminated on disposal |
At 31 December 2023 |
NET BOOK VALUE |
At 31 December 2023 |
At 31 December 2022 |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
13. | PROPERTY, PLANT AND EQUIPMENT - continued |
Fixtures |
and | Motor | Computer |
fittings | vehicles | equipment | Totals |
£ | £ | £ | £ |
COST |
At 1 January 2023 |
Additions |
Disposals | ( |
) | ( |
) |
At 31 December 2023 |
DEPRECIATION |
At 1 January 2023 |
Charge for year |
Eliminated on disposal | ( |
) | ( |
) |
At 31 December 2023 |
NET BOOK VALUE |
At 31 December 2023 |
At 31 December 2022 |
14. | INVESTMENTS |
Unlisted |
investments |
£ |
COST |
Additions | 150,001 |
At 31 December 2023 | 150,001 |
NET BOOK VALUE |
At 31 December 2023 | 150,001 |
15. | TRADE AND OTHER RECEIVABLES |
2023 | 2022 |
£ | £ |
Current: |
Trade debtors |
Amounts owed by group undertakings |
Other debtors | 193,883 | 106,492 |
Directors' current accounts | 83,953 | 84,703 |
Prepayments and accrued income | 282,515 | 108,566 |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
16. | CASH AND CASH EQUIVALENTS |
2023 | 2022 |
£ | £ |
Bank accounts |
Included in the above is an amount of £4,692,120 (2022 - £4,545,469) held on behalf of clients in designated bank accounts |
17. | CALLED UP SHARE CAPITAL |
The following table summarizes the change in issued common shares of the Company: |
December 31, 2023 | December 31, 2021 |
No of shares | Amount (£) | No. of shares | Amount (£) |
Balance beginning of period | 50,000 | 50,000 | 50,000 | 50,000 |
Issuance of common shares | - | - | - | - |
Balance end of period | 50,000 | 50,000 | 50,000 | 50,000 |
On May 2, 2019, BPO was acquired by EP Financial. The purchase price consideration was paid by issuing 20,000,000 EP Financial common shares. The purchase price consideration of $14,076,000 CAD (£8,046,647 GBP) was calculated based on the 20,000,000 EP Financial shares multiplied by the fair value of EP Financial's share of $0.7038 CAD. |
18. | RESERVES |
Retained |
earnings |
£ |
At 1 January 2023 |
Profit for the year |
At 31 December 2023 |
19. | TRADE AND OTHER PAYABLES |
2023 | 2022 |
£ | £ |
Current: |
Trade creditors |
Client funds | 4,692,120 | 4,545,469 |
Social security and other taxes | ( |
) |
No description | 217,932 | - |
Accrued expenses | 165,098 | 32,495 |
VAT | 378,717 | 407,361 |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
20. | FINANCIAL LIABILITIES - BORROWINGS |
2023 | 2022 |
£ | £ |
Current: |
Bank loans |
Leases (see note 21) | 63,797 | 63,797 |
Non-current: |
Leases (see note 21) | 238,023 | 288,512 |
Terms and debt repayment schedule |
1 year or | More than |
less | 1-2 years | 2-5 years | 5 years | Totals |
£ | £ | £ | £ | £ |
Bank loans |
Leases | 63,797 | 30,667 | 89,565 | 117,791 | 301,820 |
Other Loans |
December 31, 2023 (£) | December 31, 2022 (£) |
Facility 1 | 25,844 | 47,646 |
Net book value | 25,844 | 47,646 |
On June 11, 2020, the Company entered into a credit arrangement of £50,000 in form of a drawdown loan with a bank of which £47,646 has been drawn as at September 30, 2021 (£50,000 as at September 30, 2020). The interest rate for the credit arrangement is bearing at a rate of 2.5% per annum, commencing after 12 months from the date on which the loan is down. This lending facility is guaranteed by the UK government under the Bounce Back Loan Scheme ("BBLS"). BBLS's purpose is to enable business to access finance more quickly during the COVID - 19 outbreaks. The bank has a bond and floating charge over all assets of the Company. |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
21. | LEASING |
Right-of-use assets |
Property, plant and equipment |
2023 | 2022 |
£ | £ |
COST |
At 1 January 2023 | 555,000 | 555,000 |
Additions | 31,872 | - |
586,872 | 555,000 |
DEPRECIATION |
At 1 January 2023 | 223,226 | 134,829 |
Charge for year | 78,685 | 88,397 |
301,911 | 223,226 |
NET BOOK VALUE | 284,961 | 331,774 |
The initial recognition of right-of-use asset amounting to £498,382 and the initial lease liabilities amounting to £503,192 consists of 3 BPO office leases. |
The additions in the right-of-use asset and lease liabilities are related to a lease agreement executed by BPO for various IT equipment. |
Other leases |
PERIOD |
1/10/21 |
YEAR ENDED | TO |
31/12/23 | 31/12/22 |
£ | £ |
Low-value assets leases | 32,575 | - |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
21. | LEASING - continued |
Lease liabilities |
Minimum lease payments fall due as follows: |
2023 | 2022 |
£ | £ |
Gross obligations repayable: |
Within one year | 63,797 | 63,797 |
Between one and five years | 120,232 | 276,576 |
In more than five years | 117,791 | 11,936 |
301,820 | 352,309 |
Finance charges repayable: |
Net obligations repayable: |
Within one year | 63,797 | 63,797 |
Between one and five years | 120,232 | 276,576 |
In more than five years | 117,791 | 11,936 |
301,820 | 352,309 |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
22. | FINANCIAL INSTRUMENTS |
The Company's principal financial liabilities include trade payables, customer payables, due to related parties, credit facilities, and lease liabilities. The Company's financial assets include cash and cash equivalents, customer funds, trade receivables, and due from related parties. The Company's financial instruments have been classified as either assets or liabilities at amortized cost, fair value through other comprehensive income, or financial liabilities at fair value. The following table illustrates how the positions in the statements of financial position are classified and measured: |
Financial asset/liability | Classification and measurement |
Cash and cash equivalents | Amortised cost |
Customer funds | Amortised cost |
Trade receivables | Amortised cost |
Due from related parties | Amortised cost |
Trade payables | Amortised cost |
Customer payables | Amortised cost |
Due to related parties | Amortised cost |
Credit facilities | Amortised cost |
The risks arising from the Company's financial instruments are interest rate risk, foreign currency risk, liquidity risk and credit risk. |
Fair value |
The fair values of cash and cash equivalents, customer funds, trade receivables, trade payables, and credit facilities approximate their carrying values due to the short-term maturity of these financial instruments. The fair value of due to related parties approximates their carrying value due to the market-based rates. The Company uses a fair value hierarchy, based on the relative objectivity of inputs used to measure fair value, with Level 1 representing inputs with the highest level of objectivity and Level 3 representing the lowest level of objectivity. The fair value of credit facilities is classified at Level 3 in the fair value hierarchy as it is estimated based on unobservable inputs including discounted cash flows using the market rate, which is subject to similar risks and maturities with comparable financial instruments as at the reporting date. |
Liquidity risk |
Liquidity risk represents the risk that the Company will have difficulty meeting obligations of financial liabilities. There can be significant fluctuation in the timing of the Company's cash receipts due to various external factors. The Company mitigates this risk by regular monitoring of its cash position. Liquidity risk is also related to the possibility of insufficient debt and equity financing available to fund the desired growth of the Company and to refinance the current and long-term debt as they become due. |
Credit risk |
Credit risk arises from cash and cash equivalents, as well as credit exposure to customers, including outstanding trade receivables. The Company manages credit risk on cash and cash equivalents by ensuring the counterparties are banks, governments and government agencies with high credit ratings. |
Trade receivables are mainly with UK corporations with for whom the Company provides collection services on their default accounts. The Company manages its customers' bank accounts, and the receivable amounts are based on a portion of the amounts collected for its customers. Since the Company manages collection on behalf of its customers and receives the funds directly to the Company's bank account, credit risk on trade receivables is not material. |
Contractual maturities of financial liabilities: |
Trade | Customer | Credit | Lease | Total |
payables (£) |
payables (£) |
facilities (£) |
liabilities (£) |
(£) |
2024 | 1,261,189 | 4,692,120 | 25,844 | 63,796 | 6,042,949 |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
2025 | - | - | - | 30,667 | 30,667 |
2026 | - | - | - | 28,803 | 28,803 |
2027 | - | - | - | 30,201 | 30,201 |
2028 | - | - | - | 30,561 | 30,561 |
Thereafter | - | - | - | 117,791 | 117,791 |
1,261,189 | 4,692,120 | 25,844 | 301,819 | 6,280,972 |
23. | DEFERRED TAX |
2023 | 2022 |
£ | £ |
Balance at 1 January | 21,669 | 34,367 |
Excess of carrying value of tangible |
assets over tax values | - | (12,698 | ) |
Balance at 31 December |
24. | ULTIMATE PARENT COMPANY |
On 2 May 2019 the company was acquired by EP Financial Inc, a company registered in Canada, EP Financial Inc has included the company in it's consolidated accounts |
25. | DIRECTORS' ADVANCES, CREDITS AND GUARANTEES |
The following advances and credits to a director subsisted during the year ended 31 December 2023 and the period ended 31 December 2022: |
2023 | 2022 |
£ | £ |
Balance outstanding at start of year |
Amounts advanced |
Amounts repaid | ( |
) | ( |
) |
Amounts written off | - | - |
Amounts waived | - | - |
Balance outstanding at end of year |
Interest is charged on the average balance outstanding on the directors overdrawn loan account at 3.25% p.a. |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
26. | RELATED PARTY DISCLOSURES |
During the year, the Company entered into several related party transactions in the normal course of business. These transactions have been recorded at the agreed upon amounts between the parties. The relationships with the related parties are as follows: |
Related Party | Relationship |
EP Financial | Holding company |
EPFS | Wholly-owned subsidiary of the Company |
General Credit Services ("GCS") | Common shareholders |
EP Financial Ltd. ("EPF Ltd.") | Common shareholders |
Bridge to Home Ownership (UK) Ltd | Common shareholders |
EAM Enterprises Inc. ("EAM") | Principal shareholder |
Everyday Party People ("EPP") | Common shareholders |
Director loans | Directors |
Employee loans | Employees |
a) Balances - Due from related parties are as follows: |
December 31, 2023 (£) | December 31, 2022 (£) |
Due from EP Financial | 1,626,496 | 171,490 |
Due from EPF Ltd | 405,084 | 405,084 |
Due from GCS | 188,028 | - |
Due from BTHO (UK) | 40,017 | 40,017 |
Due from EAM | 246,441 | - |
Directors' receivables | 83,953 | 84,703 |
Employee receivables | 114,613 | 106,492 |
2,704,633 | 807,786 |
b) Balances - Due to related parties are as follows: |
December 31, 2023 (£ | ) | December 31, 2022 (£ | ) |
Due to EPFS | 217,932 | - |
217,932 | - |
Amounts due from EP Financial, EPF Ltd., GCS, BTHO UK, and EAM are unsecured and repayable in full on demand. EP Financial has provided a letter of support in relation to amount due from EPF Ltd. |
The employees' receivables are due from certain employees in accordance with BPO's employee benefit policy. |
27. | ULTIMATE CONTROLLING PARTY |
The ultimate controlling party of EP Financial Inc is C Reykdal. |
BPO COLLECTIONS LIMITED (REGISTERED NUMBER: SC295285) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 31 DECEMBER 2023 |
28. | RECONCILIATION OF PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS |
PERIOD |
1/10/21 |
YEAR ENDED | TO |
31/12/23 | 31/12/22 |
£ | £ |
Profit before income tax |
Depreciation charges |
Share based compensation | (10,932 | ) | - |
Non-cash other income | 68,621 | - |
Government grants | ( |
) |
Finance costs | 16,441 | 26,417 |
1,820,919 | 404,241 |
Increase in trade and other receivables | ( |
) | ( |
) |
Increase in trade and other payables |
Cash generated from operations |
29. | CASH AND CASH EQUIVALENTS |
The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts: |
Year ended 31 December 2023 |
31/12/23 | 1/1/23 |
£ | £ |
Cash and cash equivalents | 5,098,126 | 5,227,510 |
Period ended 31 December 2022 |
31/12/22 | 1/10/21 |
£ | £ |
Cash and cash equivalents | 5,227,510 | 3,508,061 |
30. | CAPITAL MANAGEMENT |
The primary objective of the Company's capital management is to achieve healthy capital ratios to support its business and maximize shareholder value. The Company's capital structure consists of share capital and credit facilities which as at December 31, 2023 was £75,844 (December 31, 2022 - £85,660). No changes were made to the objectives, policies and processes for capital management for the years ended December 31, 2023 and December 31, 2022. |