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REGISTERED NUMBER: SC295285 (Scotland)














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: G Rankin
I Rasul
A Scullion
A C Skeoch
Mrs J B Abel
B T Brotherston



REGISTERED OFFICE: Marina Quay
Dock Road
Ardrossan
Ayrshire
KA22 8DA



REGISTERED NUMBER: SC295285 (Scotland)



SENIOR STATUTORY AUDITOR: Gregor D.B. Orr B.Acc.C.A.



AUDITORS: Henry Brown & Co
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:





G Rankin - Director


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.

G Rankin
I Rasul
A Scullion

Other changes in directors holding office are as follows:

Ms D M Fraser - resigned 12 July 2023
A C Skeoch - appointed 1 May 2023
Mrs J B Abel - appointed 1 October 2023
B T Brotherston - appointed 1 October 2023

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:





G Rankin - Director


27 September 2024

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.




Gregor D.B. Orr B.Acc.C.A. (Senior Statutory Auditor)
for and on behalf of Henry Brown & Co
Chartered Accountants & Registered Auditors
26 Portland Road
Kilmarnock
Ayrshire
KA1 2EB

27 September 2024

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 10,025,466 10,760,677

Cost of sales (3,171,879 ) (3,398,689 )
GROSS PROFIT 6,853,587 7,361,988

Other operating income 4 120,847 76,408
Administrative expenses (5,332,533 ) (7,173,775 )
OPERATING PROFIT 1,641,901 264,621

Finance costs 6 (16,441 ) (26,417 )
PROFIT BEFORE INCOME TAX 7 1,625,460 238,204

Income tax 9 99,614 (131,505 )
PROFIT FOR THE YEAR 1,725,074 106,699

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 1,725,074 106,699

OTHER COMPREHENSIVE INCOME - -
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR

1,725,074

106,699

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 13 234,465 278,419
Right-of-use
Property, plant and equipment 13, 21 284,961 331,774
Investments 14 150,001 -
669,427 610,193
CURRENT ASSETS
Trade and other receivables 15 4,218,763 1,831,788
Cash and cash equivalents 16 5,098,126 5,227,510
9,316,889 7,059,298
TOTAL ASSETS 9,986,316 7,669,491
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 17 50,000 50,000
Retained earnings 18 3,415,745 1,690,671
TOTAL EQUITY 3,465,745 1,740,671
LIABILITIES
NON-CURRENT LIABILITIES
Financial liabilities - borrowings
Interest bearing loans and borrowings 20 238,023 288,512
Deferred tax 23 21,669 21,669
259,692 310,181
CURRENT LIABILITIES
Trade and other payables 19 6,171,239 5,369,943
Financial liabilities - borrowings
Interest bearing loans and borrowings 20 89,640 99,457
Tax payable - 149,239
6,260,879 5,618,639
TOTAL LIABILITIES 6,520,571 5,928,820
TOTAL EQUITY AND LIABILITIES 9,986,316 7,669,491


The financial statements were approved by the Board of Directors and authorised for issue on 27 September 2024 and were signed on its behalf by:



G Rankin - Director


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 50,000 1,583,972 1,633,972

Changes in equity
Total comprehensive income - 106,699 106,699
Balance at 31 December 2022 50,000 1,690,671 1,740,671

Changes in equity
Total comprehensive income - 1,725,074 1,725,074
Balance at 31 December 2023 50,000 3,415,745 3,465,745

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 28 235,240 2,158,561
Interest paid (832 ) (1,731 )
Lease interest paid (15,609 ) (24,686 )
Tax paid (49,625 ) (201,369 )
Net cash from operating activities 169,174 1,930,775

Cash flows from investing activities
Purchase of tangible fixed assets (44,956 ) (112,692 )
Purchase of fixed asset investments (150,001 ) -
Sale of tangible fixed assets 2,989 15,016
Net cash from investing activities (191,968 ) (97,676 )

Cash flows from financing activities
Loan repayments in year (9,816 ) (11,986 )
Payment of lease liabilities (97,806 ) (78,616 )
Amount introduced by directors 1,032 2,250
Amount withdrawn by directors - (25,298 )
Net cash from financing activities (106,590 ) (113,650 )

(Decrease)/increase in cash and cash equivalents (129,384 ) 1,719,449
Cash and cash equivalents at beginning of
year

29

5,227,510

3,508,061

Cash and cash equivalents at end of year 29 5,098,126 5,227,510

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 private company, limited by shares , registered in Scotland. The company's registered number and registered office address can be found on the Company Information page.

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 & fixturesStraight-line6 years
Computer equipmentStraight-line6 years
Improvements to propertyStraight-line20 years
Computer softwareStraight-line3 years to 10 years
Motor vehiclesReducing balance25%

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 income68,620-
Kickstart scheme2,50071,304
Other income49,7175,104
120,83776,408

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 3,349,438 3,591,528
Social security costs 293,968 403,913
Other pension costs 172,863 106,897
3,816,269 4,102,338

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
122 108

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 225,600 499,269
Directors' pension contributions to money purchase schemes 50,000 50,000

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes 3 3

Information regarding the highest paid director is as follows:
PERIOD
1/10/21
YEAR ENDED TO
31/12/23 31/12/22
£    £   
Emoluments etc 225,600 191,206
Pension contributions to money purchase schemes 50,000 50,000

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 3,171,879 3,398,689
Leases 32,575 -
Depreciation - owned assets 54,049 51,223
Depreciation - assets on hire purchase contracts or finance leases 78,685 88,397
Foreign exchange differences (10 ) -

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 - 131,505
Overprovision from prior years (99,614 ) -

Total tax (income)/expense in statement of profit or loss (99,614 ) 131,505

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 1,625,460 238,204
Profit multiplied by the standard rate of corporation tax in the UK of
23.520% (2022 - 19%)

382,308

45,259

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 (99,614 ) 131,505

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 498,382 173,150 151,844
Additions - - -
Disposals - - -
At 31 December 2023 498,382 173,150 151,844
DEPRECIATION
At 1 January 2023 193,031 46,100 151,844
Charge for year 59,395 8,656 -
Eliminated on disposal - - -
At 31 December 2023 252,426 54,756 151,844
NET BOOK VALUE
At 31 December 2023 245,956 118,394 -
At 31 December 2022 305,351 127,050 -

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 24,722 98,734 230,875 1,177,707
Additions 984 - 43,972 44,956
Disposals - - (11,894 ) (11,894 )
At 31 December 2023 25,706 98,734 262,953 1,210,769
DEPRECIATION
At 1 January 2023 14,287 34,317 127,935 567,514
Charge for year 3,683 16,104 44,896 132,734
Eliminated on disposal - - (8,905 ) (8,905 )
At 31 December 2023 17,970 50,421 163,926 691,343
NET BOOK VALUE
At 31 December 2023 7,736 48,313 99,027 519,426
At 31 December 2022 10,435 64,417 102,940 610,193

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 1,231,617 915,436
Amounts owed by group undertakings 2,426,795 616,591
Other debtors 193,883 106,492
Directors' current accounts 83,953 84,703
Prepayments and accrued income 282,515 108,566
4,218,763 1,831,788

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 5,098,126 5,227,510

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 1,690,671
Profit for the year 1,725,074
At 31 December 2023 3,415,745


19. TRADE AND OTHER PAYABLES

2023 2022
£    £   
Current:
Trade creditors 497,496 687,815
Client funds 4,692,120 4,545,469
Social security and other taxes 219,876 (303,197 )
No description 217,932 -
Accrued expenses 165,098 32,495
VAT 378,717 407,361
6,171,239 5,369,943

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 25,843 35,660
Leases (see note 21) 63,797 63,797
89,640 99,457

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 25,843 - - - 25,843
Leases 63,797 30,667 89,565 117,791 301,820
89,640 30,667 89,565 117,791 327,663

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 21,669 21,669

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
£    £   
G Rankin
Balance outstanding at start of year 84,703 61,655
Amounts advanced - 25,298
Amounts repaid (750 ) (2,250 )
Amounts written off - -
Amounts waived - -
Balance outstanding at end of year 83,953 84,703

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 1,625,460 238,204
Depreciation charges 123,829 139,620
Share based compensation (10,932 ) -
Non-cash other income 68,621 -
Government grants (2,500 ) -
Finance costs 16,441 26,417
1,820,919 404,241
Increase in trade and other receivables (2,386,975 ) (269,271 )
Increase in trade and other payables 801,296 2,023,591
Cash generated from operations 235,240 2,158,561

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.