Company registration number 14300135 (England and Wales)
SCARLETTABBOTT (TOPCO) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 OCTOBER 2023
SCARLETTABBOTT (TOPCO) LIMITED
COMPANY INFORMATION
Directors
Mr J Abbott
(Appointed 16 August 2022)
Mr J S Bell
(Appointed 3 December 2022)
Mr L O Donaldson
(Appointed 3 December 2022)
Mr E M Jarvie
(Appointed 3 December 2022)
Mr J F Petty
(Appointed 3 December 2022)
Ms R Thornton-Abbott
(Appointed 16 August 2022)
Company number
14300135
Registered office
The Old Chapel 27A Main Street
Fulford
York
YO10 4PJ
Auditor
Azets Audit Services Limited
12 King Street
Leeds
LS1 2HL
SCARLETTABBOTT (TOPCO) LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Group statement of comprehensive income
8
Group balance sheet
9
Company balance sheet
10
Group statement of changes in equity
11
Company statement of changes in equity
12
Group statement of cash flows
13
Notes to the financial statements
14 - 34
SCARLETTABBOTT (TOPCO) LIMITED
STRATEGIC REPORT
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 1 -

The directors present the strategic report for the 63 week period ended 31 October 2023. Scarlettabbott Topco Limited was incorporated on 16 August 2022 and purchased the trading group of Scarlettabbott Limited on 3 December 2022.

Principal activity

The principal activity of Scarlettabbott (Topco) Ltd (the ‘Company’) is that of an investment holding company for Scarlettabbott Limited (the ‘group’). The group provides a wide range of internal communication advisory services.

Business review

The business review has been completed from the perspective of Scarlettabbott Limited, being the trading entity.

After the post-covid revenue increase in 2022, revenues returned to the expected normalised level of £6.02m. While the group’s other KPI’s also decreased as expected for the same reason, the group remains focused on long-term growth and continued to invest in its infrastructure and people by increasing its direct headcount by 5.6% to give a broader expertise and enhanced offering to our clients.

Performance indicators

The business monitors a range of Key Performance Indicators (KPIs) across all specialisms. The KPIs are revenue, revenue per direct head and capital employed.

The table below shows these KPIs for 2023:

 

2023

 

Gross margin %

93%

 

Contribution %

67%

 

Revenue per direct head (£)

178k

 

Principal risks and uncertainties

The principal risks and uncertainties for the business are;

Financial position as of October 2023 and plans for the Group

The group ended October 2023 in a strong financial position with capital employed of £25.7m including £3m of cash. Plans for 2023 and beyond include investing in the group’s ability to consistently deliver high value to clients, in our technology base and in our learning and development capabilities to support our consultants.

The directors see significant opportunity to deliver value to current and future clients in all specialisms it has while also extending these to further offerings. We look to target growth of 15% or more per annum over the next 3 years. There are also opportunities to expand via acquisition which the business will be exploring.

This report was approved by the board and signed on its behalf.

SCARLETTABBOTT (TOPCO) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 2 -

On behalf of the board

Mr J F Petty
Director
4 October 2024
SCARLETTABBOTT (TOPCO) LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 3 -

The directors present their annual report and financial statements for the 63 week period ended 31 October 2023.

Principal activities

Scarlettabbott Topco Limited was incorporated on 16 August 2022 and purchased the trading group of Scarlettabbott Limited on 3 December 2022. The principal activity of Scarlettabbott (Topco) Ltd (the ‘Company’) is that of an investment holding company for Scarlettabbott Limited (the ‘group’). The group provides a wide range of internal communication advisory services.

Results and dividends

The results for the period are set out on page 8.

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

Directors

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

Mr J Abbott
(Appointed 16 August 2022)
Mr J S Bell
(Appointed 3 December 2022)
Mr L O Donaldson
(Appointed 3 December 2022)
Mr E M Jarvie
(Appointed 3 December 2022)
Ms J March
(Appointed 3 December 2022 and resigned 30 April 2024)
Mr J F Petty
(Appointed 3 December 2022)
Ms R Thornton-Abbott
(Appointed 16 August 2022)
Auditor

Azets Audit Services Limited were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

On behalf of the board
Mr J F Petty
Director
4 October 2024
SCARLETTABBOTT (TOPCO) LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 4 -

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

SCARLETTABBOTT (TOPCO) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SCARLETTABBOTT (TOPCO) LIMITED
- 5 -
Opinion

We have audited the financial statements of Scarlettabbott (Topco) Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 31 October 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

SCARLETTABBOTT (TOPCO) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SCARLETTABBOTT (TOPCO) LIMITED
- 6 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

SCARLETTABBOTT (TOPCO) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SCARLETTABBOTT (TOPCO) LIMITED
- 7 -

Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.

 

We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework.  Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.  This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

 

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

 

 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation.  This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.  The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Use of our report

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

Chris Butt (Senior Statutory Auditor)
For and on behalf of Azets Audit Services Limited
4 October 2024
Chartered Accountants
Statutory Auditor
12 King Street
Leeds
LS1 2HL
SCARLETTABBOTT (TOPCO) LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 8 -
63 week period ended
ended
31 October
2023
Notes
£
Turnover
3
5,345,886
Cost of sales
(4,264,176)
Gross profit
1,081,710
Administrative expenses
(2,102,012)
Operating loss
4
(1,020,302)
Interest receivable and similar income
8
19,054
Interest payable and similar expenses
9
(2,817,538)
Loss before taxation
(3,818,786)
Tax on loss
10
129,359
Loss for the financial period
(3,689,427)
Other comprehensive income
-
Total comprehensive expense for the period
(3,689,427)
Total comprehensive expense for the period is all attributable to the owners of the parent company.
SCARLETTABBOTT (TOPCO) LIMITED
GROUP BALANCE SHEET
AS AT
31 OCTOBER 2023
31 October 2023
- 9 -
2023
Notes
£
£
Fixed assets
Goodwill
11
22,616,414
Tangible assets
12
25,995
22,642,409
Current assets
Stocks
15
49,833
Debtors
16
2,620,440
Cash at bank and in hand
2,960,395
5,630,668
Creditors: amounts falling due within one year
17
(4,007,793)
Net current assets
1,622,875
Total assets less current liabilities
24,265,284
Creditors: amounts falling due after more than one year
18
(24,563,875)
Provisions for liabilities
Deferred tax liability
20
8,235
(8,235)
Net liabilities
(306,826)
Capital and reserves
Called up share capital
24
24,053
Share premium account
3,291,689
Other reserves
66,859
Profit and loss reserves
(3,689,427)
Total equity
(306,826)
The financial statements were approved by the board of directors and authorised for issue on 4 October 2024 and are signed on its behalf by:
04 October 2024
Mr J F Petty
Director
Company registration number 14300135 (England and Wales)
SCARLETTABBOTT (TOPCO) LIMITED
COMPANY BALANCE SHEET
AS AT 31 OCTOBER 2023
31 October 2023
- 10 -
2023
Notes
£
£
Fixed assets
Investments
13
33,768,285
Current assets
Debtors
16
151,560
Creditors: amounts falling due within one year
17
(8,919,053)
Net current liabilities
(8,767,493)
Total assets less current liabilities
25,000,792
Creditors: amounts falling due after more than one year
18
(24,563,875)
Net assets
436,917
Capital and reserves
Called up share capital
24
24,053
Share premium account
3,291,689
Other reserves
66,859
Profit and loss reserves
(2,945,684)
Total equity
436,917

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the period was £2,945,684.

The financial statements were approved by the board of directors and authorised for issue on 4 October 2024 and are signed on its behalf by:
04 October 2024
Mr J F Petty
Director
Company registration number 14300135 (England and Wales)
SCARLETTABBOTT (TOPCO) LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 11 -
Share capital
Share premium account
Other reserves
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 16 August 2022
-
-
-
-
-
Period ended 31 October 2023:
Loss and total comprehensive income
-
-
-
(3,689,427)
(3,689,427)
Issue of share capital
24
24,053
3,291,689
-
-
3,315,742
Transfers
-
-
66,859
-
66,859
Balance at 31 October 2023
24,053
3,291,689
66,859
(3,689,427)
(306,826)
SCARLETTABBOTT (TOPCO) LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 12 -
Share capital
Share premium account
Other reserves
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 16 August 2022
-
-
-
-
-
Period ended 31 October 2023:
Loss and total comprehensive income
-
-
-
(2,945,684)
(2,945,684)
Issue of share capital
24
24,053
3,291,689
-
-
3,315,742
Transfers
-
-
66,859
-
66,859
Balance at 31 October 2023
24,053
3,291,689
66,859
(2,945,684)
436,917
SCARLETTABBOTT (TOPCO) LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 13 -
2023
Notes
£
£
Cash flows from operating activities
Cash generated from operations
29
797,881
Interest paid
(174,713)
Net cash inflow from operating activities
623,168
Investing activities
Purchase of tangible fixed assets
(10,419)
Proceeds from disposal of tangible fixed assets
2,801
Purchase of subsidiaries, net of cash acquired
(24,556,442)
Interest received
19,054
Net cash used in investing activities
(24,545,006)
Financing activities
Proceeds from issue of shares
3,315,742
Proceeds from borrowings
23,566,491
Net cash generated from financing activities
26,882,233
Net increase in cash and cash equivalents
2,960,395
Cash and cash equivalents at beginning of period
-
Cash and cash equivalents at end of period
2,960,395
SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 14 -
1
Accounting policies
Company information

Scarlettabbott (Topco) Limited (the "company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is The Old Chapel, 27a Main Street, Fulford, York, YO10 4PJ.

 

The group consists of Scarlettabbott (Topco) Limited and all of its subsidiaries.

1.1
Reporting period

The parent company was incorporated on 16 August 2022 therefore the financial statements present the 63 weeks to 31 October 2023 and hence there is no comparative period.

1.2
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

 

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

 

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £1.

The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.

The company has applied section 33.1A of FRS 102 permitting it to not disclose related party transactions with wholly owned group companies.

1.3
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 15 -
1.4
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company Scarlettabbott (Topco) Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

 

All financial statements are made up to 31 October 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.

Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.

 

If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.

 

Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.

1.5
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.6
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business, and is shown net of VAT and other sales related taxes.

Turnover from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, turnover is recognised only to the extent of the expenses recognised that it is probable will be recovered.

SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 16 -
1.7
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

1.8
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

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

Plant and equipment
25% reducing balance
Motor vehicles
20% reducing balance

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.

1.9
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

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

1.10
Impairment of fixed assets

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 17 -

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

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.11
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

 

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.12
Cash and cash equivalents

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

1.13
Financial instruments

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

 

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

 

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

Basic financial assets

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

SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 18 -
Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

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

Basic financial liabilities

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

 

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

 

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

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 19 -
1.14
Equity instruments

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

1.15
Taxation

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

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.16
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

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

 

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

1.17
Retirement benefits

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

1.18
Share-based payments

For cash-settled share-based payments, a liability is recognised for the goods and services acquired, measured initially at the fair value of the liability. At the balance sheet date until the liability is settled, and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value recognised in profit or loss for the period.

SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 20 -

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black-Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

 

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

When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

 

Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.

1.19
Leases

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

2
Judgements and key sources of estimation uncertainty

In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Investments in subsidiaries and goodwill

Investments in subsidiaries and goodwill are assessed for any indicators of impairment at the reporting date. At the period end an impairments were identified of £nil. Any impairment losses are recognised within the profit and loss account.

SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 21 -
Key sources of estimation uncertainty

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

Stage of completion of contracts

In detemining turnover in accordance with the policy in note 1.6, the directors are require to estimate the stage of completion of a contract by reference to the expected costs to complete the services provided.

 

Share based payments

Share options have been fair valued using the Black Scholes model and are based upon the implied equity value at the date of grant, excluding implied exit probabilities. The Black-Scholes option pricing model takes into accounts several inputs such as volatility, risk-free rate, time to maturity and a starting stock price. The volatility input reflects an asset volatility to reflect the gearing of the group and is estimated by benchmarking similar listed entities in the industry.

At each reporting period end, the directors make an assessment of the likelihood of a range of exit routes, including implied probabilities, dates and values for each, and apply this to the outstanding share options yet to be exercised. The share based payment expense included in the consolidated statement of profit and loss is then adjusted to reflect the straight-line expensing of the underlying fair value through to expected exit. The directors do not use the benefit of hindsight when performing their judgements.

3
Turnover

Turnover is wholly attributable to the principal activity of the company, employee engagement consulting. All turnover arose within the United Kingdom.

4
Operating loss
Period ended
31 October
2023
£
Operating loss for the period is stated after charging/(crediting):
Depreciation of owned tangible fixed assets
31,293
Profit on disposal of tangible fixed assets
(936)
Amortisation of intangible assets
2,263,005
Share-based payments
66,859
Operating lease charges
87,144
5
Auditor's remuneration
Period ended
31 October
2023
Fees payable to the company's auditor and associates:
£
For audit services
Audit of the financial statements of the company's subsidiaries
33,100
For other services
All other non-audit services
13,100
SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 22 -
6
Employees

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

Group
Company
2023
2023
Number
Number
Directors
5
5
Product
27
-
Admin & Support
19
-
Total
51
5

Their aggregate remuneration comprised:

Group
Company
2023
2023
£
£
Wages and salaries
2,392,696
214,076
Social security costs
305,906
21,294
Pension costs
55,932
-
0
2,754,534
235,370
7
Directors' remuneration
Period ended
31 October
2023
£
Remuneration for qualifying services
489,747
Remuneration disclosed above includes the following amounts paid to the highest paid director:
Period ended
31 October
2023
£
Remuneration for qualifying services
226,495

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1.

SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 23 -
8
Interest receivable and similar income
Period ended
31 October
2023
£
Interest income
Interest on bank deposits
19,054
9
Interest payable and similar expenses
Period ended
31 October
2023
£
Interest on financial liabilities measured at amortised cost:
Interest on other borrowings
2,694,502
Other finance costs:
Unwinding of loans transaction cost
101,850
Other interest
21,186
Total finance costs
2,817,538
Please refer to note 19 for details of interest charged in the year.
SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 24 -
10
Taxation
Period ended
31 October
2023
£
Current tax
UK corporation tax on profits for the current period
23,768
Adjustments in respect of prior periods
(147,000)
Total current tax
(123,232)
Deferred tax
Origination and reversal of timing differences
(6,127)
Total tax credit
(129,359)

The actual (credit)/charge for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:

Period ended
31 October
2023
£
Loss before taxation
(3,818,786)
Expected tax credit based on the standard rate of corporation tax in the UK of 22.45%
(857,300)
Tax effect of expenses that are not deductible in determining taxable profit
866,908
Change in unrecognised deferred tax assets
170,609
Adjustments in respect of prior years
(147,000)
Effect of change in corporation tax rate
(393)
Other non-reversing timing differences
(16,244)
Share based payment charge
(223,685)
Other tax adjustments
77,746
Taxation credit
(129,359)
The UK corporation tax rate was 19.00% until April 2023 when it increased to 25% for groups with taxable profits of over £250,000. Deferred tax has therefore been recognised at a rate of 25%.
SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 25 -
11
Intangible fixed assets
Group
Goodwill
£
Cost
At 16 August 2022
-
0
Additions - business combinations
24,879,419
At 31 October 2023
24,879,419
Amortisation and impairment
At 16 August 2022
-
0
Amortisation charged for the period
2,263,005
At 31 October 2023
2,263,005
Carrying amount
At 31 October 2023
22,616,414
12
Tangible fixed assets
Group
Plant and equipment
Motor vehicles
Total
£
£
£
Cost
At 16 August 2022
-
0
-
0
-
0
Additions
10,419
-
0
10,419
Business combinations
46,837
1,896
48,733
Disposals
-
0
(1,896)
(1,896)
At 31 October 2023
57,256
-
0
57,256
Depreciation and impairment
At 16 August 2022
-
0
-
0
-
0
Depreciation charged in the period
31,261
32
31,293
Eliminated in respect of disposals
-
0
(32)
(32)
At 31 October 2023
31,261
-
0
31,261
Carrying amount
At 31 October 2023
25,995
-
0
25,995
The company had no tangible fixed assets at 31 October 2023.
SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 26 -
13
Fixed asset investments
Group
Company
2023
2023
Notes
£
£
Investments in subsidiaries
14
-
0
33,768,285
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 16 August 2022
-
Additions
33,768,285
At 31 October 2023
33,768,285
Carrying amount
At 31 October 2023
33,768,285
See note 26 for details of the investment addition during the year.
SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 27 -
14
Subsidiaries

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

Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
Indirect
The Scarlettabbott Group Ltd
The Old Chapel 27a Main Street, Fulford, York, North Yorkshire, United Kingdom, YO10 4PJ
Holding Company
Ordinary
100.00
-
Scarlettabbott Ltd
The Old Chapel 27a Main Street, Fulford, York, North Yorkshire, United Kingdom, YO10 4PJ
Trading Company
Ordinary
-
100.00
15
Stocks
Group
Company
2023
2023
£
£
Work in progress
49,833
-
16
Debtors
Group
Company
2023
2023
Amounts falling due within one year:
£
£
Trade debtors
998,149
-
0
Unpaid share capital
6,000
6,000
Corporation tax recoverable
86,368
-
0
Other debtors
1,488,495
145,560
Prepayments and accrued income
41,428
-
0
2,620,440
151,560
17
Creditors: amounts falling due within one year
Group
Company
2023
2023
Notes
£
£
Other borrowings
19
1,720,098
1,720,098
Trade creditors
116,176
-
0
Amounts owed to group undertakings
-
0
6,047,024
Corporation tax payable
63,270
-
0
Other taxation and social security
172,795
-
Deferred income
21
545,401
-
0
Other creditors
1,173,247
1,133,306
Accruals
216,806
18,625
4,007,793
8,919,053
SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
17
Creditors: amounts falling due within one year
(Continued)
- 28 -

Amounts owed to group undertakings are subject to an informal loan arrangement, where interest may be charged at a rate agreed between the borrower and lender from time to time. During the year, no interest was charged on the intercompany loans. The loans do not have a fixed maturity date and therefore are presented as payable within one year on the grounds that the loans called be recalled at any point.

 

Deferred consideration (£1,133,306) relates to the business combination which occurred during the year (see note 26).

 

A portion of the deferred consideration, amounting to £931,734, is due for payment at a date decided by the seller, since it is linked to the value of a publicly traded bond. At the year end, management’s best estimate was that this deferred element would be called-upon within one year, and hence has been classified as current. Post year end, the amount was called and settled on 22 April 2024.

 

The remaining £201,572 deferred consideration is expected to be repaid before 31 October 2024 and hence classified as a current liability. This element of the deferred consideration is contingent upon the Group receiving a tax refund from HMRC, at which point the payable crystalises.

 

18
Creditors: amounts falling due after more than one year
Group
Company
2023
2023
Notes
£
£
Other borrowings
19
24,563,875
24,563,875
19
Loans and overdrafts
Group
Company
2023
2023
£
£
Loan notes
26,283,973
26,283,973
Payable within one year
1,720,098
1,720,098
Payable after one year
24,563,875
24,563,875
SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
19
Loans and overdrafts
(Continued)
- 29 -

During the year, to fund the acquisition of The Scarlettabbott Group Limited (refer to note 26), the group and company issued a series of loan notes, as summarised below.

The balance of £26,283,973 reflects the amortised liability, including accrued interest, as at the reporting date.

At the year end, a total of £2,682,452 had been accrued as interest payable in respect of the loan notes outlined above. The majority of the interest expense is in relation to the A-series loan notes, where £2,129,270 has been accrued. A further £476,052 has been accrued as interest on the B-series loans, with the remainder pertaining to the C-series loan notes.

Of the payables due after one year, these are expected to be settled no later than 2 December 2027.

As part of the loan notes, a fixed and floating charge over the group and company’s assets was enacted, in favour of LDC (Managers) Limited.

20
Deferred taxation

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

Liabilities
2023
Group
£
Accelerated capital allowances
8,235
The company has no deferred tax assets or liabilities.
Group
Company
2023
2023
Movements in the period:
£
£
Asset at 16 August 2022
-
-
Charge to profit or loss
8,235
-
Liability at 31 October 2023
8,235
-
SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
20
Deferred taxation
(Continued)
- 30 -

The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.

21
Deferred income
Group
Company
2023
2023
£
£
Other deferred income
545,401
-
22
Retirement benefit schemes
2023
Defined contribution schemes
£
Charge to profit or loss in respect of defined contribution schemes
55,932

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

23
Share-based payment transactions
Number of share options
Weighted average exercise price
2023
2023
Number
£
Outstanding at 16 August 2022
-
-
Granted
120,000
1.20
Outstanding at 31 October 2023
120,000
1.20
Exercisable at 31 October 2023
-
-

The options outstanding at 31 October 2023 had an exercise price of £1.20, and a remaining contractual life of 4 years.

In the period to 31 October 2023, the Group issues C Ordinary shares to certain key employees, which constitute 'sweet shares'. The C Ordinary shares have a nominal value of £0.05, and an exercise price of £1.20. The group has loan notes in issue which are redeemable on a future exit, this settlement creates an implied hurdle on exit which has been reflected in the exercise price below. Whilst allotted, the sweet shares are not paid-up and will not require payment by the shareholders until an exit event, at which point they will be entitled to distributions on a parri passu basis with the other equity shareholders of classes A, B and D Ordinary shares. At the grant date, the scheme was considered to be an equity settled share-based payment arrangement. Sweet shares may be forfeited if the participant ceases to remain an employee of the Group before the scheme has fully vested. All C Ordinary shares were granted at the same date and carry identical terms for each participant. The inputs to the valuation are summarised below:

SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
23
Share-based payment transactions
(Continued)
- 31 -
Inputs were as follows:
2023
Weighted average share price
29.38
Weighted average exercise price
43.47
Expected volatility
30.38
Expected life
5.00
Risk free rate
3.20
Group
Company
2023
2023
£
£
Expenses recognised in the period
Arising from equity settled share based payment transactions
66,859
35,825
24
Share capital
Group and company
2023
2023
Ordinary share capital
Number
£
Issued and not fully paid
A Ordinary shares of £0.01 each
601,222
6,013
B Ordinary shares of £0.05 each
238,778
11,940
C Ordinary shares of £0.05 each
120,000
6,000
D Ordinary shares of £0.01 each
10,000
100
970,000
24,053
During the year, 601,222 A Ordinary shares were issued for total consideration of £204,116, resulting in £6,013 share capital and £198,104 share premium. 238,738 B Ordinary shares were issued for total consideration of £2,955,622 resulting in £11,940 share capital and £2,943,730 share premium. 120,000 C Ordinary shares were issued giving rise to £6,000 share capital and £138,000 share premium; these shares represent share-based payments and the additional fair value recognised is disclosed in note 23. 10,000 D Ordinary shares were issued for £12,000, resulting in £100 share capital and £11,900 share premium.

The consideration in relation to the C shares was unpaid as at the year end.
SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 32 -
25
Operating lease commitments
Lessee

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Group
Company
2023
2023
£
£
Within one year
128,400
-
Between two and five years
64,200
-
192,600
-
26
Acquisition of a business

On 3 December 2022 the group acquired 100 percent of the issued capital of The Scarlettabbott Group Ltd.

Book Value
Adjustments
Fair Value
Net assets acquired
£
£
£
Property, plant and equipment
48,733
-
48,733
Inventories
147,110
-
147,110
Trade and other receivables
4,768,816
-
4,768,816
Cash and cash equivalents
6,224,738
-
6,224,738
Trade and other payables
(1,734,344)
-
(1,734,344)
Tax liabilities
(435,859)
(147,000)
(582,859)
Deferred tax
-
(14,362)
(14,362)
Total identifiable net assets
9,019,194
(161,362)
8,857,832
Goodwill
24,879,420
Total consideration
33,737,252
The consideration was satisfied by:
£
Cash
30,781,180
Issue of shares
2,956,072
33,737,252
SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
26
Acquisition of a business
(Continued)
- 33 -
Contribution by the acquired business for the reporting period included in the group statement of comprehensive income since acquisition:
£
Turnover
5,345,886
Profit after tax
1,625,569
27
Related party transactions
Remuneration of key management personnel

The remuneration of key management personnel is as follows.

2023
£
Short-term employee benefits
479,718
Post-eployment benefits
15,592
495,310
28
Controlling party

The ultimate controlling party is Lbg Equity Investments Limited, which has a registered office of 25 Gresham Street, London, United Kingdom, EC2V 7HN.

 

The immediate parent is Ldc (Managers) Limited, which has a registered office of One Vine Street, London, W1J 0AH.

29
Cash generated from/(absorbed by) group operations
2023
£
Loss for the period after tax
(3,689,427)
Adjustments for:
Finance costs
2,892,195
Investment income
(19,054)
Gain on disposal of tangible fixed assets
(936)
Amortisation of intangible assets
2,263,005
Depreciation and impairment of tangible fixed assets
31,293
Equity settled share based payment expense
66,859
Movements in working capital:
Decrease in stocks
97,277
Increase in debtors
192,676
Decrease in creditors
(1,036,007)
Cash generated from operations
797,881
SCARLETTABBOTT (TOPCO) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 OCTOBER 2023
- 34 -
30
Analysis of changes in net funds - group
16 August 2022
Cash inflows
Other non-cash changes
31 October 2023
£
£
£
£
Borrowings excluding overdrafts
-
23,566,491
2,717,482
26,283,973
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