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Company registration number: 01724108







ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED
30 DECEMBER 2023


HAWK INCENTIVES HOLDINGS LIMITED






































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HAWK INCENTIVES HOLDINGS LIMITED
 


 
COMPANY INFORMATION


Directors
P Gurney 
M Howe 
C Ronald 




Company secretary
M Wainhouse



Registered number
01724108



Registered office
Westside
London Road

Hemel Hempstead

Hertfordshire

HP3 9TD




Independent auditors
Menzies LLP
Chartered Accountants & Statutory Auditor

Lynton House

7-12 Tavistock Square

London

WC1H 9LT





 


HAWK INCENTIVES HOLDINGS LIMITED
 



CONTENTS



Page
Group strategic report
1 - 4
Directors' report
5 - 8
Independent auditors' report
9 - 12
Consolidated statement of comprehensive income
13
Consolidated statement of financial position
14
Company statement of financial position
15
Consolidated statement of changes in equity
16
Company statement of changes in equity
17
Consolidated statement of cash flows
18
Consolidated analysis of net debt
19
Notes to the financial statements
20 - 40


 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
GROUP STRATEGIC REPORT
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

Principal activities
 
The principal activity of Hawk Incentives Holdings Limited is that of an investment holding company. Its subsidiaries provide a range of business services designed to help clients engage with their employees, channel partners, customers and prospects, to improve their business performance. In addition, following the transfer of a fellow Blackhawk business into the Group, the Group also facilitates the marketing, activation and sale of physical and electronic gift cards and vouchers through distribution channels in the UK, Europe and the Nordics.

Business review
 
Gross profit increased for the Group by £20.6M (61.0%) from £33.9M in 2022. Organic growth accounted for £4.6M of the £20.6M increase, with the balance attributable to the transfer into the Group of a fellow Blackhawk business.

Principal risks and uncertainties
 
The Group's business does not expose it to any risks other than those associated with normal commercial trading. The Hawk Incentives Holdings Limited group, performs a comprehensive review of risks each year across all businesses in the Group. Each business leader is involved in the review and tasked with identification of risks, actions to mitigate and implementing plans to address risks. The main risks specific to the Group are identified below:

Failure of our infrastructure may result in non-delivery of agreed services to clients resulting in loss of business, reputational damage and potential legal claims. The Group invests heavily in its IT infrastructure and employees to ensure this risk is mitigated

As part of the trading activities the Group receives money on behalf of clients. The Directors recognise that there are specific obligations when dealing money on behalf of third parties.

Some of the products sold by the Group, in particular relating to certain employee benefits, are attractive to our clients and their employees because of the tax savings on offer. If the government were to change or remove these savings, this could result in a loss of business. To this end, the Group is always monitoring the legislative environment and works with government wherever possible.

Our operating revenues may decline if we or Blackhawk Network, Inc. lose one or more of our top retail distribution partners, or if we fail to maintain existing relationships with our retail distribution partners or fail to attract new retail distribution partners to our network, or if the financial performance of our retail distribution partners’ businesses declines.
The Blackhawk Network Group relies on its content providers for its product and service offerings, and the loss of one or more of our top content providers or a decline in demand for their products, or our failure to maintain existing arrangements with certain content providers or to attract new content providers to our network, could have a material adverse effect on our business.

The Group is dependent on the efficient and uninterrupted operation of Blackhawk Network Inc’s transaction processing systems, including its computer network systems and data centres, and if such systems are disrupted, our business, results of operations and financial condition could be materially and adversely affected. A data security breach could expose the Group to costly government enforcement actions, liability and protracted and costly litigation, and could adversely affect our reputation and operating revenues.
 
Failure to keep pace with the rapid technological developments in our industry and the wider electronic payments industry may materially and adversely affect our business, results of operations and financial condition.
Due to the nature of the Group’s business and the assets and liabilities contained within the Group’s Statement of Comprehensive Income, the main financial risk the Directors consider relevant is credit risk. This is mitigated by the Group’s credit control policies.

 

Page 1

 


HAWK INCENTIVES HOLDINGS LIMITED
 



GROUP STRATEGIC REPORT (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

The Group's operating cash has increased following the transfer into the Group of a fellow Blackhawk business which added £47.4M of cash to the groups cash resources. In addition, members of the group entered into a cash pooling arrangement during 2023 with other entities in the EMEA Region. This allows the group to manage its working capital requirements without the need for external funding. 
The Group’s cashflow forecasts show the Group maintaining a positive operating cash position under a stress test related scenario planning for a period at least 12 months for the date of this report.
At the end of 2023, the Group has operating cash balances of £101.3M (2022: £77.3M), the Group’s ratio of current assets to current liabilities was 1.13 (2022:1.34) and the Group has no external debt obligations. The Directors therefore consider the Group to have enough liquid reserves for the next 12 months.

The Directors are satisfied that the procedures and controls that have been put in place are robust and appropriate for the nature of the business in which Hawk Incentives Holdings Limited and its subsidiaries engage.
 

Financial key performance indicators
 
The following are our financial Key Performance Indicators.
                                                30 Dec 2023         31 Dec 2022
  
Turnover (£’000’s)                               159,939              37,129
Gross profit (£'000's)                                54,512                33,865
Profit before tax (£'000's)                         21,639                 8,937
Gross profit % of turnover                          34%               91%
Profit before tax % of turnover             14%                24%

Turnover increased by £123 million to £160 million and gross profit increased by £20.6 million to £54.5 million. These significant increases were driven by the transfer of the Blackhawk Network (Europe) Ltd and Samba Days UK Ltd trade into the subsidiary company Blackhawk Network EMEA Limited with effect from 1st January 2023. The turnover and gross profit attributable to the businesses transferred was £116.5 million and £16 million respectively. The remaining increases in turnover and gross profit of £6.5 million and £4.6 million respectively relate to organic growth of the existing businesses. The directors are pleased with the performance of the Group against challenging economic conditions and increasingly competitive markets.   
The Group made a significant investment of £1.5 million in internally developed software in the period to generate profit in future periods from new products and enhancements. The Directors believe that these investments will position the business well for growth in future years.
Shareholders funds have decreased by £5.5 million to £35.6 million. The transfer of the net assets of Blackhawk Network (Europe) Ltd and Samba Days UK Ltd into Blackhawk Network EMEA Limited have been treated as a Capital contribution which increased Shareholders funds by £28 million. A dividend of £50 million was paid during 2023 to the Parent Company. Free cash increased by £24 million.

Directors' statement of compliance with duty to promote the success of the Group
 
We’ve outlined the below as part of the Group’s duty to promote the success of the group for the benefit of all stakeholders, under section 172(1) of the Companies Act (2006). In our continued efforts to uphold a high-quality standard of business across our product portfolio, we take considered action to ensure that stakeholders are informed and on board
with our decisions.
Foster business relationships with suppliers, customers, and other stakeholders
Our customers
We take the utmost care to be transparent in all of our customer communications. We do not mislead or convey false information. We divide our cardholder communications between marketing and transactional, to ensure that customer preferences are adhered to. We tailor our offering and subsequent email communications to relevant, honest topics where we have a genuine belief (and resulting data) that our customers have an interest.
 
Page 2

 


HAWK INCENTIVES HOLDINGS LIMITED
 



GROUP STRATEGIC REPORT (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023


Partners and suppliers
When managing and building relationships with our partners and suppliers, we maintain a vigorous auditing process that ensures we present ourselves at the expected standard. We provide robust compliance training for our employees, which results in positive partner and supplier management.
We work conscientiously with our partners to provide quality content to our customers, while keeping an open channel of communication to highlight issues or changes to service in good time. Our suppliers are trusted, compliant businesses who we audit on an annual basis. These audits allow us to remain in a position of trust with our customers and partners.
Interests of employees
The interests of our employees are deep routed within everything we do at Hawk Incentives Holdings. We invest our time into regular employee briefings, so that all internal stakeholders feel informed as to group decisions and processes. We provide the opportunity for quarterly feedback via our ‘Listen Surveys’, of which the results are collated and acted upon.
We also provide in depth compliance training such as anti-money laundering, code of business conduct and ethics, data privacy and information security. These trainings are mandatory once per 12-month period.
Our review process, undertaken every 6 months, allows employees to envision a clear career progression and provides a forum for issues to be raised and dealt with professionally.
Act fairly as between members of the group
Hawk Incentives Holdings are dedicated to ensuring transparency in a fair and just manner between its members.
Maintain a reputation for high standards of business conduct
Our Board of Directors are experts in their field and can therefore make calculated decisions under pressure, to drive our business forward without compromising on the quality of our products, reputation or service. We are known within the payments industry as a compliant and well-managed organisation.
Impact of the operations on the community and the environment
In light of the marked concerns surrounding environmental health, there are a number of initiatives underway. We take into consideration all impact points along the production line and have minimised our emissions wherever possible.
In terms of our products, we have focused on driving forward digital-first options. Whilst physical rewards are available to our clients, we highlight the many benefits of utilising our technology, over printed form.
In relation to our workforce and offices, we employ the services of a waste removal group who sort our waste and ensure that as little as possible goes into landfill.
We encourage our staff to commute via a green method and reward those who choose to travel via bike, car-share or public transport. We have installed cycling facilities and provide employees with access to our Cyclescheme benefit whereby participants agree to use their bike for commuting purposes where possible. 
During 2022, we launched a new Green Car Benefit scheme for our employees, offering brand new, electric or hybrid vehicles as part of a salary sacrifice scheme, thereby encouraging the use of electric and hybrid vehicles where car transport is necessary.
Additionally, we have invested in our headquarters to ensure that energy is consumed in a thoughtful way.
We have built some strong relationships within our local and wider community. We have a ‘charity of the year’, with several hosted fundraising events for our employees to participate in. We also encourage our employees to invest their own time in volunteering roles, with 2 working days per year granted for community outreach, per employee.
We have raised multiple sums of money and donations of belongings for our local foodbank and many of our staff have participated in team volunteer days to collate and distribute donations at the shelter. Other teams have visited other local charities to help with ongoing projects.
Likely consequence of any decision in the long term
Our Board of Directors consider the potential consequences of all decisions and appropriately weigh risk against each action. Regular reporting and a robust escalation process mean that the board remain fully informed at all times and are
Page 3

 


HAWK INCENTIVES HOLDINGS LIMITED
 



GROUP STRATEGIC REPORT (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

poised to take action if required.


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



M Howe
Director

Date: 28 November 2024

Page 4

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
DIRECTORS' REPORT
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

The directors present their report and the financial statements for the 52 week period ended 30 December 2023.

Directors' responsibilities statement

The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 the Group and of the profit or loss of the Group for that period.

 In preparing these financial statements, the directors are required to:


select suitable accounting policies for the Group's financial statements and then apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Results and dividends

The profit for the 52 week period, after taxation, amounted to £16,035k (2022 - £7,316k).

On 26 April 2023 the company paid a dividend of £50 million to the sole shareholder of the company. The Directors do not recommend payment of a further interim dividend for the period ended 30 December 2023.

Directors

The directors who served during the 52 week period were:

P Gurney 
M Howe 
K Richesson (resigned 16 June 2023)
C Ronald 

Future developments

The Company will continue to expand its distribution networks through grocery, convenience, speciality, online and incentives channels. It continues to expand its product portfolio to include newly launched third party branded gift cards, prepaid cards, other category specific Own Content cards and Software Platforms.

Page 5

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
DIRECTORS' REPORT (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

Financial instruments

The Group is exposed to financial risk through its financial assets and liabilities. The key financial risk is that the proceeds from financial assets are not sufficient to fund the obligations arising from liabilities as they fall due.
The Group's principal financial assets are cash, trade debtors and balances due from other group companies. In order to manage third party credit risk the Group sets limits for customers based on a combination of payment history and third party credit references. Credit limits are reviewed by the credit controller on a regular basis in conjunction with debt ageing and collection history.
The credit risk on cash balances is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.

Research and development activities

Investing in research and development programs delivers product innovation within the Group. The Group made a significant investment of £1.5m (2022: £1.1m)  in internally developed software in the period to generate profit in future periods from new products and enhancements. The Directors believe that these investments will position the business well for growth in future years.This is in line with expectations.

Modern Slavery Act

Blackhawk Network, of which the Group is a part, has published a Modern Slavery and Human Trafficking Statement on its UK corporate website www.blackhawknetworkeurope.com, in line with legislative requirements, and which applies to the Group.

Engagement with employees

The team remains as committed and enthusiastic as always. The Group's profile allows it to attract and hire some of the
best talent in the market place. The Board of Directors are committed to invest time and resources in our most valuable
asset, our people.
The Group is ever mindful of the importance and value of its employees and ensures that employees are informed and
involved regarding matters affecting them as employees and on the various factors affecting the performance of the
Group.

Disabled employees

We strive to be a genuinely equal opportunities employer, judging applicants solely based on what they can contribute to our Group and how we can help them achieve their full potential. The same philosophy underpins their subsequent advancement and promotion. Consequently, we are able to promote the causes of disability and diversity to clients on the basis of solid experience rather than empty rhetoric. In the event of staff becoming disabled every effort is made to ensure that their employment with the Group continues and disabled applicants are welcome.

Qualifying third party indemnity provisions

The Group has granted an indemnity to one or more of its Directors against liability in respect of proceedings brought by third parties, subject to the conditions set out in Companies Act 2006. Such qualifying third party indemnity provisions remain in force as at the date of approving the Directors’ report. The maximum liability covered on behalf of Directors is approximately £36 million. This is a group-wide indemnity provision that benefits all Directors of all companies within the Blackhawk group.

Page 6

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
DIRECTORS' REPORT (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

Streamlined Energy and Carbon Reporting

Quantification and reporting methodology and organisational boundary
In providing the below we have followed the 2018 UK Government environmental reporting guidance, as updated and issued in March 2019, and applied the 2020 UK Governments conversion Factors for Company Reporting.
We have used the financial control approach to define the organisational boundaries.
Intensity measurement
We have chosen the metric gross UK scope 1 and 2 emissions in tonnes of CO2e per £million of revenue as this is the most common business metric for our industry sector.


52 week period ended
30 December
52 week period ended
30 December
2023
2022

Emissions from combustion or gas tCO2e (Scope 1)
668,000
700,000

Emissions from business travel in rental cars or employee-owned vehicles where the company is responsible for purchasing the fuel (Scope 3) including emissions from purchased electricity (Scope 2, location based) (kWh)
563,800
362,740



Energy efficiency
In terms of our products, we have focused on driving forward digital-first options. Whilst physical rewards are available to our clients, we highlight the many benefits of utilising our technology, over printed form.
 
We encourage our staff to commute via a green method and reward those who choose to travel via bike, car-share or public transport. We have installed cycling facilities and provide employees with access to our Cyclescheme benefit whereby participants agree to use their bike for commuting purposes where possible.
Additionally, we have invested in our headquarters to ensure that energy is consumed in a thoughtful way. 

Intensity ratio: tCO2e/£million revenue 3.5 (2022: 9.8)

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditors are aware of that information.

Page 7

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
DIRECTORS' REPORT (CONTINUED)
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023


Post balance sheet events

The Company has entered into a new lease arrangement relating to its offices in Apsley. As a result of the new arrangement the Company will reduce its occupation of the building from 4 floors to 2 with effect from 1st January 2025.

Auditors

The auditorsMenzies LLPwill be proposed for reappointment in accordance with section 487 of the Companies Act 2006.

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





M Howe
Director

Date: 28 November 2024

Page 8

 


HAWK INCENTIVES HOLDINGS LIMITED
 

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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF HAWK INCENTIVES HOLDINGS LIMITED

Opinion


We have audited the financial statements of Hawk Incentives Holdings Limited (the 'parent Company') and its subsidiaries (the 'Group') for the 52 week period ended 30 December 2023, which comprise the Consolidated statement of comprehensive income, the Consolidated statement of financial position, the Company statement of financial position, the Consolidated statement of cash flows, the Consolidated statement of changes in equity, the Company statement of changes in equity, the Consolidated analysis of net debt and the related notes, including a summary of significant accounting policiesThe 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:


give a true and fair view of the state of the Group's and of the parent Company's affairs as at 30 December 2023 and of the Group's profit for the 52 week period then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; 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 Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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 or the 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 Auditors' report thereon. The directors are responsible for the other information contained within the Annual ReportOur 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.


Page 9

 


HAWK INCENTIVES HOLDINGS LIMITED


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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF HAWK INCENTIVES HOLDINGS LIMITED (CONTINUED)

Opinion 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 Group strategic report and the Directors' report for the financial 52 week period for which the financial statements are prepared is consistent with the financial statements; and
the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.


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 its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.


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


adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent Company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' responsibilities statement set out on page 5, 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 Group's and 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 Group or the parent Company or to cease operations, or have no realistic alternative but to do so.


Page 10

 


HAWK INCENTIVES HOLDINGS LIMITED


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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF HAWK INCENTIVES HOLDINGS LIMITED (CONTINUED)

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 an Auditors' 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 Group financial statements.


Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

The Group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation. We determined that the following laws and regulations were most significant:
 
The Companies Act 2006;
Financial Reporting Standard 102;
UK employment legislation;
UK tax legislation.
 
We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
We understood how the Group is complying with those legal and regulatory frameworks by making inquiries to management and those responsible for legal and compliance procedures.
The engagement partner assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. He did not identify any issues in this area.
We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur. Audit procedures performed by the engagement team included:

Identifying and assessing the design effectiveness of controls management has in place to prevent and detect fraud;
Understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process;
Challenging assumptions and judgements made by management in its significant accounting estimates; and
Identifying and testing journal entries, in particular any journal entries posted outside of the normal working patterns of the accounts team, or with unusual descriptions or account combinations.

As a result of the above procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas:

The application of inappropriate judgements or estimation to manipulate the financial position in the calculation of the year end provisions;
The posting of unusual journals and complex transactions; or
The use of management override of controls to manipulate results.


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 is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.


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 Auditors' report.


Page 11

 


HAWK INCENTIVES HOLDINGS LIMITED


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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF HAWK INCENTIVES HOLDINGS LIMITED (CONTINUED)

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 2006Our 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 Auditors' 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.





Andrew Wooding FCA (Senior statutory auditor)
  
for and on behalf of
Menzies LLP
 
Chartered Accountants
Statutory Auditor
  
Lynton House
7-12 Tavistock Square
London
WC1H 9LT

28 November 2024
Page 12

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

52 week period ended
30 December
52 week period ended
31 December
2023
2022
Note
£000
£000

  

Turnover
 4 
159,939
37,129

Cost of sales
  
(105,427)
(3,264)

Gross profit
  
54,512
33,865

Administrative expenses
  
(38,972)
(26,043)

Other operating income
 5 
1,500
291

Operating profit
 6 
17,040
8,113

Interest receivable and similar income
 10 
4,606
824

Profit before taxation
  
21,646
8,937

Tax on profit
 11 
(5,611)
(1,621)

Profit for the financial 52 week period
  
16,035
7,316

  

Currency translation differences
  
(4)
32

Other comprehensive income for the 52 week period
  
(4)
32

Total comprehensive income for the 52 week period
  
16,031
7,348

Profit for the 52 week period attributable to:
  

Owners of the parent Company
  
16,035
7,316

  
16,035
7,316

The notes on pages 20 to 40 form part of these financial statements.

Page 13

 


HAWK INCENTIVES HOLDINGS LIMITED
REGISTERED NUMBER:01724108



CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 DECEMBER 2023

2023
2022
Note
£000
£000

Fixed assets
  

Intangible fixed assets
 13 
2,038
1,793

Tangible assets
 14 
856
917

  
2,894
2,710

Current assets
  

Stocks
 16 
2,201
2,633

Debtors: amounts falling due after more than one year
 17 
916
1,209

Debtors: amounts falling due within one year
 17 
144,802
35,615

Cash At Bank And In Hand
 18 
143,586
109,283

  
291,505
148,740

Creditors: amounts falling due within one year
 19 
(258,820)
(110,283)

Net current assets
  
 
 
32,685
 
 
38,457

Total assets less current liabilities
  
35,579
41,167

Net assets
  
35,579
41,167


Capital and reserves
  

Called up share capital 
 21 
2,846
2,846

Share premium account
 22 
456
456

Foreign exchange reserve
 22 
704
708

Profit and loss account
 22 
31,573
37,157

Equity attributable to owners of the parent Company
  
35,579
41,167

  
35,579
41,167


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 




M Howe
Director

Date: 28 November 2024

The notes on pages 20 to 40 form part of these financial statements.

Page 14

 


HAWK INCENTIVES HOLDINGS LIMITED
REGISTERED NUMBER:01724108



COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 DECEMBER 2023

2023
2022
Note
£000
£000

Fixed assets
  

Investments
 15 
16,344
16,344

  
16,344
16,344

Current assets
  

Debtors: amounts falling due within one year
 17 
11,996
6,649

Cash at bank and in hand
 18 
924
3,199

  
12,920
9,848

Creditors: amounts falling due within one year
 19 
(14,983)
(182)

Net current (liabilities)/assets
  
 
 
(2,063)
 
 
9,666

Total assets less current liabilities
  
14,281
26,010

  

  

Net assets
  
14,281
26,010


Capital and reserves
  

Called up share capital 
 21 
2,846
2,846

Share premium account
 22 
456
456

Profit and loss account brought forward
  
22,708
22,986

Profit/(loss) for the 52 week period
  
38,271
(278)

Other changes in the profit and loss account

  

(50,000)
-

Profit and loss account carried forward
  
10,979
22,708

  
14,281
26,010


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 


M Howe
Director

Date: 28 November 2024

The notes on pages 20 to 40 form part of these financial statements.

Page 15

 


HAWK INCENTIVES HOLDINGS LIMITED
 



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023


Called up share capital
Share premium account
Foreign exchange reserve
Profit and loss account
Total equity

£000
£000
£000
£000
£000


At 2 January 2022
2,846
456
676
29,841
33,819


Comprehensive income for the period

Profit for the 52 week period
-
-
-
7,316
7,316

Foreign exchange movement
-
-
32
-
32
Total comprehensive income for the 52 week period
-
-
32
7,316
7,348



At 31 December 2022
2,846
456
708
37,157
41,167


Comprehensive income for the 52 week period

Profit for the 52 week period
-
-
-
16,035
16,035

Foreign exchange movement
-
-
(4)
-
(4)
Total comprehensive income for the 52 week period
-
-
(4)
16,035
16,031


Contributions by and distributions to owners

Dividends: Equity capital
-
-
-
(50,000)
(50,000)

Capital contribution
-
-
-
28,381
28,381


At 30 December 2023
2,846
456
704
31,573
35,579


The notes on pages 20 to 40 form part of these financial statements.

Page 16

 


HAWK INCENTIVES HOLDINGS LIMITED
 



COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023


Called up share capital
Share premium account
Profit and loss account
Total equity

£000
£000
£000
£000


At 2 January 2022
2,846
456
22,986
26,288


Comprehensive income for the period

Loss for the period
-
-
(278)
(278)
Total comprehensive income for the period
-
-
(278)
(278)



At 31 December 2022
2,846
456
22,708
26,010


Comprehensive income for the period

Profit for the 52 week period
-
-
38,271
38,271
Total comprehensive income for the 52 week period
-
-
38,271
38,271


Contributions by and distributions to owners

Dividends: Equity capital
-
-
(50,000)
(50,000)


At 30 December 2023
2,846
456
10,979
14,281


The notes on pages 20 to 40 form part of these financial statements.

Page 17

 


HAWK INCENTIVES HOLDINGS LIMITED
 



CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

2023
2022
£000
£000

Cash flows from operating activities

Profit for the financial 52 week period
16,035
7,316

Adjustments for:

Amortisation of intangible assets
1,253
1,720

Depreciation of tangible assets
355
481

Loss on disposal of tangible assets
-
13

Interest receivable
(4,606)
(824)

Taxation charge
5,611
1,621

Decrease in stocks
454
221

(Increase) in debtors
(13,739)
(10,159)

Decrease in amounts owed by groups
1,014
21,632

Increase in creditors
19,338
6,518

(Decrease)/increase in amounts owed to groups
(6,363)
2,982

Corporation tax (paid)
(4,315)
(1,966)

Foreign exchange
(4)
40

Net cash generated from operating activities

15,033
29,595


Cash flows from investing activities

Purchase of intangible fixed assets
(1,457)
(1,102)

Purchase of tangible fixed assets
(294)
(93)

Cash transferred as part of group reorganisation
52,400
-

Interest received
4,606
824

Net cash from investing activities

55,255
(371)

Cash flows from financing activities

Dividends paid
(50,000)
-

Net cash used in financing activities
(50,000)
-

Net increase in cash and cash equivalents
20,288
29,224

Cash and cash equivalents at beginning of 52 week period
109,283
80,059

Cash and cash equivalents at the end of 52 week period
129,571
109,283


Cash and cash equivalents at the end of 52 week period comprise:

Cash at bank and in hand
129,571
109,283

129,571
109,283


Page 18

 


HAWK INCENTIVES HOLDINGS LIMITED
 



CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023




At 1 January 2023
Cash flows
At 30 December 2023
£000

£000

£000

Cash at bank and in hand

109,283

34,303

143,586

Group treasury facility

-

(14,015)

(14,015)


109,283
20,288
129,571

The notes on pages 20 to 40 form part of these financial statements.

Page 19

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

1.


General information

Hawk Incentives Holdings Limited is a private Company limited by shares incorporated in the United Kingdom under the Companies Act 2006. The Company is registered in England and Wales and the address of the registered office is given on the company information page.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 3).

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.

The 52 week ended 30 December 2023 is stated as 2023, whilst the 52 week ended 31 December 2022 is stated as 2022. All reference to years represents the years detailed here, unless otherwise noted.

The following principal accounting policies have been applied:

 
2.2

Basis of consolidation

The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies in line with those used by the Group.

Hawk Incentives Holdings Limited incorporates an Employee Benefit Trust, Grass Roots Group PLC Employee Share Scheme, within its Company financial information. 

 
2.3

Going concern

The Directors have a reasonable expectation that the Company and Group has adequate resources to continue in operational existence for the foreseeable future and there are no post balance sheet events which alter this view. The Directors have considered the future expected cashflows of the Group by adjusting the cashflow forecasts for a reduction in gross profit and paying particular attention to the Group’s cost base. The group’s amended cashflow forecasts show a positive operating cash position under a stress test related scenario for a period of at least one year from the signing of the financial statements. For this reason, they continue to adopt the going concern basis in preparing the financial statements

Page 20

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

2.Accounting policies (continued)

 
2.4

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Revenue from reward and communication schemes is recorded across the period of the campaign. Revenue from the sales of goods and vouchers is recognised on dispatch of the goods and vouchers.
For Cyclescheme Limited, revenue represents the net commission received from retailers, excluding VAT, on ‘redemption’ of Cyclescheme certificates, and amounts earned from employer participants for the provision of the Cyclescheme service. Revenue on certificates is recognised on issue of a certificate when an employer signs off, which is not materially different from the date of redemption. Revenue on service provision to employer participants is recognised when the service is provided, unless collectively is not reasonably assured, in which case it is recognised once collection of consideration is reasonably assured.
Revenue from breakage is recognised only after six years have passed since the certificate was issued.

 
2.5

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is GBP.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.

On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.

 
2.6

Operating leases: the Group as lessor

Rental income from operating leases is credited to profit or loss on a straight-line basis over the lease term.

Amounts paid and payable as an incentive to sign an operating lease are recognised as a reduction to income over the lease term on a straight-line basis, unless another systematic basis is representative of the time pattern over which the lessor's benefit from the leased asset is diminished.

Page 21

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

2.Accounting policies (continued)

 
2.7

Operating leases: the Group as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

 
2.8

Research and development

In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight-line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.

 
2.9

Interest income

Interest income is recognised in profit or loss using the effective interest method.

 
2.10

Pensions

Defined contribution pension plan

The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position. The assets of the plan are held separately from the Group in independently administered funds.

Page 22

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

2.Accounting policies (continued)

 
2.11

Share-based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Group keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.
Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.
The fair value of restricted shares, restricted share units and performance share units is determined as the grant date fair value of Blackhawk Network Holdings, Inc. shares and determine the fair value of share options and share appreciation rights using a Black-Scholes option pricing model. The Black-Scholes option pricing model incorporates certain assumptions, such as the risk-fiee interest rate, expected volatility, expected dividend yield and the expected life of options in order to arrive at a fair value estimate. Share-based employee compensation expense is classified in administrative expenses, with the credit being recognised as a liability.

 
2.12

Current and deferred taxation

The tax expense for the 52 week period comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company and the Group operate and generate income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

Page 23

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

2.Accounting policies (continued)

 
2.13

Intangible assets

Goodwill

Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. 

Other intangible assets

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.

 The estimated useful lives range as follows:

Development expenditure
-
3
years
Other intangible fixed assets
-
3
years

 
2.14

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

The estimated useful lives range as follows:

Short-term leasehold property
-
5
years
Plant and machinery
-
3
years
Motor vehicles
-
4
years
Fixtures and fittings
-
5
years

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

 
2.15

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

 
2.16

Stocks

Vouchers and e-vouchers for resale are valued at the lower of cost and net realisable value. Cost is calculated using the first in first out method (FIFO). Net realisable value is based on estimated selling price less any further costs expected to be incurred on disposal.


Page 24

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

2.Accounting policies (continued)

 
2.17

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

 
2.18

Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks and other short-term liquid investments with original maturities of three months or less.
Cash and cash equivalents includes amounts held in accounts that are operationally ring-fenced. The Company voluntarily undertakes this arrangement and considers that the offsetting requirements are not met. As such the cash balance and creditor balance are shown separately.


 
2.19

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 
2.20

Financial instruments

The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated statement of comprehensive income.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the reporting date.

 
2.21

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

Page 25

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

2.Accounting policies (continued)

  
2.22

Unredeemed Hawk Select Codes

Hawk Select codes ("Select codes") are reward products issued by the Company. The codes are a choice product which the holder can redeem for a gift card or voucher of their choice.
Unredeemed Select codes are stated in the statement of financial position at the face value of the codes outstanding.
Select codes are held on the statement of financial position until their expiry date.


3.


Judgements in applying accounting policies and key sources of estimation uncertainty

In application of the Group’s accounting policies, which are described in note 2, the Directors are required to make judgements, estimates and assumptions about the carrying amounts 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.
Critical judgements in applying the Group's accounting policies
Presentation of revenue
A number of the Group’s revenue streams involve the sale of third party products and content. The presentation of revenue as gross or net is dependent on the judgement of whether the Group is acting as the principal or agent in the transaction, and the judgement is based on a number of considerations under FRS 102.
Each individual consideration can lead to a different conclusion on whether the Group is acting as principal or agent and a degree of judgement is therefore involved as whether, on balance, it is appropriate to present these revenue streams as gross or net.
Capitalised software costs
Costs relating to the development of computer software for internal use are capitalised once all of the development phase recognition criteria of FRS 102 are met. When the software is available for intended use, these costs are amortised in equal amounts over the estimated useful life of the software. Amortisation and impairment of computer software of licences are charged to administrative expenses in the period in which they arise. Judgement is required in the determination of whether and when costs incurred qualify as development expenditure as in order to be capitalised, it must be determinable to that project will meet its design specifications, including functions, features and technical performance requirements and that the expenditure will generate probable future economic benefits in excess of the development costs incurred. During the year the Company has capitalised costs of £1,457K (2022: £1,102K).

Page 26

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

4.


Turnover

An analysis of turnover by class of business is as follows:


52 week period ended
30 December
52 week period ended
31 December
2023
2022
£000
£000

Services rendered
117,906
30,688

Product sales
38,248
6,441

Intercompany
3,785
-

159,939
37,129


52 week period ended
30 December
52 week period ended
30 December
2023
2022
£000
£000

United Kingdom
118,223
37,129

Rest of Europe
37,931
-

Rest of the world
3,785
-

159,939
37,129



5.


Other operating income

52 week period ended
30 December
52 week period ended
31 December
2023
2022
£000
£000

Net rents receivable
387
291

Royalty receivable
1,113
-

1,500
291


Page 27

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

6.


Operating profit

The operating profit is stated after charging:

52 week period ended
30 December
52 week period ended
31 December
2023
2022
£000
£000

Research & development charged as an expense
34
392

Exchange differences
59
(102)

Other operating lease rentals
1,209
1,082


7.


Auditors' remuneration

During the 52 week period, the Group obtained the following services from the Company's auditors and their associates:


52 week period ended
30 December
52 week period ended
31 December
2023
2022
£000
£000

Fees payable to the Company's auditors and their associates for the audit of the consolidated and parent Company's financial statements
167
128

Fees payable to the Company's auditors and their associates in respect of:

All non-audit services not included above
16
15

Page 28

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

8.


Employees

Staff costs, including directors' remuneration, were as follows:


Group
Group
Company
Company
52 week period ended 30 December 2023
52 week period ended 31 December 2022
52 week period ended 30 December 2023
52 week period ended 31 December 2022
£000
£000
£000
£000


Wages and salaries
23,212
15,179
1,816
416

Social security costs
2,784
1,769
-
-

Cost of defined contribution scheme
1,034
623
-
-

27,030
17,571
1,816
416


Company staff costs relate to the Employee Benefit Trust, Grass Roots Group PLC Employee Share Scheme.

The average monthly number of employees, including the directors, during the 52 week period was as follows:


52 week period ended
30 December
52 week period ended 31 December
        2023
        2022
            No.
            No.







Business development
48
36



Customer services and operations
109
75



Functional specialist
166
128



Relationship Manager
86
74



Leadership
1
1

410
314

Wages and salaries includes a share-based payment charge of £502,000 (2022: £264,000).

The Company has no employees other than the directors, who did not receive any remuneration (2022 - £NIL)
Page 29

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

9.


Directors' remuneration

52 week period ended
30 December
52 week period ended
31 December
2023
2022
£000
£000

Directors' emoluments
1,278
438

Group contributions to defined contribution pension schemes
38
22

1,316
460


During the 52 week period retirement benefits were accruing to 4 directors (2022 - 1) in respect of defined contribution pension schemes.

The highest paid director received remuneration of £599k (2022 - £288k).

The value of the Group's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £12k (2022 - £10k).

The total accrued pension provision of the highest paid director at 30 December 2023 amounted to £NIL (2022 - £NIL).


10.


Interest receivable

52 week period ended
30 December
52 week period ended
31 December
2023
2022
£000
£000


Interest receivable from group companies
797
195

Bank and other interest receivable
3,809
629

4,606
824

Page 30

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

11.


Taxation


52 week period ended
30 December
52 week period ended
31 December
2023
2022
£000
£000

Corporation tax


Current tax on profits for the year
5,209
1,658

Adjustments in respect of previous periods
(36)
(30)


5,173
1,628


Total current tax
5,173
1,628

Deferred tax


Origination and reversal of timing differences
275
(3)

Changes to tax rates
-
(2)

Other changes
163
(2)

Total deferred tax
438
(7)


Taxation on profit on ordinary activities
5,611
1,621
Page 31

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023
 
11.Taxation (continued)


Factors affecting tax charge for the 52 week period/period

The tax assessed for the 52 week period/period is higher than (2022 - lower than) the standard rate of corporation tax in the UK of 23.52% (2022 - 19%). The differences are explained below:

52 week period ended
30 December
52 week period ended
31 December
2023
2022
£000
£000


Profit on ordinary activities before tax
21,646
8,937


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.52% (2022 - 19%)
5,091
1,698

Effects of:


Expenses not deductible for tax purposes
607
111

Amounts relating to other comprehensive income or otherwise transferred
(65)
-

Deferred tax on losses not previously provided for
(156)
(175)

Adjustments to tax charge in respect of prior periods
(36)
(30)

Adjustments to deferred tax charge in respect of prior periods
163
-

Non-taxable income
(61)
(47)

Differences in tax rates
26
41

Foreign tax
-
20

Other differences
42
3

Total tax charge for the 52 week period/period
5,611
1,621


Factors that may affect future tax charges

There were no factors that may affect future tax charges. 


12.


Dividends

2023
2022
£000
£000


Dividends
50,000
-

50,000
-

Page 32

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

13.


Intangible assets

Group and Company





Development expenditure
Computer software
Goodwill
Total

£000
£000
£000
£000



Cost


At 1 January 2023
6,926
122
11,696
18,744


Additions
1,457
-
-
1,457


Disposals
(3,416)
-
-
(3,416)


Intra-group transfers
-
128
-
128



At 30 December 2023

4,967
250
11,696
16,913



Amortisation


At 1 January 2023
5,133
122
11,696
16,951


Charge for the 52 week period on owned assets
1,218
35
-
1,253


On disposals
(3,416)
-
-
(3,416)


Amortisation transfer from group
-
87
-
87



At 30 December 2023

2,935
244
11,696
14,875



Net book value



At 30 December 2023
2,032
6
-
2,038



At 31 December 2022
1,793
-
-
1,793



All of the Group's intangible fixed assets are held in the Parent Company.

Page 33

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

14.


Tangible fixed assets

Group






Plant and machinery
Fixtures and fittings
Total

£000
£000
£000



Cost


At 1 January 2023
554
2,500
3,054


Additions
258
36
294



At 30 December 2023

812
2,536
3,348



Depreciation


At 1 January 2023
374
1,763
2,137


Charge for the 52 week period on owned assets
161
194
355



At 30 December 2023

535
1,957
2,492



Net book value



At 30 December 2023
277
579
856



At 31 December 2022
180
737
917

Page 34

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

15.


Fixed asset investments

Company





Investments in subsidiary companies

£000



Cost


At 1 January 2023
19,547



At 30 December 2023

19,547



Impairment


At 1 January 2023
3,203



At 30 December 2023

3,203



Net book value



At 30 December 2023
16,344



At 31 December 2022
16,344


Subsidiary undertakings


The following were subsidiary undertakings of the Company:

Name

Registered office

Class of shares

Holding

Cyclescheme Limited
**
Ordinary
100%
Blackhawk Network EMEA Limited
**
Ordinary
100%
Hawk Incentives Trust Company Limited***
**
Ordinary
100%
Intelligent Card Solutions Limited*
**
Ordinary
100%
GRG Ireland Limited
4th Floor, Investment House, 8-34 Percy Place, Dublin 4, D04 P5K3 Ireland
Ordinary
100%

*held indirectly
**Westside, London Road, Hemel Hempstead, Hertfordshire, HP3 9TD, UK
***dormant
The subsidiary undertakings Grass Roots Asia Pacific PTE Limited and Grass Roots Holdings Hong Kong Limited were dissolved in the year. 

Page 35

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

16.


Stocks

Group
Group
2023
2022
£000
£000

Vouchers held for resale
2,201
2,633

2,201
2,633



17.


Debtors

Group
Group
Company
Company
2023
2022
2023
2022
£000
£000
£000
£000

Due after more than one year

Deferred tax asset
916
1,209
-
-

916
1,209
-
-


It is anticipated that the deferred tax asset will be realised in 5 years.

Group
Group
Company
Company
2023
2022
2023
2022
£000
£000
£000
£000

Due within one year

Trade debtors
119,059
26,328
-
-

Amounts owed by group undertakings
9,939
7,692
11,988
6,649

Other debtors
14,345
874
8
-

Prepayments and accrued income
1,459
721
-
-

144,802
35,615
11,996
6,649


All amounts owed by group undertakings are unsecured, repayable on demand and non-interest bearing.

Page 36

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

18.


Cash and cash equivalents

Group
Group
Company
Company
2023
2022
2023
2022
£000
£000
£000
£000

Current accounts
115,290
77,337
-
2,952

Operationally ring-fenced accounts
27,372
31,699
-
-

Restricted cash

924
247
924
247

Cash At Bank And In Hand

143,586
109,283
924
3,199

Less: Group treasury facility
(14,015)
-
(14,015)
-

129,571
109,283
(13,091)
3,199


Cash at bank and in hand includes amounts held in accounts that are operationally ring-fenced in order to make payments to childcare providers under the Company's care-4 scheme. The Company voluntarily undertakes this arrangement as we believe it is best practice, and complies with the code of practice of the Childcare Voucher Providers Association (CVPA), of which the Company is a founding member. The code highlights and establishes clear expectations for parents, carers, employers, and voucher providers. It is considered that whilst the cash is operationally ring-fenced, the offsetting requirements are not met under FRS 102. As such the cash balance and creditor balance are shown separately.
The restricted cash relates to cash held on behalf of the Employee Benefit Trust. 
The group treasury facility balance relates to the group cash pooling arrangement referred to in the Strategic report.


19.


Creditors: Amounts falling due within one year

Group
Group
Company
Company
2023
2022
2023
2022
£000
£000
£000
£000

Group treasury facility
14,015
-
14,015
-

Trade creditors
122,791
23,648
-
-

Amounts owed to group undertakings
9,936
5,621
16
167

Corporation tax
825
-
878
15

Other taxation and social security
2,856
1,658
-
-

Other creditors
27,723
31,991
3
-

Accruals and deferred income
80,674
47,365
71
-

258,820
110,283
14,983
182


The amounts owed to group undertakings are unsecured, repayable on demand and non-interest bearing.

Page 37

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

20.


Deferred taxation


Group



2023


£000






At beginning of year
1,209


Charged to profit or loss
(438)


Arising on business combinations
145



At end of year
916

Company


2023






At end of year
-
The deferred tax asset is made up as follows:

Group
Group
2023
2022
£000
£000

Accelerated capital allowances
107
171

Tax losses carried forward
682
928

Short term timing differences
127
110

916
1,209


Deferred tax assets are expected to reverse over a 5 year period. It is estimated that £402k of the deferred tax asset will be reversed during the next financial year. 


21.


Share capital

2023
2022
£000
£000
Allotted, called up and fully paid



56,926,460 (2022 - 56,926,460) Ordinary shares of £0.05 each
2,846
2,846

The Group has one class of ordinary shares, which carry no right to fixed income.


Page 38

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

22.


Reserves

Share premium account

The share premium account includes the premium on issue of equity shares, net of any issue cost.

Foreign exchange reserve

On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in the foreign exchange reserve.

Profit and loss account

The profit & loss account represents cumulative profits and losses, net of dividends paid and other adjustments.
On 1st January 2023 the trade and assets of Blackhawk Network (Europe) Limited were transferred to the Company at fair value and have been accounted for using the hybrid method of merger accounting. A promissory note was raised as consideration for the transfer of trade which has subsequently been waived. The waiving of this promissory note has been treated as a capital contribution and is disclosed in the profit and loss reserve.


23.


Share-based payments

Certain of the Company's Directors and employees are participants in the 2018 Stock Incentive Plan of Blackhawk Network Inc. Under the terms of the 2018 Plan, Blackhawk Network Inc. may issue share options to eligible employees as a combination of Time-Vesting Post-Merger Options and Performance-Vesting Post-Merger Options. Grants received allow each grantee to purchase units of shares of the Class B common stock. The Time-Vesting Post-Merger Options vest and become exercisable over a four-year term based on continued service requirements. The vesting of Performance-Vesting Post-Merger Options is subject to achieving or exceeding pre-defined annual EBITDA targets for each of the fiscal years ended 2018 through 2025. Upon achievement of these specified targets each year, 20% of these options shall vest and become exercisable. If the targets are not satisfied in one fiscal year, the options shall vest in the next subsequent fiscal year if that year's targets are satisfied.


24.


Pension commitments

The Group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. There were contributions receivable to the fund at the reporting date of £213,000 (2022: £183,000).

Page 39

 


HAWK INCENTIVES HOLDINGS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 52 WEEK PERIOD ENDED 30 DECEMBER 2023

25.


Commitments under operating leases

At 30 December 2023 the Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:


Group
Group
2023
2022
£000
£000

Not later than 1 year
878
1,209

Later than 1 year and not later than 5 years
4,319
4,054

Later than 5 years
904
1,990

6,101
7,253
For one the Group’s rental properties, the Group has sublet a part of the premises, and is due to receive the following amounts in respect of the sub-lease:


Group
Group
2023
2022
£000
£000

Not later than 1 year
307
344

Later than 1 year and not later than 5 years
-
307

307
651


26.


Post balance sheet events

The Company has entered into a new lease arrangement relating to its offices in Apsley. As a result of the new arrangement the Company will reduce its occupation of the building from 4 floors to 2 with effect from 1st January 2025.


27.


Controlling party

The immediate parent company is Blackhawk Network Inc., which is incorporated in the USA. Blackhawk Network Inc. is the smallest group that the Company is consolidated into and whose registered office is 6220 Stoneridge Mall Rd, Pleasanton, CA 94588, USA.
As at 30 December 2023, the ultimate parent company is BHN Holdings, Inc. which is the largest group that the Company is consolidated into and is incorporated in the USA. The registered office of BHN Holdings, Inc. is 6220 Stoneridge Mall Rd, Pleasanton, CA 94588, USA. 
BHN Holdings, Inc. is majority owned by investment funds affiliated with Silver Lake Partners and investment funds affiliated with P2 Capital Partners. There is no individual who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, owns 25% or more of the equity interests of BHN Holdings, Inc.
Page 40