The directors present the strategic report for the year ended 31 December 2023.
The principal activity of the company and group is a tech-enabled, socially aware, human capital business focused on high-growth technology-led sectors.
We deliver this via three market leading specialist staffing businesses (SODA, Broadgate, and Deeprec.ai) as well as our own social enterprise supporting veterans (Ex-military Careers).
SODA are a next-generation tech-enabled recruitment specialist. We are the partner of choice for digital technology recruitment to a range of industries. For us, digital technology encompasses Software Engineering, DevOps, Data and Design, as well as Product Management and Marketing & Sales. Our community groups include Women in DevOps and Computer Vision in Production.
Broadgate recruit across business enablement and business protection. We recruit for tech-enabled businesses, and represent candidates, across the UK, US, Germany and wider Europe, within the specialist fields of Cyber Security; Finance, Accounting & Audit; Risk & Analytics; Compliance, Legal & Financial Crime; and Transformation & Change. Our community groups include Diversity within Cyber and Ethnicity Talks.
Deeprec.ai was set up in 2023 as our deep-tech, machine learning and AI recruitment partners. We are your Deep Tech recruitment specialists, driven by a mission to power progress in the world’s most exciting industries. We build high-quality connections through a dedicated community of AI specialists, bridging the gap between Deep Tech pioneers and world-class talent.
The results for the year ended 31 December 2023 are set out in the Profit and Loss account on page 10. The group recorded turnover of £32.5m (2020: £52.3m) and gross profit of £13.8m (2022: £23.5m).
The cost of living crisis in the United Kingdom and across the world has affected the group’s results in the year. To mitigate the continued impact, directors have taken steps to reduce costs and focus on collections to drive working capital. To drive productivity across the group the group has also focused on growing and diversifying its geographical coverage and quality of service through investment in scalable process improvement, technology and analytics.
The group actively considers and manages its risks. The directors consider the group to be subject to the following material areas of risk:
Business and operational risk management
Currently, there is a significant level of global uncertainty in the markets, coupled with high inflation and the cost of living crisis and the broader economic outlook does tend to loosely correlate with our clients hiring plans. To mitigate this we focus on a number of sectors that will allow the group to hopefully mitigate any fluctuations in the economy. We also ensure that the business is geographically diverse. We offer both permanent and contractor solutions to our clients and remain agile to new opportunities that are presented in the regions in which we operate. The diversity of our client base means we are well placed to take advantage of an increase in demand, or mitigate a decline.
Workforce trends, the technology revolution and highly uncertain business environment is impacting the employment market. Coupled with low unemployment rates across Europe, this is leading to a war on talent for highly skilled contractors. We see this as a key risk area. The group’s business model is based on offering niche talent solutions, deploying the right talent at the client locations and having a wide client base covering a number of industries, countries and economies.
Financial risk management
The Directors regularly review the financial requirements of the business and the associated risks. The group
is financed through a combination of retained earnings, discount credit facility, and a third party short-term loan and does not use complicated financial instruments or derivatives. 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 obligations arising from liabilities as they fall due. The main components of financial risk are liquidity risk and credit risk.
Due to the nature of the group’s business and the assets and liabilities contained within the group’s balance sheet, the principal financial risk that the Directors consider relevant to the group is credit risk. The risk is mitigated through a robust credit control function.
All data used in the key performance indicators are derived from the Group’s financial statements for the year ended 31 December 2022, which only include three weeks consolidated position:
| Year ended 2023 | Year ended 2022 |
Revenue | £32,468,817 | £52,259,295 |
NFI | £13,809,487 | £23,460,599 |
Profit before tax | £3,081,330 | £1,335,906 |
Headcount | 148 | 228 |
The group is well positioned for the future. Whilst the market conditions remain volatile, with the quality of operational delivery, geographic reach, financial efficiencies and liquidity, the directors believe that the group has the opportunity to take advantage of the expected improvements in the economy and the hopeful increase in the demand for employment services will help the group’s future growth trajectory from Q1 2025 onwards.
On 3 November 2023, the group sold the trade and assets of subsidiary company Trinnovo Group Staffing Limited (formerly known as BioTalent Limited), being recruitment activities in the life sciences sector, for a sum of £7m.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on pages 10 to 11.
Ordinary dividends were paid amounting to £98,867. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
At the time of approving the financial statements, the directors have a reasonable expectation that the company and group have 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.
The directors recognise that the cost of living crisis in the United Kingdom and across the world represents a material uncertainty to the future of the economy and casts doubt on the ability of many companies to continue as a going concern. Having considered these impacts and through the preparation of forecasts which have been sensitised to take into account the uncertainty in the global economy and with the funds it has available through the sale of the trade and assets of subsidiary company Trinnovo Group Staffing Limited (formerly known as BioTalent Limited), the directors consider it appropriate to prepare the financial statements on a going concern basis.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of Trinnovo Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, 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).
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 directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
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 the audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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:
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.
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.
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.
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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.
Identifying and assessing risks related to irregularities:
We assessed the susceptibility of the group and parent company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the group and parent company by discussions with directors and by updating our understanding of the sector in which the group and parent company operates.
Laws and regulations of direct significance in the context of the group and parent company include The Companies Act 2006 and UK Tax legislation.
Audit response to risks identified
We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of group and parent company financial statement disclosures. We reviewed the parent company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the parent company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.
During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.
As group auditors, our assessment of matters relating to non-compliance with laws or regulations and fraud differed at group and component level according to their particular circumstances. Our communications included a request to identify instances of non-compliance with laws and regulations and fraud that could give rise to a material misstatement of the group financial statements in addition to our risk assessment.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
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.
Use of our report
This report is made solely to the parent 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 parent 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 parent company and the parent company's members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £1,031,491 (2022 - £3,929,052 profit).
Trinnovo Group Limited (“the company”) is a private company limited by shares incorporated in England and Wales. The registered office is 20 Westland Place, London, N1 7JR.
The group consists of Trinnovo Group Limited and all of its subsidiaries.
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.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The 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 for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
In the parent company financial statements, the cost of a group reconstruction where whole companies are transferred, and where the consideration is in shares, is recognised at the value of the consideration received in exchange for shares. No share premium has been recognised in accordance with merger relief as detailed in Section 612 of the Companies Act 2006, with the investment in subsidiary being recognised at the nominal value of shares issued as part of the group reconstruction.
Subsidiaries acquired during the year following a share for share exchange have been consolidated using the acquisition accounting method. The difference between the fair value of the subsidiaries and the nominal value of shares issued, has been recognised in the merger relief reserve.
The consolidated group financial statements consist of the financial statements of the parent company Trinnovo Group Limited for the full year, together with all entities controlled by the parent company (its subsidiaries) from the date of acquisition. Comparatives have been omitted from the consolidated statements as they show the company only figures.
All financial statements are made up to 31 December 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.
At the time of approving the financial statements , the directors have a reasonable expectation that the company and group has adequate resources to continue in operational existence for the foreseeable future. The directors have prepared forecasts for a period of greater than twelve months from the date of the signed audit report, which show that they have sufficient funds to ensure that the Group will continue to trade for the foreseeable future. If required the directors will also take the necessary steps to ensure that the company and group remains in a strong trading position during the current global uncertainty. From the forecast produced and the sensitivities that have been applied to them, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
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. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Turnover from contractor placements, representing fees billed for the services of contractors including their costs, is recognised when the service has been provided.
Turnover from permanent placements is recognised on the candidates acceptance date or start date, depending on the contract with the client.
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 income statement.
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.
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.
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.
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 statement of financial position 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, which include debtors, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
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.
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.
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.
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, 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
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.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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 liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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.
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.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
Government grants relating to turnover are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Intercompany balances are reviewed at each year end for recoverability by assessing the historical transactions and expected future cash flows respectively.
The directors have applied judgement in order to determine whether there are indicators of impairment in the group's intangible and tangible assets, including goodwill and negative goodwill, at the year end.
Determining whether goodwill, negative goodwill or other non-current assets are impaired requires an estimation of the value in use of the business being tested for impairment and of the cash generating units to which these assets have been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash generating unit, taking into account the achievability of long term business plans.
EMI share options have been granted to employees of the group companies. The company has used the Black-Scholes model to determine the fair value of the options on grant date. Consideration is also taken in relation to vesting conditions and non-market variables which impact the estimated charge.
Subsidiaries acquired have been consolidated using the acquisition accounting method. The difference between the fair value of the subsidiaries and the nominal value of shares issued, has been recognised in the merger relief reserve. See notes 1.2 and 23 for further information.
Grants received are in relation to the Coronavirus Business Interruption Loan Scheme (see Note 19).
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
On 3 November 2023, the group disposed of it's trade and assets in respect of the BioTalent brand. The disposal was effected in order to generate cash flow for the expansion of the group's other businesses.
A profit of £4,826,663 arose on the disposal, being the proceeds of the sale, less the carrying amount of the
business assets and attributable goodwill.
The actual charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
The impairment losses in respect of financial assets are recognised in other gains and losses in the income statement.
More information on impairment movements in the year is given in note 13.
Details of the company's subsidiaries at 31 December 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
Broadgate Search Limited was exempted from the requirement to a statutory audit in the period by virtue of taking the s479A exemption from audit through issuance of a parental guarantee by Trinnovo Group Limited.
Amounts owed by group undertakings are interest free, unsecured and repayable on demand.
Other creditors include invoice financing facilities of £673,106 (2022: £408,642) where the agency holds a guarantee as security for all the present and future debts, moneys and and liabilities owed to the agency by the subsidiary.
Amounts owed to group undertakings are interest free, unsecured and repayable on demand.
In 2021, three subsidiary companies entered into new loan agreements for £250,000 each, with HSBC UK Bank plc., attracting an interest rate of 3.99% per annum over Base Rate. These lending facilities are supported by the Coronavirus Business Interruption Loan Scheme, therefore the annual interest rate applicable during the first twelve months of the term was 0%. The loans are repayable in monthly instalments and are due to be repaid in full by 25 May 2027. One of the subsidiaries repaid the loan in full during the year. The combined balance at 31 December 2023 was £351,816 (2022: £680,567), which is split between amounts due within one year and amounts due after more than one year.
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.
During the year ended 31 December 2023, the company granted nil (2022: 316,596) share options. The options have an exercise price of £0.0566, and a vesting period of 5 years. They are subject to certain conditions as set out in the option scheme rules.
During the year, 21 (2022: 3) employees left the company, forfeiting 378,620 (2022: 338,133) share options.
The directors have reviewed the value of the options and based on the conditions of the agreement any option charge is considered immaterial, therefore a charge of £nil has been recognised (2022: £nil). Following the year end, the remaining agreements were terminated.
On 8 March 2022, the company allotted 10,000,000 Ordinary F shares of 0.01p each. The shares were allotted as part of a group reorganisation and the allottee shareholders received the shares in exchange for shares they have transferred to the company.
On 31 August 2022, the company allotted 55,556 Ordinary E shares of 0.01p each. The company received £9,393 in respect of these shares, with the difference being recognised as share premium.
On 6 September 2023, the company purchased 55,556 Ordinary E shares of 0.01p each, for £555. The shares were then immediately cancelled.
Each of the share have attached to the full voting, dividend and capital distribution (including on winding up) rights; they do not confer any rights of redemption.
The number of shares issued equals the total number of shares allotted.
On 6 December 2021, the company acquired four entities by way of share for share exchange, and on 8 March 2022, the company acquired another entity by way of share for share exchange.
In the parent company financial statements, the cost of a group reconstruction where whole companies are transferred, and where the consideration is in shares, is recognised at the value of the consideration received in exchange for shares. No share premium has been recognised in accordance with merger relief as detailed in Section 612 of the Companies Act 2006, with the investment in subsidiary being recognised at the nominal value of shares issued as part of the group reconstruction.
Subsidiaries acquired have been consolidated using the acquisition accounting method. The difference between the fair value of the subsidiaries and the nominal value of shares issued, has been recognised in the merger relief reserve.
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:
As at 31 December 2023 the company was owed the following amounts by the Directors:
£57,021 by Ashley Lawrence (2022: £354)
£59,814 by David Young (2022: £6,211)
£97,953 by Ben Adams (2022: £75,186)
These balances are denominated in sterling, accrue no interest and are repayable upon demand.
Dividends totaling £93,866 (2022: £2,781,299) were paid in the year in respect of shares held by the company's directors.
The company has taken advantage of the exemption to disclose related party transactions with companies that are wholly owned within the group. The balances outstanding at the year end are disclosed in Notes 16 and 17.