The director presents the strategic report for the year ended 31 December 2024.
Despite a backdrop of economic uncertainty and market hesitancy driven by elevated living and borrowing costs, Zircon Group Limited (“ZGL” or “the group”) continued to demonstrate resilience and momentum. The group’s strong and improved financial performance reflects the depth of our expertise, the strength of our institutional funding partnerships, and sustained market demand for our financial solutions.
ZGL reported an operating profit of £25.9m (2023: £5.1m) and post-tax profits of £19.4m (2023: £3.9m), representing a substantial increase in profitability.
The group also maintained a robust balance sheet and liquidity position, with cash at bank increasing to £43.6m (2023: £41.0m) and net assets rising to £27.4m (2023: £12.0m) at year-end.
The director is pleased with these results. Key achievements underpinning this performance are noted below.
Securing additional institutional funding to support increased lending demand which resulted in growth in the loan book by the year-end.
First full year of operating activity for London Bridging Limited, a subsidiary which was formed in 2023.
Continued focus on maintaining a strong commercial and operational relationship with affiliated companies who support ZGL on various aspects including regulation and compliance, client on-boarding, monitoring and liaison, key account management and liaison with institutional funding partners and other essential operational matters.
Key performance indicators
Turnover
Turnover, derived from loan interest and arrangement fees, increased by £48.8m to £114.5m (2023: £65.7m). The group continued to adopt a strict criteria for lending, close monitoring of the loan book and sustained focus on customer experience including speed of response. These factors, coupled with the ongoing institutional funding support, allowed the group to increase the volume of loans executed during the current financial year and therefore turnover.
Profit after tax
Profit after tax rose by £15.5m to £19.4m (2023: £3.9m), reflecting a good and proportionate contribution made by all subsidiaries. Maintenance of robust financial controls and disciplined growth has facilitated the rise in profit after tax.
Shareholder’s funds
Shareholder’s funds increased by £15.4m to £27.4m as at 31 December 2024 (2023: £12.0m), supported by strong profit generation and retained earnings.
Loan book
The group loan book as at 31 December 2024 was £1,207.8m (2023: £508.4m). The year-on-year increase of £699.4m reflects growth in demand for the group’s products, which in turn is a symbol of the group’s reputation for providing effective client service whilst maintaining an emphasis on prudent, selective lending in changing market conditions.
Non-financial performance
Ongoing priorities include maintaining high standards of regulatory compliance and strengthening operational and strategic relations with key suppliers. ZGL confirms that it met all applicable legal and regulatory obligations throughout the year.
The director actively monitors key risks and meets regularly with key service providers including affiliates to assess, manage, and mitigate potential exposures. Core risks include:
Credit risk: Lending decisions are subject to rigorous underwriting and stress testing, with continued focus on conservative loan-to-value ratios and borrower affordability. Once approved, borrowers are subject to a thorough process of ongoing monitoring to provide an early indication of potential non-compliance.
Interest rate risk: The group ensures that rates charged to borrowers protect margins and support profitability while absorbing market fluctuations.
Liquidity risk: ZGL ensures that there are always sufficient liquid funds to settle financial obligations as and when they are due. This includes adopting a policy of prudent cash flow management to ensure the group can not only meet financial obligations, but also plan for contingencies.
The group regularly reviews its going concern position and is confident that the current level of liquid reserves, together with anticipated future cash inflows, is sufficient to settle debts as they fall due.
Operational risk: The director has close oversight of all key service delivery providers to ensure adequate and compliant internal controls and processes are in operation.
Regulatory risk: The group takes its compliance responsibilities seriously. Clients undergo a robust on boarding and due diligence process prior to acceptance.
Future developments
The group operates in a competitive lending environment shaped by continued economic and geopolitical uncertainty. The groups focus remains on being vigilant of and adapting to likely short to medium term external influences, whilst maintaining a long-term strategy of increasing the loan book which is secured by product review and development coupled with growth in institutional funding support.
The director is required to act in the way he considers would be most likely to promote the success of the group for the benefit of its members as a whole, with regards to the matters below, and work in collaboration with the group’s strategic service delivery partners in order to achieve this.
A. The likely consequences of any decisions in the long-term
The director considers the medium and long-term impact of decisions when formulating the strategic direction of the group and making supporting decisions. Annual budgets and medium-term plans are prepared which align with the underlying strategy. Such plans are reviewed periodically throughout the year with amendments made as needed to reflect changes in market conditions, current and predicted in the future.
Key plans implemented during the current financial year include the widening of the product range and increase in institutional funding lines to satisfy current and future demand.
B. The interest of the group’s employees
Other than the director, the group does not have any employees given the group’s business model is for operational service delivery to be undertaken by strategic business partners.
C. The need to foster the group’s business relationships with suppliers, customers and others
The group is focused on building and maintaining strong, mutually beneficial relationships with all of the key partners including customers, affiliates, funding partners, brokers, professional service providers and regulatory bodies. A plan exists to allow stakeholders to be kept updated on the business activities, performance and future plans in a timely manner.
D. The impact of the group’s operations on the community and environment
The group is focused on ensuring its operations are in compliance with environmental laws and regulations. Sustainability and doing business responsibly are very important for the director.
Whilst the group does not have its own premises, employees, motor vehicles or other direct measures which creates a significant environmental impact, the group remains mindful of its obligations on the community and environment. The group aims to be a respectful corporate citizen in this regard by aiming to support key business delivery partners in taking a considered view.
E. The desirability of the group maintaining a reputation for high standards of business conduct
Maintaining a clear reputation for quality and strong ethical business practices is imperative for the group. The continued growth and success of the business is underpinned by this, and the culture which the director promotes supports such a way of working whilst simultaneously ensuring compliance with the group’s regulatory and governance responsibilities to all stakeholders.
F. The need to act fairly between members of the company
The director of the group is also the ultimate controlling party by virtue of his shareholding. He ensures all decisions are made in a fair, transparent and considered manner.
On behalf of the board
The director presents his annual report and financial statements for the year ended 31 December 2024.
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £4,000,000. The director does not recommend payment of a final dividend.
The director who held office during the year and up to the date of signature of the financial statements was as follows:
The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the director's report.
The auditor, Silver Levene (UK) Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
In accordance with the statutory requirements for Streamlined Energy and Carbon Reporting (SECR), the group is required to disclose its carbon emissions by virtue of of its size. However, given the group does not have a workforce, company cars or have its own operating location, the director is of the opinion that the group generates a negligible amount of greenhouse gas emissions. As such the group has elected not to report the ordinarily required information.
We have audited the financial statements of Zircon Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company 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 director's 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 director with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's 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 director's 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 director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the parent company or to cease operations, or has 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Discussions were held with, and enquiries made of, management and those charged with governance with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.
The following laws and regulations were identified as being of significance to the entity:
Those laws and regulations considered to have a direct effect on the financial statements include UK financial reporting standards, Tax legislation, Company law, FCA rules, General Data Protection Regulation and distributable profits legislation.
It is considered that, other than FCA rules, there are no laws and regulations for which non-compliance may be fundamental to the operating aspects of the business.
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: inquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; testing the appropriateness of entries in the nominal ledger, including journal entries; reviewing transactions around the end of the reporting period; and the performance of analytical procedures to identify unexpected movements in account balances which may be indicative of fraud.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
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 company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
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 £11,442,004 (2023 - £3,978,777 profit).
Zircon Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 2nd Floor, 314 Regents Park Road, Finchley, London, N3 2JX.
The group consists of Zircon Group Limited and all of its subsidiaries.
The company's and group's principal activities and nature of its operations are disclosed in the Director's Report.
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 consolidated group financial statements consist of the financial statements of the parent company Zircon Group Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2024. 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 director has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
Turnover represents interest receivable on loans advanced to customers. Turnover is recognised at the fair value of the consideration received or receivable for services provided and interest receivable in the normal course of business. The turnover of the group is not subject to VAT.
Interest receivable is recognised at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period. The effective interest rate (EIR) is the rate that exactly discounts estimated future cash flows through the expected life, or contractual term if shorter, of the financial asset to the net carrying amount of the financial asset. When calculating the EIR, the company estimates cash flows considering all contractual terms of the financial instruments, but does not include an expectation for future credit losses.
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.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
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 period. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The average monthly number of persons (including directors) employed by the group and company during the year was:
The director did not receive any remuneration in the year.
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
The corporation tax rate increased from 19% to 25%, starting from 1 April 2023 for companies with profits over £250,000. Therefore, the effective tax rate is 25.00% (2023: 23.52%).
Details of the company's subsidiaries at 31 December 2024 which have been included in the consolidated accounts are as follows:
The bridge loans receivable, both within one year and after more than one year are secured.
Included in other creditors is an amount of £8,592,651 (2023: £19,588,620) due to the director. It is an interest free loan and is repayable on demand.
Other loans are secured by way of fixed and floating charges on all the assets of the group assigned to security agents.
Amounts included in other loans payable after one year relate to senior lenders, mezzanine lenders and junior lenders.
Loan terms vary from 1 to 3 years and charge interest of between SONIA plus 3.4% (2023: SONIA plus 3.4%) and SONIA plus 8% (2023: SONIA plus 10%). The interest charge is calculated and paid monthly.
Group:
During the period, total interest receivable from related parties amounted to £1,540,287 (2023: £1,647,723). At the end of the period, included in other debtors, amounts totalling £24,731,671 (2023: £23,191,383) were due from related parties.
During the period, total fees and interest payable to related parties amounted to £21,199,431 (2023: £6,729,285). At the end of the period, the balance due, included in other creditors, was £162,891,800 (2023: £104,195,467).
All the related parties are controlled by the director of the company.
Company:
Other than the transactions disclosed above and note 12, the company’s other related party transactions were with wholly owned subsidiaries.