Registration number:
for the
Year Ended
Strand Hanson Limited
Contents
Company Information |
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Strategic Report |
|
Directors' Report |
|
Statement of Directors' Responsibilities |
|
Independent Auditor's Report |
|
Profit and Loss Account |
|
Balance Sheet |
|
Statement of Changes in Equity |
|
Statement of Cash Flows |
|
Notes to the Financial Statements |
Strand Hanson Limited
Company Information
Directors |
Rory Murphy James Harris Simon Wharmby Simon Raggett Lord Anthony St. John |
Registered office |
|
Auditors |
|
Strand Hanson Limited
Strategic Report for the Year Ended 31 December 2021
The directors present their strategic report for the year ended 31 December 2021.
Principal activity
The principal activity of the company is the provision of corporate finance and related advisory services.
Fair review of the business
As noted in the prior year, despite the ongoing COVID-19 pandemic and wider market volatility extending into 2021, there was significant pent-up demand carried forward from the uncertainty of 2020, which led to a resurgent market for AIM admissions in 2021, particularly during the second half of the year.
In particular, within our ECM division we benefited from the strong equity markets and a solid pipeline of companies/opportunities which were looking to come to market and capitalise on investor demand from previous years for high quality growth companies that can create value for shareholders. During the course of the year we were pleased to successfully conclude nine IPOs/RTOs across a range of sectors including natural resources and technology.
The AIM market continued to perform strongly in terms of share price performance and fundraising activity which was the highest since 2007. In contrast to 2020 this came from both new and further issues with fewer companies needing to undertake emergency fundraisings during the year. With the strong performance of the stock market in 2021, we were also able to successfully realise over £1.1 million during the course of the year through disposals of shares held in our portfolio.
Conditions were more challenging in our M&A division with several transactions being aborted due to the ongoing uncertainty and unfavourable market conditions. However, despite this we were able to conclude a number of transactions during the year including an offer, and several successful defence and whitewash transactions.
We continue to focus primarily on the AIM market, advising clients on a range of ECM and M&A transactions, including reverse takeovers, listings and secondary fundraisings across diverse sectors and geographies but with a continued focus on emerging markets, which remains a key area of expertise for the Group.
In the year ended 31 December 2021, the Group recorded a pre-tax profit of £1.5 million (2020: £1.3 million) on turnover of £7.6 million (2020:£5.2 million), representing a 46 per cent. increase on 2020.
Following record IPO activity in 2021, 2022 has seen a return to more challenging market conditions with Russia’s invasion of Ukraine leading to unfavourable macroeconomic factors, weakening stock market valuations and general market uncertainty, giving rise to a challenging fundraising environment. Notwithstanding this, we continue to have a solid pipeline of transactions, including IPOs, both at the mandated and pre-mandate stage, although these are typically taking longer to execute, particularly where they involve an equity raise element, while market participants wait for current uncertainty and volatility to subside.
We continue to see a good level of ordinary course corporate activity amongst our retained clients, such as related party transactions and secondary placings.
In April 2022, one of our peers in the Nomad/ broking community relinquished its Nomad status as a result of a recommended takeover. Strand Hanson was the principal beneficiary of the resulting redistribution of their AIM clients and, accordingly we were appointed as Nomad to an additional eight AIM-listed clients across a range of sectors. This has brought our total number of retained AIM-listed clients to 59, which also includes clients gained from the successful IPOs with which we were involved in 2021 and accordingly we now have the distinction of having the highest number of AIM clients for a Nomad which is both independent and not itself publicly listed. This has enabled us to strengthen our ranking across a number of sectors, in particular, energy (where we are ranked number one), technology and healthcare. In addition, Strand Hanson has been retained as financial adviser to a further two clients recently admitted to the Standard segment of the Main Market of the London Stock Exchange, bringing our total retained client base to 61 as at September 2022.
The challenging macroeconomic environment continues to affect our M&A division. We have a number of mandated and pre-mandated transactions in our current pipeline; however these too are progressing slowly until an improvement in market conditions is seen.
As previously identified, visibility as to future revenues arising from corporate transactions is always challenging in our type of business, particularly in times of considerable macroeconomic uncertainty. However, based on the level of activity we have seen in the year to date and the number of transactions we currently have mandated and expect shortly to be mandated, and, consistent with previous years, the likelihood that additional corporate transactions will be mandated during the remainder of the year, we remain optimistic as to our future trading and prospects despite current market uncertainty.
Strand Hanson Limited
Strategic Report for the Year Ended 31 December 2021
The Company's key financial and other performance indicators during the year were as follows:
Unit |
2021 |
2020 |
|
Turnover from advisory services |
£ |
7,603,759 |
5,215,354 |
Operating profit from advisory services |
£ |
948,350 |
732,679 |
Cash at year end |
£ |
350,089 |
1,851,980 |
Trade Debtors at year end |
£ |
2,070,062 |
385,591 |
Retained clients at year end |
No. |
50 |
48 |
Principal risks and uncertainties
In common with most UK businesses, inflationary pressure in the economy and its impact on the broad economic outlook will present potential risks and challenges to the business. The directors believe that the company is well placed to respond to these risks.
Section 172 statement
The Directors of the Company are required to promote the success of the Company for the benefit of the Members / Shareholders as a whole. Section 172(1) of the Companies Act 2006) expands this duty and requires the Directors to consider a broader range of interested parties when considering the promotion of the Company. This wider group of stakeholders will include employees, customers, regulators and others, and the Board will look to understand and take into account the needs of each stakeholder, although recognising that different stakeholders may have conflicting priorities and not all decisions made will be to the benefit of all stakeholder groups. When making decisions the Board should consider the following:
• the likely consequences of any decisions in the long-term;
• the interests of the Company’s employees (if applicable);
• the need to foster the Company’s business relationships with suppliers, customers and others;
• the impact of the Company’s operations on the community and environment;
• the desirability of the Company maintaining a reputation for high standards of business conduct, and
• the need to act fairly as between members of the Company.
At every Board meeting the Directors review the performance of the Company against its strategy. The financial performance is reviewed and measured against the Key Performance Indicators as set by the Board. The compliance with existing legal and regulatory requirements are reviewed, together with any new regulations that are to be introduced or are being proposed. Any new regulations are discussed and their potential impact on the Company and its stakeholders assessed. The Board recognises the importance of, and is committed to, understanding the views of Shareholders and maintaining communication with its Shareholders in the most appropriate manner.
The Directors have identified the following groups as key stakeholders and relevant according to Section 172 Companies Act 2006:
Employees
Employees are key for the performance and development of the business. Employees are engaged and communicated with regularly on the performance, health and safety, and cultural and environmental effects of the business. Engagement is maintained with employees to ensure a strong diverse and talented workforce.
Regulators
The Company operates in an environment that is governed by legal and regulatory requirements, which prescribe what the Company can undertake and how it can operate. The two primary regulators for the Company are the Financial Conduct Authority and the London Stock Exchange. The Board recognises that the restrictions put in place by its regulators are there to protect stakeholders. The Board’s view is to adopt the sentiment and ethos of the rules and regulations.
The Company seeks to ensure an open and transparent dialogue with its regulators and is mindful of its responsibilities in maintaining the integrity of the markets in which it operates. The Board continues to monitor market practice and regulatory developments, and ensures that employees undertake ongoing training on such developments, in order that we are able to guide our clients appropriately as the market evolves.
Strand Hanson Limited
Strategic Report for the Year Ended 31 December 2021
Section 172 statement (continued)
Environment and Community
Due to the nature of its activities the Company has little direct impact on the community or the environment. However, as a global financial advisory company it acts for companies operating across a range of sectors and geographies. As such, Strand Hanson recognises the need to act in a way that is sustainable and responsible, striving wherever possible to make a real difference to the numerous stakeholders and communities with which it interacts.
It is important that the company recognises the areas in which it can have the greatest impact as a financial advisory company, and it approaches sustainability through three interconnected pillars:
Clients and investments - Strand Hanson considers the sustainability profile of potential clients and investments from a social and environmental as well as a financial perspective and actively encourage clients and partners to adopt corporate and environmental programmes in line with its own.
Communities - Strand Hanson provides financial and non-financial support to its communities in various ways, including donations, sponsorships and employee volunteering.
Planet - the company strives to minimise its environmental impact, encouraging schemes to improve energy efficiency and minimise waste.
Strand Hanson has selected the Atlantis Dream Team as an official corporate social investment (CSI) initiative. The Atlantis Dream Team is a registered non-profit organisation based in the Atlantis community in Cape Town, South Africa. The initiative is focused on empowering and uplifting a disadvantaged community through developing sustainable job creation programmes, basic health care, nutrition, education and training, and the promotion of human rights.
The Directors believe that they have effectively implemented their duties under section 172 of the Companies Act 2006. The Company has considered the long-term strategy of the business and consider that this strategy will continue to deliver long term success to the business and its stakeholders.
Strategy and Key Performance Indicators
The Company's principal activity is set out in this Strategic Report.
Strand Hanson is a management owned, independent, advisory led, merchant bank, providing financial and strategic advice to public and private companies, private equity and activist investors. Strand Hanson’s operations are supported by a global network of advisers and consultants in Africa, South East Asia, South America and the Middle East, providing clients with local contacts who both understand their regional markets and have global capital market expertise.
Strand Hanson offers a full range of corporate finance services, including advising on flotations, fundraisings (both debt and equity), shareholder activism, restructuring and M&A. The company continues to focus primarily on the AIM market, with Strand Hanson advising clients on a range of transactions, including reverse takeovers, listings and secondary fundraisings across diverse sectors and geographies but with a continued focus on emerging markets, which remains a key area of expertise for the company.
The Company generates revenues from:
a) Retainer fees;
b) Advisory fees arising from corporate transactions undertaken by its clients; and
c) Proceeds from the sales of investments held as principal.
The majority of revenues are generated in the UK, although a number of the Company’s clients are based overseas.
The Company’s longer-term strategy is to focus on attracting and retaining higher calibre, more active and higher growth client companies, together with enhancing its strategic partnerships to enable the Company to broaden our global reach and contacts, and provide access to a large number of opportunities, particularly in emerging markets, including Africa, the Middle East, South America and Asia.
The Company believes that the key drivers for the success of the business are its Key Performance Indicators, which are set out in this Strategic Report.
Strand Hanson Limited
Strategic Report for the Year Ended 31 December 2021
Financial instruments
Objectives and policies
The company's financial instruments comprise cash and liquid resources, and various other items such as trade debtors and trade creditors etc. that arise directly from its operations. The main purpose of these financial instruments is to finance the operations of the company. The main risks arising from the company's financial instruments are set out below.
Price risk, credit risk, liquidity risk and cash flow risk
Liquidity risk - Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company's principal liquidity risk is to ensure that it has sufficient liquid assets to meet the regulatory capital requirements of its authorisation with the Financial Conduct Authority. This is closely monitored on a monthly basis and unencumbered cash resources are retained in order to meet this requirement.
Cash flow risk - cash flow risk is the risk of exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability such as future interest payments on a variable rate loan or changes in exchange rates. The company has limited exposure to cash flow risk, with fixed repayments on the time to pay arrangement with HMRC and limited transactions in foreign currency. The company has net cash resources and is therefore not at risk from increases in interest rates. Surplus funds are placed in short term fixed rate deposits, which are reviewed at least monthly.
Credit risk - Credit risk refers to a risk that a counterparty will default on its contractual obligations resulting in a financial loss to the company. The company's credit risk is primarily attributable to its trade receivables. The company's policies are aimed at minimising such losses, and require that deferred terms are only granted to customers that satisfy the company's internal credit worthiness procedures. The amounts presented in the balance sheet are, where appropriate, net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.
Price risk - Price risk is the risk that the fair value of a financial asset will fluctuate because of changes in market prices (other than those due to interest rates and currency). The company has no significant exposure to price risk, other than in respect to changes in the market value of its investments held for trading.
Approved by the
Director
Strand Hanson Limited
Directors' Report for the Year Ended 31 December 2021
The directors present their report and the financial statements for the year ended 31 December 2021.
Directors of the Company
The directors who held office during the year were as follows:
Going concern
The financial statements have been prepared on a going concern basis.
In considering the going concern status of the Company, the directors have reviewed mandated recurring and transactional advisory revenue, committed expenditure liquidity forecasts and available liquid resources as at the date of approving the financial statements. The directors therefore have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and have continued to adopt the going concern basis in preparing the financial statements.
Information included in the Strategic Report
Information on financial risk management and future developments is shown within the Strategic Report.
Reappointment of auditors
In accordance with s485 of the Companies Act 2006, Hazlewoods LLP will be proposed for re-appointment as auditors of the company.
Disclosure of information to the auditors
Each director has taken the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.
Approved by the
Director
Strand Hanson Limited
Statement of Directors' Responsibilities
The directors are responsible for preparing the Strategic Report, Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the directors are required to:
• |
select suitable accounting policies and apply them consistently; |
• |
make judgements and accounting estimates that are reasonable and prudent; |
• |
state whether applicable UK Accounting Standards has been followed, subject to any material departures disclosed and explained in the financial statements; and |
• |
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. |
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Strand Hanson Limited
Independent Auditor's Report to the Members of Strand Hanson Limited
Opinion
We have audited the financial statements of Strand Hanson Limited (the 'Company') for the year ended 31 December 2021, which comprise the Profit and Loss Account, Balance Sheet, Statement of Changes in Equity, Statement of Cash Flows, and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and 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 Company's affairs as at 31 December 2021 and of its profit for the year 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 Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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 company's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were 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.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.
Opinion on other matter 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 Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
• |
the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements. |
Strand Hanson Limited
Independent Auditor's Report to the Members of Strand Hanson Limited
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• |
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
• |
the financial statements are not in agreement with the accounting records and returns; or |
• |
certain disclosures of directors’ remuneration specified by law are not made; or |
• |
we have not received all the information and explanations we require for our audit. |
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities set out on page 7, 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 Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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:
We evaluated the directors’ and management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting manual journal entries to manipulate financial performance,management bias through judgements and assumptions and significant one-off or unusual transactions.
Our audit procedures were designed to respond to those identified risks, including non-compliance with laws and regulations (irregularities) and fraud that are material to the financial statements. Our audit procedures included but were not limited to:
• |
Discussing with the directors and management their policies and procedures regarding compliance with laws and regulations; |
• |
Communicating identified laws and regulations throughout our engagement team and remaining alert to any indications of non-compliance throughout our audit; |
• |
Considering the risk of acts by the company which were contrary to the applicable laws and regulations, including fraud. |
Our audit procedures in relation to fraud included but were not limited to:
• |
Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud; |
• |
Gaining an understanding of the internal controls established to mitigate risks related to fraud; |
• |
Discussing amongst the engagement team the risks of fraud; and |
• |
Addressing the risks of fraud through management override of controls by performing journal entry testing. |
Strand Hanson Limited
Independent Auditor's Report to the Members of Strand Hanson Limited
We consider that our procedures are sufficient to detect irregularities, including fraud, although they are not designed specifically for the detection of irregularities. The primary responsibility for the prevention and detection of irregularities including fraud rests with both those charged with governance and management. As with any audit, there remains a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions,misrepresentations or the override of internal controls.
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 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.
For and on behalf of
Windsor House
Bayshill Road
GL50 3AT
Strand Hanson Limited
Profit and Loss Account for the Year Ended 31 December 2021
Note |
2021 |
2020 |
|
Turnover |
|
|
|
Cost of sales |
( |
( |
|
Gross profit |
|
|
|
Administrative expenses |
( |
( |
|
Other operating income |
|
|
|
Operating profit |
|
|
|
Other interest receivable and similar income |
|
|
|
Interest payable and similar charges |
( |
( |
|
Profit before tax |
|
|
|
Taxation |
( |
( |
|
Profit for the financial year |
|
|
The above results were derived from continuing operations.
The company has no other comprehensive income for the year.
Strand Hanson Limited
(Registration number: 02780169)
Balance Sheet as at 31 December 2021
Note |
2021 |
2020 |
|
Fixed assets |
|||
Tangible assets |
|
|
|
Investments |
|
|
|
|
|
||
Current assets |
|||
Debtors |
|
|
|
Investments |
|
|
|
Cash at bank and in hand |
|
|
|
|
|
||
Creditors: Amounts falling due within one year |
( |
( |
|
Net current assets |
|
|
|
Total assets less current liabilities |
|
|
|
Creditors: Amounts falling due after more than one year |
- |
( |
|
Net assets |
|
|
|
Capital and reserves |
|||
Called up share capital |
|
|
|
Share premium reserve |
|
|
|
Capital redemption reserve |
|
|
|
Other reserves |
( |
( |
|
Profit and loss account |
|
|
|
Total equity |
|
|
Approved and authorised by the
Director
Strand Hanson Limited
Statement of Changes in Equity for the Year Ended 31 December 2021
Share capital |
Share premium |
Capital redemption reserve |
Other reserves |
Profit and loss account |
Total |
|
At 1 January 2020 |
|
|
|
( |
|
|
Profit for the year |
- |
- |
- |
- |
|
|
At 31 December 2020 |
|
|
|
( |
|
|
Share capital |
Share premium |
Capital redemption reserve |
Other reserves |
Profit and loss account |
Total |
|
At 1 January 2021 |
|
|
|
( |
|
|
Profit for the year |
- |
- |
- |
- |
|
|
At 31 December 2021 |
|
|
|
( |
|
|
Strand Hanson Limited
Statement of Cash Flows for the Year Ended 31 December 2021
Note |
2021 |
2020 |
|
Cash flows from operating activities |
|||
Profit for the year |
|
|
|
Adjustments to cash flows from non-cash items |
|||
Depreciation and amortisation |
|
|
|
Gains on investments |
( |
( |
|
Finance income |
( |
( |
|
Finance costs |
|
|
|
Income tax expense |
|
|
|
|
|
||
Working capital adjustments |
|||
Increase in trade and other debtors |
( |
( |
|
(Decrease)/increase in trade and other creditors |
( |
|
|
Net acquisitions and sales of investments |
590,473 |
273,002 |
|
Cash generated from operations |
( |
|
|
Income taxes paid |
( |
( |
|
Net cash flow from operating activities |
( |
|
|
Cash flows from investing activities |
|||
Interest received |
|
|
|
Acquisitions of tangible assets |
( |
( |
|
Net cash flows from investing activities |
( |
|
|
Cash flows from financing activities |
|||
Interest paid |
( |
( |
|
Related party loan movements |
- |
(27,698) |
|
Net cash flows from financing activities |
( |
( |
|
Net (decrease)/increase in cash and cash equivalents |
( |
|
|
Cash and cash equivalents at 1 January |
|
|
|
Cash and cash equivalents at 31 December |
350,089 |
1,851,890 |
Strand Hanson Limited
Notes to the Financial Statements for the Year Ended 31 December 2021
General information |
The Company is a private company limited by share capital, incorporated in England and Wales.
The address of its registered office is:
Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Statement of compliance
These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.
Basis of preparation
These financial statements have been prepared using the historical cost convention except for, where disclosed in these accounting policies, certain items that are shown at fair value.
The presentational currency of the financial statements is Pounds Sterling, being the functional currency of the primary economic environment in which the Company operates. Monetary amounts in these financial statements are rounded to the nearest Pound.
Going concern
Whilst there continues to be macroeconomic environment nationally and globally, as noted previously, recent years have also been similarly affected by general market uncertainty, arising from, amongst other things the Coronavirus pandemic, Brexit delays and the political instability in the UK. However, based on the level of activity in the year to date and the number of transactions currently mandated and expect shortly to be mandated, and, consistent with previous years, the likelihood that additional corporate transactions will be mandated during the remainder of the year, together with levels of recurring revenue, the directors remain optimistic as to future trading and prospects despite current market uncertainty.
In considering the going concern status of the Company, the directors have reviewed mandated recurring and transactional advisory revenue, committed expenditure, liquidity forecasts and available liquid resources as at the date of approving the financial statements. The directors therefore have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and have continued to adopt the going concern basis in preparing the financial statements.
Exemption from preparing group accounts
The Company is exempt from the requirement to prepare group accounts under section 405 of the Companies Act 2006 since its subsidiary undertakings can be excluded from consolidation by virtue of being dormant and immaterial to the group.
Critical accounting judgements and key sources of estimation uncertainty
In the application of the Company’s accounting policies, 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.
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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Strand Hanson Limited
Notes to the Financial Statements for the Year Ended 31 December 2021
Warrants
The directors have made key assumptions regarding the valuations of warrants to acquire shares in a number of companies whose shares are traded on the AIM of the London Stock Exchange. The directors have carried out a detailed review of warrant instruments held, applying the Black-Scholes valuation methodology. For warrants where the underlying company has published announcements outlining positive progress in the natural resource exploration giving greater certainty over future economic in flow of benefits a value is recognised in the financial statements. For the warrant instruments with no such public announcement and in view of the fact that the warrants relate to investments in small AIM listed companies, a number of which were pre-revenue as at the balance sheet date and in the field of natural resource exploration, the directors have taken the view that the fair value of the warrants at the balance sheet date is not material to the financial statements and therefore no value has been attributed.
Unquoted Investments
The directors have also made key assumptions regarding the valuations of unquoted investments. The directors have considered the fair value of each unquoted investment and consider them to be materially fairly stated either at original cost or after making full provisions for impairment. The valuation of the unquoted investments at the reporting date is shown in note 14.
Revenue recognition
Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the Company’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts.Revenue is recognised as the service is provided for ongoing advisory services or in accordance with mandated milestones for transactional services.
The Company recognises revenue when:
The amount of revenue can be reliably measured;
it is probable that future economic benefits will flow to the entity;
and specific criteria have been met for each of the Company's activities.
Foreign currency transactions and balances
Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.
Tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a charge attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.
The current 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 operates and generates taxable income.
Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the company. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.
Tangible assets
Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.
Strand Hanson Limited
Notes to the Financial Statements for the Year Ended 31 December 2021
Depreciation
Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:
Asset class |
Depreciation method and rate |
Land and buildings leasehold |
4 3/4 years on cost |
Fixtures, fittings and equipment |
2 to 4 years on cost |
Computer equipment |
2 years on cost |
Investments
Investments in equity shares which are publicly traded or where the fair value can be measured reliably are initially measured at cost, with changes in fair value recognised in profit or loss. Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.
Interest income on debt securities, where applicable, is recognised in income using the effective interest method. Dividends on equity securities are recognised in income when receivable.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits.
Trade debtors
Trade debtors are amounts due from customers for services performed in the ordinary course of business.
Trade debtors are recognised initially at the transaction price. All debtors are repayable within one year and are hence included at the undiscounted amount of the cash expected to be received. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.
Trade creditors
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.
Trade creditors are recognised initially at the transaction price and all are repayable within one year and hence are included at the undiscounted amount of cash expected to be paid.
Leases
Rentals payable under operating leases are charged against income on a straight line basis over the lease term. Benefits received and receivable as an incentive to sign an operating lease are similarly spread on a straight line basis over the lease term, except where the period to the review date on which the rent is first expected to be adjusted to the prevailing market rate is shorter than the full lease term, in which case the shorter period is used.
Rental income from operating leases is recognised on a straight line basis over the term of the lease.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the Company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.
Strand Hanson Limited
Notes to the Financial Statements for the Year Ended 31 December 2021
Financial instruments
Classification
Financial instruments are classified and accounted for according to the substance of the contractual arrangement, as financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Where shares are issued, any component that creates a financial liability of the Company is presented as a liability on the balance sheet. The corresponding dividends relating to the liability component are charged as interest expenses in the profit and loss account.
Recognition and measurement
All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a financing transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
Financial assets and liabilities are only offset in the balance sheet when, and only when, there exists a legally enforceable right to set off the recognised amounts and the company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Impairment
Assets, other than those measured at fair value, are assessed for indicators of impairment at each balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss as described below.
A non-financial asset is impaired where there is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated recoverable value of the asset has been reduced. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use.
For financial assets carried at amortised cost, the amount of an impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.
For financial assets carried at cost less impairment, the impairment loss is the difference between the asset’s carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date.
Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.
Strand Hanson Limited
Notes to the Financial Statements for the Year Ended 31 December 2021
Revenue |
The analysis of the Company's revenue for the year from continuing operations is as follows:
2021 |
2020 |
|
Rendering of services |
|
|
The analysis of the Company's turnover by geographic region for the year is as follows:
2021 |
2020 |
|
UK |
5,047,357 |
3,551,542 |
North America |
875,293 |
372,726 |
Europe |
603,813 |
284,685 |
Australasia |
518,144 |
233,382 |
Africa |
199,974 |
115,761 |
Asia |
117,079 |
116,668 |
Middle East |
157,500 |
- |
Offshore jurisdiction |
64,605 |
538,802 |
South America |
19,994 |
1,788 |
7,603,759 |
5,215,354 |
Other operating income |
The analysis of the company's other operating income for the year is as follows:
2021 |
2020 |
|
Realised gains on investments |
|
|
Fair value movements on investments and warrants |
( |
|
|
|
Operating profit |
Arrived at after charging/(crediting):
2021 |
2020 |
|
Depreciation expense |
|
|
Foreign exchange losses/(gains) |
|
( |
Operating lease expense - property |
|
|
Operating lease expense - plant and machinery |
|
|
Auditors' remuneration |
2021 |
2020 |
|
Audit of the financial statements |
|
|
Other fees to auditors |
||
All other non-audit services |
|
|
Strand Hanson Limited
Notes to the Financial Statements for the Year Ended 31 December 2021
Interest payable and similar expenses |
2021 |
2020 |
|
Interest expense on other finance liabilities |
|
|
Staff costs |
The aggregate payroll costs (including directors' remuneration) were as follows:
2021 |
2020 |
|
Wages and salaries |
|
|
Social security costs |
|
|
Pension costs, defined contribution scheme |
|
|
|
|
The average number of persons employed by the Company (including directors) during the year, analysed by category was as follows:
2021 |
2020 |
|
Fee earning staff |
|
|
Administration and support |
|
|
|
|
Directors' remuneration |
The directors' remuneration for the year was as follows:
2021 |
2020 |
|
Remuneration |
|
|
Contributions paid to money purchase schemes |
|
|
1,921,201 |
1,193,776 |
During the year the number of directors who were receiving benefits was as follows:
2021 |
2020 |
|
Accruing benefits under money purchase pension scheme |
|
|
In respect of the highest paid director:
2021 |
2020 |
|
Remuneration |
|
|
Cost of key management compensation
2021 |
2020 |
|
Salaries and other short term employee benefits |
|
|
Other long-term benefits |
|
|
|
|
Strand Hanson Limited
Notes to the Financial Statements for the Year Ended 31 December 2021
Taxation |
Tax charged/(credited) in the profit and loss account
2021 |
2020 |
|
Current taxation |
||
UK corporation tax |
|
|
UK corporation tax adjustment to prior periods |
( |
- |
282,480 |
169,849 |
The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2020 - lower than the standard rate of corporation tax in the UK) of
The differences are reconciled below:
2021 |
2020 |
|
Profit before tax |
|
|
Corporation tax at standard rate |
|
|
Effect of expense not deductible in determining taxable profit (tax loss) |
|
|
Effect of tax losses |
- |
( |
Decrease in UK and foreign current tax from adjustment for prior periods |
( |
- |
Tax decrease from effect of capital allowances and depreciation |
( |
( |
Tax (decrease)/increase from other short-term timing differences |
( |
|
Total tax charge |
|
|
Tangible assets |
Leasehold land and buildings |
Furniture, fittings and equipment |
Computer equipment |
Total |
|
Cost |
||||
At 1 January 2021 |
|
|
|
|
Additions |
- |
|
|
|
At 31 December 2021 |
|
|
|
|
Depreciation |
||||
At 1 January 2021 |
|
|
|
|
Charge for the year |
- |
|
|
|
At 31 December 2021 |
|
|
|
|
Carrying amount |
||||
At 31 December 2021 |
- |
|
|
|
At 31 December 2020 |
- |
- |
|
|
Strand Hanson Limited
Notes to the Financial Statements for the Year Ended 31 December 2021
Investments in subsidiaries |
Subsidiaries |
£ |
Cost and carrying amount |
|
At 1 January 2021 and 31 December 2021 |
|
Details of undertakings
Details of the investments in which the Company holds 20% or more of the nominal value of any class of share capital are as follows:
Undertaking |
Registered office |
Holding |
Proportion of voting rights and shares held |
|
2021 |
2020 |
|||
Subsidiary undertakings |
||||
|
Ordinary |
|
|
|
England and Wales |
||||
|
Ordinary |
|
|
|
South Africa |
The registered offices of the subsidiaries are as follows:
Strand Hanson Securities Limited: the same as the Company
Strand Hanson (Pty) Limited: 2nd Floor, Madison Place, Alphen Office Park, Constantia Main Road, Constantia, Cape Town 7806 South Africa
Both Subsidiary undertakings are dormant. In the opinion of the directors, the aggregate value of the Company's investments is not less than the amount included in the balance sheet.
Debtors |
Note |
2021 |
2020 |
|
Trade debtors |
|
|
|
Other debtors |
|
|
|
Prepayments |
|
|
|
Corporation tax asset |
249,301 |
156,086 |
|
|
|
Current asset investments |
2021 |
2020 |
|
Other investments |
|
|
Warrants at fair value |
530,332 |
1,011,849 |
|
|
Current asset investments combine shares which are quoted on AIM, a market operated by the London Stock Exchange plc of £1,342,265 (2020 - £854,327), unquoted investments of £208,709 (2020 - £217,774) and warrants to acquire shares in companies whose shares are quoted on AIM.
Strand Hanson Limited
Notes to the Financial Statements for the Year Ended 31 December 2021
Creditors |
Note |
2021 |
2020 |
|
Due within one year |
|||
Loans and borrowings |
|
|
|
Trade creditors |
|
|
|
Social security and other taxes |
|
|
|
Other creditors |
|
|
|
Accrued expenses |
|
|
|
Corporation tax liability |
346,562 |
299,104 |
|
|
|
||
Due after one year |
|||
Social security and other taxes |
- |
291,480 |
|
Corporation tax liability |
- |
86,736 |
|
- |
378,216 |
Loans and borrowings |
Note |
2021 |
2020 |
|
Current loans and borrowings |
|||
Loans from Directors |
|
|
Pension and other schemes |
The Company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the Company to the scheme and amounted to £
Contributions totalling
£
Share capital |
Allotted, called up and fully paid shares
2021 |
2020 |
|||
No. |
£ |
No. |
£ |
|
|
|
650,179 |
|
650,179 |
Strand Hanson Limited
Notes to the Financial Statements for the Year Ended 31 December 2021
Reserves |
Share premium reserve
The share premium account includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium.
Capital redemption reserve
Represents the nominal value of shares that have been redeemed.
Other reserves
The treasury reserves represents the cost of shares in the Company repurchased and held by the Company in treasury. The number of shares held in treasury at 31 December 2021 was 151,855 (2020 - 151,855).
Profit and loss account
The Profit and Loss Account includes all current and prior year retained profits and losses.
Obligations under operating leases |
The total of future minimum lease payments is as follows:
2021 |
2020 |
|
Not later than one year |
|
|
Later than one year and not later than five years |
|
|
Later than five years |
|
|
|
|
The amount of non-cancellable operating lease payments recognised as an expense during the year was £
Related party transactions |
Directors' advance and credits
During the year four of the directors advanced/(received) loans to/(from) the Company. The loans are interest free and repayable on demand.
The amounts owed to/(by) each director at each period end were as follows (creditor balances recognised with Loans and Borrowings, debtor balances recognised within Other Debtors):
2021 |
2020 |
||
£ |
£ |
||
James Harris |
95,329 |
95,329 |
|
Rory Murphy |
215,646 |
215,646 |
|
Simon Raggett |
(489,777) |
(469,101) |
|
Stuart Faulkner |
(116,319) |
(116,319) |
The maximum balance owed to the company by Simon Raggett during the year was £489,777 (2020 - £469,101).
The maximum balance owed to the company by Stuart Faulkner during the year was £116,319 (2020 - £116,319).
Strand Hanson Limited
Notes to the Financial Statements for the Year Ended 31 December 2021
21 |
Related party transactions (continued) |
Other related party transactions
During the year the company made the following related party transactions:
Key Management Personnel
Key management personnel are considered to be the board of directors and certain other senior staff including the managing director and chief operating officer. Details of loan relationships with directors are disclosed within this note. For details of key management personnel's remuneration, please see note 9.
Angela Hallett
(shareholder and member of key management personnel)
The loan which was outstanding throughout the year is interest free and repayable on demand. At the balance sheet date the amount due from Angela Hallett was £75,417 (2020 - £75,417).
Financial instruments |
Categorisation of financial instruments
All financial assets and liabilities are measured at amortised cost. Current investments are measured at their fair value, see notes 4 and 14 for further details.
Items of income, expense, gains or losses
2021 |
Income |
Expense |
Net gains |
Net losses |
Financial assets measured at fair value through profit or loss |
- |
- |
587,828 |
- |
Financial assets measured at amortised cost |
- |
102,312 |
- |
- |
- |
102,312 |
587,828 |
- |
2020 |
Income |
Expense |
Net gains |
Net losses |
Financial assets measured at fair value through profit or loss |
- |
- |
571,561 |
- |
Financial assets measured at amortised cost |
- |
248,503 |
- |
- |
- |
248,503 |
571,561 |
- |
The total interest expense for financial liabilities not measured at fair value through profit or loss is £35,551 (2020 - £39,224).
Net debt note |
Analysis of changes in net debt |
At 1 January 2021 |
Cash flows |
Other non cash changes |
As at 31 December 2021 |
Cash and cash equivalents |
||||
Cash |
1,851,890 |
(1,501,801) |
- |
350,089 |
Total net debt |
1,851,890 |
(1,501,801) |
- |
350,089 |