Company registration number 03770985 (England and Wales)
NEWLYN PLC
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2022
Century House
Wargrave Road
Henley-on-Thames
Oxfordshire
United Kingdom
RG9 2LT
NEWLYN PLC
CONTENTS
Page
Company information
1
Strategic report
2 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 9
Statement of comprehensive income
10
Balance sheet
11 - 12
Statement of changes in equity
13
Notes to the financial statements
14 - 28
NEWLYN PLC
COMPANY INFORMATION
- 1 -
Directors
Mr. D. Smith
Ms. M. Coyne
Mr. T. Durant
Ms. M. Fenner
Ms. C. Vickers
Mr. A. White
Ms. L. Sargent
Secretary
Mr. I. Whittingham
Company number
03770985
Registered office
Century House
Wargrave Road
Henley-on-Thames
Oxfordshire
United Kingdom
RG9 2LT
Auditor
Verallo
Century House
Wargrave Road
Henley-on-Thames
Oxfordshire
United Kingdom
RG9 2LT
NEWLYN PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
The directors present the strategic report for the year ended 31 December 2022.
Fair review of the business
The company continues to focus on its core activity, being debt recovery and enforcement services, principally to Local Authorities.
As reported in the company's profit and loss account on page 10. These figures show a marked increase on the previous year’s performance which underlines the success of the Board’s decisions and strategic planning for developing the company’s market share of the enforcement recovery industry.
Principal risks and uncertainties
The enforcement recovery industry has in many ways returned to near normal trading conditions, however there are still some lingering effects from the global pandemic that have caused changes to the way in which we now operate. Client instructions are almost back to pre-pandemic levels, which has seen the company produce best-ever results. This linked with the board’s continuing efforts in monitoring the key risks facing the business has lead to an impressive years performance. The board now meet on a monthly basis to formally review and document the challenges facing the company and its clients.
Economic Position - The importance of maintaining close relationships with all of its customers has never been more important, during the last year understanding our clients needs and requirements has helped the company maintain its strong trading position and seen its market share increase with some key new business gains.
The company has continued to evolve its practices and procedures by embracing another effect of the pandemic, the Working From Home (WFH) culture which has developed in both its own work force and that of its clients. Our hybrid system featuring a combination of home and office working fits well with the reduced face to face meetings required by our clients. The use of zoom and team meetings has seen us reduce travelling expenses, fuel costs, help improve our green credentials and increase performance by reducing unproductive travelling time. This approach is opening up a whole different marketplace of staff resources whilst allowing for continued development of our service offering to clients.
Competitor pressure - The market remains highly competitive, and the directors believe the market will continue to be subject to amalgamations and takeovers. Our very strong performance has seen the company expand its market share and we believe we are in a unique position to offer the Local Authority customers a bespoke, crafted service delivery that corporate agency's cannot offer.
Key performance indicators
Management use a range of performance measures to monitor and manage the business. The KPIs used to determine the progress and performance of the company are set out below.
Turnover Turnover has increased by 43.8% compared to the prior year, as a result of collections returning to pre COVID levels throughout the year.
Gross profit margin
The company's gross profit margin has increased in the year from 38.3% to 41.5%, as a result of a return in collections to pre COVID methods.
Financial position at the reporting date
The balance sheet shows that the company's net assets at the year end have increased from £9,248,683 to £14,310,020 indicating the strong management within the company.
NEWLYN PLC
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
Other information and explanations
The company retained all key operating personnel and recruited several new members of staff to strategic roles within the operation. Management continues to seek to ensure that key personnel are appropriately remunerated to ensure that good performance is recognised and that the level of staff turnover is kept to a minimum. The company has resumed and maintained service of the bank loan repayments including interest payments.
The company has continued to win new business during the last trading period and is intent on increasing its market share through strategic tender submissions based on service delivery and a quality product.
Mr. D. Smith
Director
5 June 2023
NEWLYN PLC
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -
The directors present their annual report and financial statements for the year ended 31 December 2022.
Principal activities
The principal activity of the company continued to be that of debt collection services.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr. D. Smith
Ms. M. Coyne
Mr. T. Durant
Ms. M. Fenner
Ms. C. Vickers
Mr. A. White
Ms. L. Sargent
Results and dividends
The results for the year are set out on page 10.
Ordinary dividends were paid amounting to £1,000,000. The directors do not recommend payment of a further dividend.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the 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 then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standard have been followed, subject to any material departures disclosed and explained in the financial statements.
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the 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.
NEWLYN PLC
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 5 -
Auditor
In accordance with the company's articles, a resolution proposing that Verallo be reappointed as auditor of the company will be put at a General Meeting.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr. D. Smith
Director
5 June 2023
NEWLYN PLC
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF NEWLYN PLC
- 6 -
Opinion
We have audited the financial statements of Newlyn PLC (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2022 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.
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 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 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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
NEWLYN PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NEWLYN PLC
- 7 -
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 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.
Matters on which we are required to report by exception
In the light of the 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 remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit; or
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Extent to which the audit was considered capable of detecting irregularities, including fraud
The objectives of our audit, in respect to fraud, are: to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and its management.
NEWLYN PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NEWLYN PLC
- 8 -
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our approach was as follows:
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussion with the directors and other management (as required by auditing standards), the policies and procedures regarding compliance with laws and regulations;
We considered the legal and regulatory frameworks directly applicable to the financial statements reporting framework (FRS 102 and the Companies Act 2006) and the relevant tax compliance regulations in the UK;
We considered the nature of the industry, the control environment and business performance, including the key drivers for management’s remuneration;
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit;
We considered the procedures and controls that the company has established to address risks identified, or that otherwise prevent, deter and detect fraud; and how senior management monitors those programmes and controls.
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Where the risk was considered to be higher, we performed audit procedures to address each identified fraud risk. These procedures included: testing manual journals; reviewing the financial statement disclosures and testing to supporting documentation; performing analytical procedures; and enquiring of management, and were designed to provide reasonable assurance that the financial statements were free from fraud or error.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditors/audit-assurance/auditor-s-responsibilities-for-the-audit-of-the-fi/description-of-the-auditor%E2%80%99s-responsibilities-for. This description forms part of our auditor’s report.
NEWLYN PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NEWLYN PLC
- 9 -
Use of 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.
Michelle Hewitt-Dutton FCCA (Senior Statutory Auditor)
For and on behalf of Verallo
Statutory Auditor
8 June 2023
Office: Henley-on-Thames
NEWLYN PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 10 -
2022
2021
Notes
£
£
Turnover
3
25,752,910
17,906,484
Cost of sales
(15,066,544)
(11,045,724)
Gross profit
10,686,366
6,860,760
Administrative expenses
(3,307,771)
(2,597,897)
Other operating income
95,102
130,980
Operating profit
4
7,473,697
4,393,843
Interest receivable and similar income
8
26,011
685
Interest payable and similar expenses
9
(351)
Profit before taxation
7,499,357
4,394,528
Tax on profit
10
(1,438,020)
(754,027)
Profit for the financial year
6,061,337
3,640,501
The notes on pages 14 to 28 form part of these financial statements
NEWLYN PLC
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 11 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
12
494,342
360,220
Current assets
Debtors
13
9,790,860
7,938,917
Cash at bank and in hand
12,497,615
7,204,022
22,288,475
15,142,939
Creditors: amounts falling due within one year
14
(8,406,544)
(6,227,245)
Net current assets
13,881,931
8,915,694
Total assets less current liabilities
14,376,273
9,275,914
Provisions for liabilities
Deferred tax liability
15
66,253
27,231
(66,253)
(27,231)
Net assets
14,310,020
9,248,683
Capital and reserves
Called up share capital
17
51,000
51,000
Profit and loss reserves
18
14,259,020
9,197,683
Total equity
14,310,020
9,248,683
NEWLYN PLC
BALANCE SHEET (CONTINUED)
AS AT
31 DECEMBER 2022
31 December 2022
- 12 -
The financial statements were approved by the board of directors and authorised for issue on 5 June 2023 and are signed on its behalf by:
Mr. D. Smith
Director
Company Registration No. 03770985
The notes on pages 14 to 28 form part of these financial statements
NEWLYN PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 13 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2021
51,000
6,057,182
6,108,182
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
3,640,501
3,640,501
Dividends
11
-
(500,000)
(500,000)
Balance at 31 December 2021
51,000
9,197,683
9,248,683
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
6,061,337
6,061,337
Dividends
11
-
(1,000,000)
(1,000,000)
Balance at 31 December 2022
51,000
14,259,020
14,310,020
The notes on pages 14 to 28 form part of these financial statements
NEWLYN PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 14 -
1
Accounting policies
Company information
Newlyn PLC is a private company limited by shares incorporated in England and Wales. The registered office is Century House, Wargrave Road, Henley-on-Thames, Oxfordshire, United Kingdom, RG9 2LT.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
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.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
- Section 4 Statement of Financial Position': Reconciliation of the opening and closing number of shares;
- 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': Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; 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 33 'Related Party Disclosures': Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Newlyn Group Holding Ltd. These consolidated financial statements are available from its registered office, Century House, Wargrave Road, Henley-on-Thames, RG9 2LT.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation, based upon future forecasts, that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
The financial statements have been prepared on a going concern basis, which assumes the company will continue in operational existence, and will be able to meet its liabilities as they fall due, for a period of at least twelve months from the date of approval of the financial statements.
NEWLYN PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
1.3
Turnover
Turnover represents revenue earned (excluding value added tax) under contracts to provide professional services from bailiff and related activities.
Bailiff service income is recognised on remittance of fees to the clients' debtors, as it is only at this point that the economic benefits are guaranteed to flow to the company.
Rent receivable is recognised on the accruals basis. Rent received in advance is carried forward as deferred income and released to the income statement in the period to which it relates.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Plant and equipment
33% straight line
Fixtures and fittings
15% on reducing balance
Motor vehicles
33% on reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible 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.
Recoverable amount is the higher of fair value less costs to sell and value in use.
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.
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.
NEWLYN PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 16 -
1.6
Cash at bank and in hand
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.7
Financial instruments
The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
NEWLYN PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 17 -
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors and bank loans, 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.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.8
Equity instruments
Equity instruments issued by the company 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 company.
NEWLYN PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 18 -
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.9
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset 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.
1.10
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.11
Retirement benefits
The company operates a money purchase (defined contribution) pension scheme. Contributions payable to the scheme are charged to the profit and loss account in the period to which they relate. The contributions are invested separately from the company's assets.
NEWLYN PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 19 -
1.12
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
1.13
Government grants
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.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
2
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 amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Assessing indicators of impairment
In assessing whether there have been any indicators of impairment of assets, the directors have considered both external and internal sources of information such as market conditions, counterparty credit ratings and experience of recoverability. There have been no material indicators of impairments identified during the current financial year.
NEWLYN PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
2
Judgements and key sources of estimation uncertainty
(Continued)
- 20 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Recoverability of receivables
Directors assess the recoverability of receivables on a monthly basis, through the review of the ageing profile of the current debtors, along with past knowledge of the client and recoverability. At the year end, it was concluded by the directors that no provision would be required. A 1% bad debt provision would give rise to a £10,258 impact on the financial statements.
Determining residual and useful economic life of tangible assets
The company depreciates tangible assets over their estimated useful lives. The estimation on the useful life of assets is based on historic performance as well as expectations about future use and therefore requires estimates and assumptions to be applied by management. The actual lives of these assets can vary depending on a variety of factors, including technological innovation, product life cycles and maintenance programs.
Judgement is applied by management when determining the residual values for tangible fixed assets. When determining the residual value management aim to assess the amount that the company would currently obtain for the disposal of the asset, if it were already of the condition expected at the end of its useful economic life. Where possible this is done with reference to external market prices.
Added Value
Within the contractual agreements between Newlyn PLC and the local councils, there is potential for a contractual obligation to provide added value services.
The agreements do not specify a cash value, therefore the directors estimate the cost of the obligations, based on the stage of the agreement at the year end. Assessing previous experiences with the customer and the anticipated cost over the life of the agreement. Any amendment to the provision is made through the profit and loss on an annual basis.
Legal Provision
Management are aware that the risk of litigation against the company is high in the sector they operate in. As such, they employ the use of legal professionals to ensure accurate estimation of the potential exposure they may face in relation to such legal proceedings.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2022
2021
£
£
Turnover analysed by class of business
Debt Collection
25,752,910
17,906,484
NEWLYN PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
3
Turnover and other revenue
(Continued)
- 21 -
2022
2021
£
£
Turnover analysed by geographical market
United Kingdom
25,752,910
17,906,484
2022
2021
£
£
Other revenue
Interest income
26,011
685
Grants received
63,954
Rent received
43,333
36,666
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants - furlough
(63,954)
Fees payable to the company's auditor for the audit of the company's financial statements
20,900
19,000
Depreciation of owned tangible fixed assets
190,427
175,424
Profit on disposal of tangible fixed assets
(32,793)
(30,011)
Operating lease charges
161,546
160,663
5
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
20,900
19,000
NEWLYN PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was 68 (2021 - 62)
2022
2021
Number
Number
Director's
7
7
Bailiff's
11
12
Admin
43
37
Sales & Marketing
7
6
Total
68
62
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
4,131,378
3,212,577
Social security costs
353,531
283,591
Pension costs
44,001
41,762
4,528,910
3,537,930
7
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
1,078,895
1,010,647
Company pension contributions to defined contribution schemes
7,815
8,842
1,086,710
1,019,489
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 7 (2021 - 7). The directors are also considered to be the key management personnel.
NEWLYN PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
7
Directors' remuneration
(Continued)
- 23 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
200,030
179,770
8
Interest receivable and similar income
2022
2021
£
£
Interest income
Interest on bank deposits
25,243
685
Other interest income
768
Total income
26,011
685
9
Interest payable and similar expenses
2022
2021
£
£
Other interest
351
10
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
1,365,281
753,056
Adjustments in respect of prior periods
33,717
Total current tax
1,398,998
753,056
Deferred tax
Origination and reversal of timing differences
39,022
971
Total tax charge
1,438,020
754,027
NEWLYN PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
10
Taxation
(Continued)
- 24 -
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:
2022
2021
£
£
Profit before taxation
7,499,357
4,394,528
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
1,424,878
834,960
Tax effect of expenses that are not deductible in determining taxable profit
10,309
(21,757)
Effect of change in corporation tax rate
15,901
Group relief
(33,998)
(52,678)
Permanent capital allowances in excess of depreciation
(6,498)
Under/(over) provided in prior years
33,717
Deferred tax adjustments in respect of prior years
(58)
Super deduction
(12,697)
Movement in provisions
(32)
Taxation charge for the year
1,438,020
754,027
In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate would increase to 25% (rather than remaining at 19% as previously enacted). The Finance Bill 2021 had its third reading on 24 May 2021 and is now considered substantively enacted. This means that the 25% main rate of corporation tax and marginal relief will be relevant for any asset sales or timing differences expected to reverse on or after 1 April 2023.
11
Dividends
2022
2021
£
£
Final paid
1,000,000
500,000
NEWLYN PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 25 -
12
Tangible fixed assets
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2022
1,177,990
34,447
464,988
1,677,425
Additions
222,754
137,690
360,444
Disposals
(456,323)
(8,917)
(88,240)
(553,480)
At 31 December 2022
944,421
25,530
514,438
1,484,389
Depreciation and impairment
At 1 January 2022
904,259
14,594
398,352
1,317,205
Depreciation charged in the year
155,784
2,852
31,791
190,427
Eliminated in respect of disposals
(430,965)
(4,574)
(82,046)
(517,585)
At 31 December 2022
629,078
12,872
348,097
990,047
Carrying amount
At 31 December 2022
315,343
12,658
166,341
494,342
At 31 December 2021
273,731
19,853
66,636
360,220
13
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
7,168,573
5,354,436
Amounts owed by group undertakings
2,500,000
2,500,000
Other debtors
18,368
Prepayments and accrued income
103,919
84,481
9,790,860
7,938,917
Included within trade debtors is an amount of £5,015,371 (2021 - £3,581,988), that relates to designated client money (note 14).
The bank holds a £100,000 bond against the client money balance by way of security.
NEWLYN PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 26 -
14
Creditors: amounts falling due within one year
2022
2021
£
£
Trade creditors
5,142,377
3,772,233
Amounts owed to group undertakings
470,150
392,149
Corporation tax
232,431
148,535
Other taxation and social security
449,142
517,346
Other creditors
52,353
170,695
Accruals and deferred income
2,060,091
1,226,287
8,406,544
6,227,245
Included within trade creditors is an amount of £5,015,371 (2021 - £3,581,988) that relates to designated client money (note 13).
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
66,253
27,231
2022
Movements in the year:
£
Liability at 1 January 2022
27,231
Charge to profit or loss
30,422
Effect of change in tax rate - profit or loss
8,600
Liability at 31 December 2022
66,253
The deferred tax liability set out above is expected to reverse and relates to accelerated capital allowances that are expected to mature.
NEWLYN PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 27 -
16
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
44,001
41,762
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
17
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of £1 each
51,000
51,000
51,000
51,000
The company has one class of ordinary shares. The ordinary shares each carry one voting right.
18
Reserves
Profit and loss reserves
The Profit and loss account represents cumulative profits or losses, net of dividends paid and other adjustments.
19
Financial commitments, guarantees and contingent liabilities
Due to the nature of the business, the company is subject to small claims litigation from time to time. At the year end the directors are not aware of any cases, both individually or collectively, that would have a material impact on the financial statements. A general estimate of £54,739 (2021 - £62,500) has been recognised within accruals.
20
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2022
2021
£
£
Within one year
155,200
161,200
Between two and five years
620,800
622,800
In over five years
1,084,800
1,231,200
1,860,800
2,015,200
NEWLYN PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 28 -
21
Related party transactions
The company has taken advantage of the exemption conferred by paragraph 33.1A of FRS 102 "Related Party Disclosures" not to disclose transactions with other group entities whose voting rights are 100% controlled within the group, and where consolidated financial statements of the group are publicly available.
During the year the company entered into transactions with three companies related by virtue of mutual directors. In total, sales of £2,918 (2021 - £77,010) and purchases of £164,038 (2021 - £173,810) were made with these entities. At the year end, the company owed these related parties £nil (2021 - £53).
22
Ultimate controlling party
The ultimate controlling party of the entity is Newlyn Group Holding Ltd, the parent company.
The registered office of Newlyn Group Holding Ltd is Century House, Wargrave Rd, Henley-on-Thames RG9 2LT.
2022-12-312022-01-01falseCCH SoftwareCCH Accounts Production 2023.100Mr. D. SmithMs. M. CoyneMr. T. DurantMs. M. FennerMs. C. VickersMr. A. WhiteMs. L. SargentMr. I. Whittingham037709852022-01-012022-12-3103770985bus:Director12022-01-012022-12-3103770985bus:Director22022-01-012022-12-3103770985bus:Director32022-01-012022-12-3103770985bus:Director42022-01-012022-12-3103770985bus:Director52022-01-012022-12-3103770985bus:Director62022-01-012022-12-3103770985bus:Director72022-01-012022-12-3103770985bus:CompanySecretary12022-01-012022-12-3103770985bus:RegisteredOffice2022-01-012022-12-31037709852022-12-31037709852021-01-012021-12-3103770985core:RetainedEarningsAccumulatedLosses2021-01-012021-12-3103770985core:RetainedEarningsAccumulatedLosses2022-01-012022-12-31037709852021-12-3103770985core:PlantMachinery2022-12-3103770985core:FurnitureFittings2022-12-3103770985core:MotorVehicles2022-12-3103770985core:PlantMachinery2021-12-3103770985core:FurnitureFittings2021-12-3103770985core:MotorVehicles2021-12-3103770985core:CurrentFinancialInstrumentscore:WithinOneYear2022-12-3103770985core:CurrentFinancialInstrumentscore:WithinOneYear2021-12-3103770985core:ShareCapital2022-12-3103770985core:ShareCapital2021-12-3103770985core:RetainedEarningsAccumulatedLosses2022-12-3103770985core:RetainedEarningsAccumulatedLosses2021-12-3103770985core:ShareCapital2020-12-3103770985core:RetainedEarningsAccumulatedLosses2020-12-31037709852020-12-3103770985core:PlantMachinery2022-01-012022-12-3103770985core:FurnitureFittings2022-01-012022-12-3103770985core:MotorVehicles2022-01-012022-12-310377098512022-01-012022-12-310377098512021-01-012021-12-3103770985core:UKTax2022-01-012022-12-3103770985core:UKTax2021-01-012021-12-310377098522022-01-012022-12-310377098522021-01-012021-12-310377098532022-01-012022-12-310377098532021-01-012021-12-3103770985core:PlantMachinery2021-12-3103770985core:FurnitureFittings2021-12-3103770985core:MotorVehicles2021-12-31037709852021-12-3103770985core:CurrentFinancialInstruments2022-12-3103770985core:CurrentFinancialInstruments2021-12-3103770985core:WithinOneYear2022-12-3103770985core:WithinOneYear2021-12-3103770985core:BetweenTwoFiveYears2022-12-3103770985core:BetweenTwoFiveYears2021-12-3103770985core:MoreThanFiveYears2022-12-3103770985core:MoreThanFiveYears2021-12-3103770985bus:PrivateLimitedCompanyLtd2022-01-012022-12-3103770985bus:FRS1022022-01-012022-12-3103770985bus:Audited2022-01-012022-12-3103770985bus:FullAccounts2022-01-012022-12-31xbrli:purexbrli:sharesiso4217:GBP