Company Registration No. 06365189 (England and Wales)
BALDWINS HOLDINGS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
BALDWINS HOLDINGS LIMITED
COMPANY INFORMATION
Directors
Mr W Payne
(Appointed 28 September 2018)
C Warburton
(Appointed 1 June 2020)
Company number
06365189
Registered office
Churchill House
59 Lichfield Street
Walsall
West Midlands
WS4 2BX
Auditor
Ernst & Young LLP
One Colmore Square
Birmingham
B4 6HQ
BALDWINS HOLDINGS LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 6
Directors' responsibilities statement
7
Independent auditor's report
8 - 10
Profit and loss account
11
Statement of comprehensive income
12
Balance sheet
13
Statement of changes in equity
14
Notes to the financial statements
15 - 41
BALDWINS HOLDINGS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2019
- 1 -
The directors present the strategic report for the year ended 30 June 2019.
Review of the business
Baldwins Holdings Limited (the "
company
") heads the Baldwins sub-group within the Cogital Group. Cogital Group was established in 2016 as an international business services group supporting entrepreneurial business and their owners and managers. Cogital Group is backed by
HG Pool Management Limited
.
The company acts as both a holding company and provides accountancy
, advisory
and taxation services in the United Kingdom.
Prior to 30 June 2017, the company
solely acted as a holding company for the Baldwins group of companies. From 1 July 2017,
all acquisitions by the Baldwins group were undertaken by the company (with
the trade and net assets of acquired companies
being
transferred to the company
immediately on acquisition, via hive up arrangements
where share acquisitions were involved)
and its principal activities expanded to include the provision of accountancy, advisory and taxation services
.
Subsequent to the year end, on
1 July 2019, the trade and assets of the majority of the company
's
subsidiaries were transferred to the company, via hive up arrangements, and the company
became the main trading entity for the Baldwins group of companies.
During the year
ended 30 June 2019
, the company acquired
eleven
accountancy practices that provide accountancy and taxation services in the United Kingdom.
Revenue for the year at £67.3 million was £63.2 million higher than
prior
year, largely as a result of acquisitions made during the current and prior year.
The company
recorded
an operating loss for the year of £3.9 million (
2018:
£1.8 million). There was a net interest charge of £6.2 million (2018: £
1.8
million) following increased debt funding for acquisitions, which, combined with the operating loss, resulted in a loss for the year of £
10.2
million (2018: £4.5 million).
T
he company
incurred
an operating loss for the year
but
after adjusting for goodwill amortisation (£5.8 million) and exceptional items (£1.1 million) there was an adjusted operating profit of £3.0 million. The trading result for the year has been impacted by investment in central support and infrastructure to support the growing business
, and a conservative approach to the valuation of work in progress and receivables during the year. Future years
will benefit from
the
full year impact from the businesses acquired during the year along with the trade of the companies hived-up on 1 July 2019 and as a result significant growth is expected in
the
year
ended 30 June 2020
.
The company received dividends from subsidiaries amounting to £236,554 during the year (2018: £nil).
B
usiness changes
since year end
Subsequent to the year end, on 1 July 2019, the activities of the Baldwins group of companies
have
been restructured such that the majority of the trading activity of the company’s subsidiaries has been transferred into the company. Since that date, and despite the impact of Covid-19 on conditions, the company has continued to generate operating profits (before depreciation and amortisation charges) and has also seen improvements in its overall ability to convert current revenue into cash.
In July 2020, the company has received additional loan finance from the Cogital Group and the terms of all its Cogital Group loans
were
amended such that no amounts are payable, interest or capital, prior to 31 December 2021. This significantly reduces the company’s current liabilities, as reported in these financial statements, such that if reflected in these financial statements the company would have substantial net current assets.
BALDWINS HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 2 -
Principal risks and uncertainties
The company bears the risk of changes in the valuation of its investments in the individual subsidiaries or impairment of goodwill. This is monitored by the company annually. The company is also exposed to market risk and price pressure from competitors which could also significantly impact the valuation of goodwill and investment in subsidiaries.
Following the acquisition by the Cogital group, a significant portion of the Baldwins group of companies' debt owed by the company is now due to entities under the control of Cogital Topco Limited.
The company monitors all aspects of risk including economic risk, competition and changes in market conditions, financial risk and customer dependencies. The company has a large number of clients that reduces the risk that it is overly dependent on a single customer.
The company does not expect to be significantly impacted by the potential economic issues associated with the UK exit of the European Union, given all its operations are in the UK.
Credit risk
The company has implemented policies that require appropriate credit checks on potential customers before sales are made. Credit risk is managed by close attention to credit control procedures
Liquidity risk
The company is reliant upon its immediate parent for funding of acquisitions and other financing requirements. The company actively manages its working capital requirements to ensure it has sufficient funds for its operations.
Covid-19
The Covid-19 pandemic which has arisen since the year end has brought significant uncertainty to the business environment. The long-term impact on the UK economy and the timescale for recovery are uncertain, including the possibility that as current restrictions are lifted there will be a resurgence of the virus resulting in restrictions being reinstated.
The pandemic is impacting many of the company’s clients as well as impacting the manner in which the company and its staff are able to work. This creates additional risk for the company both in terms of its ongoing ability to secure new clients and its ongoing ability to service new and existing clients. It also has implications for the company should clients face challenges in respect their own ongoing ability to operate or to require and be able to pay for the company’s services.
The directors are actively monitoring the risks associated with the virus and have taken early decisive action to manage its cost base during the pandemic. This included a voluntary 20% salary reduction for the senior leaders for the three months to 30 June 2020 and a voluntary move to a four-day working week for the remainder of the staff for the same period. The Directors have also taken advantage of Government assistance programmes including the use of the Job Retention Scheme along with deferral of payroll taxes and VAT as well as other measures to control the cash flows of the
company
.
Subsequent to the year end the
company
has received additional funding of £2
2
m
illion
from within the Cogital group and contractually agreed that none of its intercompany indebtedness, or interest thereon, is due to be settled within 12 months of the approval of these financial statements. As a result, the
company
currently has a strong balance sheet and cash flow projections, which are being updated on a regular basis, indicate the
company
has sufficient cash reserves to operate successfully.
BALDWINS HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 3 -
Acquisitions
The Company acquired the trade and certain assets of a number of accountancy practices during the year as set out below
:
The Fish Partnership Accountants
Dental Business Solutions
Wilkins Kennedy LLP (including its trade and assets of its subsidiaries and
related
businesses
such as WK Financial Planning Limited
)
Booth Ainsworth LLP
Broomfield Alexander
Scott Moncrieff
Montpelier Professional
R A Clement
Further details are set out in note
12
to the financial statements.
The company also acquired the shares of the following companies, with an immediate
transfer
of the trade and assets to the company:
The Capital Allowances Partnership Limited
Broomfield Alexander Limited
Further details are set out in note
14
to the financial statements.
All acquisitions are businesses who provide accountancy
, advisory
and taxation services in the United Kingdom.
Future developments
The Baldwins group of companies continue to acquire businesses that contribute to the Cogital group’s strategic goal to become a leading international financial services group. Acquisitions subsequent to the year-end are set out in the directors' report.
On 1 July 2019, as part of a wider restructuring within the Baldwins group of companies, the trade and net assets held within the majority of the subsidiary undertakings of Baldwins Holdings Limited was transferred to the company, with the subsidiary undertakings ceasing to trade on that date. The company's future principal activity will be that of a trading entity providing accountancy, advisory and taxation services in the United Kingdom.
Mr W Payne
Director
23 July 2020
BALDWINS HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2019
- 4 -
The directors present their annual report and financial statements for the year ended 30 June 2019.
Principal activities
The principal activity of the company is the provision of accountancy, advisory and taxation services in the United Kingdom. The company also acts as a holding company.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr J Baldwin
(Resigned 21 April 2020)
Mr D Baldwin
(Resigned 21 April 2020)
Mr S N Southall
(Resigned 19 June 2020)
Mr S Knight
(Resigned 21 April 2020)
Mr W Payne
(Appointed 28 September 2018)
C Warburton
(Appointed 1 June 2020)
Results and dividends
The results for the year are set out on page 11.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Disabled persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employee involvement
The company's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the company's performance.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.
Auditor
In accordance with the company's articles, a resolution proposing that Ernst & Young LLP 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.
BALDWINS HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 5 -
Subsequent events
As noted in the Strategic Report, on 1 July 2019, the trade and net assets of the majority of the company’s subsidiary undertakings was hived up into the company for consideration in the form of an intercompany balance due on demand. Following this transfer the vast majority of the trading activities of the Baldwins sub-group is now undertaken by the company.
Since the year-end, the company has acquired the trade and assets of the following businesses:-
On 5 July 2019, the company acquired the trade and ongoing client engagements of Kelsall Steele Limited.
On 5 July 2019, the company acquired the shares, trade and ongoing client engagements of Perrins Limited.
On 26 July 2019, the company acquired the trade and ongoing client engagements of Treasury Accounting.
On 26 July 2019, the company acquired the trade and ongoing client engagements of Rothmans (East2 LLP and East1 Audit LLP).
On 2 August 2019, the company acquired the trade and ongoing client engagements of the firm of Williamson & Dunn Chartered Accountants.
On 19 August 2019, the company acquired the trade and ongoing client engagements of MCA Business Limited and MCA Business Services Limited.
On 13 September 2019, the company acquired the shares, trade and ongoing client engagements of Gardners Accountants Limited.
On 30 September 2019, the company acquired the trade and ongoing client engagements of Michael Gale & Co Limited.
On 16 October 2019, the company acquired certain non-core trade and ongoing client engagements of the Nottingham office of BDO LLP.
On 8 November 2019, the company acquired the share capital of Wilkins Kennedy Financial Planning Limited.
In July 2020, the company renegotiated the terms of its intercompany borrowings with the Cogital Group and also received additional Cogital Group loans amounting to £22 million. As a result of this neither the £148 million outstanding loan balance at 30 June 2019 nor the new £22 million loan are due on demand having no interest or capital payments due prior to 31 December 2021.
On 11 March 2020, the World Health Organization declared the outbreak of COVID-19 to be an international pandemic. The rapid evolution of events, nationally and internationally, represents an unprecedented health crisis, which will impact the macroeconomic environment and the future prospects of many businesses.
The pandemic is impacting many of the company’s clients as well as impacting the manner in which the company and its staff are able to work. This creates additional risk for the company both in terms of its ongoing ability to secure new clients and its ongoing ability to service new and existing clients. It also has implications for the company should clients face challenges in respect their own ongoing ability to operate or to require and be able to pay for the company’s services.
The directors are actively monitoring the risks associated with the virus and have taken early decisive action to manage its cost base during the pandemic. This included a voluntary 20% salary reduction for the senior leaders for the three months to 30 June 2020 and a voluntary move to a four-day working week for the remainder of the staff for the same period. The Directors have also taken advantage of Government assistance programmes including the use of the Job Retention Scheme along with deferral of payroll taxes and VAT as well as other measures to control the cash flows of the company.
Whilst the impact on the company’s results is difficult to predict, based on the measures taken to mitigate the disruption on the company’s operations and boost its liquidity, as well as the sensitivity analysis described in the basis of preparation note, the Directors consider that the company has adequate resources to continue in operational existence for the foreseeable future. In addition, the Directors have considered the possible impact on the valuation of the company’s non-current assets and currently do not expect that the Covid-19 pandemic will have any material impact of the carrying value of those assets although it remains possible that a future write down of assets may occur as a result of the pandemic.
BALDWINS HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 6 -
Going concern
The financial statements have been prepared on a going concern basis.
In making their assessment of going concern, the Directors have considered the Company’s current and future prospects taking into consideration the impact of the COVID-19 pandemic on cash flows and liquidity. As set out in note 1, the results of the base case and downside scenario assessments and reverse stress test considerations support that the Company can continue to pay its liabilities as they fall due for a period of at least 12 months from the date of approval of these financial statements.
As such, the Directors continue to adopt the going concern basis of preparation for these financial statements.
On behalf of the board
Mr W Payne
Director
23 July 2020
BALDWINS HOLDINGS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2019
- 7 -
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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accountancy Practice), including financial Reporting Standard 102 'The financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and 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;
• state whether applicable UK accounting standards have been followed, subject to any material departures
disclosed and explained in the financial statements;
• make judgments and accounting estimates that are reasonable and prudent;
• 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.
BALDWINS HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF BALDWINS HOLDINGS LIMITED
- 8 -
Opinion
We have audited the financial statements of Baldwins Holdings Limited (the ‘company’) for the year ended 30 June 2019 which comprise the Profit and Loss Account, the Balance Sheet, the Statement of comprehensive income, the Statement of changes in equity and the related notes 1 to 29, 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 FRS 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 30 June 2019 and of its loss 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.
Emphasis of matter - Effects of COVID-19
We draw attention to Note 1 and
27
of the financial statements, which describes the economic and operational consequences the company is facing as a result of COVID-19. Our opinion is not modified in respect of this matter.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
-
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue
.
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.
BALDWINS HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BALDWINS HOLDINGS LIMITED
- 9 -
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' r
eport 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 identifie
d
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 directors'
r
esponsibilities
s
tatement, 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.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s report.
BALDWINS HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BALDWINS HOLDINGS LIMITED
- 10 -
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.
Andrew Merrick (Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP
23 July 2020
Statutory Auditor
One Colmore Square
Birmingham
B4 6HQ
BALDWINS HOLDINGS LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 2019
- 11 -
Year
Year
ended
ended
30 June
30 June
2019
2018
Notes
£
£
Turnover
3
67,337,354
4,139,468
Other operating income
1,465,658
1,467
Staff costs
7
(48,998,282)
(3,946,706)
Depreciation and other amounts written off tangible and intangible fixed assets
5
(6,322,733)
(509,521)
Other operating expenses
(17,385,429)
(1,505,688)
Operating loss
5
(3,903,432)
(1,820,980)
Interest receivable and similar income
9
287,401
-
Interest payable and similar expenses
10
(6,540,690)
(1,928,114)
Amounts written off investments
11
-
(791,317)
Loss before taxation
(10,156,721)
(4,540,411)
Tax on loss
12
2,682
-
Loss for the financial year
(10,154,039)
(4,540,411)
The format of the profit and loss account has been revised in the year as described in note 1. All operations are continuing operations.
BALDWINS HOLDINGS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
- 12 -
Year
Year
ended
ended
30 June
30 June
2019
2018
£
£
Loss for the year
(10,154,039)
(4,540,411)
Other comprehensive income
-
-
Total comprehensive income for the year
(10,154,039)
(4,540,411)
BALDWINS HOLDINGS LIMITED
BALANCE SHEET
AS AT
30 JUNE 2019
30 June 2019
- 13 -
2019
2018
Notes
£
£
£
£
Fixed assets
Goodwill
13
78,601,466
10,573,985
Tangible assets
14
3,160,077
331,644
Investments
15
16,274,693
16,324,433
98,036,236
27,230,062
Current assets
Debtors
18
139,202,178
79,788,946
Cash at bank and in hand
253,890
2,914,288
139,456,068
82,703,234
Creditors: amounts falling due within one year
19
(184,451,061)
(61,120,244)
Net current (liabilities)/assets
(44,994,993)
21,582,990
Total assets less current liabilities
53,041,243
48,813,052
Creditors: amounts falling due after more than one year
20
(10,311,662)
(3,835,621)
Provisions for liabilities
22
(8,322,189)
(416,000)
Net assets
34,407,392
44,561,431
Capital and reserves
Called up share capital
24
993,828
993,828
Share premium account
45,323,341
45,323,341
Profit and loss reserves
(11,909,777)
(1,755,738)
Total equity
34,407,392
44,561,431
The financial statements were approved by the board of directors and authorised for issue on 23 July 2020 and are signed on its behalf by:
C Warburton
Director
Company Registration No. 06365189
BALDWINS HOLDINGS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
- 14 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 July 2017
993,828
45,323,341
2,784,673
49,101,842
Period ended 30 June 2018:
Loss and total comprehensive income for the period
-
-
(4,540,411)
(4,540,411)
Balance at 30 June 2018
993,828
45,323,341
(1,755,738)
44,561,431
Period ended 30 June 2019:
Loss and total comprehensive income for the period
-
-
(10,154,039)
(10,154,039)
Balance at 30 June 2019
993,828
45,323,341
(11,909,777)
34,407,392
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
- 15 -
1
Accounting policies
Company information
Baldwins Holdings Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Churchill House, 59 Lichfield Street, Walsall, West Midlands, WS4 2BX.
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
and are presented to the nearest £'000
.
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
.
T
he company has
therefore
taken advantage of
e
xemptions 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 company has taken advantage of the exemption under section 400 of the
Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group
.
Baldwins Holdings Limited is a wholly owned subsidiary of Baldwins Bidco Limited and the results of Baldwins Holdings Limited are included in the consolidated financial statements of Cogital Topco Limited, a company incorporated in Jersey. Copies of the financial statements of Cogital Topco Limited can be obtained from Companies House, Crown Way, Cardiff, CF14 3UZ.
Presentation
In preparing the financial statements the company has revised the format of the profit and loss account to one aligned to Format 2 as set out in the Companies Act prescribed form of accounts. This change of presentation has been made to both align with the format adopted by Cogital Topco Limited, the company who presents consolidated financial statements including the company, and as the directors consider that this better reflects the underlying nature of the company’s trading operations.
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
1
Accounting policies
(Continued)
- 16 -
1.2
Going concern
The financial statements have been prepared on a going concern basis which the directors consider to be appropriate.
true
As described
in note 27,
with effect from 1 July 2019, substantially all of the operating activities of the Baldwins sub-group are now held within the
company
. Since this date despite the current market conditions, the company
has continued to generate operating profits (before depreciation and amortization charges) and has seen improvements in its overall ability to convert current revenue recognized into cash. Additional loans
amounting to £22 million
have also been introduced by the Cogital Group and the terms of both these and existing inter-company loans have been amended such that there are no interest or capital repayments due within the 12 month period from the date of approval of these financial statements.
In assessing the going concern position of the company
for the year ended 30 June 2019, the Directors have considered the company
's
cash flows, liquidity and likely business activities over a period of over 12 months from the date of approval of the financial statements. At the time of this review in July 2020, there was cash of £
30 million which is available for operations.
In making their assessment, the Directors have considered the potential direct and indirect impact of Covid-19 on the cash flows and liquidity of the company, as well as the steps taken to preserve cash within the business which have included participation in the government Job Retention Scheme and the deferral of payroll taxes and VAT.
The company
has a diversified client base including corporate and individual clients, with no concentration of risk into any one particular sector. As a result of this, the base case and downsides scenarios applied by the Directors in their assessment of going concern shows that the company
will have adequate resources to continue in operational existence for the next 12 months.
The directors have also considered a reverse stress test to identify the downside sensitivity assumptions which would need to arise in order for the business to need additional funding to continue in operation. Having identified and considered these assumptions, and after taking into consideration potential mitigating actions that the directors could take, including right sizing the cost base to reflect the
potential
trading downturn and the deferral of non-contractual payments, the directors have concluded that such a scenario is not plausible.
For these reasons, the Directors continue to believe that it is appropriate to continue to adopt a going concern basis for the preparation of the financial statements.
1.3
Reporting period
Financial statements are presented for the year from 1 July to 30 June.
1.4
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts and settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Where revenue recognised exceeds the amount billed, this amount is included within
d
ebtors.
Contingent fees are only recognised when the contingent event has been completed.
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
1
Accounting policies
(Continued)
- 17 -
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to hourly staff rates, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.
1.5
Intangible fixed assets - goodwill
Intangible assets acquired separately are capitalised at cost. Intangible assets acquired as part of an acquisition of a business are capitalised separately
only
if the fair value can be measured reliably at initial recognition. Subsequently, intangible assets are stated at cost less accumulated amortisation and impairment. Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a straight
-
line basis over its expected life
,
which is
estimated to be 10
years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are
tested for indications of impairment
at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.6
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
Over the term of the lease
Plant and machinery
20% straight line
Fixtures, fittings & equipment
15% straight line
Motor vehicles
25% 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
.
1.7
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
The investments are assessed for impairment at each reporting date
and
any
impairment
losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company
. Control is
the power to govern the financial and operating policies of
the
entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
1
Accounting policies
(Continued)
- 18 -
Entities in which the company has a long
-
term interest and shares control under a contractual arrangement are classified as jointly controlled entities
.
1.8
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.9
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.
1.10
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.
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
1
Accounting policies
(Continued)
- 19 -
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.
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, bank loans and loans from fellow group companies 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.
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
1
Accounting policies
(Continued)
- 20 -
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
s
ubsequently 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.
1.11
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.
1.12
Derivatives
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.
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.
1.13
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 date.
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
1
Accounting policies
(Continued)
- 21 -
Deferred tax
Deferred tax liabilities are 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 taxable 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 based on tax rates that are substantively enacted at the balance sheet date. 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.
1.14
Provisions
Provisions are recognised when the
company
has a legal or constructive present obligation as a result of a past event, it is probable that the
company
will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation.
Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision i
s
measured at present value
,
the unwinding of the discount is recognised as a finance cost in profit or loss in the period
in which
it arises.
1.15
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 unbilled revenue or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
1.16
Retirement benefits
Payments to defined contribution retirement benefit schemes are recognised in profit or loss as they fall due.
1.17
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit & 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 lease asset are consumed.
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 22 -
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.
Revenue recognition
In determining the ‘Revenue recognition’ policy described in note 1, the directors have made the judgement that the most appropriate method to assess the stage of completion of ongoing assignments by reference to the time and expense recorded prior to the period end date in respect of the relevant engagement at standard charge out rates, adjusted to reflect the expected level at which those standard rates will be recovered from the client.
Impairment of goodwill
In considering whether there are any indicators of impairment, the directors have made the judgement that the activities of the company represent a single cash generating unit (“CGU”). This reflects the fact that acquired businesses are immediately integrated into the business. A CGU is the smallest identifiable group of assets that generate cash flows that are largely independent of the cash inflows from other assets or groups of assets.
3
Turnover and other revenue
Turnover by business segment is as follows:
Accounting and taxation services
67,337,354
4,139,468
Turnover by geographic region is as follows:
United Kingdom
67,337,354
4,139,468
4
Exceptional items
There are exceptional costs comprising redundancy costs and claims amounting to £1,080,000 (2018: £nil).
As discussed in the strategic report, the
company
has made a number of acquisitions. As part of the integration of these businesses there have been a number of redundancies, the cost of these redundancies has been presented separately in order to show a clear and consistent presentation of the
company's
underlying performance.
As discussed in note 22, the
company
may receive claims, in the ordinary course of business, which are covered by professional indemnity insurance. To the extent that these claims, or elements of these claims are uninsured, the
directors
consider that this is not in the ordinary course of business and
therefore
warrant separate presentation in order to show a clear and consistent presentation of the
company's
underlying performance.
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 23 -
5
Operating loss
2019
2018
Operating loss for the period is stated after charging:
£
£
Depreciation of owned tangible fixed assets
477,057
31,223
Loss on disposal of tangible fixed assets
4,321
-
Amortisation of intangible assets
5,841,355
478,298
Exceptional items (refer to note 4)
1,080,000
-
Operating lease charges
2,902,685
135,006
6
Auditor's remuneration
2019
2018
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
344,278
250,000
The audit fees payable above includes the audit of the company and the audit of certain of the company's subsidiaries.
7
Employees
With effect from 6th April 2018 the employment of all individuals within the Baldwins Holdings Limited group were transferred to Baldwins Holdings Limited. From that date, the company recharged its subsidiaries the equivalent to the staff cost had the individuals been employed by the entity to whom their services were principally provided.
The total number of employees of the Baldwins group of companies at the year-end was 2,333 (2018: 1,810).
The note below relates solely to the employees who worked directly for the company during the year.
2019
2018
Number
Number
Average number of full-time equivalents
1,014
156
Their aggregate remuneration (including directors' remuneration) comprised:
2019
2018
£
£
Wages and salaries
43,482,309
3,518,224
Social security costs
4,358,945
324,233
Pension costs
1,157,028
104,249
48,998,282
3,946,706
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 24 -
8
Directors' remuneration
2019
2018
£
£
Remuneration for qualifying services
1,729,637
700,000
Company pension contributions to defined contribution schemes
15,866
11,000
1,745,503
711,000
Remuneration disclosed above include the following amounts paid to the highest paid director:
2019
2018
£
£
468,576
201,665
9
Interest receivable and similar income
2019
2018
£
£
Interest income
Interest on bank deposits
50,847
-
Income from fixed asset investments
Income from shares in group undertakings
236,554
-
Total income
287,401
-
10
Interest payable and similar expenses
2019
2018
£
£
Interest paid on deferred consideration and overdrafts
176,380
739
Interest payable to group undertakings
6,230,226
1,811,570
Unwinding of discount on deferred consideration
134,084
115,805
6,540,690
1,928,114
11
Amounts written off investments
fixed asset investments
2019
2018
£
£
Impairment of investment
-
(791,317)
The company recorded an impairment of £791,317
in the prior year
following a review of the fair value of each subsidiary entity prepared in anticipation of the post year end transfer of trade and net assets of the majority of the company's subsidiaries into the company
.
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 25 -
12
Taxation
2019
2018
£
£
Current tax
UK corporation tax on profits for the current period
(2,682)
-
The actual (credit)/charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2019
2018
£
£
Loss before taxation
(10,156,721)
(4,540,411)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%)
(1,929,777)
(862,678)
Tax effect of expenses that are not deductible in determining taxable profit
1,828,952
-
Change in unrecognised deferred tax assets
(1,017)
-
Group relief
101,842
862,678
Under/(over) provided in prior years
(2,682)
-
Taxation credit for the period
(2,682)
-
Deferred tax
The company has brought forward losses totalling £1,348,761 (2018: £1,235,754), which equates to an unrecognised deferred tax asset of £229,289, based on the substantially enacted deferred tax rate at the balance sheet date of 17%.
Deferred tax assets have not been recognised in respect of these losses as there continues to be uncertainty over the timing of the
company's
future profit.
Factors that may affect future tax charges
The changes to the main rate of corporation tax for UK companies announced in the Summer Finance Bill 2017 were substantively enacted for financial reporting purposes on 6 September 2017. The main changes in corporation tax rates, that will have accounting implications for deferred tax, are as follows:
On 11 March 2020, the UK government announced that the corporation tax rate from 1 April 2020, will remain at 19%. This would increase the company’s unrecognised deferred tax to £256,264.
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 26 -
13
Intangible fixed assets
Goodwill
£
Cost
At 1 July 2018
11,052,283
Additions - business combinations
73,024,037
Transfers
863,292
Other changes
(18,493)
At 30 June 2019
84,921,119
Amortisation and impairment
At 1 July 2018
478,298
Amortisation charged for the year
5,841,355
At 30 June 2019
6,319,653
Carrying amount
At 30 June 2019
78,601,466
At 30 June 2018
10,573,985
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
13
Intangible fixed assets
(Continued)
- 27 -
On 13 July 2018, the company acquired the trade, ongoing client engagements and certain assets of The Fish Partnership for total consideration of £1,813,165 including directly capitalised costs of £78,315. £471,750 of the gross consideration has been deferred and recorded at its present value of £464,767 in line with applicable standards.
On 13 August 2018, the company acquired the trade, ongoing client engagements and certain assets of Dental Business Solutions for total consideration of £779,110. £
313,500
of the gross consideration has been deferred and recorded at its present value of £
308,859
in line with applicable standards
.
On 3 September 2018, the company acquired the trade, ongoing client engagements and certain assets of Wilkins Kennedy LLP for total consideration of £54,78
1
,
930
including directly capitalised costs of £1,151,260. £10,650,158 of the gross consideration has been deferred and recorded at its present value of £10,49
5
,
696
in line with applicable standards.
On 31 January 2019, the company acquired the trade, ongoing client engagements and certain assets of Booth Ainsworth for total consideration of £4,11
2
,
379
including directly capitalised costs of £35,500. £1,440,000 of the gross consideration has been deferred and recorded at its present value of £1,41
4
,
985
in line with applicable standards.
On 15 April 2019, the company acquired the trade, ongoing client engagements and certain assets of Broomfield & Alexander Associates for total consideration of £
10,943,812
including directly capitalised costs of £
129,111
. £2,513,668 of the gross consideration has been deferred and recorded at its present value of £2,47
8
,
525
in line with applicable standards.
On the same date, the company acquired the share capital of Broomfield & Alexander Limited, a sister company of Broomfield & Alexander Associates, of 2 Ordinary shares for consideration of £137,999.
On 7 May 2019, the company acquired the trade, ongoing client engagements and certain assets of Montpelier for total consideration of £311,022 including directly capitalised costs of £15,091.
On 7 May 2019, the company acquired the trade, ongoing client engagements and certain assets of Scott Moncrieff for total consideration of £11,
282,630
including directly capitalised costs of £38,099. £2,616
,
705 of the gross consideration has been deferred and recorded at its present value of £2,552,573 in line with applicable standards.
On 27 June 2019, the company acquired the trade, ongoing client engagements and certain assets of RA Clements for total consideration of £52,000.
On 9 March 2019 and 15 April 2019 respectively
, the company acquired
the share capital
and then immediately
transferred the trade and assets of Capital Allowances Partnership Limited
and
Broomfield & Alexander Limited to the company and accordingly reclassified the cost of investment as goodwill.
The other adjustments to goodwill of £18,493 relate to adjustments made to the consideration payable on acquisitions undertaken in prior years.
The share consideration comprises the subscription of A shares and Preference shares in Cogital Topco Limited under the Cogital Equity Subscription scheme.
T
he revenue and profit of each acquired
business
is subsumed into the overall
operations of the company
and it is therefore not possible to reliably identify the
revenue and profit
for each
since the date of acquisition. Given the short period of time that the majority of the trade within the business has been held, the directors have performed a review for indicators of impairment of goodwill reflecting their expectations of the acquired businesses at the time of acquisition. This review concluded that there are no indications of impairment and accordingly a full impairment review was not performed.
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
13
Intangible fixed assets
(Continued)
- 28 -
Fish Partnership
Dental Business Solutions
Wilkins Kennedy LLP
Booth Ainsworth
Broomfield & Alexander
Montpelier
Scott Moncrieff
RA Clements
Total
Fixed assets
-
-
2,404,890
-
30,000
-
-
-
2,434,890
Gross amounts recoverable from contract customers
169,333
(17,021)
6,586,998
126,774
353,281
95,931
737,139
-
8,052,435
Debtors and other assets
-
-
1,205,366
-
2,519,863
-
283,572
-
4,008,801
Cash
-
-
-
-
116,808
-
-
-
116,808
Liabilities
-
-
(593,762)
-
(550,449)
-
(154,022)
-
(1,298,233)
Office reinstatement provision
(80,000)
(40,000)
(1,518,464)
(96,000)
(240,000)
-
(424,000)
-
(2,398,464)
89,333
(57,021)
8,085,028
30,774
2,229,503
95,931
442,689
-
10,916,237
Cash and deferred consideration
1,577,600
779,110
45,630,170
3,851,759
9,835,821
295,931
9,537,859
52,000
71,560,250
Share consideration
157,250
-
8,000,500
225,120
978,880
-
1,570,898
-
10,932,648
Acquisition and other costs
78,315
-
1,151,260
35,500
129,111
15,091
38,099
-
1,447,376
Total consideration
1,813,165
779,110
54,781,930
4,112,379
10,943,812
311,022
11,146,856
52,000
83,940,274
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
13
Intangible fixed assets
(Continued)
- 29 -
Goodwill
1,723,832
836,131
46,696,902
4,081,605
8,714,309
215,091
10,704,167
52,000
73,024,037
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 30 -
14
Tangible fixed assets
Leasehold improve-ments
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 July 2018
25,000
60,313
56,397
221,157
362,867
Additions
281,621
594,534
204,314
-
1,080,469
Business combinations
284,402
1,885,412
-
265,076
2,434,890
Disposals
-
(5,401)
-
(221,157)
(226,558)
At 30 June 2019
591,023
2,534,858
260,711
265,076
3,651,668
Depreciation and impairment
At 1 July 2018
-
8,152
7,462
15,609
31,223
Depreciation charged in the year
35,874
370,210
15,749
55,224
477,057
Eliminated in respect of disposals
-
(1,080)
-
(15,609)
(16,689)
At 30 June 2019
35,874
377,282
23,211
55,224
491,591
Carrying amount
At 30 June 2019
555,149
2,157,576
237,500
209,852
3,160,077
At 30 June 2018
25,000
52,161
48,935
205,548
331,644
15
Fixed asset investments
2019
2018
Notes
£
£
Investments in subsidiaries
16
16,274,644
16,324,354
Investments in associates
17
49
79
Total costs and net book value
16,274,693
16,324,433
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
15
Fixed asset investments
(Continued)
- 31 -
On 9 March 2019, the company acquired the whole of The Capital Allowances Partnership Limited share capital of 990 Ordinary shares for consideration of £725,263.
On 15 April 2019, the company acquired the whole of Broomfield & Alexander Limited share capital of 2 Ordinary shares for consideration of £137,999.
On the date of acquisition, the company transferred the trade and assets of Capital Allowances Partnership Limited and Broomfield & Alexander Limited to the company and accordingly the company reclassified the cost of investment as goodwill.
There were a number of adjustments to deferred consideration in respect of acquisitions in the prior year which amounted to a net reduction in investment of £49,710.
During the year, the company wrote-off its investment amounting to £30 in its associate, Baldwins & Simmons Business Solutions Limited, following its dissolution.
In the prior year, the company has recorded a total impairment of £789,291 which has been established following a review of the fair value of each subsidiary entity prepared in anticipation of the post year end transfer of trade and net assets of the majority of the company's subsidiaries into the company.
Movements in fixed asset investments
Shares in group undertakings and participating interests
£
Cost
At 1 July 2018
17,113,724
Additions
863,292
Deferred consideration adjustments
(49,710)
Transfer to goodwill
(863,292)
Disposals
(30)
At 30 June 2019
17,063,984
Impairment
At 1 July 2018 & 30 June 2019
789,291
Carrying amount
At 30 June 2019
16,274,693
At 30 June 2018
16,324,433
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 32 -
16
Subsidiaries
Details of the company's subsidiaries and undertakings at 30 June 2019 are as follows:
Name of undertaking
Country of incorporation
Nature of business
Class of
% Held
shares held
Baldwin Turner Peachy Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Acquisition 2) Limited
England and Wales
Dissolved
Ordinary
100.00
Baldwins (Acquisition 3) Limited
England and Wales
Dissolved
Ordinary
100.00
Baldwins (Advantage) Limited
England and Wales
Non-trading
Ordinary
100.00
Baldwins (Alnwick) Limited*
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Ashby) Limited
England and Wales
Accountancy and Taxation services
Ordinary
90.00
Baldwins (Bicester) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Bridgnorth) Limited*
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Cannock) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Cardiff) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Cheltenham) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Coventry) Limited*
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Crook) Limited *
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Derby) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Dursley) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
16
Subsidiaries
Name of undertaking
Country of incorporation
Nature of business
Class of
% Held
shares held
(Continued)
- 33 -
Baldwins (Evesham) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Gloucester) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Guisborough) Limited*
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Hetton-Le-Hole) Limited*
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Hexham) Limited *
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Jesmond) Limited*
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Kettering) Limited
England and Wales
Dissolved
Ordinary
100.00
Baldwins (Leamington) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (North East) Limited
England and Wales
Holding company
Ordinary
100.00
Baldwins (North West) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Nottingham) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Nuneaton) Limited
England and Wales
Non-trading
Ordinary
100.00
Baldwins (Oswestry) Limited*
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Portobello) Limited*
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Seaton Burn) Limited*
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Shrewsbury) Limited*
England and Wales
Accountancy and Taxation services
Ordinary
100.00
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
16
Subsidiaries
Name of undertaking
Country of incorporation
Nature of business
Class of
% Held
shares held
(Continued)
- 34 -
Baldwins (Stevenage) Limited
England and Wales
Dissolved
Ordinary
100.00
Baldwins (Stourbridge) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Tamworth) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Telford) Limited*
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Walsall) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Welshpool) Limited*
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (West Country) Limited
England and Wales
Non-trading
Ordinary
100.00
Baldwins (Witney) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Wolverhampton) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Worcester) Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Wynyard) Limited*
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins (Yarm) Limited*
England and Wales
Non-trading
Ordinary
100.00
Baldwins Corporate Finance Limited
England and Wales
Corporate finance services
Ordinary
100.00
Baldwins Corporate Services Limited
England and Wales
Group services
Ordinary
100.00
Baldwins McCranor Limited
England and Wales
Non-trading
Ordinary
100.00
Baldwins Payestaff Limited *
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins Restructuring & Insolvency Limited*
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Baldwins Technology Solutions Limited
England and Wales
IT Support
Ordinary
100.00
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
16
Subsidiaries
Name of undertaking
Country of incorporation
Nature of business
Class of
% Held
shares held
(Continued)
- 35 -
Barnett DM Limited*
England and Wales
Non-trading
Ordinary
100.00
Campbell Dallas (Debt Solutions) Limited*
Scotland
Provision of Debt Arrangement Scheme in Scotland
Ordinary
100.00
Campbell Dallas (South West) Limited*
Scotland
Accountancy and Taxation services
Ordinary
100.00
Campbell Dallas Limited
England and Wales
Accountancy and Taxation services
Ordinary
100.00
Clark Howes Auditing Solutions Limited
England and Wales
Non-trading
Ordinary
100.00
Clark Howes Business Services Limited*
England and Wales
Company secretarial services
Ordinary
100.00
Clark Howes Group Limited
England and Wales
Holding company
Ordinary
100.00
Clark Howes Ltd*
England and Wales
Dissolved
Ordinary
100.00
CLB Coopers Services Limited*
England and Wales
Non-trading
Ordinary
100.00
Cotswold Accountancy Limited*
England and Wales
Dissolved
Ordinary
95.00
Cox Jerome Group Limited*
England and Wales
Non-trading
Ordinary
100.00
Cox Jerome Taxation & Accountancy Limited*
England and Wales
Non-trading
Ordinary
100.00
Fox Evans Limited*
England and Wales
Non-trading
Ordinary
100.00
Gittins Limited*
England and Wales
Non-trading
Ordinary
100.00
Group Property Holding Company Limited
England and Wales
Non-trading
Ordinary
100.00
Minshalls Limited*
England and Wales
Non-trading
Ordinary
100.00
Rawlinsons Limited
England and Wales
Non-trading
Ordinary
100.00
Rawlinsons Payroll and HR Limited*
England and Wales
Non-trading
Ordinary
100.00
Resolve Cambridge Limited*
England and Wales
Non-trading
Ordinary
100.00
Resolve London Limited*
England and Wales
Non-trading
Ordinary
100.00
Taylor Rowlands Limited*
England and Wales
Non-trading
Ordinary
100.00
Broomfield and Alexander Ltd
England and Wales
Non-trading
Ordinary
100.00
The Capital Allowances Partnership Limited
England and Wales
Non-trading
Ordinary
100.00
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
16
Subsidiaries
(Continued)
- 36 -
* represents investments that are held indirectly.
The registered office of all subsidiaries with the exception of the companies incorporated in Scotland is Churchill House, 59 Lichfield Street, Walsall, WS4 2BX. The registered office of the companies incorporated in Scotland is Titanium 1 Kings Inch Place, Renfrew, PA4 8WF.
Subsequent to the year end, on 1 July 2019 the activities of the Baldwins group of companies has been restructured such that the majority of the trading activity of the company’s subsidiaries has been transferred into the company. Following this transfer, other than in respect of the Baldwins (Ashby) Limited, Baldwins Corporate Finance Limited, Baldwins Technology Solutions Limited and Campbell Dallas Debt Solutions Limited the subsidiaries listed above are non-trading.
17
Associates
Details of the company's associates at 30 June 2019 are as follows:
Name of undertaking
Registered
Nature of business
Class of
% Held
office
shares held
Direct
Indirect
Group Audit Services Limited
United Kingdom
Audit services
Ordinary
49.00
0
The registered office of the associate is Churchill House, 59 Lichfield Street, Walsall, WS4 2BX.
18
Debtors
2019
2018
Amounts falling due within one year:
£
£
Trade debtors
16,756,350
1,516,468
Gross amounts recoverable from contract customers
12,604,922
2,444,967
Corporation tax recoverable
369,419
369,419
Amounts due from group undertakings
99,481,374
74,774,983
Other debtors
7,302,288
305,263
Prepayments and accrued income
2,687,825
377,846
139,202,178
79,788,946
Included within other debtors are amounts receivable in respect of insured amounts relating to litigation and claims (refer to note 22) amounting to £
4,518,000
.
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 37 -
19
Creditors: amounts falling due within one year
2019
2018
Notes
£
£
Loans
21
147,742,154
52,112,436
Trade creditors
2,376,978
588,069
Amounts due to group undertakings
7,546,445
2,059,330
Corporation tax
140,348
-
Other taxation and social security
5,516,053
1,716,581
Other creditors
14,786,757
4,040,307
Accruals and deferred income
6,342,326
603,521
184,451,061
61,120,244
Included within other creditors is £11,196,544 related to deferred consideration due within one year.
20
Creditors: amounts falling due after more than one year
2019
2018
£
£
Deferred consideration
10,311,662
3,835,621
21
Loans and overdrafts
2019
2018
£
£
Other loans
147,742,154
52,112,436
Payable within one year
147,742,154
52,112,436
Other loans represent amounts due to Cogital Group companies. At the balance sheet date, the balance is repayable on demand and incurs interest at an average rate of 6%. The increase during the year has been primarily used to fund the acquisitions made by the company.
Subsequent to the year end, in July 2020, the company renegotiated the terms of its intercompany borrowings with the Cogital Group and also received additional Cogital Group loans amounting to £22 million. As a result of this neither the £148 million outstanding loan balance at 30 June 2019 nor the new £22 million loan are, at the time of signing these accounts, due on demand having no interest or capital payments due prior to 31 December 2021.
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 38 -
22
Provisions for liabilities and contingent liabilities
2019
2018
£
£
Dilapidations
2,814,464
416,000
Legal claims
5,507,725
-
8,322,189
416,000
Movements on provisions:
Dilapidations
Legal claims
Total
£
£
£
Additional provisions in the year
2,398,464
5,507,725
7,906,189
The dilapidations provision represents the estimated cost of dilapidations and restoration costs on leasehold property. These provisions are generally expected to be utilised within ten years.
In the normal course of business, the company may receive claims from clients for a variety of reasons. The company carries professional indemnity insurance such that most claims are covered by insurance subject to an excess. Where a claim is capable of being quantified an appropriate provision is recorded together with an associated asset recorded in the same amount in respect of insurance recoveries, less any insurance excess and any uninsured amounts. Both insured and uninsured claims are usually resolved between two and five years although claims that involve court action can take longer. The company has a contingent liability in respect of claims for which settlement is not considered likely or it is not possible to reliably estimate the financial effect.
Included within other debtors
(refer to note 18)
are amounts receivable in respect of insured amounts relating to litigation and claims amounting to £
4,518,000
.
23
Retirement benefit schemes
2019
2018
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
1,157,028
104,249
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.
24
Share capital
2019
2018
£
£
Ordinary share capital
Issued and fully paid
592,803 Ordinary of £1 each
592,803
592,803
825 Ordinary 'A' non-voting of £1 each
825
825
385,000 Ordinary 'B' non-voting of £1 each
385,000
385,000
15,200 Ordinary 'C' of £1 each
15,200
15,200
993,828
993,828
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 39 -
25
Financial commitments, guarantees and contingent liabilities
In 2016 the company gave security to the bankers of the Baldwins Holdings Limited group of companies by way of a group cross guarantee supported by a debenture over the whole of the company's assets.
Along with other members of the Cogital Group, including certain of the company’s subsidiaries, the company is party to a cross guarantee in respect of the third party borrowings of the Cogital Group
.
26
Operating lease commitments
Lessee
At the reporting date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases relating to property, which fall due as follows:
2019
2018
£
£
Within one year
3,321,275
249,040
Between two and five years
10,538,089
865,717
In over five years
7,195,897
477,600
21,055,261
1,592,357
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 40 -
27
Events after the reporting date
On 1 July 2019, the trade and net assets of the majority of the company’s subsidiary undertakings was hived up into the company Following this transfer the vast majority of the trading activities of the Baldwins sub-group is now undertaken by the company.
Since the year end the Company has acquired the following businesses:
-
Kelsall Steele, trade and ongoing client engagements acquired on 5 July 2019
-
Perrins Limited, shares, trade and ongoing client engagements acquired on 5 July 2019
-
Treasury Accounting, trade and ongoing client engagements acquired on 26 July 2019
-
Rothmans, trade and ongoing client engagements acquired on 26 July 2019
-
Williamson & Dunn Chartered Accountants, trade and ongoing client engagements acquired on 2 August 2019
-
MCA Business and MCA Business Services trade and ongoing client engagements acquired on 19 August 2019
-
Gardners Accountants Limited, shares, trade and ongoing client engagements acquired on 13 September 2019
-
Michael Gale & Co, trade and ongoing client engagements acquired on 30 September 2019
-
Certain non-core trade and ongoing client engagements of the Nottingham office of BDO LLP acquired on 16 October 2019.
-
On 8 November 2019, the company acquired the share capital of Wilkins Kennedy Financial Planning Limited.
In July 2020, the company renegotiated the terms of its intercompany borrowings with the Cogital Group and also received additional Cogital Group loans amounting to £22 million. As a result of this neither the £148 million outstanding loan balance at 30 June 2019 nor the new £22 million loan are due on demand having no interest or capital payments due prior to 31 December 2021.
On 11 March 2020, the World Health Organization declared the outbreak of COVID-19 to be an international pandemic. The rapid evolution of events, nationally and internationally, represents an unprecedented health crisis, which will impact the macroeconomic environment and the future prospects of many businesses
. A
future write down of assets may occur as a result of the pandemic.
The pandemic is impacting the many of the company’s clients as well as impacting the manner in which the company and its staff are able to work. This creates additional risk for the company both in terms of its ongoing ability to secure new clients and its ongoing ability to service new and existing clients. It also has implications for the company should clients face challenges in respect their own ongoing ability to operate or to require and be able to pay for the company’s services.
The directors are actively monitoring the risks associated with the virus and have taken early decisive action to manage its cost base during the pandemic. This included a voluntary 20% salary reduction for the senior leaders for the three months to 30 June 2020 and a voluntary move to a four-day working week for the remainder of the staff for the same period. The Directors have also taken advantage of Government assistance programmes including the use of the Job Retention Scheme along with deferral of payroll taxes and VAT as well as other measures to control the cash flows of the Company.
Whilst the impact on the Company’s results is difficult to predict, based on the measures taken to mitigate the disruption on the Company’s operations and boost its liquidity, as well as the sensitivity analysis described in the the basis of preparation note, the Directors consider that the Company has adequate resources to continue in operational existence for the foreseeable future. In addition, the Directors have considered the possible impact on the valuation of the Company’s non-current assets and currently do not expect that the Covid-19 pandemic will have any material impact of the carrying value of those assets although it remains possible that a future write down of assets may occur as a result of the pandemic.
BALDWINS HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
- 41 -
28
Related party transactions
In the normal course of business the company has a number of transactions with companies that are part of the Baldwins group of companies and are exempt from disclosing balances with wholly owned group companies. This includes intercompany recharges, management recharges and sales and purchases between these related parties made at market prices. Outstanding balances are unsecured, interest free and cash settlement is expected in line with normal trading terms.
The company has the following debtor/(creditor) balances with companies that are not wholly owned by the group:
Baldwins (Ashby) Limited £347,145 (2018: £177,312)
Group Audit Services Limited £(2,167,462) (2018: £934,726)
Group Probate Services Limited (formerly Group Wills and Probate Services Limited) £(46,555) (2018: £Nil)
During the year, the company made sales to group companies as follows:-
Group Audit Services Limited £12,037,500 (2018: £580,661)
Group Probate Services Limited (formerly Group Wills and Probate Services Limited) £95,800 (2018: £22,800)
During the year, the company charged Baldwins (Ashby) Limited payroll and related expenses of £977,526 (2018: £177,891).
During the year, the company incurred rent from Bridge House Friendly Society, with certain director in common, of £423,110 (2018: £Nil). There was no outstanding balance at the year end.
29
Ultimate controlling party
The immediate parent company is
Baldwins Bidco Limited
, a company registered in
Jersey
.
The parent company of the smallest group of undertakings for which consolidated financial statements are drawn up and of which the company is a member is Cogital Topco Limited, a company incorporated in Jersey, whose registered address is 22 Grenville Street, St Helier, Jersey, JE4 8PX. Copies of the group financial statements are available f
r
om Companies House, Crown Way, Cardiff, CF14 3UZ.
In the opinion of the directors , there is no ultimate controlling party as none of the limited partners in the
limited partnerships managed by Hg Pool Management Limited or any other investor in the company’s
ultimate parent company has an ownership of more than 20% of the issued share capital of the ultimate
parent company.
2019-06-30
2018-07-01
false
CCH Software
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Mr D Baldwin
Mr S N Southall
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Mr W Payne
C Warburton
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