Company Registration No. 08178576 (England and Wales)
Folk2Folk Limited
Annual report and financial statements
for the period ended 31 January 2021
Folk2Folk Limited
Company information
Directors
Louis Mathers
Timothy Sawyer
Roy Warren
Megan McCracken
Alexander Daly
Justin Abbott Chalew
Graham Dingle
Company number
08178576
Registered office
Number One Business Centre
Western Road
Launceston
Cornwall
PL15 7FJ
Independent auditor
Saffery Champness LLP
St Catherine's Court
Berkeley Place
Clifton
Bristol
BS8 1BQ
Folk2Folk Limited
Contents
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Income statement
9
Statement of financial position
10
Notes to the financial statements
12 - 22
Folk2Folk Limited
Strategic report
For the period ended 31 January 2021
Page 1
The directors present the strategic report for the Period ended 31 January 2021.
Fair review of the business
2020 has been a truly challenging year with the COVID-19 pandemic and successive lockdowns, resulting in the majority of staff working from home. It was our intent to “keep the doors open” during this difficult time and maintain stability and confidence with our Borrowers and Investors. We saw a wobble in confidence from Investors in March 2020, our historic re-investment rate was in the 90% range and fell for a very short period of time to the mid 60%. However, confidence came back within weeks. We had less than 10 Borrowers seeking forbearance on their loan interest. Some of our key achievements:
-
Firstly, we surpassed £400m in cumulative lending.
-
Secondly, we were accredited by the British Business Bank to provide CBILS loans, although we could not fund on competitive terms.
-
Thirdly, we have made significant strides to implement our new loan management system.
Aside from these business landmarks, we continue to keep costs under control and improve our profit margins, breaking the £1m profit barrier for the first time.
Principal risks and uncertainties
We are proud of our accomplishments so far, but recognise that the current difficulties are not over and the likelihood of more distressed Borrowers is in clear focus. Default rates are at an acceptable level and below industry standards. Without doubt the strong property sector has helped our portfolio performance and looks like persisting for some time to come. Our ongoing portfolio management assists us in keeping ahead of the game and minimises unexpected shocks.
Institutional funding continues to be a challenge and something that needs to be resolved in the short term, if we are to meet our growth aspirations. Most institutional funding has been gravitating towards government backed loans, however, it is our view this position will change over the coming months. We bucked the trend in 2020 in terms of profitability and came in more or less on target, despite the obstacles. 2021 is starting with great optimism and the initial trading is looking promising.
Future developments
Our 3 main strategies from last year hold good:
-
Enhancing technology by replacing the current system.
-
Servicing Borrowers via institutional funding.
-
Empowering our own Folks by stimulating a proactive working environment.
We are a company now that is moving forward in a positive way and becoming very bold in its aspirations and realising the art of the possible, whilst maintaining our core values.
Folk2Folk Limited
Strategic report (continued)
For the period ended 31 January 2021
Page 2
Louis Mathers
Director
24 May 2021
Folk2Folk Limited
Directors' report
For the period ended 31 January 2021
Page 3
The directors present their annual report and financial statements for the Period ended 31 January 2021.
Principal activities
The principal activity of the company continued to be that of a marketplace lender.
Directors
The directors who held office during the Period and up to the date of signature of the financial statements were as follows:
Louis Mathers
Timothy Sawyer
Roy Warren
Megan McCracken
Alexander Daly
Justin Abbott Chalew
Graham Dingle
Auditor
Saffery Champness LLP have expressed their willingness to continue in office.
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;
-
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.
Folk2Folk Limited
Directors' report (continued)
For the period ended 31 January 2021
Page 4
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.
Small companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
On behalf of the board
Louis Mathers
Director
24 May 2021
Folk2Folk Limited
Independent auditor's report
To the members of Folk2Folk Limited
Page 5
Opinion
We have audited the financial statements of Folk2Folk Limited (the 'company') for the Period ended 31 January 2021 which comprise the income statement, the statement of financial position, 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
S
tandard 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 January 2021 and of its profit for the Period 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.
Folk2Folk Limited
Independent auditor's report (continued)
To the members of Folk2Folk Limited
Page 6
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of
the
audit
:
-
the information given in the strategic report and the directors'
r
eport for the financial Period 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'
r
eport
.
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
-
the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption in preparing the directors' report.
Folk2Folk Limited
Independent auditor's report (continued)
To the members of Folk2Folk Limited
Page 7
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
.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.
Identifying and assessing risks related to irregularities:
We assessed the susceptibility of the company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the company by discussions with directors and by updating our understanding of the sector in which the company operates.
Laws and regulations of direct significance in the context of the company include The Companies Act 2006, FCA regulations and UK Tax legislation.
Audit response to risks identified
We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of financial statement disclosures. We reviewed the company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.
Folk2Folk Limited
Independent auditor's report (continued)
To the members of Folk2Folk Limited
Page 8
During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud
.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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.
Neil Davies (Senior Statutory Auditor)
For and on behalf of Saffery Champness LLP
24 May 2021
Chartered Accountants
Statutory Auditors
St Catherine's Court
Berkeley Place
Clifton
Bristol
BS8 1BQ
Folk2Folk Limited
Income statement
For the period ended 31 January 2021
Page 9
Period
Year
ended
ended
31 January
30 January
2021
2020
£
£
Turnover
3,425,548
3,242,806
Cost of sales
(232,087)
(232,354)
Gross profit
3,193,461
3,010,452
Administrative expenses
(2,139,215)
(2,822,022)
Other operating income
53,003
-
Profit before taxation
1,107,249
188,430
Tax on profit
1,746
9,613
Profit for the financial Period
1,108,995
198,043
Folk2Folk Limited
Statement of financial position
As at 31 January 2021
Page 10
2021
2020
Notes
£
£
£
£
Fixed assets
Intangible assets
5
200,353
41,733
Tangible assets
6
-
5,545
200,353
47,278
Current assets
Debtors
7
891,091
637,374
Cash at bank and in hand
1,260,548
445,668
2,151,639
1,083,042
Creditors: amounts falling due within one year
8
(338,521)
(227,088)
Net current assets
1,813,118
855,954
Total assets less current liabilities
2,013,471
903,232
Provisions for liabilities
-
(1,746)
Net assets
2,013,471
901,486
Capital and reserves
Called up share capital
10
21,945
21,945
Share premium account
4,070,672
4,070,672
Share option reserve
45,744
42,754
Profit and loss reserves
(2,124,890)
(3,233,885)
Total equity
2,013,471
901,486
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements were approved by the board of directors and authorised for issue on 24 May 2021 and are signed on its behalf by:
Louis Mathers
Director
Company Registration No. 08178576
Folk2Folk Limited
Statement of changes in equity
For the period ended 31 January 2021
Page 11
Share capital
Share premium account
Share option reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 31 January 2019
21,195
3,823,472
33,325
(3,431,928)
446,064
Period ended 30 January 2020:
Profit and total comprehensive income for the period
-
-
-
198,043
198,043
Issue of share capital
10
-
247,200
-
-
247,200
Issue of share capital
10
750
-
-
-
750
Equity settled share based payment movement
-
-
9,429
-
9,429
Balance at 30 January 2020
21,945
4,070,672
42,754
(3,233,885)
901,486
Period ended 31 January 2021:
Profit and total comprehensive income for the period
-
-
-
1,108,995
1,108,995
Equity settled share based payment movement
-
-
2,990
-
2,990
Balance at 31 January 2021
21,945
4,070,672
45,744
(2,124,890)
2,013,471
Folk2Folk Limited
Notes to the financial statements
For the period ended 31 January 2021
Page 12
1
Accounting policies
Company information
Folk2Folk Limited is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
Number One Business Centre, Western Road, Launceston, Cornwall, PL15 7FJ.
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 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £
1
.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
These financial statements are prepared on the going concern basis. The directors have a reasonable expectation that the company will continue in operational existence for the foreseeable future. The directors are not aware of material uncertainties which may cause doubt on the company's ability to continue as a going concern.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for
services provided to customers for peer to peer lending.
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.
1.4
Research and development expenditure
Development expenditure incurred on an individual project is carried forward when its future recoverability can reasonable be regarded as assured. Any expenditure carried forward is amortised in line with the expected future sales from the related projects.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Folk2Folk Limited
Notes to the financial statements (continued)
For the period ended 31 January 2021
1
Accounting policies (continued)
Page 13
Amortisation 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:
Website
25% straight line
Patents & licences
10% straight line
Software development
25% straight line
1.6
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:
Fixtures and fittings
25% straight line
Office equipment
25% straight line
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
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.
1.8
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.
1.9
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 statement of financial position 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.
Folk2Folk Limited
Notes to the financial statements (continued)
For the period ended 31 January 2021
1
Accounting policies (continued)
Page 14
Basic financial assets
Basic financial assets, which include debtors, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
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, loans from
fellow group companies and preference shares that are classified as debt, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts 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. A
m
ounts 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.
1.10
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.
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.
Folk2Folk Limited
Notes to the financial statements (continued)
For the period ended 31 January 2021
1
Accounting policies (continued)
Page 15
1.11
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
income statement
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
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. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.12
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Folk2Folk Limited
Notes to the financial statements (continued)
For the period ended 31 January 2021
1
Accounting policies (continued)
Page 16
1.14
Share-based payments
The share options programme allows employees to acquire shares of the parent company Folk Group Limited. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employee becomes unconditionally entitled to the options. The fair value of the options granted is measured based on market values at the date of grant, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of options that are vesting.
Where the Company's parent grant rights to its equity instruments to the Company's employees, which are accounted for as equity-settled in the accounts of the parent, the Company accounts for these share-based payments as equity settled.
1.15
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 lease
s
asset are consumed.
1.16
Government grants
Government grants are recognised at the fair value of the asset receive
d
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.
Folk2Folk Limited
Notes to the financial statements (continued)
For the period ended 31 January 2021
Page 17
2
Critical accounting judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying 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.
There are not considered to be any significant estimates or judgements in the financial statements.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant
effect on amounts recognised in the financial statements.
Share-based payments
In order to calculate the charge for share-based payments as required by FRS 102, the company makes estimates principally relating to the assumptions used in its option-pricing model. Refer to note 9 for details on valuation of share-based payments, including options granted.
3
Employees
The average monthly number of persons (including directors) employed by the company during the Period was:
2021
2020
Number
Number
Total
37
40
4
Directors' remuneration
2021
2020
£
£
Remuneration paid to directors
297,582
227,564
Folk2Folk Limited
Notes to the financial statements (continued)
For the period ended 31 January 2021
Page 18
5
Intangible fixed assets
Website
Patents & licences
Software development
Total
£
£
£
£
Cost
At 31 January 2020
75,805
12,058
306,910
394,773
Additions - internally developed
-
-
186,448
186,448
At 31 January 2021
75,805
12,058
493,358
581,221
Amortisation and impairment
At 31 January 2020
56,486
5,879
290,675
353,040
Amortisation charged for the Period
10,388
1,205
16,235
27,828
At 31 January 2021
66,874
7,084
306,910
380,868
Carrying amount
At 31 January 2021
8,931
4,974
186,448
200,353
At 30 January 2020
19,319
6,179
16,235
41,733
The company has capitalised software development expenditure as part of the development of a new cloud based system. No amortisation has been charged on this addition during the current period because the asset is still under construction.
6
Tangible fixed assets
Fixtures and fittings
Office equipment
Total
£
£
£
Cost
At 31 January 2020 and 31 January 2021
6,346
40,966
47,312
Depreciation and impairment
At 31 January 2020
6,346
35,421
41,767
Depreciation charged in the Period
-
5,545
5,545
At 31 January 2021
6,346
40,966
47,312
Carrying amount
At 31 January 2021
-
-
-
At 30 January 2020
-
5,545
5,545
Folk2Folk Limited
Notes to the financial statements (continued)
For the period ended 31 January 2021
Page 19
7
Debtors
2021
2020
Amounts falling due within one year:
£
£
Amounts owed by group undertakings
208,036
251,824
Other debtors
377,962
235,766
Prepayments and accrued income
305,093
149,784
891,091
637,374
8
Creditors: amounts falling due within one year
2021
2020
£
£
Trade creditors
82,953
64,587
Amounts owed to group undertakings
-
57,374
Taxation and social security
28,815
27,505
Other creditors
226,753
77,622
338,521
227,088
9
Share-based payment transactions
Certain employees of the Company participate in the share incentive schemes operated by the parent company Folk Group Limited, providing shares in the ultimate parent company.
The fair value of the options is calculated based on the Black Scholes valuation model and assumptions as determined by management at the date of grant of the share options.
Folk2Folk Limited
Notes to the financial statements (continued)
For the period ended 31 January 2021
9
Share-based payment transactions (continued)
Page 20
Number of share options
Weighted average exercise price
2021
2020
2021
2020
Number
Number
£
£
Outstanding at 31 January 2020
1,676
1,350
75.79
112.00
Granted
-
500
-
114.17
Forfeited
-
(450)
-
184.02
Other adjustments
-
276
-
3.91
Outstanding at 31 January 2021
1,676
1,676
-
75.79
Exercisable at 31 January 2021
1,176
976
59.47
30.67
The options outstanding at 31 January 2021 had an exercise price ranging from £3.91 to £200.
The share options granted on 11 November 2015 are exercisable after a vesting period ranging between 2 and 3.5 years. The options are then exercisable by the employee up to November 2025.
The share options granted on 12 October 2016 are exercisable after a vesting period ranging between 3 and 3.5 years. The options are then exercisable by the employee up to October 2026.
The share options granted on 24 January 2020 are exercisable after a vesting period of 3 years. The options are then exercisable by the employee up to January 2030.
Liabilities and expenses
During the Period, the company recognised total share-based payment expenses of £2,990 (2020: £9,429) which related to equity settled share based payment transactions.
Folk2Folk Limited
Notes to the financial statements (continued)
For the period ended 31 January 2021
Page 21
10
Called up share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
ordinary 'A' shares of £1 each
13,330
13,330
13,330
13,330
ordinary 'B' shares of £1 each
2,655
2,655
2,655
2,655
ordinary 'C' shares of £1 each
1,770
1,770
1,770
1,770
ordinary 'D' shares of £1 each
1,770
1,770
1,770
1,770
ordinary 'E' shares of £1 each
885
885
885
885
ordinary 'F' shares of £1 each
885
885
885
885
ordinary 'G' shares of £1 each
650
650
650
650
21,945
21,945
21,945
21,945
Share classes A-F are non redeemable shares which have full voting, equity and dividends rights.
Share class G are non redeemable, non voting shares which have full equity and dividends rights.
11
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:
2021
2020
£
£
Within one year
93,351
118,346
Between two and five years
39,736
139,478
133,087
257,824
Folk2Folk Limited
Notes to the financial statements (continued)
For the period ended 31 January 2021
Page 22
12
Related party transactions
The company has taken advantage of the exemption provided by FRS102 to not disclose transactions entered into between two or more members of a group, provided that any subsidiary which is party to the transactions is wholly owned by such a member.
At 31 January 2021, the company owed £nil (2020: £3,192) to related parties under common control. There is no interest charged on these balances and the amounts are presented in trade creditors. During the year £78,195 (2020: £71,552) was invoiced by related parties in connection with services provided.
At 31 January 2021, amounts owed to the directors was £nil (2020: £771). These amounts are presented in trade creditors.
A key management personnel member, acts as a lender and issued funds to a peer-to-peer borrower through the company. The company generates income on the borrower's loan.
13
Parent company
The company's immediate parent is Folk Group Limited, incorporated in England and Wales.
The most senior parent entity producing publicly available financial statements is Folk Group Limited. These financial statements are available upon request from Companies House.
2021-01-31
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