Redress Solutions Plc
Annual Report and Financial Statements
For the year ended 30 June 2022
Company Registration No. 09079980 (England and Wales)
Redress Solutions Plc
Company Information
Directors
M Nasta
M Zuckerman
Secretary
M Zuckerman
Company number
09079980
Registered office
Coopers' Hall
13 Devonshire Square
London
United Kingdom
EC2M 4TH
Auditor
Moore Kingston Smith LLP
6th Floor
9 Appold Street
London
EC2A 2AP
Redress Solutions Plc
Contents
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 27
Redress Solutions Plc
Strategic Report
For the year ended 30 June 2022
Page 1
These are the audited accounts of Redress Solutions PLC ("the Company”) for the year ended 30 June 2022. The business of the company is specialist litigation funding.
Fair review of the business
During the year, the Company has continued to invest in its live cases whilst at the same time effectively containing operating costs whilst it continues efforts to raise capital from outside sources in order to fund its growing pipeline of strong leads.
Future Developments
It is the intention of the Company to raise additional funds from outside investors to make further investments in the funding of high-quality commercial litigation and arbitration. The Company will continue to refer cases to other funders for introductory commission and to enter into joint ventures with other funders.
Principal risks and uncertainties
The principal risk of investment in litigation is risk of the claim failing before courts and arbitral tribunals. The Company minimises risk by carrying out a careful review of cases before offering funding terms.
A further risk to the Company is ensuring sufficient working capital is maintained to fund investments into legal cases. The Company has mitigated this risk through the novation of the case in 2021 which it formerly funded in exchange for the amount invested as well as reducing its ongoing operating costs.
Key performance indicators
The directors consider realised gains on funded cases to be the main key financial performance indicator.
The board of the Company monitors closely expenditure on overheads and is satisfied that these are kept to a reasonable level.
2022
2021
Income from settled cases
£nil
£nil
Administrative expenses
£468,175
£619,780
Other performance indicators
The main non-financial key performance indicators of the Company are the number of cases being funded and the number of cases which have been successfully completed.
2022
2021
Number of cases funded at year-end
2 (1 joint venture)
2 (1 joint venture)
Number of cases successfully completed in year 0
0
Redress Solutions Plc
Strategic Report (Continued)
For the year ended 30 June 2022
Page 2
Financial Risk Management
The Company's financial instruments comprise cash and liquid resources as well as various items such as investments in cases in progress and trade creditors that arise directly from its operations. The main risks arising from the Company's financial instruments are cash flow risk and liquidity risk. The Company has formal procedures for managing these risks including cash flow forecasting and budgeting. The Company continually reviews these risks and takes action as deemed necessary.
Section 172 statement
Section 172 of the Companies Act 2006 requires a director of a company to act in the way he or she considers, in good faith, would most likely promote the success of the company for the benefits of its members as a whole. In doing this s.172 requires a director to have regard, amongst other matters, to the:
-
Likely consequences of any decisions in the long term;
-
Interests of the company's employees;
-
Need to foster the company's business relationships with suppliers, customers and others;
-
Impact of the company's operations on the community and environment;
-
Desirability of the company maintaining a reputation for high standards of business conduct; and
-
Need to act fairly as between members of the company.
Board Papers are prepared with section 172 duties in mind, to ensure Directors have all the relevant information required to enable them to properly reflect and consider the factors set out above in their decision making. The Board recognises that each decision made will not always reflect in positive outcome for each of the Company's stakeholders. However, by having good governance procedures in place for decision making, the Board does aim to make sure that its decisions maintain a high standard of business conduct.
M Nasta
Director
19 December 2022
Redress Solutions Plc
Directors' Report
For the year ended 30 June 2022
Page 3
The directors present their annual report and financial statements for the year ended 30 June 2022.
Principal activities
The principal activity of the company continued to be that of specialist litigation funding.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
M Nasta
M Zuckerman
Results and dividends
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Auditor
The auditor, Moore Kingston Smith LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Redress Solutions Plc
Directors' Report (Continued)
For the year ended 30 June 2022
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.
On behalf of the board
M Nasta
M Zuckerman
Director
Director
19 December 2022
19 December 2022
Redress Solutions Plc
Independent Auditor's Report
To the Members of Redress Solutions Plc
Page 5
Opinion
We have audited the financial statements of Redress Solutions Plc (the 'company') for the year ended 30 June 2022 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity, the Statement of Cash Flows and notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including 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 2022 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Redress Solutions Plc
Independent Auditor's Report (Continued)
To the Members of Redress Solutions Plc
Page 6
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'
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.
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.
Redress Solutions Plc
Independent Auditor's Report (Continued)
To the Members of Redress Solutions Plc
Page 7
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
.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
-
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the company’s internal control.
-
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
-
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
-
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Redress Solutions Plc
Independent Auditor's Report (Continued)
To the Members of Redress Solutions Plc
Page 8
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.
Our approach was as follows:
-
We obtained an understanding of the legal and regulatory requirements applicable to the company and considered that the most significant are the Companies Act 2006, UK financial reporting standards as issued by the Financial Reporting Council, and UK taxation legislation.
-
We obtained an understanding of how the company complies with these requirements by discussions with management and those charged with governance.
-
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
-
We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
-
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. 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.
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.
John Staniforth (Senior Statutory Auditor)
for and on behalf of Moore Kingston Smith LLP
19 December 2022
Chartered Accountants
Statutory Auditor
6th Floor
9 Appold Street
London
EC2A 2AP
Redress Solutions Plc
Statement of Comprehensive Income
For the year ended 30 June 2022
Page 9
2022
2021
Notes
£
£
Turnover
3
1,830,321
Cost of sales
(1,830,321)
Gross profit
Administrative expenses
(468,175)
(619,780)
Other operating income
3
5,355
22,592
Exceptional item
4
(14,290)
Operating loss
5
(462,820)
(611,478)
Interest payable and similar expenses
8
(648)
(375)
Loss before taxation
(463,468)
(611,853)
Taxation
9
Loss for the financial year
(463,468)
(611,853)
The Statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
Redress Solutions Plc
Balance Sheet
As at 30 June 2022
Page 10
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
10
5,397
8,874
Investments
11
100
5,497
8,874
Current assets
Debtors
14
10,944
6,328
Investments
15
892,861
869,569
Cash at bank and in hand
732,535
1,227,545
1,636,340
2,103,442
Creditors: amounts falling due within one year
16
(50,500)
(47,511)
Net current assets
1,585,840
2,055,931
Total assets less current liabilities
1,591,337
2,064,805
Creditors: amounts falling due after more than one year
17
(69,167)
(79,167)
Provisions for liabilities and charges due after more than one year
19
(4,022,490)
(4,022,490)
Net liabilities
(2,500,320)
(2,036,852)
Capital and reserves
Called up ordinary share capital
21
10,000
10,000
Profit and loss reserves
(2,510,320)
(2,046,852)
Total equity
(2,500,320)
(2,036,852)
The financial statements were approved by the board of directors and authorised for issue on 19 December 2022 and are signed on its behalf by:
M Nasta
M Zuckerman
Director
Director
Company Registration No. 09079980
Redress Solutions Plc
Statement of Changes in Equity
For the year ended 30 June 2022
Page 11
Ordinary share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 July 2020
50,000
(1,434,999)
(1,384,999)
Year ended 30 June 2021:
Loss and total comprehensive income for the year
-
(611,853)
(611,853)
Reduction of shares
21
(40,000)
(40,000)
Balance at 30 June 2021
10,000
(2,046,852)
(2,036,852)
Year ended 30 June 2022:
Loss and total comprehensive income for the year
-
(463,468)
(463,468)
Balance at 30 June 2022
10,000
(2,510,320)
(2,500,320)
Redress Solutions Plc
Statement of Cash Flows
For the year ended 30 June 2022
Page 12
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
24
(460,970)
(973,476)
Interest paid
(648)
(375)
Net cash outflow from operating activities
(461,618)
(973,851)
Investing activities
Purchase of tangible fixed assets
(4,258)
Purchase of subsidiaries
(100)
Investments in legal cases
(23,292)
(83,775)
Proceeds from other investments and loans
2,226,309
Net cash (used in)/generated from investing activities
(23,392)
2,138,276
Financing activities
Repayment of bank loans
(10,000)
(833)
Net cash used in financing activities
(10,000)
(833)
Net (decrease)/increase in cash and cash equivalents
(495,010)
1,163,592
Cash and cash equivalents at beginning of year
1,227,545
63,953
Cash and cash equivalents at end of year
732,535
1,227,545
Redress Solutions Plc
Notes to the Financial Statements
For the year ended 30 June 2022
Page 13
1
Accounting policies
Company information
Redress Solutions Plc is a
public
company
limited by shares
incorporated in
England and Wales
.
The registered office is
Coopers' Hall, 13 Devonshire Square, London, United Kingdom, EC2M 4TH.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future.
At the year end the company has net liabilities of £2,500,320
(2021: £2,036,852)
and cash of £732,535
(2021: £1,227,545)
. During the prior year, as part of the company's funding restructure, restrictions were placed on the repayment of existing shareholder loans totalling £4,022,490 (included in creditors over one year) meaning repayment is only due upon successful conclusion of certain investments in cases. As these loans are ring-fenced, the directors have a reasonable expectation the company has sufficient cash to continue to operate for at least twelve months from the date when the financial statements are authorised for issue.
Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Revenue represents the gain on investments during the year, through an increase in the investments fair value or an amount realised on settlement, to the extent that these exceed the carrying value of the relevant investment.
Where a loss is made on settlement, through the amount realised on settlement being lower than the amount invested, this is recognised within cost of sales.
1.4
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Fixtures and fittings
5 years straight line
IT Equipment
5 years 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
.
Redress Solutions Plc
Notes to the Financial Statements (Continued)
For the year ended 30 June 2022
1
Accounting policies
(Continued)
Page 14
1.5
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.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities
.
1.6
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. 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.
1.7
Cash and cash equivalents
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.
Redress Solutions Plc
Notes to the Financial Statements (Continued)
For the year ended 30 June 2022
1
Accounting policies
(Continued)
Page 15
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include
debtors
and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in
profit
or
loss
, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
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.
Redress Solutions Plc
Notes to the Financial Statements (Continued)
For the year ended 30 June 2022
1
Accounting policies
(Continued)
Page 16
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.
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 th
r
ough 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.
1.9
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.
1.10
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.
Redress Solutions Plc
Notes to the Financial Statements (Continued)
For the year ended 30 June 2022
1
Accounting policies
(Continued)
Page 17
1.11
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.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
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
d
asset are consumed.
1.14
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.
1.15
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation
in the period
are included in profit or loss.
Redress Solutions Plc
Notes to the Financial Statements (Continued)
For the year ended 30 June 2022
1
Accounting policies
(Continued)
Page 18
1.16
Investments in cases in progress
Investments in cases in progress represent amounts advanced in respect of funded litigation cases. These are categorised as fair value through profit or loss and are initially measured as the cash sum invested. Attributable due diligence and closing costs are expensed when incurred. Fair value is determined based on the directors expectation, at the balance sheet date, of the likely outcome of each case and their best estimate of the return on each investment. Where a reliable measure of fair value is not available, the asset is held at cost less any impairments. The cost is the amount invested or the carrying amount at the last date the fair value of the asset was reliably measurable.
Movements in fair value are included within revenue or costs of sales in the Statement of Income and Retained Earnings.
Where the carrying value of the investment exceeds the return to the Company the deficit against the carrying value is recognised as an impairment charge.
Upon the favourable settlement of a case the difference between the return to the company and the carrying value of the relevant investment is recognised within revenue in the Statement of Income and Retained Earnings, unless the carrying value of the investment exceeds the return to the company. Where there is an unfavourable conclusion of a case the amount by which the historic cost of the investment exceeds the return to the Company is recognised as an impairment charge in cost of sales.
1.17
Investment in settled cases
Investments in settled cases represent funded cases which have successfully concluded, have fixed and determinable amounts to be received and receipt of those amounts in due course is anticipated by the Company, however, the judgement or settlement amount has yet to be received by the funded party and the relevant amount paid to the Company.
Investments in settled cases are measured at amortised cost using the effective interest method, less any impairment.
Redress Solutions Plc
Notes to the Financial Statements (Continued)
For the year ended 30 June 2022
Page 19
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.
Investments in cases in progress
Fair values of the investments made are determined based on the specifics of each investment. The value will change should it be determined that the case is progressing in such a way that the company would expected to receive a different amount from that invested. Fair values are determined based on the directors' expectation, at the balance sheet date, of the likely outcome of each case and their best estimates of the return on each investment.
At the balance sheet date, due to the difficulty in assessing the probability of the various estimates involved in assessing the fair value, and the wide range of possible outcomes for cases invested into, the investments in cases in progress were held at cost, as it was not deemed possible to determine a reasonable fair value for these.
Provisions
As described in note 1
9
, the company entered into an agreement with former shareholders to repurchase their shares. As part of this agreement the company may make payments depending on the outcome of two ongoing cases. The directors have judged that the cases will succeed, and the financial statements reflect a provision for liabilities due after more than one year only to the value of existing shareholder loans of £4,022,490. Any amounts beyond this cannot be reliably estimated.
3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by class of business
Income from investments in sold cases
-
1,830,321
2022
2021
£
£
Other operating income
Grants received
5,355
22,592
Redress Solutions Plc
Notes to the Financial Statements (Continued)
For the year ended 30 June 2022
Page 20
4
Exceptional item
2022
2021
£
£
Expenditure
Restructuring costs
-
14,290
5
Operating loss
2022
2021
Operating loss for the year is stated after charging/(crediting):
£
£
Government grants
(5,355)
(22,592)
Fees payable to the company's auditor for the audit of the company's financial statements
20,316
23,340
Depreciation of owned tangible fixed assets
3,477
4,156
Operating lease charges
13,200
11,999
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Directors
2
2
Administrative staff
-
1
Total
2
3
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
217,945
291,702
Social security costs
24,071
22,411
Pension costs
311
1,050
242,327
315,163
7
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
217,123
269,180
Redress Solutions Plc
Notes to the Financial Statements (Continued)
For the year ended 30 June 2022
7
Directors' remuneration
(Continued)
Page 21
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
113,459
135,501
8
Interest payable and similar expenses
2022
2021
£
£
Other finance costs:
Other interest
648
375
9
Taxation
The actual 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:
2022
2021
£
£
Loss before taxation
(463,468)
(611,853)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
(88,059)
(116,252)
Tax effect of expenses that are not deductible in determining taxable profit
2,975
14,839
Unutilised tax losses carried forward
85,084
101,515
Permanent capital allowances in excess of depreciation
(102)
Taxation charge for the year
-
-
A deferred tax asset of £650,989 (2021 - £
411,282
) has not been recogni
s
ed in the accounts as it is uncertain whether the Company will make sufficient future taxable profits to utili
s
e this asset. The asset
arises due to losses generated by the Company, which may be offset against future taxable profits
.
Redress Solutions Plc
Notes to the Financial Statements (Continued)
For the year ended 30 June 2022
Page 22
10
Tangible fixed assets
Fixtures and fittings
IT Equipment
Total
£
£
£
Cost
At 1 July 2021 and 30 June 2022
4,258
38,812
43,070
Depreciation and impairment
At 1 July 2021
71
34,125
34,196
Depreciation charged in the year
851
2,626
3,477
At 30 June 2022
922
36,751
37,673
Carrying amount
At 30 June 2022
3,336
2,061
5,397
At 30 June 2021
4,187
4,687
8,874
11
Fixed asset investments
2022
2021
Notes
£
£
Investments in subsidiaries
12
100
Movements in fixed asset investments
Shares in subsidiaries
£
Cost or valuation
At 1 July 2021
-
Valuation changes
100
At 30 June 2022
100
Carrying amount
At 30 June 2022
100
At 30 June 2021
-
12
Subsidiaries
Details of the company's subsidiaries at 30 June 2022 are as follows:
Redress Solutions Plc
Notes to the Financial Statements (Continued)
For the year ended 30 June 2022
12
Subsidiaries
(Continued)
Page 23
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Redress Solutions Investments Limited
Coopers' Hall, 13 Devonshire Square, London, England, EC2M 4TH
Ordinary
100.00
13
Financial instruments
2022
2021
£
£
Carrying amount of financial assets
Instruments measured at fair value through profit or loss
892,861
869,569
Financial assets measured at fair value through profit or loss comprise investments in cases in progress. At the balance sheet date the directors consider that the fair value of these cases cannot be reliably measured. There are a wide range of possible outcomes for cases invested into and the probabilities of these outcomes cannot be reasonably assessed. Therefore these investments have been held at the value of the amounts invested to the cases.
14
Debtors
2022
2021
Amounts falling due within one year:
£
£
Prepayments and accrued income
10,944
6,328
15
Current asset investments
2022
2021
£
£
Unlisted investments
892,861
869,569
16
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Bank loans
18
10,000
10,000
Trade creditors
13,782
7,457
Amounts owed to group undertakings
100
Taxation and social security
6,096
15,958
Accruals and deferred income
20,522
14,096
50,500
47,511
Redress Solutions Plc
Notes to the Financial Statements (Continued)
For the year ended 30 June 2022
Page 24
17
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Bank loans and overdrafts
18
29,167
39,167
Other borrowings
18
40,000
40,000
69,167
79,167
18
Loans and overdrafts
2022
2021
£
£
Bank loans
39,167
49,167
Preference shares
40,000
40,000
79,167
89,167
Payable within one year
10,000
10,000
Payable after one year
69,167
79,167
19
Provisions for liabilities
2022
2021
£
£
4,022,490
4,022,490
During the prior financial period the company entered into an agreement with a number of shareholders to purchase their interests in the company. As part of this agreement the amounts received in respect of two ongoing cases will be due primarily to the former shareholders with the company entitled to the remainder. Further to this amounts previously classified as shareholders loans will only be repaid using these funds. Repayment is dependent on the outcome of these cases. The directors believe that the cases will be successful and the loan balances of £4,022,490 will be repaid in full.
Any further repayment beyond this is difficult to quantify as it is dependent on the outcome of the cases and remains a contingent liability at the balance sheet date. No amounts have been recognised in profit or loss in respect of this agreement.
The cases are not expected to be heard in court for at least
12 months from the balance sheet date and as such have been disclosed as provisions due more than one year. Were the cases to be settled at an earlier date these liabilities may crystalise at an earlier date.
Redress Solutions Plc
Notes to the Financial Statements (Continued)
For the year ended 30 June 2022
19
Provisions for liabilities
(Continued)
Page 25
Movements on provisions:
£
At 1 July 2021 and 30 June 2022
4,022,490
20
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
311
1,050
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.
21
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
10,000
10,000
10,000
10,000
2022
2021
2022
2021
Preference share capital
Number
Number
£
£
Issued and fully paid
Ordinary A Preference of £1 each
20,000
20,000
20,000
20,000
Ordinary B Preference of £1 each
15,000
15,000
15,000
15,000
Ordinary C Preference of £1 each
5,000
5,000
5,000
5,000
40,000
40,000
40,000
40,000
Preference shares classified as liabilities
40,000
40,000
On 15 December 2020, three new share classes were created (Ordinary A Preference, Ordinary B Preference, and Ordinary C Preference Shares). A total of 40,000 Ordinary £1 shares were converted into a total of 20,000 Ordinary A Preference shares, 15,000 Ordinary B Preference shares, and 5,000 Ordinary C Preference shares. The preference shares have been classified as liabilities
but their nominal value of £1 each remains as part of the Company’s share capital (see note 1
8
).
Redress Solutions Plc
Notes to the Financial Statements (Continued)
For the year ended 30 June 2022
Page 26
22
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2022
2021
£
£
Within one year
13,200
15,600
Between two and five years
38,009
61,100
51,209
76,700
23
Related party transactions
Remuneration of key management personnel
Key management personnel includes those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including directors. Total amounts paid to key management personnel during the year was £
217,123
(2021: £
269,180
).
Transactions with related parties
During the year the company entered into transactions, in the ordinary course of business, with related parties. Transactions entered into, and balances outstanding at 30 June, are as follows:
2022
2021
£
£
Expenses charged by entities with control. joint control or significant influence over the entity
22,911
10,553
At the year end the company owed its directors £940 (2021: £nil) which is included in trade creditors due within one year. No interest is accruing on this balance.
Redress Solutions Plc
Notes to the Financial Statements (Continued)
For the year ended 30 June 2022
Page 27
24
Cash absorbed by operations
2022
2021
£
£
Loss for the year after tax
(463,468)
(611,853)
Adjustments for:
Finance costs
648
375
Depreciation and impairment of tangible fixed assets
3,477
4,156
Increase in provisions
4,022,490
Movements in working capital:
(Increase)/decrease in debtors
(4,616)
1,328
Increase/(decrease) in creditors
2,989
(4,389,972)
Cash absorbed by operations
(460,970)
(973,476)
25
Analysis of changes in net funds
1 July 2021
Cash flows
30 June 2022
£
£
£
Cash at bank and in hand
1,227,545
(495,010)
732,535
Borrowings excluding overdrafts
(89,167)
10,000
(79,167)
1,138,378
(485,010)
653,368
2022-06-30
2021-07-01
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