Company Registration No. 10624123 (England and Wales)
CHURCHILL KNIGHT UMBRELLA LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 JULY 2023
CHURCHILL KNIGHT UMBRELLA LIMITED
COMPANY INFORMATION
Directors
Mr J V Payne
Mr T Edwards
Mrs S J O'Toole
Mr C Woodcock
Company number
10624123
Registered office
Suite G
Hollies House
230 High Street
Potters Bar
Herefordshire
EN6 5BL
Auditor
Knowles Warwick Audit Services Limited
Charlotte House
500 Charlotte Road
Sheffield
S2 4ER
Business address
Suite G
Hollies House
230 High Street
Potters Bar
Herefordshire
EN6 5BL
Bankers
Metro Bank
1 Southampton Row
London
WC1B 5HA
CHURCHILL KNIGHT UMBRELLA LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 8
Profit and loss account
9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Notes to the financial statements
13 - 21
CHURCHILL KNIGHT UMBRELLA LIMITED
STRATEGIC REPORT
FOR THE PERIOD ENDED 31 JULY 2023
1
The directors present the strategic report for the period ended 31 July 2023.
Review of the business
Churchill Knight Umbrella are an Umbrella Employment solution for contractors in a variety of industries.
Working from one head office in Potters Bar. The staff are broken up into four main areas, Payroll, Contractor Finance, Compliance and Onboarding, with Onboarding created last year to assist further with explaining the detail of the Umbrella processes. The staff within these four areas service over a thousand contractors with most staff being employed within the payroll department.
The reason the company is predominantly payroll is because it has been built with a focus on customer service, ensuring that our contractors are paid as efficiently as possible as we run multiple payrolls every day of the week to deliver a service that cannot be bettered.
As a company we have implemented sophisticated analytics to automate detection of any anomalies as well as assist the management to run the services on a day to day basis. By doing so and syncing this with our payroll software it has enabled us to become more efficient and also remove risks that are common with processing large sums of money on a daily basis.
Markets and Trends
With the IR35 off payroll reforms predicted to stay permanent, Umbrella plays a huge part in the contractor market due to the fact that contractors will still need a way of being paid and all taxes accounted for. There have been calls for governance of the Umbrella industry which we would more than welcome as we are operating a very transparent services and do feel that there are others in the market who do not and this should not be accepted.
Growth
The growth of the company has been in line with projections and is in fact the largest and most profitable company within the group. The increase in profit has been vital and a direct result of the infrastructure both in software and personnel that has been put in place.
The company is providing services at an extremely high and efficient level and it is now looking at additional services it can provide in order to maximise the data it holds whilst also providing the individuals with useful and helpful services that they can benefit from.
The company has a fantastic foundation of systems, processes and personnel in place in order to sustain such growth and we will be recruiting in the next year with growth and expansion in mind.
Principal risks and uncertainties
For any umbrella company, including Churchill Knight Umbrella the assessment of risk is of the utmost importance due to the nature of the company. The company needs to be fully compliant with employment law as well as having security in place due to the amounts of money coming in and out of the company and current checks and balances taking place on an extremely frequent basis.
As a company the board is fully responsible for the risk management including both a Compliance Director and an Operations Director. As a company we have a 3 point risk management process where all risk is identified, assessed and actioned accordingly.
Identifying Risk – We promote all staff to bring risks and issues to the attention of the board, however there are 4 main areas where we have people in place to identify risk, namely Compliance, Finance, Operations and Industry/Market. Any risks that are identified are brought to the bi-weekly Company Direction Meeting to be assessed if an assessment is required. If they have been identified and the individual responsible for that area has already assessed and actioned accordingly then the review of the risk is still brought to the meeting to inform the rest of the board of the risk, assessment and action that took place.
Risk Assessment – Once risks have been identified the board will assess the risk, led by the individual in which area the risk has been identified. As a company we are extremely risk adverse so it is very rare that no action would be taken when identifying risk. It is also important to us to not only action this risk identified but look at how the attributes of this risk could potentially be found in other areas also. It is important to learn from every one of these instances.
CHURCHILL KNIGHT UMBRELLA LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 JULY 2023
2
Risk Action – Any actions identified by the board are agreed and the assigned to the relevant lead person to complete. These are reviewed until the action has been completed and then feedback provided to the board on the success of the actions.
Ongoing risks
The company has identified and has appropriate protections is place for the following risks:
Compliance – Employment Law
Any changes in employment law will have an impact on us as a company and we need to ensure that we are able to adapt with any changes. We have a Compliance Director in place to ensure they feed back any pending employment law changes and we have an external Employment Consultant and an Employment Lawyer to do the same so that if any of them miss anything there are two back up sources
Compliance – Right To Work
Any contractor who is employed by the company and does not have the right to work in the UK can lead to a penalty of up to £20,000 per worker. Our workflows do not allow anyone to be paid without Right to Work proof.
There are also two methods of verifying right to work
Compliance – Regulator Changes
Being accredited by FCSA we need to keep up to date with any changes. A yearly audit ensures that we are reviewing our processes on a regular basis and with a communication structure in place with FCSA any changes throughout the year are provided with time to implement
Finance - Cash flow
The company itself receives a high quantity of transactions and although the individual values are not
necessarily large, they aggregate to millions. Likewise thousands of transactions go out of the company on a monthly basis as well whilst all liabilities needing to be covered. A negative cash flow would affect the company to the highest severity and could even cause the company to no longer trade. The cash flow forecast is part of the regular forecasting performed by the finance team with weekly, monthly and annual cash flows continuously monitored.
Finance – Liabilities
Overdue liabilities with HMRC could result in significant fines and penalties due to the size of the company and its liabilities. It is critical that we do not have late payment of liabilities for our external relationships. Multiple members of the finance team are responsible for the payments of liabilities meaning that should one staff member be unable to there are multiple other staff who will ensure payments are made.
Operations – Human Error
With any company and operations there is always an element of human error and because in an umbrella
company human error can lead to incorrect tax or underpaid contractors it is vitally important to review this. We have significant reporting which not only alerts us when certain abnormal criteria is met but there are weekly reports that are commented on and reviewed so that should any error be identified that it is remedied within 7 days.
Operations – Data Protection
The data protection regulations including GDPR must be met as an ICO registered company. As a company we need to ensure that we are keeping the personal data of our contractors secure. Regular training is provided to all of our staff as well as policies provided. We have a legal team to deal with and monitor any breaches and liaise with the ICO where necessary. Our systems provide security and controls for data protection also.
Infrastructure – Cyber Security
Cyber Security is one of the largest threats to the contractor industry as a whole. As an Umbrella company we process millions of pounds on a daily basis and therefore can be prime for being attacked. The due diligence that is undertaken with every company we deal with is essential but on top of this, monitoring attack attempts and adjusting Cyber Security configurations based on attempts is critical to the business, its workers and business partners.
Industry/Market - Legislation
Legislation changes can impact the company in both a positive or negative way. Either way they could result in an overhaul of processes or a large influx or loss of contractors at once, both of which carry risk. With legislation changes usually being confirmed via the budget each year we have a team responsible for throughout the year keeping up with the potential budget changes and then a board review of all budget changes post budget announcement.
CHURCHILL KNIGHT UMBRELLA LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 JULY 2023
3
Mr T Edwards
Director
26 April 2024
CHURCHILL KNIGHT UMBRELLA LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 JULY 2023
4
The directors present their annual report and financial statements for the period ended 31 July 2023.
Principal activities
The principal activity of the company continued to be that of the provision of temporary staff.
Results and dividends
The results for the period are set out on page 9.
Ordinary dividends were paid amounting to £539,000. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
Mr J V Payne
Mr T Edwards
Mrs S J O'Toole
Mr C Woodcock
Disabled persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employee involvement
The company's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the company's performance.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.
Business relationships
Customer relationships and high standards of service are key to maintaining the company's growth
The company has been built with a focus on customer service, ensuring that contractors are paid as efficiently as possible. Efficiency is at the heart of everything we do. In the last company year we changed our payroll software to ensure that we could continue to improve on our efficiency.
Creditor relationships are also key to the company's ongoing sustainability, ensuring all liabilities are paid on time is crucial to ensure healthy relationships are maintained.
Auditor
In accordance with the company's articles, a resolution proposing that Knowles Warwick Audit Services Limited be reappointed as auditor of the company will be put at a General Meeting.
Energy and carbon report
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
CHURCHILL KNIGHT UMBRELLA LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 JULY 2023
5
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.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr T Edwards
Director
26 April 2024
CHURCHILL KNIGHT UMBRELLA LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CHURCHILL KNIGHT UMBRELLA LIMITED
6
Opinion
We have audited the financial statements of Churchill Knight Umbrella Limited (the 'company') for the period ended 31 July 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 July 2023 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.
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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial 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.
CHURCHILL KNIGHT UMBRELLA LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CHURCHILL KNIGHT UMBRELLA LIMITED
7
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which 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' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly followed auditing standards.
We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud might occur, by;
Making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
Considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
In response to the risk of revenue recognition, we;
In response to the risk of fraud through management bias and override of controls, we:
Performed analytical procedures to identify unusual transactions;
Assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
Investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
Agreeing financial statement disclosures to underlying supporting documentation
Enquiring of management as to actual and potential litigation and claims; and
Reviewing correspondence with HMRC and other relevant parties.
CHURCHILL KNIGHT UMBRELLA LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CHURCHILL KNIGHT UMBRELLA LIMITED
8
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.
Steven Knowles FCA
Senior Statutory Auditor
For and on behalf of Knowles Warwick Audit Services Limited
29 April 2024
Chartered Accountants
Statutory Auditor
Charlotte House
500 Charlotte Road
Sheffield
S2 4ER
CHURCHILL KNIGHT UMBRELLA LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 31 JULY 2023
9
Period
Year
ended
ended
31 July
31 January
2023
2022
Notes
£
£
Turnover
2
243,699,086
116,983,303
Cost of sales
(241,431,542)
(115,833,680)
Gross profit
2,267,544
1,149,623
Administrative expenses
(1,835,672)
(1,079,684)
Operating profit
3
431,872
69,939
Interest receivable and similar income
6
688
688
Interest payable and similar expenses
7
(27)
(4,750)
Profit before taxation
432,533
65,877
Tax on profit
8
(18,572)
(13,435)
Profit for the financial period
413,961
52,442
The profit and loss account has been prepared on the basis that all operations are continuing operations.
CHURCHILL KNIGHT UMBRELLA LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 JULY 2023
10
Period
Year
ended
ended
31 July
31 January
2023
2022
£
£
Profit for the period
413,961
52,442
Other comprehensive income
-
-
Total comprehensive income for the period
413,961
52,442
CHURCHILL KNIGHT UMBRELLA LIMITED
BALANCE SHEET
AS AT 31 JULY 2023
31 July 2023
11
31 July 2023
31 January 2022
Notes
£
£
£
£
Fixed assets
Intangible assets
10
10,625
12,875
Tangible assets
11
1,998
12,623
12,875
Current assets
Debtors
12
4,417,708
3,152,922
Cash at bank and in hand
8,696,118
4,929,544
13,113,826
8,082,466
Creditors: amounts falling due within one year
13
(13,055,425)
(7,899,278)
Net current assets
58,401
183,188
Net assets
71,024
196,063
Capital and reserves
Called up share capital
15
100
100
Profit and loss reserves
70,924
195,963
Total equity
71,024
196,063
The financial statements were approved by the board of directors and authorised for issue on 26 April 2024 and are signed on its behalf by:
Mr T Edwards
Director
Company registration number 10624123 (England and Wales)
CHURCHILL KNIGHT UMBRELLA LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 JULY 2023
12
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 February 2021
2
143,521
143,523
Year ended 31 January 2022:
Profit and total comprehensive income
-
52,442
52,442
Issue of share capital
15
98
-
98
Balance at 31 January 2022
100
195,963
196,063
Period ended 31 July 2023:
Profit and total comprehensive income
-
413,961
413,961
Dividends
9
-
(539,000)
(539,000)
Balance at 31 July 2023
100
70,924
71,024
CHURCHILL KNIGHT UMBRELLA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 JULY 2023
13
1
Accounting policies
Company information
Churchill Knight Umbrella Limited is a private company limited by shares incorporated in England and Wales. The registered office is Suite G, Hollies House, 230 High Street, Potters Bar, Herefordshire, EN6 5BL.
1.1
Reporting period
The reporting period end for these financial statements was extended from 31 January 2023 to 31 July 2023. As a result the comparative amounts presented in the financial statements are not entirely comparable.
1.2
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Darbayne Group Limited. These consolidated financial statements are available from its registered office Suite G, Hollies House, 230 High Street, Potters Bar, Herefordshire, EN6 5BL.
1.3
Going concern
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.true
1.4
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business, and is shown net of VAT and other sales related taxes.
Turnover is recognised at the point of service provision which matches to when the company incurs the liability to HMRC and the worker. The income for future payroll runs, which is billed in advance of operating the payroll, is deferred until payment is received from the customer.
CHURCHILL KNIGHT UMBRELLA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 JULY 2023
1
Accounting policies
(Continued)
14
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.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
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:
Software and website
10 - 33% 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:
Computers
33.3% straight line method
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 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.
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 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.
CHURCHILL KNIGHT UMBRELLA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 JULY 2023
1
Accounting policies
(Continued)
15
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.
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 payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
CHURCHILL KNIGHT UMBRELLA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 JULY 2023
1
Accounting policies
(Continued)
16
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
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.
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 profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
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.
CHURCHILL KNIGHT UMBRELLA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 JULY 2023
1
Accounting policies
(Continued)
17
1.14
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.
2
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Umbrella payroll services
243,699,086
116,983,303
2023
2022
£
£
Other revenue
Interest income
688
688
3
Operating profit
2023
2022
Operating profit for the period is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
12,354
6,920
Depreciation of owned tangible fixed assets
117
-
Amortisation of intangible assets
2,250
1,563
4
Employees
The average monthly number of persons (including directors) employed by the company during the period was:
2023
2022
Number
Number
Employees
2,296
1,729
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
208,649,606
101,960,738
Social security costs
25,635,647
11,836,220
Pension costs
7,441,190
2,420,591
241,726,443
116,217,549
CHURCHILL KNIGHT UMBRELLA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 JULY 2023
18
5
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
26,785
41,882
Company pension contributions to defined contribution schemes
41,080
1,087
67,865
42,969
6
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
688
688
7
Interest payable and similar expenses
2023
2022
£
£
Other interest on financial liabilities
27
4,750
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
18,572
11,865
Adjustments in respect of prior periods
1,570
Total current tax
18,572
13,435
From 1 April 2023 the effective tax rate increased from 19% to 25% following an increase in the corporation tax rate.
CHURCHILL KNIGHT UMBRELLA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 JULY 2023
8
Taxation
(Continued)
19
The actual charge for the period can be reconciled to the expected charge for the period based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
432,533
65,877
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
108,133
12,517
Tax effect of expenses that are not deductible in determining taxable profit
40,408
473
Effect of change in corporation tax rate
(4,012)
Group relief
(125,428)
(1,125)
Permanent capital allowances in excess of depreciation
(529)
Under/(over) provided in prior years
1,570
Taxation charge for the period
18,572
13,435
9
Dividends
2023
2022
£
£
Interim paid
539,000
10
Intangible fixed assets
Software and website
£
Cost
At 1 February 2022 and 31 July 2023
33,635
Amortisation and impairment
At 1 February 2022
20,760
Amortisation charged for the period
2,250
At 31 July 2023
23,010
Carrying amount
At 31 July 2023
10,625
At 31 January 2022
12,875
CHURCHILL KNIGHT UMBRELLA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 JULY 2023
20
11
Tangible fixed assets
Computers
£
Cost
At 1 February 2022
Additions
2,115
At 31 July 2023
2,115
Depreciation and impairment
At 1 February 2022
Depreciation charged in the period
117
At 31 July 2023
117
Carrying amount
At 31 July 2023
1,998
At 31 January 2022
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
3,939,175
2,793,365
Amounts owed by group undertakings
131,390
Other debtors
298,979
356,890
Prepayments and accrued income
48,164
2,667
4,417,708
3,152,922
13
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
18,847
20,005
Amounts owed to group undertakings
22,413
Corporation tax
18,572
11,865
Other taxation and social security
8,603,043
4,410,208
Other creditors
713,871
603,710
Accruals and deferred income
3,678,679
2,853,490
13,055,425
7,899,278
CHURCHILL KNIGHT UMBRELLA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 JULY 2023
21
14
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
7,441,190
2,420,591
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.
15
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100
100
100
100
Ordinary shares in issue enjoy full voting rights and full entitlement to profit distributions and capital distributions upon winding up.
16
Related party transactions
Balances with related parties
The following amounts were outstanding at the reporting end date:
Amounts owed by
Amounts owed to
related parties
related parties
2023
2022
2023
2022
£
£
£
£
Entities under common control
404,485
269,742
22,413
17
Ultimate controlling party
The company's parent company is Darbayne Group Limited, a company registered in England & Wales under company number 13425944.
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