REGENT_OFFICE_CARE_LIMITE - Accounts

The directors present the strategic report for the year ended 31 December 2020.

Principal activities

The principal activity of the company continued to be that of contract cleaning and security services to a wide variety of organisations in the public and private sectors, including local authorities, schools, universities, shops, offices and industrial premises.

Apart from providing daily cleaning and security services to clients, the company also carries out specialist works either directly or through selected service partners.

The results for the year show a pre-tax profit of £5,094,713 (2019: profit of £2,346,924) and sales for the year of £63,114,900 (2019: £60,840,072).

The Directors are pleased with the result for the year throughout the Covid19 pandemic, Cleaning and Security has been classed as an essential service which led to reducing the business risk. We have continued our focus on cost management and customer satisfaction. The economic climate continues to be tough with clients looking to cut costs whilst maintaining a quality service.

The Directors, as a result of current market trends and client requests, believe there are real growth opportunities, even taking in to account the impact of Covid19, by developing a multi-service offering and offering clients housekeeping services, rather than cleaning once a day service to clients.

For the upcoming 12 months, we do not see Covid19 being an issue for our business sector, as we have found when lockdown restrictions were lifted, clients requested more cleaning operatives being present on site to be doing touch point cleans.

Our portfolio has a mixture of clients which are classed as essential which has meant we have had 80% of our business operating as normal throughout Covid19.

Competition

The outsourcing market in the UK is one of the most mature markets in Europe and as a result there continues to be intense pulling pressure on margins.

Foreign currency risk

The company has no operations outside of the United Kingdom but has transactions with other group members in currencies other than Sterling. As a result the value of the company's non-Sterling costs, liabilities and cash flows can be affected significantly by movements in exchange rates in general.

The company's transactional currency exposure arises from costs in currencies other than its functional currency. It is the company's policy not to enter into forward contracts.

Liquidity risk

The company mitigates liquidity risk by managing cash generated by its operations and applying cash collection targets, including a policy that requires appropriate credit checks on potential customers before work is undertaken. The company has a policy of maintaining sufficient cash levels. The company's funding is reliant on external finance some of which is provided by group funds.

Price risk

The company does not enter into swap or option contracts. No trading in derivative financial instruments has been undertaken in the year.

Cashflow Position at year end

During the year we have seen an increase in our cashflow position from 2020, we have found clients have continued to pay in a timely fashion which has meant we can continue to invest in our business and our people.

Due to the position we have been in, we have taken the opportunity to pay back any outstanding loans and finance agreements.

Throughout the pandemic, we have not approached the Bank/Government/Group for additional funding to help with cashflow, this has put us in a position which will enable us to invest in the business in 2021 to help with growth.

Throughout 2020 we have continued to produce management information to the bank, who are more than comfortable with our current banking arrangements and they do not feel any reason to review the current arrangements in place due to the current climate.

In order to assist the Board in monitoring the control of the risks that the company is facing, a number of financial key performance indicators (‘KPIs’) are used. Amongst the KPIs used are:

• Turnover: Increased by 3.7% to £63.1m (2019: £60.8m). This is due to the increase of one off / periodic cleans requested throughout the Pandemic.

• Gross margin: Decreased to 14.5% (2019: 17.9%). Cost of sales have naturally increased as the company’s activities increase, although the margin has dropped slightly, this is primarily due the increasing of competition in the saturated market.

Subcontract labour increased due to staff shortages in the year although this has been resolved by a recruitment drive.

Wages and salaries have increased by 10% due to a rise in the minimum wage for cleaners and security staff, and increases of specialist cleans.

• Operating margin: Increased to 8.20% (2019: 4.13%). The main factors for this are savings on travel / motor expenses and the use of furlough where sites have been closed.

• Debtor days: Decreased by 12 to 64.8 days (2019: 76.8days). There has been continual focus on the debtor days. As the company continues to expand it has led to the employment of an additional credit controller in the London area.

The company does not use non-financial KPI’s to measure performance.

For us to grow our security division as a business we feel we can do this by organic growth but also by an acquisition into a system business, the sectors seem to be moving away from static guards to more IT monitoring systems.

We have strengthened all departments; sales, operations, finance and administration, bringing improvements in performances in all areas, and giving us confidence for the coming year.

This statement by the Board of Directors describes how the responsibilities under s172 (1) (a) to (f) of the Companies Act 2006 have been approached. These responsibilities are managed by the board of directors of Regent Office Care Limited.

The Directors consider that they have acted in good faith to promote the success of the group on behalf of the stakeholders, in relation to matters set out in s172 of the Act.

The stakeholders of the business include the employees, clients, suppliers of the business.

The Board of Directors monitor and review strategic objectives of the business by regular board meetings and departmental reviews. Areas which are reviewed include retention of business by employee engagements, employee engagement, and the company financial performance. The groups ambition for the UK is to be at £125M turnover by 2023, to achieve this it is we are continually reviewing our objectives.

The Directors have overall responsibility for delivering the company strategy and values, and for ensuring high standards of governance. Our values are integrity, innovation, responsibility for the environment, and quality. For us to achieve our goals the values need to be incorporated in to all the business day to day activities.

The group has an equal opportunities policy and is committed to the principles within the policy in respect of all stakeholders.

The group enjoy good relationships with suppliers in relation to credit arrangements and takes a firm approach to debtor management. Payment terms and credit reviews reduce the risk to the business whilst the process for debt-collection minimises the risk of non-payments.

Business investment and improvement plans will continue to enhance operational performance, customer experience and the health and safety of our employees.

Operational and financial models have been used throughout 2020 and will continue to be used in 2021 to ensure throughout the Covid-19 pandemic we are a robust business in the marketplace.

The Directors are confident for the future of the business, based on 2020 results we do not see why the business will not continue to grow.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 December 2020.

The results for the year are set out on page 11.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

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.

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.

Employee engagement

Employee engagement for Regent Samsic is important, our employees represent the face of Regent, we are continually training our employees so they are able to offer a service to the expectation we want to deliver to clients.

We are in the process of introducing an employee portal, which will help us as a business to share training videos with our workforce.

Staff Wellbeing

During 2020 it has highlighted the importance of staff wellbeing and mental health more than ever, as a business throughout the pandemic we have tried to engage with employees in regards to the company situation and their personal situation if they have been on furlough. We have used the digital platform to engage with all employees so they do not feel left alone throughout the pandemic.

A positive impact of engaging with staff is the feedback we have had from employees advising how they have felt as an important part of the team even if they have not been at work.

Effective communication and engagement with stakeholders is considered paramount in maintaining the group's reputation and success.

Regular updates on performance (financial and non-financial) are shared with all employees and are considered to be of great importance as they engage in delivering customer service and overall group objectives. In addition to the forums mentioned in respect to s172 compliance, the group also communicates through regular Managing Director email updates, its intranet, online videos and notice boards.

For us to grow our security division as a business we feel we can do this by organic growth, but also by an acquisition into a system business, the sectors seem to be moving away from static guards to more IT monitoring systems.

We have strengthened all departments; sales, operations, finance and administration, bringing improvements in performance in all areas, and giving us confidence for the coming year.

The auditor, MHA Moore and Smalley, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

In line with good practice, the Directors and senior management team adhere to the highest standards of corporate governance which are reflected in the way the group is managed in terms of its purpose and engagement with all stakeholders.

The strategy of the business is in line with group strategy which is to invest in:

. CSR – Innovation, continuously looking at technology to bring to the market

- Invest in our employees to development them through further training

- Maintain sustainable environment as a business we are always looking at the chemicals we use across the

business and as a business we have reduced the chemicals we use by introducing to our clients Eco friendly

products

- Community engagement as a business we have partnered with the Rainbow Trust to give back to the

community

The board and senior management team constitute an appropriate blend of professional who come from the industry with over 100 years of experience within the Facilities Industry, however we are continually investing in the future and brining through young talent through to management level.

We are accredited member of the following:

ISO 45001 Occupational Health and Safety management system

ISO 14001 Environmental Management System

ISO9001 Quality Management systems

SIA Approved Contractor

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.

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.

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments.

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.

We have audited the financial statements of Regent Office Care Limited (the 'company') for the year ended 31 December 2020 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 31 December 2020 and of its profit for the year then ended;

•     have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

•     have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

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.

Other information

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 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.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

•     adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

•     the financial statements are not in agreement with the accounting records and returns; or

•     certain disclosures of directors' remuneration specified by law are not made; or

•     we have not received all the information and explanations we require for our audit.

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.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

• Enquiries with management, about any known or suspected instances of non-compliance with laws and regulations and fraud; and

• Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to provisions and future performance in light of the impact of Covid-19; and

• Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness.

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.

Use of our 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.

The profit and loss account has been prepared on the basis that all operations are continuing operations.

Regent Office Care Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 2, Oak Court, Pilgrims Walk, Prologis Park, Coventry, CV6 4QH.

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.

Group financial statements

The financial statements present information about the company as an individual undertaking and not about its group. The company has not prepared group financial statements on the grounds that all subsidiary undertakings are collectively immaterial.

The global Covid-19 pandemic continues to have a significant impact on a number of businesses but the Directors consider that the Company is well placed to minimise the impact.true

Continuous assessment of the impact of the virus on employees, customers and suppliers is ongoing with regular contact with the supply chain to minimise disruption. Procedures are in place for management staff to work from home where approprite to ensure that the business could continue to operate at near pre Covid-19 utilisation.

As a business throughout Covid-19 we have managed to increase turnover due to the increase in additional deep cleans and one off cleaning services. We are confident the business will continue to grow as we exit these uncertain times due to the investment in the business going forward.

The company makes little use of financial instruments other than an operational bank account and overdraft. It currently has a healthy bank account, which again places it well to minimise any impact of a reduced cashflow that any disruption, including a government forced lockdown may cause.

The Directors have considered a period of 12 months from the signing date of the financial statements. Having assessed the potential impacts of this crisis on the business the Directors have a reasonable expectation that the company has adequate resources to continue for the foreseeable future. As a result continue to adopt the going concern basis of accounting in preparing the financial statements.

Turnover is recognised at the fair value of the consideration received services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Goodwill represents the excess of the cost of acquisition of businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 20 years.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

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.

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

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, 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 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.

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.

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.

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, including creditors, bank loans, loans from fellow group companies are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

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.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

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.

The tax expense represents the sum of the tax currently payable and deferred 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 liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

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.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

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.

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.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

The company establishes a reliable estimate of the holiday pay accrual by reviewing the holiday pay due and the holiday pay paid. The movement on these balances is the holiday pay accrual.

The trade debtors balance of £11,218,843 recorded in the company’s balance sheet comprise a relatively small number of large balances. A full line by line review of trade debtors is carried out at the end of each month. Whilst every attempt is made to ensure that the bad debt provisions are as accurate as possible, there remains a risk that the provisions do not match the level of debts which ultimately prove to be uncollectable.

All turnover is generated from UK customers.

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2019 - 2).

Key management personnel

All directors and certain senior employees who have authority and responsibility for planning, directing and controlling the activities of the company are considered to be key management personnel. Total remuneration in respect of these individuals is £1,208,239 (2019: £1,122,577).

Investment income includes the following:

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

The deferred tax balance was calculated through applying a corporation tax rate of 19% (2019: 17%) by reference to future taxation rates which are substantively enacted at the balance sheet date, the expectation as to when the various timing differences may unwind and with due regard to prudence.

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Details of the company's subsidiaries at 31 December 2020 are as follows:

Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

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.

At the reporting end date, the pension creditor was £56,307 (2019: £108,687).

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:

The company has taken advantage of the exemption conferred by FRS 102 Section 33.11 'Disclosure of related party transactions', not to disclose transactions with any subsidiaries of the company that are wholly owned.

At 31 December 2020, the company owed a fellow group company £2,928,219 (2019: £4,214,708) in respect of the intercompany loans. The company is charged interest on the loans at EURIBOR +1.7%. During the year the company was charged £69,533 (2019: £90,167).

At 31 December 2020, the company owed £3,455,483 (2019: £2,461,226) in respect of licence and assistance fees. The company is not charged any interest on this balance. During the year the company was charged management fees of £921,179 (2019: £538,414).

At 31 December 2020, the company owed a fellow group company £426,699 (2019: £426,699) in respect of the franchise fee. The company is not charged any interest on this balance.

The company is a subsidiary of FIGJI Sarl, a company incorporated in France.

FIGJI Sarl is a subsidiary of Groupe Samsic, another company incorporated in France. C Roulleau and O Payen were directors of Groupe Samsic during the year.