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Directors' report and audited financial statements
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For the year ended 31 December 2022
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Registered number: 12292074
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Duo Holdings Limited
Company Information
Page 1
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Duo Holdings Limited
Contents
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Independent auditor's report
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Statement of comprehensive income
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Statement of financial position
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Statement of changes in equity
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Notes to the financial statements
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Page 2
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Duo Holdings Limited
Directors' report
For the year ended 31 December 2022
The directors present their report together with the audited financial statements of Duo Holdings Limited ('the company') for the year ended 31 December 2022.
During the year under review, the principal activity of the company was to hold an investment in Duo Holdings AS.
The profit for the year, after taxation, amounted to £3,291,281 (2021 - £3,882,130).
The directors did not recommend any dividends during the year.
The directors who served during the year were:
Financial risk management
The financial risk management of the company is detailed in note 12 of the company's financial statements.
Directors' responsibilities statement
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The directors are responsible for preparing the Directors' report and the financial statements, in accordance with applicable law.
Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with International Accounting Standards as adopted by the United Kingdom (UK-adopted IAS).
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 the financial statements, the directors are required to:
∙select suitable accounting policies and then apply them consistently;
∙make judgements and estimates that are reasonable and prudent;
∙state whether they have been prepared in accordance with International Accounting Standards as adopted by the United Kingdom (UK-adopted IAS), subject to any material departures disclosed and explained in the financial statements; and
∙use the going concern basis of accounting unless they either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
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 responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities.
Page 3
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Duo Holdings Limited
Directors' report (continued)
For the year ended 31 December 2022
Disclosure of information to auditor
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Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the company's auditor is aware of that information.
This report was approved by the board on 28 December 2023 and signed on its behalf.
Page 4
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Independent auditor's report to the members of Duo Holdings Limited
For the year ended 31 December 2022
We have audited the financial statements of Duo Holdings Limited for the year ended 31 December 2022 which comprise the Statement of comprehensive income, the Statement of financial position, the Statement of changes in equity, Statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Accounting Standards adopted by the United Kingdom.
In our opinion the financial statements:
∙give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its profit for the year then ended;
∙have been properly prepared in accordance with UK-adpoted IAS; 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 United Kingdom, including the Financial Reporting Council'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
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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.
Page 5
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Independent auditor's report to the members of Duo Holdings Limited (continued)
For the year ended 31 December 2022
Opinion on other matters prescribed by the Companies Act 2006
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In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Directors' report has 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 identified material misstatements in 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 Directors' remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Directors' 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. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Page 6
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Independent auditor's report to the members of Duo Holdings Limited (continued)
For the year ended 31 December 2022
Auditor's responsibilities for the audit of the financial statements (continued)
How the audit was considered capable of detecting irregularities including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
∙the Senior Statutory Auditor ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations, including knowledge specific to auditing investment holding companies;
∙we made enquiries of management as to where they considered there was susceptibility to fraud, and their knowledge of actual, suspected and alleged fraud;
∙we identified the laws and regulations that could reasonably be expected to have a material effect on the financial statements of the company through discussions with directors and other management at the planning stage, and from our knowledge and experience of investment holding companies;
∙the audit team held a discussion to identify any particular areas that were considered to be susceptible to misstatement, including with respect to fraud and non-compliance with laws and regulations; and
∙we focused our planned audit work on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company including Companies Act 2006.
We assessed the extent of compliance with the laws and regulations identified above through:
∙making enquiries of management;
∙inspecting legal expenditure and correspondence throughout the period for any potential litigation or claims; and
∙considering the internal controls in place that are designed to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
∙determined the susceptibility of the company to management override of controls by checking the implementation of controls and enquiring of individuals involved in the financial reporting process;
∙reviewed journal entries throughout the period to identify unusual transactions;
∙performed analytical procedures to identify any large, unusual or unexpected transactions and investigated any large variances from the prior period;
∙reviewed accounting estimates and evaluated where judgements or decisions made by management indicated bias on the part of the company's management;
∙tested the completeness of fair value movements by reviewing management's methodology for the valuation of the investment; and
∙carried out substantive testing to check the occurrence and cut-off of expenditure.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included:
∙agreeing financial statement disclosures to underlying supporting documentation; and
∙enquiring of management as to actual and potential litigation and claims.
Page 7
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Independent auditor's report to the members of Duo Holdings Limited (continued)
For the year ended 31 December 2022
Auditor's responsibilities for the audit of the financial statements (continued)
There are inherent limitations in our audit procedures described above. Irregularities that result from fraud might be inherently more difficult to detect that irregularities that result from error as they may involve deliberate concealment or collusion. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the members and other management and the inspection of regulatory and legal correspondence, if any.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: 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.
Peter Chapman (Senior statutory auditor)
for and on behalf of
Buzzacott LLP
Statutory Auditor
130 Wood Street
London
EC2V 6DL
30 December 2023
Page 8
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Duo Holdings Limited
Statement of profit or loss and other comprehensive income
For the year ended 31 December 2022
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Unrealised gain on FVTPL financial assets
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Total comprehensive income
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The activities of the company relate entirely to continuing operations.
The notes on pages 12 to 19 form part of these financial statements.
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Page 9
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Duo Holdings Limited - Registered number: 12292074
Statement of financial position
As at 31 December 2022
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Trade and other liabilities
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Issued capital and reserves
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The financial statements were approved and authorised for issue by the board of directors on 28 December 2023 and were signed on its behalf by:
The notes on pages 12 to 19 form part of these financial statements.
Page 10
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Duo Holdings Limited
For the year ended 31 December 2022
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Total contributions by and distributions to owners
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Comprehensive income for the year
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Total comprehensive income for the year
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The notes on pages 12 to 19 form part of these financial statements.
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Page 11
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Duo Holdings Limited
Notes to the financial statements
For the year ended 31 December 2022
Duo Holdings Limited is a limited company incorporated in England and Wales. The company's registered office is at 21 Queen Anne's Gate, London, SW1H 9BU.
2.Significant accounting policies
The financial statements have been prepared in accordance with International Accounting Standards ('IASs') adopted by the United Kingdom, IFRIC Interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IASs.
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Basis of preparation of financial statements
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The financial statements have been prepared on the historical cost basis except for the non-current asset investment held at fair value, and the accounting policies set out below have been applied. The preparation of the financial statements in conformity with IASs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies.
These financial statements do not consolidate the company's subsidiary, as the company meets the definition of an Investment Entity in accordance with IFRS 10 'Consolidated financial statements'.
A Statement of cash flows has not been prepared as the company does not have a bank account and there have been no cash flows.
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Foreign currency translation
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a) Functional and presentational currency
These financial statements are presented in Pounds Sterling, which is the company's functional currency.
b) Transactions and balances
Transactions denominated in currencies other than the functional currency of the company are initially recorded in the functional currency using the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are remeasured at the rate of exchange ruling at the reporting date. Exchange gains and losses on settlement of foreign currency transactions which are translated at the rate prevailing at the date of transactions, or on the translation of monetary assets and liabilities which are translated at period-end exchange rates, are taken to the Statement of comprehensive income. Non-monetary assets and liabilities denominated in foreign currencies that are stated at historical cost are translated to the functional currency at the foreign exchange rate prevailing at the date of transaction.
Page 12
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Duo Holdings Limited
Notes to the financial statements
For the year ended 31 December 2022
2.Significant accounting policies (continued)
The income tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss, except that a charge attributable to an item of income or expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous periods.
Deferred tax is recognised in respect of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retained associated tax allowances have been met.
Recognition, initial instruments and derecognition
Financial assets and financial liabilities are recognised when the company or its becomes a party to the contractual provisions of the financial instrument, and are measured initially at fair value adjusted for the transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities is described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified in to the following categories upon initial recognition:
Financial assets at amortised cost
Financial assets measured at amortised cost are subject to review for impairment at least at each reporting date to identify whether there is any objective evidence that a financial asset is impaired. Different criteria are applied for each category of financial asset to determine impairment.
Financial assets at fair value through profit or loss
Derivatives that are not designated and effective as hedging instruments are classified as held for trading and are categorised as financial assets at fair value through profit or loss. These are initially recognised at fair value on trade date and are carried at fair value with changes in fair value recognised in profit or loss.
Page 13
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Duo Holdings Limited
Notes to the financial statements
For the year ended 31 December 2022
2.Significant accounting policies (continued)
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Financial instruments (continued)
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Financial liabilities at fair value through profit or loss
Financial liabilities are carried at fair value with changes in fair value recognised in profit or loss. These are financial instruments held for short term trading and are initially recognised at fair value on trade date. Gains or losses arising from changes in fair value of the financial liabilities within this category are recognised in profit or loss.
Fair value measurement
Fair value measurements are categorised into Level 1, 2 or 3, based on the degree to which inputs to the fair value
measurements are observable. These are described as follows:
∙Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity
can access at the measurement date;
∙Level 2 inputs are inputs, other than quoted prices within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
∙Level 3 inputs are unobservable inputs for the asset or liability.
Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost.
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Critical accounting judgements and key sources of estimation uncertainty
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In application of the company's accounting policies, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are no readily apparent from other sources. The estimates and associated assumptions are based on experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of revision and future periods if the revision affects both current and future periods.
Management must hold its investment in Duo Holdings AS at fair value (see note 7).
Page 14
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Duo Holdings Limited
Notes to the financial statements
For the year ended 31 December 2022
2.Significant accounting policies (continued)
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New or revised standards and interpretations or amendments
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Issued and effective
The directors are of the opinion that adoption of new or revised standards, interpretations or amendments did not have a material impact on these financial statements.
Issued but not yet effective
At the end of the reporting period, certain new or revised standards and interpretations or amendments thereto, were in issue, but not yet effective for the current financial year. There have been no instances of early adoption of new or revised standards, interpretations or amendments thereto ahead of their effective date. The directors anticipate that the adoption of new standards, interpretations or amendments thereto, will not have a material impact on the financial statements upon initial application.
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Results from operating activities
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This is stated after charging:
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Fees payable to the auditor in respect of:
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Staff costs and average number of employees
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The company had no employees other than the directors during the year (2021: £nil).
The directors did not receive any remuneration during the year (2021: £nil).
Page 15
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Duo Holdings Limited
Notes to the financial statements
For the year ended 31 December 2022
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6.1 Income tax recognised in profit or loss
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Origination and reversal of timing differences
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The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to profits for the year are as follows:
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Profit before income taxes
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Tax using the company's domestic tax rate of 19% (2021:19%)
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Income not taxable for tax purposes
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Adjust deferred tax to applicable rate
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Movement in deferred tax not recognised
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Changes in tax rates and factors affecting the future tax charges
With effect from 1 April 2023 the rate of corporation tax increased, tapering from 19% for businesses with profits
of less than £50,000 to 25% for businesses with profits over £250,000.
Page 16
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Duo Holdings Limited
Notes to the financial statements
For the year ended 31 December 2022
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Non-current asset investment
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Financial asset carried at fair value through profit or loss.
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The company's unlisted investment is in shares in Duo Holdings AS. As the company is an Investment Entity, the investment in Duo Holdings AS., a subsidiary of the company, is accounted for at fair value through profit or loss. The company owns 100% of the shares in Duo Holdings AS. which are not traded in an active market and so fair value is determined by using an appropriate valuation technique, i.e. Level 3 inputs. The company uses a market approach, determining fair value with reference to comparable companies and the subsidiary's EBITDA, applying appropriate size and liquidity discounts.
The principal place of business of Duo Holdings AS. is Elvegata 3, 2500 Tynset, Norway.
The increase in fair value during the year (net of foreign exchange differences) using these unobservable inputs was £962,234 (2021: £4,809,470).
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Amounts owed to related undertakings
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Page 17
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Duo Holdings Limited
Notes to the financial statements
For the year ended 31 December 2022
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The movement in liability for deferred taxation is as follows:
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Provision at the begining of the year
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Recognised during the year
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Provision at the end of the year
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Deferred tax relates to the unrealised gains on fair value movements of investments. Deferred tax has been provided at 25%, being the substantively enacted rate at the reporting date which is expected to apply to the company.
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Shares issued during the year
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Retained earnings
Retained earnings include current and prior years' profits and losses.
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Financial risk management
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Market risk
The company's investment is long-term and highly illiquid and there is no assurance that the underlying company will achieve investment objectives including targeted returns. Due to the illiquidity of the investment, valuation of the investment is judgemental, as generally there is no established market for the asset. As the company's financial instruments are carried at fair value with fair value changes recognised in the Statement of comprehensive income, all changes in market conditions will directly affect the net asset value of the company.
Concentration risk
The company currently participates in only one portfolio investment and, as a consequence, the return of the company will be materially and adversely affected by the unfavourable performance of that single portfolio investment.
Geographic risk
Page 18
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Duo Holdings Limited
Notes to the financial statements
For the year ended 31 December 2022
The company's investment is in one geographic area. The company could be severely impacted by adverse developments affecting that geographic area.
Illiquidity risk
The portfolio company in which the company invested is privately held. As a result there will be no readily available secondary market for the company's interests in the portfolio company, and the interests will be subject to legal restrictions on transfer. Therefore, there is no assurance that the company will be able to realise liquidity for such investment in a timely manner, if at all.
The company had contingent liabilities at 31 December 2022 or 31 December 2021.
The company had no capital commitments at 31 December 2022 or 31 December 2021.
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Related party transactions
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During the year, AKKR Fund II Management Company, LP ('the LP') paid £44,726 (2021 - £18,896) of expenses on behalf of the company.
At 31 December 2022, £44,726 (2021 - £29,726) was due to the LP.
The LP is a related party by virtue of being under common control.
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Parent undertaking and controlling party
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The immediate parent undertaking of the company is Accel-KKR Capital Partners V, LP and the ultimate parent
undertaking is the Accel-KKR group.
In the opinion of the directors, there is no ultimate controlling party of the company.
Page 19
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