Company Registration No. 05649414 (England and Wales)
Compass Business Finance Limited
Unaudited Financial Statements
For The Year Ended 31 December 2020
COMPASS BUSINESS FINANCE LIMITED
Compass Business Finance Limited
CONTENTS
Page
Balance sheet
1 - 2
Notes to the financial statements
3 - 10
COMPASS BUSINESS FINANCE LIMITED
Compass Business Finance Limited
BALANCE SHEET
AS AT
31 DECEMBER 2020
31 December 2020
- 1 -
2020
2019
Notes
£
£
£
£
Fixed assets
Tangible assets
4
63,774
53,274
Current assets
Debtors falling due after more than one year
5
23,943,524
9,230,167
Debtors falling due within one year
5
10,570,107
8,834,817
Cash at bank and in hand
63
220,349
34,513,694
18,285,333
Creditors: amounts falling due within one year
7
(12,082,037)
(8,499,608)
Net current assets
22,431,657
9,785,725
Total assets less current liabilities
22,495,431
9,838,999
Creditors: amounts falling due after more than one year
8
(18,577,148)
(7,333,163)
Provisions for liabilities
(52,000)
(17,000)
Net assets
3,866,283
2,488,836
Capital and reserves
Called up share capital
9,999
9,999
Profit and loss reserves
3,856,284
2,478,837
Total equity
3,866,283
2,488,836
The directors of the company have elected not to include a copy of the profit and loss account within the financial statements.
true
For the financial year ended 31 December 2020 the company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.
The directors acknowledge their responsibilities for complying with the requirements of the Companies Act 2006 with respect to accounting records and the preparation of financial statements.
T
he members have not required the company to obtain an audit of its financial statements for the year in question in accordance with section 476
.
These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.
COMPASS BUSINESS FINANCE LIMITED
Compass Business Finance Limited
BALANCE SHEET (CONTINUED)
AS AT
31 DECEMBER 2020
31 December 2020
- 2 -
The financial statements were approved by the board of directors and authorised for issue on
15 September 2021
15 September 2021
and are signed on its behalf by:
Mr M D Nelson
Mr J D Nelson
Director
Director
Company Registration No. 05649414
COMPASS BUSINESS FINANCE LIMITED
Compass Business Finance Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
- 3 -
1
Accounting policies
Company information
Compass Business Finance Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Compass House, Medway Wharf Road, Tonbridge, TN9 1GH.
1.1
Accounting convention
These financial statements have been prepared in accordance with “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £1.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The ultimate parent company is CBF Holdings Limited. The registered office of CBF Holdings Limited is Great Hollanden Business Centre, Mill Lane, Underriver, Sevenoaks, TN15 0SQ. The company and its parent company comprise a small group and as such are exempt from preparing group accounts.
1.2
Going concern
The directors have considered all factors, including the conditions created by the Covid-19 outbreak, as part of their assessment of going concern. Although the current economic climate creates both cashflow and profitability risks for the company, the directors believe on balance that they have sufficient resources to enable trading to continue for a period of at least one year from the date of approval of the financial statements. Accordingly, these financial statements have been prepared on the going concern basis.
true
1.3
Turnover
Turnover represents amounts receivable for commissions and operating lease rentals net of VAT and trade discounts. In addition, turnover includes finance funding interest which is accounted for on an accruals basis
.
Finance leases and instalment credit agreements
Income from assets leased to customers and from instalment credit agreements is determined by spreading interest and charges over the period of repayment in proportion to the net cash investment. Amounts due from customers under finance leases and instalment credit agreements are included in debtors.
Operating lease assets
Operating lease rental income is recognised on a straight line basis over the term of the related hire agreement.
Other income
Fees and commission income are recognised on an accruals basis and are stated net of VAT where applicable.
1.4
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
COMPASS BUSINESS FINANCE LIMITED
Compass Business Finance Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 4 -
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:
Operating lease assets
Straight line over period of lease
Fixtures, fittings and equipment
25% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.5
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset 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 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
in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
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.
1.7
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
COMPASS BUSINESS FINANCE LIMITED
Compass Business Finance Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 5 -
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.
Trade debtors
, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.
Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.
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.
COMPASS BUSINESS FINANCE LIMITED
Compass Business Finance Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 6 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans,
block discount financing agreements
and
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
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade creditors are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.8
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.
1.9
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.
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.
COMPASS BUSINESS FINANCE LIMITED
Compass Business Finance Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 7 -
1.10
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.
1.11
Retirement benefits
The company contributes to individuals personal pension funds. The pension cost charge represents contributions payable by the company to these funds
1.12
Leases
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 lease
s
asset are consumed.
Amounts due from lessees under finance leases are recognised as receivables at the amount of the
company’s
net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the
company’s
net investment outstanding in respect of leases.
1.13
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
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
COMPASS BUSINESS FINANCE LIMITED
Compass Business Finance Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
2
Judgements and key sources of estimation uncertainty
(Continued)
- 8 -
Key sources of estimation uncertainty
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.
Accrual for clawbacks
The company receives commission when clients are introduced to the ultimate funder. However, where the client withdraws from the deal within a set period the funder can claw back some of the commission already paid. This is an area of estimation whereby the directors use their knowledge and experience to estimate the amount of commission that will be clawed back as at the year end.
3
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2020
2019
Number
Number
Total
14
12
4
Tangible fixed assets
Operating lease assets
Plant and machinery etc
Total
£
£
£
Cost
At 1 January 2020
150,792
12,124
162,916
Additions
49,730
49,730
Disposals
(23,000)
(23,000)
At 31 December 2020
127,792
61,854
189,646
Depreciation and impairment
At 1 January 2020
104,101
5,541
109,642
Depreciation charged in the year
22,218
11,645
33,863
Eliminated in respect of disposals
(17,633)
(17,633)
At 31 December 2020
108,686
17,186
125,872
Carrying amount
At 31 December 2020
19,106
44,668
63,774
At 31 December 2019
46,691
6,583
53,274
COMPASS BUSINESS FINANCE LIMITED
Compass Business Finance Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 9 -
5
Debtors
2020
2019
Amounts falling due within one year:
£
£
Trade debtors
153,673
228,706
Amounts owed by group undertakings
390
Other debtors
10,416,044
8,606,111
10,570,107
8,834,817
2020
2019
Amounts falling due after more than one year:
£
£
Other debtors
23,943,524
9,230,167
Total debtors
34,513,631
18,064,984
Other debtors include finance lease receivables which are more fully disclosed in note 6.
6
Finance lease receivables
2020
2019
£
£
Gross amounts receivable under finance leases:
Within one year
13,387,427
9,672,322
In two to five years
28,353,561
11,436,118
41,740,988
21,108,440
Unearned finance income
(8,003,819)
(3,543,040)
Present value of minimum lease payments receivable
33,737,169
17,565,400
The present value is receivable as follows:
Within one year
9,793,645
8,335,233
In two to five years
23,943,524
9,230,167
33,737,169
17,565,400
COMPASS BUSINESS FINANCE LIMITED
Compass Business Finance Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 10 -
7
Creditors: amounts falling due within one year
2020
2019
£
£
Bank loans and overdrafts
69,440
Trade creditors
831,859
422,405
Amounts owed to group undertakings
9,550
Taxation and social security
752,033
427,600
Other creditors
10,428,705
7,640,053
12,082,037
8,499,608
Other creditors includes block discount financing agreements of £8,609,640 (2019 - £6,305,045), which are secured by fixed charges over the underlying finance agreements.
Other creditors also includes a finance lease of £11,187 (2019 - £nil) which is secured against
certain
tangible assets of the company.
8
Creditors: amounts falling due after more than one year
2020
2019
£
£
Other creditors
18,577,148
7,333,163
Other creditors
includes
block discount financing agreements
of £17,144,963 (2019 - £7
,327,314
), which are secured by fixed charges over the underlying finance agreements.
Other creditors also includes a finance lease of £31,296 (2019: £nil) which is secured against
certain
tangible assets of the company.
9
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:
2020
2019
£
£
675,000
22,000
10
Parent company
The company is a wholly owned subsidiary of CBF Holdings Limited, a company registered in England and Wales, which is the immediate and ultimate parent undertaking.
CBF Holdings Limited is not required to prepare group accounts.