The director presents the strategic report for the year ended 28 February 2022.
The group consists of Smallworld Accessories Holdings Limited, a non-trading holding company and Smallworld Accessories Limited, an accessories supplier. The group, through Smallworld Accessories Limited, operates concessions with major UK retailers providing fully merchandised end-to-end solutions in adults' and children's accessories across jewellery, hair, gifting, bags, cold weather and event categories. It also operates its own direct online sales channels.
The strategy of the business is:
To grow by supplying sustainably-sourced accessory ranges to customers that enhance their brand positioning and clothing offer.
To grow online sales through existing customers and directly through our own branded sustainably-sourced product.
To develop profitable product extension opportunities within the accessories category to expand the width of the company's offer and grow the customer base both in the UK and internationally.
The business delivered a strong sales and profit performance in the year as the retail environment normalised through 2021/22, with sales of £16.1m up 47.8% and a PBT of £0.7m up £1.1m against the previous year. The sales performance was underpinned by the processes put in place during the pandemic in 2020/21, resulting in minimal disruption in supply of product to meet customer demand. Given the continued supply chain challenges the market faced, the business rightly made the decision to pull forward stock intake to protect sales in the first half of 2022/23, resulting in the higher closing stock position in February 2022.
This strong business performance was underpinned by the focus on execution and delivery of the colleagues across the business. Reacting to the evolving hybrid model, supply chain challenges etc. this focus ensured that the business was able to have the right product available to meet the customer demand.
From a product perspective, our adults' jewellery and hair ranges were enhanced with the introduction of the Small Stuff branded athleisure adults' hair accessories range, made from recycled materials, proving very successful with existing and new customers. Within our children's ranges, we saw our Back-to-School hair accessories offering rebound to pre-2020 levels and this has continued into 2022/23. In the second half of 2021/22, we had a very positive response when we introduced ranges containing glitter made from recycled plastic. All of our glitter is now made from recycled plastic.
The business has continued to accelerate its sustainable sourcing programme whilst at the same time offering the customer great value for money. We consistently deliver a more sustainable product offering whilst keeping our retail prices competitive. The forecast for 2022/23 is that 73% of the group's products manufactured will be made using recycled materials. During 2021/22, the business has also begun working with suppliers to focus on reducing its carbon footprint across its end-to-end supply chain.
During the year, the company has continued to work with customers to increase online presence on their platforms, whilst continuing to grow its direct online sales channels through its own brands, STYCH (Smile 'Til Your Cheeks Hurt) and Small Stuff. For the second year running, our STYCH brand was a winner of the Junior Design Awards, winning best children's fashion accessories brand.
The following are the financial key performance indicators (‘KPIs’) used by management to assess and regulate the group’s performance:
Contribution per customer contract - these measures are not disclosed externally, but are used internally to ensure each contract delivers a sustainable level of contribution to support the ongoing profitability of the business.
Gross profit as a % of turnover – 29.1% for the period, down 0.5% on the previous years’ accounts.
Trade debtor days: 18 (2021: 20)
Administrative expenses as a % of turnover – 24.3% for the period, a decrease of 13% from the previous year, partially as a result of sales recovery in 2021/22 after the sales down-turn the year before as a result of the COVID-19 pandemic. In the previous year there were also one-off up-front costs of the structural changes made to the cost base, which meant that the full cost reduction benefit was not realised until this year.
Market risk
The business has reacted to the supply chain challenges within the industry by increasing the lead times on orders as well as building stocks earlier to ensure peak sales periods are protected.
There is continuing market risk as a result of the negative economic headwinds that have started to impact the UK during 2022/23. From a business perspective these risks are that high cost inflationary pressures drive up the cost base of the business and negatively impact on customers' disposable income.
In order to mitigate these headwinds, the business is focussed on the following areas:
Rebalancing the product ranges to ensure that the product mix and value for money offering is aligned with customer demand.
Development of both existing sales channels and potential new channels - leveraging our strengths in product design across adults' and children's accessories, especially in events, gifting and Back-to-School, whilst continuing to drive the use of recycled materials, with the focus on the conscious consumer of today.
Continue to drive our own-brand sales growth organically, which had year-on-year sales growth across our own brands in the year of +81%, whilst developing new sales channels for these brands that both utilises and enhances the brand equity that has already been developed.
Focus on mitigating overheads price increases as a result of the inflationary cost pressures in the UK, with special focus on where contractual arrangements come up for renewal to ensure that the cost base of the business is tightly controlled, and that cost efficiencies are made where possible.
Continue to work with the company's suppliers in order to reduce the carbon footprint across its end-to-end supply chain. The company believes that this continued evolution along this pathway is critical to the long-term future of the business, whilst also providing it with an important point of difference in its market space.
Foreign exchange risk
The group imports the majority of its products from the Far East, with this largely being paid for in Chinese RMB, along with a smaller USD currency requirement. There has been a weakening of the pound against both RMB and USD currencies over the course of 2022 to date, and in order to mitigate against this the group has forward currency contracts in place to cover its currency requirements through until March 2023. The group regularly reviews the current exchange situation, and the potential economic indicators which could cause any further weakness in the pound, in order to determine if there is a need to place forward deals on a longer-term basis in order to mitigate the impact of currency fluctuations on its cost of product.
Regulatory risk
The group designs, manufactures and tests its products to ensure that they meet all legal requirements for the markets in which it operates. The group is a full member of the Ethical Trading Initiative.
On behalf of the board
The director presents his annual report and financial statements of the group and company for the year ended 28 February 2022.
The results for the year are set out on page 9.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
The director who held office during the year and up to the date of signature of the financial statements was as follows:
The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring it has sufficient liquid resources to meet the operating needs of the group.The ultimate controlling entity has provided finance to assist cash flow and liquidity management.
All customers who wish to trade on credit terms are subject to credit verification procedures. The concession stands are operated from the premises of large supermarket chains and some high street stores and sales are reported by the stores themselves based upon the goods passing through the tills. Due to the customer mix the group has not experienced debtor recovery issues but trade debtors are monitored on an ongoing basis and provision will be made for doubtful debts where necessary.
The group's policy is to consult and discuss with employees, through 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 group's performance.
The auditor, Carpenter Box, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The director has undertaken a robust assessment of the group's future trading prospects and have
concluded that the group remains a going concern. See note 1.3 to the financial statements for further detail.
We have audited the financial statements of Smallworld Accessories Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 28 February 2022 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group 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).
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 director's 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 group's and parent 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 director 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 director is 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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the director's 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company 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 director's responsibilities statement, the director is 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 director determines 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 director is responsible for assessing the parent 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 director either intends to liquidate the company or to cease operations, or has 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.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:
Obtaining an understanding of the legal and regulatory framework that the group operates in, focusing on those laws and regulations that had a direct effect on the financial statements and operations;
Obtaining an understanding of the group’s policies and procedures on fraud risks, including knowledge of any actual, suspected or alleged fraud and;
Discussing among the engagement team how and where fraud might occur in the financial statements and any potential indicators of fraud through our knowledge and understanding of the group and our sector-specific experience.
As a result of these procedures, we considered the opportunities and incentives that may exist within the group for fraud. We are also required to perform specific procedures to respond to the risk of management override. As a result of performing the above, we identified the following areas as those most likely to have an impact on the financial statements: health & safety, employment law and compliance with the UK Companies Act.
In addition to the above, our procedures to respond to risks identified included the following:
Making enquiries of management about any known or suspected instances of non-compliance with laws and regulations and fraud;
Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to stock provisions and write offs, goodwill and fair value of forward contracts; and
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness.
Due to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.
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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the period was £0 (2021 - £0 profit).
Smallworld Accessories Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is The Courtyard, River Way, Uckfield, East Sussex, TN22 1SL.
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 £1.
The financial statements have been prepared under the historical cost convention adjusted for certain financial instruments measured at fair value. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income.
In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued, and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date.
The group consists of Smallworld Accessories Holdings Limited and its subsidiary, Smallworld Accessories Limited. Upon the incorporation of the subsidiary, the company subscribed for its share capital, which is recorded within the fixed asset investments of the company's balance sheet.
Smallworld Accessories Limited has been included in the group financial statements using the purchase method of accounting. Accordingly, the group statement of comprehensive income and statement of cash flows include the results and cash flows of Smallworld Accessories Limited for the year.
The financial statements have been prepared on the going concern basis. The director has considered relevant information, including the annual budget, forecast future cash flows and the impact of subsequent events in making their assessment.
The business has shown a significant recovery in turnover post the COVID-19 pandemic with a +48% increase against the previous year, with the Far East supply chain having stabilised and all of the groups's concession sales locations being fully open again from mid-April 2021 when all UK COVID-19 restrictions were removed. The actions which were implemented early on in 2020 in response to the COVID-19 pandemic challenges ensured that the business was in a solid position at the beginning of the year in order to be able to maximise the sales during 2021, and also to ensure the business returned to a strong profit for the year of £735k before tax.
There is continuing market risk as a result of the negative economic headwinds that have started to impact the UK during 2022. From a business perspective, the risks are that high cost inflationary pressures drive up the cost base of the business and negatively impact on customers' disposable income. As a result of these business pressures, the director has performed a robust analysis of forecast future cash flows, taking into account the potential impact on the business of possible future scenarios arising from the impact of the current economic operating environment. This analysis also considers the effectiveness of available measures to assist in mitigating the impact.
Based on these assessments and having regard to the resources available to the entity, the director has concluded that there is no material uncertainty in relation to the appropriateness of continuing to adopt the going concern basis in preparing the annual report and accounts.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of customer returns, VAT and other sales related taxes. It is shown prior to any commissions paid.
At each reporting period end date, the group 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.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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 are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost.
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 group 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.
Basic financial liabilities 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.
Derivatives, including 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.
For derivatives that are designated and qualify as cash flow hedges, the effective portion of changes in the fair value of the hedge is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss. Any gain or loss previously recognised in other comprehensive income is reclassified to profit or loss when the hedge relationship ends. This occurs when the hedging instrument expires or no longer meets the hedging criteria, the forecast transaction is no longer highly probable, the hedged debt instrument is derecognised, or the hedging instrument is terminated.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a
negative fair value is recognised as a financial liability.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs.
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 group’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 costs of short-term employee benefits are recognised as a liability and an expense.
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.
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 group’s accounting policies, the director is 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 group monitors stock levels and impairment on an ongoing basis. Units held on concession stands are vulnerable to damage, pilfering and misplacement within the stores and provisions are maintained to reflect this. At the end of a season the group writes off the bulk of the remaining goods as new product lines are introduced. The estimation includes judgement on a number of factors including historical sales patterns, expected sales profiles and potential obsolescence. At the reporting date, the carrying amount of inventory was £2,724,903 (2021 - £1,339,068).
There was a one-off goodwill impairment loss event in the year, with £11,315 of impairment losses recognised within administrative expenses in the Group Statement of Comprehensive Income. The director has reviewed the estimated useful life of the remaining goodwill after this impairment event, and determined that this goodwill should continue to be amortised over 10 years from the inception date, with no further impairment of goodwill required to be recognised.
The group uses forward foreign exchange contracts to hedge its currency transaction exposures. The contracts are initially recognised at fair value on the date the derivative contract is entered into, and subsequently re-measured to fair value at each reporting date, by reference to the spot exchange rate of the relevant currency at the relevant date. At the reporting date, the fair value of the financial liability in relation to forward foreign exchange contracts was £17,071 (2021 - £121,861).
All turnover is derived from the sale of goods.
Exchange differences recognised in profit or loss during the year, except for those arising on financial instruments measured at fair value through profit or loss, amounted to £225,333 (2021 - £175,471).
Costs in relation to the audit of the group financial statements are encapsulated within the fees payable by the subsidiary.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The director is also considered to represent the key management personnel of the group.
The actual charge for the year can be reconciled to the expected charge/(credit) for the period based on the profit or loss and the standard rate of tax as follows:
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
Details of the company's subsidiaries at 28 February 2022 are as follows:
Note 1: The Courtyard, River Way, Uckfield, East Sussex, TN22 1SL.
Other debtors falling due after more than one year includes a deposit of £827,168 (2021: £797,204) with a key supplier to provide security on orders placed by the group. This is funded by a loan from the ultimate controlling entity of the same amount, which is recorded in creditors: amounts falling due after more than one year within other borrowings.
Other borrowings relates to a loan from the ultimate controlling entity, which has been subordinated to the loan received under the UK Government-backed Coronavirus Business Interruption Loan Scheme ("CBILS") received during the year.
As disclosed within note 17, the ultimate controlling entity has provided a loan to the group to fund a deposit that is held with a key supplier.
In the prior year, the group obtained a bank loan under the UK Government-backed Coronavirus Business Interruption Loan Scheme ("CBILS"). The loan is subject to interest charges at a rate of 3.8% above the Bank of England base rate per annum, with the Government providing a Business Interruption payment to cover the first 12 months of interest payments. The loan is repayable over 6 years, with a repayment holiday in place for the first 12 months of the loan.
The loan is secured by fixed and floating charges over the company's assets and has external guarantees.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The timing of the expected reversal of the deferred tax asset is expected to be in the next 12 months. The deferred tax liability is expected to reverse over the useful lives of the tangible fixed assets.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Ordinary shares have attached to them full voting, dividend and capital distribution (including on winding up) rights.
The group entered into forward foreign exchange contracts to mitigate exchange rate risk for foreign currency payments, all contracts mature within 12 months of the reporting date.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Group and company
At the reporting date the group had loans outstanding with the ultimate controlling entity amounting to £2,282,588 (2021: £2,296,204), included within non-current liabilities. The loan interest paid during the year was £57,843 (2021: £57,843) and was charged at a rate of 4% (2021: 4%) on the interest bearing loan.
The ultimate controlling entity is Chuan Men Investment Inc, a company incorporated in Taiwan.