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COMPANY REGISTRATION NUMBER: 05158665
Talasey Ltd
Financial Statements
For the year ended
31 December 2022
Talasey Ltd
Financial Statements
Year ended 31 December 2022
Contents
Page
Officers and professional advisers
1
Strategic report
2
Directors' report
4
Independent auditor's report to the members
6
Statement of comprehensive income
11
Statement of financial position
12
Statement of changes in equity
13
Statement of cash flows
14
Notes to the financial statements
15
Talasey Ltd
Officers and Professional Advisers
The board of directors
G J Vaughton (Resigned 2 June 2023)
D Weighill (Appointed 5 June 2023)
M Wall
M Gough (Resigned 29 November 2022)
Company secretary
D Weighill
Registered office
St Vincent House
Normanby Road
Scunthorpe
DN15 8QT
Auditor
Streets Audit LLP
Chartered accountants & statutory auditor
Tower House
Lucy Tower Street
Lincoln
LN1 1XW
Bankers
HSBC Bank plc.
84 High Street
Scunthorpe
North Lincolnshire
DN15 6HQ
Talasey Ltd
Strategic Report
Year ended 31 December 2022
We aim to present a balanced and comprehensive review of the development and performance of our business during the year and its position at the year end. Our review is consistent with the size and nature of our business and is written in the context of the risks and uncertainties we face. Business Review The company's principal activity is to provide landscaping products to a variety of customers throughout the UK and overseas. We consider our key financial performance indicators to be those that illustrate the financial performance and strength of the company, namely turnover and profit margin, these are monitored via monthly management accounts. Non-financial KPI's essential to our business which are monitored internally include employee training and development, customer satisfaction and delivery completion. The after effects of the COVID-19 pandemic continued to impact on our business and industry. With International shipping rates in decline through quarter 4 2022 and quarter 1 2023, this led the business to write down a significant value against inventory in order to show a fair value at year end. This one off event substantially erased 2022 profitability by £2.6M. The business was able to mitigate longer term impacts on the business through our continued focus on supporting our customers through a quality service proposition and ethically sourced products at competitive prices. We continue our focus on maintaining a mix of customers with no over reliance on one customer group. In 2022 we have continued to invest in our new offices providing an enhanced working environment whilst being able to support our customers and industry colleagues in one of a kind facilities unmatched within our industry. There continues to be a degree of uncertainty within our markets as the country responds and adapts to post Brexit UK and inflation. Such uncertainties include foreign exchange movements and capacity within shipping and imports. Despite this, we are cautiously optimistic that 2023 will be another profitable year for the company supported by the continued investment in our people, systems and product range and offering for 2023. Loss before taxation is £600,094 (2021 - £6,165,402 - Profit). Engagement with suppliers, customers and others in a business relationship with the company Management monitor closely how suppliers, customers, and other business relationships are managed. The company has fostered good working relationships with the various suppliers and customers, who are paid on a timely basis to ensure no disruption to the supply chain, and payments from customers are closely monitored to ensure cashflow is not affected. Promoting the success of the company Management constantly review the operations of the company to ensure the welfare of the employees, reputation of the company and its impact on the local environment are meeting the highest standards in accordance with all legal and industry requirements so that they ultimately benefit and contribute to the overall success of the company. Streamlined Energy and Carbon Reporting UK Energy use data for the period:
2022 2021
£ £
Energy Consumption used to calculate emissions (kWh) 597,735 498,116
Emissions in metric tonnes CO2e
Purchased Electricity 40 35
Gas Consumption 28 2
Owned Vehicles 70 80
Total Emissions in metric tonnes CO2e 138 117
Emissions in metric tonnes CO2e per £million of turnover 3 2
Methodology - We have followed HM Government Environmental Reporting Guidelines. We have also used the National Energy Foundations conversion factors for reporting. Measures taken to improve energy efficiency - We have undertaken a full energy usage review across our sites to identify areas for efficiency. We have also introduced electric and hybrid vehicles into our fleet. Credit risk The company seeks to manage its credit risk by dealing with established customers or otherwise checking the credit-worthiness of new customers, establishing clear contractual relationships with those customers and by identifying and addressing any credit issues arising in a timely manner. Liquidity risk The company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Short-term flexibility is achieved by overdraft facilities. Despite the risks and uncertainties brought about by the continued economic instability and the challenges this brings, the company has achieved growth in both turnover and profit before tax. On the basis of these results the directors consider the affairs of the company to be satisfactory.
This report was approved by the board of directors on 30 October 2023 and signed on behalf of the board by:
M Wall
D Weighill
Director
Company Secretary
Registered office:
St Vincent House
Normanby Road
Scunthorpe
DN15 8QT
Talasey Ltd
Directors' Report
Year ended 31 December 2022
The directors present their report and the financial statements of the company for the year ended 31 December 2022 .
Directors
The directors who served the company during the year were as follows:
G J Vaughton
M Wall
M Gough
(Resigned 29 November 2022)
Dividends
Particulars of recommended dividends are detailed in note 12 to the financial statements.
Disclosure of information in the strategic report
Information required by schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 has been included in the Strategic Report.
Directors' responsibilities statement
The directors are responsible for preparing the strategic report, directors' report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: - select suitable accounting policies and then apply them consistently; - make judgments and accounting estimates that are reasonable and prudent; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Auditor
Each of the persons who is a director at the date of approval of this report confirms that:
- so far as they are aware, there is no relevant audit information of which the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves 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 of directors on 30 October 2023 and signed on behalf of the board by:
M Wall
D Weighill
Director
Company Secretary
Registered office:
St Vincent House
Normanby Road
Scunthorpe
DN15 8QT
Talasey Ltd
Independent Auditor's Report to the Members of Talasey Ltd
Year ended 31 December 2022
Opinion
We have audited the financial statements of Talasey Ltd (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows 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 United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In our opinion the financial statements: - give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its loss for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; - have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. 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. In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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 the audit:
- the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: - adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or - the financial statements are not in agreement with the accounting records and returns; or - certain disclosures of 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: 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 engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations; - we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the company and sector in which it operates; - we focused 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 the Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental and health and safety legislation; - we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and - identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit. We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by: - making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and - considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations. To address the risk of fraud through management bias and override of controls, we: - performed analytical procedures to identify any unusual or unexpected relationships; - tested journal entries to identify unusual transactions; - assessed whether judgements and assumptions made in determining the accounting estimates set out in Note 3 were indicative of potential bias; and - investigated the rationale behind significant or unusual transactions. In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to: - agreeing financial statement disclosures to underlying supporting documentation; - enquiring of management as to actual and potential litigation and claims; and - reviewing correspondence with HMRC, relevant regulators and the company's legal advisors. There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion. As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. - Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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.
ROBERT ANDERSON
(Senior Statutory Auditor)
For and on behalf of
Streets Audit LLP
Chartered accountants & statutory auditor
Tower House
Lucy Tower Street
Lincoln
LN1 1XW
3 November 2023
Talasey Ltd
Statement of Comprehensive Income
Year ended 31 December 2022
2022
2021
Note
£
£
Turnover
4
41,365,167
57,175,276
Cost of sales
( 35,207,723)
( 44,689,009)
---------------
---------------
Gross profit
6,157,444
12,486,267
Distribution costs
( 614,350)
( 658,407)
Administrative expenses
( 5,814,745)
( 5,504,194)
Other operating income
5
20,750
-------------
---------------
Operating (loss)/profit
6
( 271,651)
6,344,416
Interest payable and similar expenses
10
( 328,443)
( 179,014)
-------------
---------------
(Loss)/profit before taxation
( 600,094)
6,165,402
Tax on (loss)/profit
11
96,970
( 1,183,836)
----------
-------------
(Loss)/profit for the financial year and total comprehensive income
( 503,124)
4,981,566
----------
-------------
All the activities of the company are from continuing operations.
Talasey Ltd
Statement of Financial Position
31 December 2022
2022
2021
Note
£
£
£
Fixed assets
Tangible assets
13
602,497
685,458
Current assets
Stocks
14
11,582,655
16,365,629
Debtors
15
15,179,984
12,853,597
Cash at bank and in hand
1,421,696
2,402,546
---------------
---------------
28,184,335
31,621,772
Creditors: amounts falling due within one year
16
12,095,139
14,023,426
---------------
---------------
Net current assets
16,089,196
17,598,346
---------------
---------------
Total assets less current liabilities
16,691,693
18,283,804
Creditors: amounts falling due after more than one year
17
1,808,333
2,508,333
Provisions
Taxation including deferred tax
18
119,886
121,373
---------------
---------------
Net assets
14,763,474
15,654,098
---------------
---------------
Capital and reserves
Called up share capital
21
895
895
Capital redemption reserve
22
210,125
210,125
Profit and loss account
22
14,552,454
15,443,078
---------------
---------------
Shareholders funds
14,763,474
15,654,098
---------------
---------------
These financial statements were approved by the board of directors and authorised for issue on 30 October 2023 , and are signed on behalf of the board by:
M Wall
Director
Company registration number: 05158665
Talasey Ltd
Statement of Changes in Equity
Year ended 31 December 2022
Called up share capital
Capital redemption reserve
Profit and loss account
Total
£
£
£
£
At 1 January 2021
1,020
210,000
11,611,512
11,822,532
Profit for the year
4,981,566
4,981,566
-------
----------
--------------
--------------
Total comprehensive income for the year
4,981,566
4,981,566
Dividends paid and payable
12
( 50,000)
( 50,000)
Redemption of shares
( 125)
125
( 1,100,000)
( 1,100,000)
-------
----------
--------------
--------------
Total investments by and distributions to owners
( 125)
125
( 1,150,000)
( 1,150,000)
At 31 December 2021
895
210,125
15,443,078
15,654,098
Loss for the year
( 503,124)
( 503,124)
-------
----------
--------------
--------------
Total comprehensive income for the year
( 503,124)
( 503,124)
Dividends paid and payable
12
( 387,500)
( 387,500)
----
----
----------
----------
Total investments by and distributions to owners
( 387,500)
( 387,500)
----
----------
--------------
--------------
At 31 December 2022
895
210,125
14,552,454
14,763,474
----
----------
--------------
--------------
Talasey Ltd
Statement of Cash Flows
Year ended 31 December 2022
2022
2021
£
£
Cash flows from operating activities
(Loss)/profit for the financial year
( 503,124)
4,981,566
Adjustments for:
Depreciation of tangible assets
377,194
307,217
Government grant income
( 20,750)
Interest payable and similar expenses
328,443
179,014
Tax on (loss)/profit
( 96,970)
1,183,836
Accrued (income)/expenses
( 925,158)
1,533,828
Changes in:
Stocks
4,782,974
( 8,577,287)
Trade and other debtors
( 2,247,264)
( 1,560,444)
Trade and other creditors
3,633,940
( 1,420,825)
-------------
-------------
Cash generated from operations
5,350,035
( 3,393,845)
Interest paid
( 328,443)
( 179,014)
Tax paid
( 1,140,551)
( 400,000)
-------------
-------------
Net cash from/(used in) operating activities
3,881,041
( 3,972,859)
-------------
-------------
Cash flows from investing activities
Purchase of tangible assets
( 294,233)
( 394,475)
Proceeds from sale of tangible assets
6,240
-------------
-------------
Net cash used in investing activities
( 294,233)
( 388,235)
-------------
-------------
Cash flows from financing activities
Purchase of own shares
( 1,100,000)
Proceeds from borrowings
( 3,480,158)
3,539,647
Repayments of borrowings
( 700,000)
( 641,667)
Proceeds from loans from group undertakings
641,667
Government grant income
20,750
Dividends paid
( 387,500)
( 50,000)
-------------
-------------
Net cash (used in)/from financing activities
( 4,567,658)
2,410,397
-------------
-------------
Net decrease in cash and cash equivalents
( 980,850)
( 1,950,697)
Cash and cash equivalents at beginning of year
2,402,546
4,353,243
-------------
-------------
Cash and cash equivalents at end of year
1,421,696
2,402,546
-------------
-------------
Talasey Ltd
Notes to the Financial Statements
Year ended 31 December 2022
1. General information
The company is a private company limited by shares, registered in England and Wales. The address of the registered office is St Vincent House, Normanby Road, Scunthorpe, DN15 8QT.
2. Statement of compliance
These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.
3. Accounting policies
Basis of preparation
The financial statements have been prepared on the historical cost basis. The financial statements are prepared in sterling, which is the functional currency of the entity.
Judgements and key sources of estimation uncertainty
The directors make estimates and assumptions about the future. These estimates and assumptions impact recognised assets and liabilities, as well as revenue and expenses and other disclosures. These estimates are based on historical experience and on various assumptions considered reasonable under the prevailing conditions. The actual outcome may diverge from these estimates if other assumptions are made, or other conditions arise. The estimates and assumptions that may have a significant effect on the carrying amounts of assets and liabilities within financial year include: Tangible fixed assets are recognised at cost, less accumulated depreciation and any impairments. Depreciation takes place over the estimated useful life, down to the assessed residual value. The carrying amount of the company's fixed assets is tested as soon as changed conditions show that a need for impairment has arisen. The recoverability of trade debtors and associated provisioning is considered on a regular basis. When calculating the debtor provision, the directors consider the age of the debts and the financial position of its customers. The carrying value of stock is considered on a regular basis. When calculating the provision against stock, the directors consider the condition and estimated realisable value of stock held.
Revenue recognition
The turnover shown in the profit and loss account represents the value of all work done during the period, exclusive of Value Added Tax. Turnover is recognised at the point at which the company has fulfilled its contractual obligations and the risks and rewards attaching to the sale have been transferred to the customer.
Taxation
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised in respect of all material timing differences at the reporting date. Unrelieved tax losses and other 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Operating leases
Lease payments are recognised as an expense over the lease term on a straight-line basis. The aggregate benefit of lease incentives is recognised as a reduction to expense over the lease term, on a straight-line basis.
Tangible assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses.
Depreciation
Depreciation is calculated so as to write off the cost, less its residual value, over the useful economic life of that asset as follows:
Leasehold property
-
10% straight line
Plant and machinery
-
25% - 33% straight line
Fixtures and fittings
-
33% reducing balance
Motor vehicles
-
25% straight line
Equipment
-
25% straight line
Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets.
Stocks
Stocks are valued at the lower of cost and net realisable value, on a first-in, first-out basis, after making due allowance for obsolete and slow moving items. Stock includes stock in transit where the company has taken responsibility for ownership.
Government grants
Under the accrual model, government grants relating to revenue are recognised on a systematic basis over the periods in which the company recognises the related costs for which the grant is intended to compensate. Grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs are recognised in income in the period in which it becomes receivable.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of the provision as an expense. Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in profit or loss unless the provision was originally recognised as part of the cost of an asset. When a provision is measured at the present value of the amount expected to be required to settle the obligation, the unwinding of the discount is recognised as a finance cost in profit or loss in the period it arises.
Financial instruments
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 entity after deducting all of its financial liabilities.
4. Turnover
Turnover arises from:
2022
2021
£
£
Sale of goods
41,365,167
57,175,276
---------------
---------------
The turnover is attributable to the one principal activity of the company. An analysis of turnover by the geographical markets that substantially differ from each other is given below:
2022
2021
£
£
United Kingdom
38,820,952
55,084,786
Overseas
2,544,215
2,090,490
---------------
---------------
41,365,167
57,175,276
---------------
---------------
5. Other operating income
2022
2021
£
£
Government grant income
20,750
----
---------
6. Operating profit
Operating profit or loss is stated after charging/crediting:
2022
2021
£
£
Depreciation of tangible assets
377,194
307,217
Impairment of trade debtors
(60,583)
56,099
Operating lease rentals
679,082
601,552
Foreign exchange differences
( 14,407)
38,631
Stock write down
2,661,693
-------------
----------
During the year there was an exceptional write down of stock as explained in the Strategic Report.
7. Auditor's remuneration
2022
2021
£
£
Fees payable for the audit of the financial statements
10,500
8,750
---------
-------
Fees payable to the company's auditor and its associates for other services:
Taxation advisory services
11,670
3,200
Other non-audit services
8,000
6,500
---------
-------
19,670
9,700
---------
-------
8. Staff costs
The average number of persons employed by the company during the year, including the directors, amounted to:
2022
2021
No.
No.
Administrative staff
11
12
Management staff
6
6
Sales staff
74
79
----
----
91
97
----
----
The aggregate payroll costs incurred during the year, relating to the above, were:
2022
2021
£
£
Wages and salaries
2,955,059
2,753,788
Social security costs
323,524
270,689
-------------
-------------
3,278,583
3,024,477
-------------
-------------
9. Directors' remuneration
The directors' aggregate remuneration in respect of qualifying services was:
2022
2021
£
£
Remuneration
289,569
151,550
----------
----------
Remuneration of the highest paid director in respect of qualifying services:
2022
2021
£
£
Aggregate remuneration
150,769
105,000
----------
----------
10. Interest payable and similar expenses
2022
2021
£
£
Interest on banks loans and overdrafts
328,443
179,014
----------
----------
11. Tax on (loss)/profit
Major components of tax (income)/expense
2022
2021
£
£
Current tax:
UK current tax expense
1,156,911
Adjustments in respect of prior periods
( 16,360)
10,449
---------
-------------
Total current tax
( 16,360)
1,167,360
---------
-------------
Deferred tax:
Origination and reversal of timing differences
( 80,610)
16,476
---------
-------------
Tax on (loss)/profit
( 96,970)
1,183,836
---------
-------------
Reconciliation of tax (income)/expense
The tax assessed on the (loss)/profit on ordinary activities for the year is higher than (2021: higher than) the standard rate of corporation tax in the UK of 19 % (2021: 19 %).
2022
2021
£
£
(Loss)/profit on ordinary activities before taxation
( 600,094)
6,165,402
----------
-------------
(Loss)/profit on ordinary activities by rate of tax
( 114,018)
1,171,426
Adjustment to tax charge in respect of prior periods
( 16,360)
10,449
Effect of expenses not deductible for tax purposes
83,170
62,798
Effect of capital allowances and depreciation
( 49,762)
( 60,837)
----------
-------------
Tax on (loss)/profit
( 96,970)
1,183,836
----------
-------------
12. Dividends
Dividends paid during the year (excluding those for which a liability existed at the end of the prior year):
2022
2021
£
£
Equity dividends on ordinary shares
387,500
50,000
----------
---------
13. Tangible assets
Short leasehold property
Plant and machinery
Fixtures and fittings
Motor vehicles
Equipment
Total
£
£
£
£
£
£
Cost
At 1 Jan 2022
859,035
546,889
74,360
144,608
1,624,892
Additions
28,216
71,800
71,772
76,578
45,867
294,233
---------
----------
----------
----------
----------
-------------
At 31 Dec 2022
28,216
930,835
618,661
150,938
190,475
1,919,125
---------
----------
----------
----------
----------
-------------
Depreciation
At 1 Jan 2022
481,369
305,957
55,168
96,940
939,434
Charge for the year
705
204,651
130,687
18,626
22,525
377,194
---------
----------
----------
----------
----------
-------------
At 31 Dec 2022
705
686,020
436,644
73,794
119,465
1,316,628
---------
----------
----------
----------
----------
-------------
Carrying amount
At 31 Dec 2022
27,511
244,815
182,017
77,144
71,010
602,497
---------
----------
----------
----------
----------
-------------
At 31 Dec 2021
377,666
240,932
19,192
47,668
685,458
---------
----------
----------
----------
----------
-------------
14. Stocks
2022
2021
£
£
Finished goods and goods for resale
11,582,655
16,365,629
---------------
---------------
Stock is stated after provisions for impairment of £345,000 (2021 - £660,737). Year end stock values include an amount of £2,022,564 (2021 - £3,375,536) of stock in transit.
15. Debtors
2022
2021
£
£
Trade debtors
6,242,814
3,595,372
Deferred tax asset
79,123
Prepayments and accrued income
116,291
73,230
Other debtors
8,741,756
9,184,995
---------------
---------------
15,179,984
12,853,597
---------------
---------------
Trade debtors are stated after provisions for impairment of £11,000 (2021 - £71,583).
16. Creditors: amounts falling due within one year
2022
2021
£
£
Bank loans and overdrafts
3,863,143
7,377,260
Trade creditors
952,727
775,472
Accruals and deferred income
3,072,247
3,997,405
Corporation tax
1,156,911
Social security and other taxes
88,846
621,088
Director loan accounts
91,749
57,790
Other creditors
4,026,427
37,500
---------------
---------------
12,095,139
14,023,426
---------------
---------------
Bank loans and overdrafts include amounts for a Loan Against Import account of £3,163,143 (2021 - £6,677,260) and a Government backed CBIL loan of £700,000 (2021 - £700,000). Both are secured by a legal agreement and a first floating charge over all the assets of the company.
Amounts have been reanalysed between trade creditors and accruals in the current and prior year to reflect amounts paid in advance for stock in transit, with no effect to the overall balances reported.
Other creditors includes Invoice Discounting balances at the year end of £3,891,427 (2021 - £Nil).
17. Creditors: amounts falling due after more than one year
2022
2021
£
£
Bank loans and overdrafts
1,808,333
2,508,333
-------------
-------------
Loans are secured by a legal agreement and a first floating charge over all the assets of the company.
18. Provisions
Deferred tax (note 19)
£
At 1 January 2022
121,373
Charge against provision
( 1,487)
----------
At 31 December 2022
119,886
----------
19. Deferred tax
The deferred tax included in the statement of financial position is as follows:
2022
2021
£
£
Included in debtors (note 15)
79,123
Included in provisions (note 18)
( 119,886)
( 121,373)
----------
----------
( 40,763)
( 121,373)
----------
----------
The deferred tax account consists of the tax effect of timing differences in respect of:
2022
2021
£
£
Accelerated capital allowances
40,763
121,373
---------
----------
20. Government grants
The amounts recognised in the financial statements for government grants are as follows:
2022
2021
£
£
Recognised in other operating income:
Government grants recognised directly in income
20,750
----
---------
21. Called up share capital
Issued, called up and fully paid
2022
2021
No.
£
No.
£
Ordinary shares of £ 0.01 each
87,500
875
87,500
875
Ordinary 'B' shares of £ 0.01 each
2,000
20
2,000
20
---------
----
---------
----
89,500
895
89,500
895
---------
----
---------
----
Both ordinary and ordinary 'B' shares have full dividend, voting and equity rights.
22. Reserves
Capital redemption reserve - This reserve records the nominal value of shares repurchased by the company. Profit and loss account - This reserve records retained earnings and accumulated losses.
23. Analysis of changes in net debt
At 1 Jan 2022
Cash flows
At 31 Dec 2022
£
£
£
Cash at bank and in hand
2,402,546
(980,850)
1,421,696
Debt due within one year
(7,435,050)
3,480,158
(3,954,892)
Debt due after one year
(2,508,333)
700,000
(1,808,333)
-------------
-------------
-------------
( 7,540,837)
3,199,308
( 4,341,529)
-------------
-------------
-------------
24. Operating leases
The total future minimum lease payments under non-cancellable operating leases are as follows:
2022
2021
£
£
Not later than 1 year
608,522
94,902
Later than 1 year and not later than 5 years
2,154,645
149,174
Later than 5 years
2,383,333
-------------
----------
5,146,500
244,076
-------------
----------
25. Directors' advances, credits and guarantees
The company was under the control of M Wall throughout the current and previous year. M Wall is the Managing Director and majority shareholder. In relation to his interests in the company, M Wall received dividends totalling £370,000 (2021 - £35,000).
26. Related party transactions
Included within other debtors are balances due from other related parties under common control of £8,2463,894 (2021 - £8,243,141). Other related parties under common control charged the company rent of £546,000 (2021 - £459,175) in the year of which £Nil (2021 - £3,332) was outstanding at the year end. Other transactions with related parties under common control include sales of £2,634,593 (2021 - £1,043,219) and purchases of £436,818 (2021 - £421,734). There are balances relating to these in trade debtors of £Nil (2021 - £49,439) and trade creditors of £80,893 (2021 - £1,431). No other transactions with related parties under common control were undertaken such as are required to be disclosed under FRS 102. The only key management personnel are considered to be the directors. See note 9 for their remuneration.
27. Controlling party
The ultimate controlling party is M Wall .