Company registration number 04070786 (England and Wales)
Sutton Venture Group Limited
Annual report and Financial Statements
For the period ended 1 July 2023
Sutton Venture Group Limited
Company information
Directors
Mr R Sutton
Mrs S M Sutton
Secretary
Mrs S M Sutton
Company number
04070786
Registered office
Sutton House
Berry Hill Road
Fenton
Stoke on Trent
Staffordshire
ST4 2NL
Auditor
DJH Mitten Clarke Audit Limited
The Glades
Festival Way
Stoke-on-Trent
Staffordshire
ST1 5SQ
Sutton Venture Group Limited
Contents
Page
Strategic report
1 - 4
Directors' report
5 - 7
Independent auditor's report
8 - 11
Income statement
12
Group statement of comprehensive income
13
Group statement of financial position
14 - 15
Company statement of financial position
16
Group statement of changes in equity
17 - 18
Company statement of changes in equity
19
Group statement of cash flows
20
Notes to the financial statements
21 - 45
Sutton Venture Group Limited
Strategic report
For the period ended 1 July 2023
- 1 -

The directors present the strategic report for the period ended 1 July 2023.

Review of the business

The principal activity of the group continued to be research and design, sourcing, distribution, import and sale of electrical and houseware products.

 

Highlights

Turnover for the period ending 1 July 2023 was £190.4m, a 49.6% improvement vs the prior year (FY22: £127.4m) thanks to exceptional growth in sales of air fryers which saw high levels of consumer demand throughout the reporting period. Compared to 2020, the cumulative average growth rate (CAGR) of the group’s turnover was an impressive 32.4% per annum.

The group continued to grow market share in several key categories during the year. The Tower brand maintained dominance by volume in the air fryer market and grew share considerably in vacuum cleaners, proving again that the group is able to gain traction and accelerate growth in new areas.

The group continued to invest in digital transformation projects during the year and will deploy a new ERP system in Q2 2024 which will enable a step change in operational efficiency and service delivery.

Finally, the group purchased the Goblin brand from Glen Electric in January 2023. This acquisition fits perfectly within the existing brand portfolio being a renowned historic British brand name in vacuuming, a category which the group has identified for growth and investment.

 

Market overview

The consumer durables market remained robust throughout the reporting period. Demand for energy saving products increased substantially, following a surge in the cost of gas and electricity, whilst higher interest rates impacted household disposable income putting pressure on volumes in some categories.

The share of small appliances purchased online as apposed to in physical retail stores continued to increase during the year and is expected to exceed 50% of the market in the years ahead.

Consumers continue to demand time saving appliances that are functional, stylish and good value for money.

The group is well placed to benefit from these factors thanks to a rapid product development cycle that follows consumer trends and a wide distribution network with strong relationships with both traditional retailers and online pure players.

 

Strategic goals

The primary strategic goal of the group is to deliver continued profitable growth through the design, sourcing and distribution of competitively priced high quality consumer goods. International expansion is a key part of delivering this strategy and good progress has been made during the year with turnover generated outside of the United Kingdom increasing by 20.2% to £10.3m (FY22: £8.4m).

The continued shift in consumer spending towards online sales brings further opportunities for growth as existing strong relationships with key players such as Amazon can be leveraged to access more consumers and product fulfilment capabilities.

The group continues to invest in the systems, people and processes required to continue accelerating growth. These investments are closely monitored to ensure that they deliver results as planned.

 

 

Sutton Venture Group Limited
Strategic report (continued)
For the period ended 1 July 2023
- 2 -
Principal risks and uncertainties

 

The group faces several risks and uncertainties in the course of doing business. Effective strategies have been developed to ensure that these risks are minimized, with a particular focus on the following areas:

 

Credit risk is a significant concern, as the group may face challenges collecting payments from customers. Comprehensive credit insurance policies and stringent internal limit management policies are in place to mitigate risk in this area.

 

Foreign currency exchange rate volatility is recognized as a risk factor and mitigated via a policy designed to secure rates at least 6 months in advance.

 

Sourcing and supply chain management need close management to ensure that instances of over and under stocking are minimized. The group ensures that products are sourced from a wide range of suppliers and countries to minimize the risk of disruption in this area.

 

Macroeconomic factors such as high rates of interest and inflation can affect demand for non-food products and therefore represent a risk to turnover and profitability. The group mitigates this risk by developing mass-market products and category managing them to offer high quality at affordable price points.

 

Sutton Venture Group Limited
Strategic report (continued)
For the period ended 1 July 2023
- 3 -
Development and performance

 

Key performance indicators

 

Turnover for the period ending 1 July 2023 was £190.4m, an impressive 49.6% increase compared to the previous year (FY22: £127.4m)

 

Gross profit for the period was £43.4m representing 22.8% of turnover, an improvement of 3.2% pts compared to the prior year (FY22: £24.9m; 19.6%) helped by more favourable shipping costs in the second half of the financial year.

 

Administrative expenses were £26.2m, an increase of £5.6m on the prior year (FY22: £20.6m) driven mainly by further investment in advertising and promotion activities, quality assurance and back-office support functions.

 

Operating profit for the period ended 1 July 2023 was £16.1m (FY22: £1.9m loss) thanks to the increased level of turnover and gross margin percentage improvement.

 

Net current assets were £24.1m as at 1 July 2023, an increase of £6.5m vs the previous year (FY22: £17.6m) coming from a decrease in creditors due within one year (FY23: £89.3m; FY22: £67.1m)

 

Performance in fiscal year 2024 to date has been in line with expectations in terms of turnover growth, market share gain and profitability. Historical and continued investment in new product development has produced a healthy roadmap of new product launches and is expected to deliver continued growth in the years ahead.

 

 

Future developments

 

Whilst inflation is currently high compared to the average for the previous decade, it is expected to fall in the coming years which will ease pressure on household incomes.

 

The markets in which the group operates are forecast to continue to grow for the foreseeable future, fuelled by consumer demand for time saving energy efficient goods.

 

CAGR for the UK home and small appliance market as a whole is forecast to be 4.8% to 2027. The group intends to substantially outperform the market over this period by expanding its’ brand and product portfolios and opening new international channels of distribution.

 

The quality and sustainability of products is a priority for consumers and the group has invested funds to ensure that the highest standards are met.

 

 

Sutton Venture Group Limited
Strategic report (continued)
For the period ended 1 July 2023
- 4 -
Section 172(1) statement

We have had regard to the matters set out in section 172(1)(a) to (f) of the Companies Act 2006 when performing our duty under section 172.

 

We have made consideration of:

- the likely consequences of any decision in the long term

- the interests of the company's employee

- the need to foster the company's business relationships with suppliers, customers and others

- the impact of the company's operations on the community and the environment

- the desirability of the company maintaining a reputation for high standards of business conduct, and

- the need to act fairly as between members of the company.

 

 

 

 

 

On behalf of the board

Mr R Sutton
Director
29 March 2024
Sutton Venture Group Limited
Directors' report
For the period ended 1 July 2023
- 5 -

The directors present their annual report and financial statements for the period ended 1 July 2023.

Results and dividends

The results for the period are set out on page 12.

An interim ordinary dividend was paid amounting to £1,750,000. The directors do not recommend payment of a final dividend.

Directors

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

Mr R Sutton
Mrs S M Sutton
Disabled persons

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the group continues and that the appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

Employee involvement

The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.

 

Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.

 

There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.

Energy and carbon report
2023
2022
Energy consumption
kWh
kWh
Aggregate of energy consumption in the year
- Gas combustion
47,806
141,179
- Electricity purchased
1,158,880
741,266
1,206,686
882,445
Sutton Venture Group Limited
Directors' report (continued)
For the period ended 1 July 2023
- 6 -
2023
2022
Emissions of CO2 equivalent
metric tonnes
metric tonnes
Scope 1 - direct emissions
- Gas combustion
27.23
24.13
- Fuel consumed for owned transport
-
-
27.23
24.13
Scope 2 - indirect emissions
- Electricity purchased
364.67
159.46
Scope 3 - other indirect emissions
- Fuel consumed for transport not owned by the group
-
-
Total gross emissions
391.90
183.59
Intensity ratio
Tonnes CO2e per average full-time employee
1.30
0.37
Quantification and reporting methodology

The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting

Intensity measurement

The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per average employee.

Measures taken to improve energy efficiency

The group is always looking for ways to reduce its carbon footprint.

Sutton Venture Group Limited
Directors' report (continued)
For the period ended 1 July 2023
- 7 -
Statement of directors' responsibilities

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Strategic report

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

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

On behalf of the board
Mr R Sutton
Director
29 March 2024
Sutton Venture Group Limited
Independent auditor's report
To the members of Sutton Venture Group Limited
- 8 -

Qualified opinion

We have audited the financial statements of Sutton Venture Group Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 1 July 2023 which comprise the group income statement, the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, 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 Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements:

Basis for qualified opinion

The directors have included intangible assets at market value, as they believe there is an active market place for brands and trademarks and have obtained professional valuations to support the amounts in the financial statements. On this basis the directors have presented the brand at its fair value on the balance sheet rather than at cost.

 

This constitutes a departure from accounting standard FRS102 which indicates that there is a presumption that there is no active market place for trademarks and brands separable to the trade, and that accordingly the asset cannot be shown at valuation.

 

Had the directors adopted the presumption in FRS102, the trademarks/brands would be valued at a cost of £2,248,000 (2022:1,071,000), deferred tax liabilities would be stated at £3,424,580 (2022: £3,197,260), and the net assets of the group would be stated at £44,457,180 as at 1 July 2023 (2022: £34,790,526).

 

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 group and parent 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 qualified 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 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 directors with respect to going concern are described in the relevant sections of this report.

Sutton Venture Group Limited
Independent auditor's report (continued)
To the members of Sutton Venture Group Limited
- 9 -

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their 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:

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 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 directors either intend to liquidate the parent 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.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Sutton Venture Group Limited
Independent auditor's report (continued)
To the members of Sutton Venture Group Limited
- 10 -

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:

 

 

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

 

 

To address the risk of fraud through management bias and override of controls, we:

 

 

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

 

 

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.

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.

Sutton Venture Group Limited
Independent auditor's report (continued)
To the members of Sutton Venture Group Limited
- 11 -
Gary Neil Chadwick FCCA (Senior Statutory Auditor)
For and on behalf of DJH Mitten Clarke Audit Limited
29 March 2024
Accountants
Statutory Auditor
The Glades
Festival Way
Stoke-on-Trent
Staffordshire
ST1 5SQ
Sutton Venture Group Limited
Group income statement
For the period ended 1 July 2023
- 12 -
Period
Year
ended
ended
1 July
30 June
2023
2022
Notes
£
£
Turnover
3
190,482,992
127,350,137
Cost of sales
(147,082,517)
(102,383,819)
Gross profit
43,400,475
24,966,318
Administrative expenses
(26,251,066)
(20,596,681)
Other operating (expenses)/income
(54,435)
838,023
Exceptional item
4
(969,388)
(7,166,213)
Operating profit/(loss)
5
16,125,586
(1,958,553)
Interest receivable and similar income
8
56
156,503
Interest payable and similar expenses
9
(1,629,800)
(878,697)
Amounts written off investments
10
-
(1,239)
Profit/(loss) before taxation
14,495,842
(2,681,986)
Tax on profit/(loss)
11
(2,660,581)
-
0
Profit/(loss) for the financial period
30
11,835,261
(2,681,986)
Profit/(loss) for the financial period is attributable to:
- Owners of the parent company
11,824,725
(2,740,801)
- Non-controlling interests
10,536
58,815
11,835,261
(2,681,986)

The income statement has been prepared on the basis that all operations are continuing operations.

Sutton Venture Group Limited
Group statement of comprehensive income
For the PERIOD ended 1 July 2023
- 13 -
Period
Year
ended
ended
1 July
30 June
2023
2022
£
£
Profit/(loss) for the period
11,835,261
(2,681,986)
Other comprehensive income
Revaluation of tangible fixed assets and intangible assets
28,340,000
5,122,960
Tax relating to other comprehensive income
(7,312,000)
(1,469,425)
Other comprehensive income for the period
21,028,000
3,653,535
Total comprehensive income for the period
32,863,261
971,549
Total comprehensive income for the period is attributable to:
- Owners of the parent company
32,852,725
873,574
- Non-controlling interests
10,536
97,975
32,863,261
971,549
Sutton Venture Group Limited
Group statement of financial position
As at 1 July 2023
01 July 2023
- 14 -
1 July 2023
30 June 2022
Notes
£
£
£
£
Fixed assets
Intangible assets
13
78,618,000
49,101,000
Tangible assets
14
27,451,409
25,422,873
Investment property
15
327,222
327,222
106,396,631
74,851,095
Current assets
Stocks
19
22,118,783
27,137,440
Debtors
20
84,773,679
54,118,866
Cash at bank and in hand
6,517,069
3,476,304
113,409,531
84,732,610
Creditors: amounts falling due within one year
21
(89,329,951)
(67,136,897)
Net current assets
24,079,580
17,595,713
Total assets less current liabilities
130,476,211
92,446,808
Creditors: amounts falling due after more than one year
22
(6,224,771)
(6,429,022)
Provisions for liabilities
Deferred tax liability
25
19,681,260
12,369,260
(19,681,260)
(12,369,260)
Net assets
104,570,180
73,648,526
Capital and reserves
Called up share capital
28
25,100
25,100
Revaluation reserve
29
74,208,592
53,443,156
Profit and loss reserves
30
30,432,348
20,095,059
Equity attributable to owners of the parent company
104,666,040
73,563,315
Non-controlling interests
(95,860)
85,211
104,570,180
73,648,526
Sutton Venture Group Limited
Group statement of financial position (continued)
As at 1 July 2023
01 July 2023
- 15 -
The financial statements were approved by the board of directors and authorised for issue on 29 March 2024 and are signed on its behalf by:
29 March 2024
Mr R  Sutton
Director
Company registration number 04070786 (England and Wales)
Sutton Venture Group Limited
Company statement of financial position
As at 1 July 2023
01 July 2023
- 16 -
1 July 2023
30 June 2022
Notes
£
£
£
£
Fixed assets
Intangible assets
13
75,300,000
-
0
Tangible assets
14
5,861,454
5,992,778
Investment property
15
519,800
519,800
Investments
16
195,628
195,628
81,876,882
6,708,206
Current assets
Debtors
20
18,878,027
107,472
Cash at bank and in hand
9,515
756
18,887,542
108,228
Creditors: amounts falling due within one year
21
(70,178,212)
(10,764,796)
Net current liabilities
(51,290,670)
(10,656,568)
Total assets less current liabilities
30,586,212
(3,948,362)
Creditors: amounts falling due after more than one year
22
(5,500,000)
(5,900,000)
Provisions for liabilities
Deferred tax liability
25
19,008,546
235,546
(19,008,546)
(235,546)
Net assets/(liabilities)
6,077,666
(10,083,908)
Capital and reserves
Called up share capital
28
25,100
25,100
Revaluation reserve
29
3,825,060
4,052,060
Profit and loss reserves
30
2,227,506
(14,161,068)
Total equity
6,077,666
(10,083,908)

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 year was £52,084,574 (2022 - Loss - £18,794,151).

The financial statements were approved by the board of directors and authorised for issue on 29 March 2024 and are signed on its behalf by:
29 March 2024
Mr R  Sutton
Director
Company registration number 04070786 (England and Wales)
Sutton Venture Group Limited
Group statement of changes in equity
For the period ended 1 July 2023
- 17 -
Share capital
Revaluation reserve
Profit and loss reserves
Total controlling interest
Non-controlling interest
Total
Notes
£
£
£
£
£
£
Balance at 1 July 2021
25,100
49,996,553
23,168,088
73,189,741
26,396
73,216,137
Year ended 30 June 2022:
Loss for the year
-
-
(2,740,801)
(2,740,801)
58,815
(2,681,986)
Other comprehensive income:
Revaluation of tangible fixed assets
-
5,122,960
-
5,122,960
-
5,122,960
Tax relating to other comprehensive income
-
(1,469,425)
-
0
(1,469,425)
-
(1,469,425)
Amounts attributable to non-controlling interests
-
-
(39,160)
(39,160)
39,160
-
Total comprehensive income
-
3,653,535
(2,779,961)
873,574
97,975
971,549
Dividends
12
-
-
(500,000)
(500,000)
(39,160)
(539,160)
Transfers
-
(206,932)
206,932
-
-
-
Balance at 30 June 2022
25,100
53,443,156
20,095,059
73,563,315
85,211
73,648,526
Sutton Venture Group Limited
Group statement of changes in equity (continued)
For the period ended 1 July 2023
Share capital
Revaluation reserve
Profit and loss reserves
Total controlling interest
Non-controlling interest
Total
Notes
£
£
£
£
£
£
- 18 -
Period ended 1 July 2023:
Profit for the period
-
-
11,824,725
11,824,725
10,536
11,835,261
Other comprehensive income:
Revaluation of intangible assets
-
28,340,000
-
28,340,000
-
28,340,000
Tax relating to other comprehensive income
-
(7,312,000)
-
0
(7,312,000)
-
(7,312,000)
Total comprehensive income
-
21,028,000
11,824,725
32,852,725
10,536
32,863,261
Dividends
12
-
-
(1,750,000)
(1,750,000)
(191,607)
(1,941,607)
Transfers
-
(262,564)
262,564
-
-
-
Balance at 1 July 2023
25,100
74,208,592
30,432,348
104,666,040
(95,860)
104,570,180
Sutton Venture Group Limited
Company statement of changes in equity
For the period ended 1 July 2023
- 19 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 July 2021
25,100
3,220,556
5,140,387
8,386,043
Year ended 30 June 2022:
Loss for the year
-
-
(18,794,151)
(18,794,151)
Other comprehensive income:
Revaluation of tangible fixed assets
-
863,360
-
863,360
Total comprehensive income
-
863,360
(18,794,151)
(17,930,791)
Dividends
12
-
-
(539,160)
(539,160)
Transfers
-
(31,856)
31,856
-
Balance at 30 June 2022
25,100
4,052,060
(14,161,068)
(10,083,908)
Period ended 1 July 2023:
Profit for the period
-
-
18,138,574
18,138,574
Other comprehensive income:
Tax relating to other comprehensive income
-
(227,000)
-
0
(227,000)
Total comprehensive income
-
(227,000)
18,138,574
17,911,574
Dividends
12
-
-
(1,750,000)
(1,750,000)
Balance at 1 July 2023
25,100
3,825,060
2,227,506
6,077,666
Sutton Venture Group Limited
Group statement of cash flows
For the period ended 1 July 2023
- 20 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
34
15,275,007
(6,595,258)
Interest paid
(1,629,800)
(878,697)
Income taxes paid
(1,973,204)
(616,341)
Net cash inflow/(outflow) from operating activities
11,672,003
(8,090,296)
Investing activities
Purchase of intangible assets
(1,177,000)
-
Purchase of tangible fixed assets
(2,535,024)
(532,157)
Proceeds from disposal of tangible fixed assets
106,031
229,278
Proceeds from disposal of investments
-
(1,239)
Repayment of loans
948,929
(505,781)
Interest received
56
156,503
Net cash used in investing activities
(2,657,008)
(653,396)
Financing activities
(Repayment) of / proceeds from bank loans
(10,235,380)
4,480,521
Proceeds from / (Purchase) of derivatives
475,269
(475,269)
Payment of finance leases obligations
(111,677)
(136,956)
Dividends paid to equity shareholders
(1,750,000)
(500,000)
Dividends paid to non-controlling interests
(191,607)
(39,160)
Net cash (used in)/generated from financing activities
(11,813,395)
3,329,136
Net decrease in cash and cash equivalents
(2,798,400)
(5,414,556)
Cash and cash equivalents at beginning of period
(14,396,420)
(8,981,864)
Cash and cash equivalents at end of period
(17,194,820)
(14,396,420)
Relating to:
Cash at bank and in hand
6,517,069
3,476,304
Bank overdrafts included in creditors payable within one year
(23,711,889)
(17,872,724)
Sutton Venture Group Limited
Notes to the group financial statements
For the period ended 1 July 2023
- 21 -
1
Accounting policies
Company information

Sutton Venture Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Sutton House, Berry Hill Road, Fenton, Stoke on Trent, Staffordshire, ST4 2NL.

 

The group consists of Sutton Venture Group Limited and all of its subsidiaries.

1.1
Reporting period

The financial reporting period was extended by a day to facilitate the intra-group purchase of a trademark.

1.2
Accounting convention

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, other than where a true and fair override has been applied as noted in accounting policy note 1.7 - Intangible fixed assets.

 

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments 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 the parent of the group that prepares publicly available consolidated financial statements, 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.

 

 

1.3
Business combinations

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. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
1
Accounting policies
(Continued)
- 22 -
1.4
Basis of consolidation

The consolidated financial statements incorporate those of Sutton Venture Group Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.

 

All financial statements are made up to 1 July 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The following subsidiaries have been included in the group financial statements using the purchase method of accounting. Accordingly, the group profit and loss account and statement of cash flows includes the results and cashflows of the subsidiaries from the date of acquisition.

 

R K Wholesale Limited

Powerforce Distribution Limited

Clearco Specialists Limited (Dormant)

Powerforce Homewares Limited (Dormant)

Connextions Logistics Limited (Dormant

Sourcing Partner Limited

Powerforce Distribution Ireland Limited

Andrew James (Homewares) Limited

Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates. In the group financial statements, associates are accounted for using the equity method.

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. In the group financial statements, joint ventures are accounted for using the equity method.

1.5
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.6
Turnover

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 VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

 

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
1
Accounting policies
(Continued)
- 23 -

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from rentals of property are recognised when the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

 

Revenue from royalty agreements is recognised on an accruals basis in accordance with the substance of the agreement (usually on the sale of the right to use the entity's trademark), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

1.7
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

 

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

1.8
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

 

The directors have considered the accounting policy for trademarks and brands in the context of section 18 of accounting standard FRS102.

 

FRS102 indicates that there is a presumption that there is no active market place for trademarks and brands separable to the trade, and that accordingly i) the asset cannot be shown at valuation, and ii) the asset should be amortised over its useful economic life.

 

The directors believe that this does not present a true and fair view of the business or financial statements. The directors have undertaken research regarding market data for trademarks and brands in respect of consumer products in this sector and believe that there is such an active market place.

 

On this basis the directors present the brand at its fair value on the balance sheet rather than at cost. For the same reason the directors believe that there is also a residual value at the end of its useful life economic life, and that the amortisation policy of amortising fair value less residual value over its useful economc life is appropriate.

Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
1
Accounting policies
(Continued)
- 24 -

Amortisation 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:

Trademarks / Brands
Over its estimated useful economic life of 20 years

Where the directors consider the carrying amount of an intangible fixed asset is equal to it's recoverable amount, no amortisation is charged.

1.9
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.

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:

Freehold property
2% per annum on revalued cost
Plant and machinery
15% per annum on net book value
Fixtures, fittings and equipment
15% / 25%  per annum on net book value
Motor vehicles
25% per annum on net book value

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 recognised in the income statement.

1.10
Investment property

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

 

Property rented to a group entity is accounted for as tangible fixed assets.

1.11
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
1
Accounting policies
(Continued)
- 25 -
1.12
Impairment of fixed assets

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.

 

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

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.

1.13
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

 

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.14
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.

Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
1
Accounting policies
(Continued)
- 26 -
1.15
Financial instruments

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 statement of financial position 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

Basic financial assets, which include debtors, cash and bank balances and amounts due from fellow group companies, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

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.

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 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.

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 group after deducting all of its liabilities.

Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
1
Accounting policies
(Continued)
- 27 -
Basic financial liabilities

Basic financial liabilities, including creditors, bank loans 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 payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

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

 

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

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.16
Equity instruments

Equity instruments issued by the group 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 group.

1.17
Derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

 

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.

1.18
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
1
Accounting policies
(Continued)
- 28 -
Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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

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.

 

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 income statement, 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 if, and only if, there is 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.

1.19
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.

1.20
Retirement benefits

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

1.21
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 statement of financial position 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 leased asset are consumed.

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
1
Accounting policies
(Continued)
- 29 -
1.22
Government grants

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.

1.23
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.

Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
- 30 -
2
Judgements and key sources of estimation uncertainty

In the application of the group’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.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Slow moving stock provision

Stock is valued at the lower cost and net realisable value. Net realisable value includes, where necessary, provisions for slow moving and obsolete stocks.

Bad debt provision

A provision for bad debts is made where, in the opinion of the directors, the recoverability of the debt is no longer considered probable.

Valuation of freehold land and buildings

The directors use the market opinion of qualified, external valuers when valuing freehold land and buildings.

Valuation of intangible trademarks / brands

A key judgement applied to the treatment of owned trademarks and brands is that there is a current and future active market for these assets, which differs to the presumption included in section 18 of FRS102.

 

The directors have undertaken research regarding market data for trademarks and brands in respect of consumer products in this sector and believe that there is such an active market place, which rebuts the presumption within FRS102.

 

Accordingly, the directors present the brand at its fair value on the balance sheet rather than at cost. For the same reason the directors believe that there is also a residual value at the end of its useful economic life, and that the policy of amortising fair value less residual value over its useful economic life is appropriate.

 

The company employed an external valuer (BDO) to undertake a valuation of the brand. The external valuation applied the relief from royalty valuation method, using a discounted cash flow model.

 

Had the directors adopted the presumption in FRS102, the trademarks/brands would be valued at a cost of £2,248,000 (2022:1,071,000) Deferred tax liabilities would be stated at £3,424,580 (2022: £3,197,260), and the net assets of the group would be stated at £44,457,180 as at 1 July 2023 (2022: £34,790,526).

 

The directors use the market opinion of qualified, external valuers when valuing intangible assets.

3
Turnover and other revenue

An analysis of the group's turnover is as follows:

Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
3
Turnover and other revenue
(Continued)
- 31 -
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
180,230,389
118,979,659
European Union
9,034,921
7,815,320
Rest of the world
1,217,682
555,158
190,482,992
127,350,137
2023
2022
£
£
Other revenue
Interest income
56
156,503
Royalty income
221,886
193,990
Grants received
58,010
51,875
Rental income
138,489
233,778
4
Exceptional items
2023
2022
£
£
Expenditure
Demurrage costs
969,388
7,166,213
969,388
7,166,213

Due to the effects of the global pandemic on the movement and storage of goods, the group incurred exceptional demurrage costs in the financial period over and above the normal level of trade. These exceptional costs are not expected to be repeated.

5
Operating profit/(loss)
2023
2022
£
£
Operating profit/(loss) for the period is stated after charging/(crediting):
Exchange losses/(gains)
801,104
(1,243,239)
Hedging item losses/(gains)
472,820
(475,269)
Government grants
(58,010)
(51,875)
Depreciation of owned tangible fixed assets
692,436
683,672
Depreciation of tangible fixed assets held under finance leases
179,078
133,281
(Profit)/loss on disposal of tangible fixed assets
-
58,847
Operating lease charges
66,071
78,271
Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
- 32 -
6
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
13,650
13,530
Audit of the financial statements of the company's subsidiaries
112,350
106,205
126,000
119,735
7
Employees

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

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Management and administration
197
219
-
-
Warehouse, distribution and drivers
235
239
-
-
Sales
23
23
-
-
Total
455
481
-
0
-
0

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
16,969,387
14,817,063
23,112
24,014
Social security costs
838,215
582,803
-
-
Pension costs
428,145
259,114
-
0
-
0
18,235,747
15,658,980
23,112
24,014
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
56
-
0
Other interest income
-
156,503
Total income
56
156,503
Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
- 33 -
9
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
584,089
343,150
Other interest on financial liabilities
69,522
195,458
Interest on finance leases and hire purchase contracts
-
5,594
Other interest
976,189
334,495
Total finance costs
1,629,800
878,697
10
Amounts written off investments
2023
2022
£
£
Gain/(loss) on disposal of financial assets held at cost
-
(1,239)
11
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
2,660,581
-
0

The actual charge for the period 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:

2023
2022
£
£
Profit/(loss) before taxation
14,495,842
(2,681,986)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 20.50% (2022: 19.00%)
2,971,648
(509,577)
Tax effect of expenses that are not deductible in determining taxable profit
(375,923)
467,451
Unutilised tax losses carried forward
-
0
186,819
Group relief
-
0
(97,500)
Effect of overseas tax rates
-
0
590
Depreciation and loss on disposal
178,660
166,402
Capital allowances
(113,804)
(214,185)
Group loss relief
-
0
97,500
Other
-
0
(97,500)
Taxation charge
2,660,581
-
Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
11
Taxation
(Continued)
- 34 -

In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised directly in other comprehensive income:

2023
2022
£
£
Deferred tax arising on:
Revaluation of property and intangible assets
7,312,000
1,469,425

Factors that may affect future tax charges:

 

The UK Budget 2021 announcements on 3 March 2021 included measures to support economic recovery as a result of the ongoing COVID-19 pandemic. These included an increase to the UK's main corporation tax rate to 25%, which is due to be effective from 1 April 2023. These changes were substantively enacted at the balance sheet date and hence have been reflected in the measurement of deferred tax balances at the year end.

12
Dividends
2023
2022
£
£
Interim paid
1,789,936
554,160
13
Intangible fixed assets
Group
Trademarks / Brands
£
Cost or valuation
At 1 July 2022
49,101,000
Additions
1,177,000
Revaluation
28,340,000
At 1 July 2023
78,618,000
Amortisation and impairment
At 1 July 2022 and 1 July 2023
-
0
Carrying amount
At 1 July 2023
78,618,000
At 30 June 2022
49,101,000
Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
13
Intangible fixed assets
(Continued)
- 35 -
Company
Trademarks / Brands
£
Cost or valuation
At 1 July 2022
-
0
Additions
90,700,000
At 1 July 2023
90,700,000
Amortisation and impairment
At 1 July 2022
-
0
Impairment losses
15,400,000
At 1 July 2023
15,400,000
Carrying amount
At 1 July 2023
75,300,000
At 30 June 2022
-
0

If revalued assets were stated on an historical cost basis rather than a fair value basis, the total amounts included would have been as follows:

Group
Company
2023
2022
2023
2022
£
£
£
£
Cost
2,248,000
1,071,000
-
-
Accumulated amortisation
-
-
-
-
Carrying value
2,248,000
1,071,000
-
-

The brands were revalued by an independent valuer, BDO LLP in May 2021 to current market value, by applying relief from royalty valuation method, using a discounted cash flow model. In the opinion of the directors the carrying amount of the asset remains equal to its recoverable amount.

 

An annual impairment review is carried out at each balance sheet date.

Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
- 36 -
14
Tangible fixed assets
Group
Freehold property
Assets under construction
Plant and machinery
Fixtures, fittings and equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost or valuation
At 1 July 2022
23,656,024
-
0
564,684
3,350,786
1,695,362
29,266,856
Additions
-
0
2,298,603
-
0
289,586
417,892
3,006,081
Disposals
-
0
-
0
-
0
-
0
(174,000)
(174,000)
At 1 July 2023
23,656,024
2,298,603
564,684
3,640,372
1,939,254
32,098,937
Depreciation and impairment
At 1 July 2022
2,996
-
0
564,684
2,436,465
839,838
3,843,983
Depreciation charged in the period
420,436
-
0
-
0
261,357
189,721
871,514
Eliminated in respect of disposals
-
0
-
0
-
0
-
0
(67,969)
(67,969)
At 1 July 2023
423,432
-
0
564,684
2,697,822
961,590
4,647,528
Carrying amount
At 1 July 2023
23,232,592
2,298,603
-
0
942,550
977,664
27,451,409
At 30 June 2022
23,653,028
-
0
-
0
914,321
855,524
25,422,873
Company
Freehold property
Plant and machinery
Total
£
£
£
Cost or valuation
At 1 July 2022 and 1 July 2023
5,992,778
120,000
6,112,778
Depreciation and impairment
At 1 July 2022
-
0
120,000
120,000
Depreciation charged in the period
131,324
-
0
131,324
At 1 July 2023
131,324
120,000
251,324
Carrying amount
At 1 July 2023
5,861,454
-
0
5,861,454
At 30 June 2022
5,992,778
-
0
5,992,778
Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
14
Tangible fixed assets
(Continued)
- 37 -

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

Group
Company
2023
2022
2023
2022
£
£
£
£
Fixtures, fittings and equipment
863,189
571,265
-
0
-
0
Motor vehicles
144,803
223,249
-
0
-
0
1,007,992
794,514
-
-

Freehold land and buildings with a carrying amount of £23.08m were revalued at 16 March 2021 by Mark Weller MRCIS of Lambert Smith Hampton, independent valuers not connected with the company on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.

The following assets are carried at valuation. If the assets were measured using the cost model, the carrying amounts would be as follows:

Freehold land
2023
2022
£
£
Group
Cost
9,161,000
9,161,000
Accumulated depreciation
(2,096,200)
(1,912,980)
Carrying value
7,064,800
7,248,020
Company
Cost
4,400,000
4,400,000
Accumulated depreciation
(1,144,000)
(1,056,000)
Carrying value
3,256,000
3,344,000
15
Investment property
Group
Company
2023
2023
£
£
Fair value
At 1 July 2022 and 1 July 2023
327,222
519,800
Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
15
Investment property
(Continued)
- 38 -

Investment property comprises residential and commercial property.

 

The fair value of residential investment property has been arrived at on the basis of a valuation carried out by the directors. The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties.

 

The fair value of commercial investment property has been arrived at on the basis of a valuation carried by Mark Weller MRICS of Lambert Smith Hampton, independent valuers not connected with the company on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.

16
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
17
-
0
-
0
195,628
195,628
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 July 2022 and 1 July 2023
195,628
Carrying amount
At 1 July 2023
195,628
At 30 June 2022
195,628
17
Subsidiaries

Details of the company's subsidiaries at 1 July 2023 are as follows:

Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
17
Subsidiaries
(Continued)
- 39 -
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Clearco Specialists Limited
Sutton House, Bery Hill Road, Fenton, Stoke on Trent, ST4 2NL
Ordinary
100.00
Connextions Logistics Limited
Sutton House, Bery Hill Road, Fenton, Stoke on Trent, ST4 2NL
Ordinary
100.00
Powerforce Distribution Ireland Limited
Sutton House, Bery Hill Road, Fenton, Stoke on Trent, ST4 2NL
Ordinary
100.00
Powerforce Distribution Limited
Sutton House, Bery Hill Road, Fenton, Stoke on Trent, ST4 2NL
Ordinary
100.00
Powerforce Homewares Limited
Sutton House, Bery Hill Road, Fenton, Stoke on Trent, ST4 2NL
Ordinary
100.00
R K Wholesale Limited
Sutton House, Bery Hill Road, Fenton, Stoke on Trent, ST4 2NL
Ordinary
100.00
Sourcing Partner Limited
Sutton House, Bery Hill Road, Fenton, Stoke on Trent, ST4 2NL
Ordinary
80.00
Andrew James (Homewares) Limited
Sutton House, Bery Hill Road, Fenton, Stoke on Trent, ST4 2NL
Ordinary
100.00
18
Financial instruments
Group
Company
2023
2022
2023
2022
£
£
£
£
Carrying amount of financial assets
Instruments measured at fair value through profit or loss
-
475,269
-
-
19
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Goods for resale
22,118,783
27,137,440
-
0
-
0
Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
- 40 -
20
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
56,048,380
39,324,436
24,433
24,435
Corporation tax recoverable
431,901
335,067
-
0
-
0
Amounts due from subsidiary undertakings
-
0
-
0
496,206
(9,352)
Amounts due from fellow group undertakings
-
0
-
0
11,631
11,821
Derivative financial instruments
-
475,269
-
-
Other debtors
25,949,837
10,955,939
18,302,361
37,187
Prepayments and accrued income
2,300,315
2,984,909
150
135
84,730,433
54,075,620
18,834,781
64,226
Amounts falling due after more than one year:
Deferred tax asset (note 25)
43,246
43,246
43,246
43,246
Total debtors
84,773,679
54,118,866
18,878,027
107,472
21
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
23
24,111,889
28,108,104
400,000
400,000
Obligations under finance leases
24
387,169
256,392
-
0
-
0
Trade creditors
19,526,493
20,613,967
17,296
17,224
Amounts owed to group undertakings
-
0
-
0
69,548,717
10,148,019
Corporation tax payable
2,655,387
1,871,176
104,267
120,667
Other taxation and social security
24,441,207
2,562,310
-
-
Government grants
26
34,583
49,281
-
0
-
0
Other creditors
6,226,620
5,931,373
170
170
Accruals and deferred income
11,946,603
7,744,294
107,762
78,716
89,329,951
67,136,897
70,178,212
10,764,796
Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
- 41 -
22
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
23
5,500,000
5,900,000
5,500,000
5,900,000
Obligations under finance leases
24
724,771
496,168
-
0
-
0
Government grants
26
-
0
32,854
-
0
-
0
6,224,771
6,429,022
5,500,000
5,900,000

Net obligations under finance lease and hire purchase contracts are secured by fixed charges on the assets to which they relate.

23
Loans and overdrafts
Group
Company
2023
2022
2023
2022
£
£
£
£
Bank loans
5,900,000
16,135,380
5,900,000
6,300,000
Bank overdrafts and invoice discounting
23,711,889
17,872,724
-
0
-
0
29,611,889
34,008,104
5,900,000
6,300,000
Payable within one year
24,111,889
28,108,104
400,000
400,000
Payable after one year
5,500,000
5,900,000
5,500,000
5,900,000

Debt is in the form of a bank loan which is secured by a fixed charge over properties held at Stone Business Park, Berryhill Road, Fenton and Bute Street, Fenton.

 

The bank loan is a monthly repayment (capital and interest) instrument, maturing in May 2024.

The interest rate is calculated at a percentage rate equal to 2.65% per annum above LIBOR.

 

24
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
387,169
256,392
-
0
-
0
In two to five years
724,771
496,168
-
0
-
0
1,111,940
752,560
-
-
Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
24
Finance lease obligations
(Continued)
- 42 -

Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

25
Deferred taxation

Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Group
£
£
£
£
Accelerated capital allowances
-
-
-
43,246
Tax losses
-
-
43,246
-
Deferred tax on revalued freehold property
3,424,580
3,197,580
-
-
Deferred tax in relation to revalued intangible fixed assets
16,256,680
9,171,680
-
-
19,681,260
12,369,260
43,246
43,246
Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Company
£
£
£
£
Accelerated capital allowances
-
-
-
43,246
Tax losses
-
-
43,246
-
Deferred tax on revalued freehold property
462,546
235,546
-
-
Intangible fixed assets
18,546,000
-
-
-
19,008,546
235,546
43,246
43,246
Group
Company
2023
2023
Movements in the period:
£
£
Liability at 1 July 2022
12,326,014
192,300
Charge to profit or loss
227,000
18,773,000
Charge to other comprehensive income
7,085,000
-
Liability at 1 July 2023
19,638,014
18,965,300
Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
- 43 -
26
Government grants
Group
Company
2023
2022
2023
2022
£
£
£
£
Arising from government grants
34,583
82,135
-
-
34,583
82,135
-
-

Deferred income is included in the financial statements as follows:

Current liabilities
34,583
49,281
-
0
-
0
Non-current liabilities
-
0
32,854
-
0
-
0
34,583
82,135
-
-
27
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
428,145
259,114

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.

28
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
25,100
25,100
25,100
25,100

Each class of ordinary shares carry full voting, dividend and capital distribution rights.

29
Revaluation reserve

The revaluation reserve represents the excess of the fair value of assets over their book value.

30
Profit and loss reserves

The retained earnings reserve holds the retained earnings of the Group, after the deduction of any dividends paid in the period.

Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
- 44 -
31
Events after the reporting date

On 21 July 2023, Sutton Venture Group Limited acquired 45% of the share capital of Swan Products Limited. Consideration payable included £2,500,000 on completion.

 

Since the year end, the Group has refinanced its current borrowing arrangements with HSBC and agreed an arrangement with Close Brothers Finance Limited.

32
Directors' transactions

Interest free loans have been granted by the group to its directors as follows:

 

Description
% Rate
Opening balance
Amounts advanced
Amounts repaid
Closing balance
£
£
£
£
Director loan account
-
1,059,056
913,464
(1,750,000)
222,520
1,059,056
913,464
(1,750,000)
222,520
33
Controlling party

The ultimate controlling party is Mr R Sutton by virtue of his majority shareholding.

34
Cash generated from/(absorbed by) group operations
2023
2022
£
£
Profit/(loss) for the period after tax
11,835,261
(2,681,986)
Adjustments for:
Taxation charged
2,660,581
-
0
Finance costs
1,629,800
878,697
Investment income
(56)
(156,503)
(Gain)/loss on disposal of tangible fixed assets
-
58,847
Depreciation and impairment of tangible fixed assets
871,514
816,953
Other gains and losses
-
1,239
Movements in working capital:
Decrease/(increase) in stocks
5,018,657
(8,865,972)
Increase in debtors
(31,982,177)
(9,415,576)
Increase in creditors
25,288,979
12,820,918
Decrease in deferred income
(47,552)
(51,875)
Cash generated from/(absorbed by) operations
15,275,007
(6,595,258)
Sutton Venture Group Limited
Notes to the group financial statements (continued)
For the period ended 1 July 2023
- 45 -
35
Analysis of changes in net debt - group
1 July 2022
Cash flows
New finance leases
1 July 2023
£
£
£
£
Cash at bank and in hand
3,476,304
3,040,765
-
6,517,069
Bank overdrafts
(17,872,724)
(5,839,165)
-
(23,711,889)
(14,396,420)
(2,798,400)
-
(17,194,820)
Borrowings excluding overdrafts
(16,135,380)
10,235,380
-
(5,900,000)
Obligations under finance leases
(752,560)
111,677
(471,057)
(1,111,940)
(31,284,360)
7,548,657
(471,057)
(24,206,760)
2023-07-012022-07-01falseCCH SoftwareCCH Accounts Production 2023.300No description of principal activityMr R SuttonMrs S M SuttonMrs S M 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