Company registration number 01530324 (England and Wales)
NEWROSS IMPEX LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 1 JULY 2023
NEWROSS IMPEX LIMITED
COMPANY INFORMATION
Directors
Simon Cope
Robert Siswick
Hongmei Chen
Paul Marlow
David Cropper
(Appointed 19 January 2023)
Company number
01530324
Registered office
New Skopes House
2 Cross Green Garth
Cross Green Industrial Estate
Leeds
LS9 0SF
Auditor
BHP LLP
New Chartford House
Centurion Way
Cleckheaton
Bradford
West Yorkshire
BD19 3QB
Bankers
HSBC Bank Plc
33 Park Row
Leeds
West Yorkshire
LS1 1LD
Solicitors
Beyond Corporate Limited
Castlefield House
Liverpool Road
Castlefield
Manchester
M3 4SB
NEWROSS IMPEX LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 26
NEWROSS IMPEX LIMITED
STRATEGIC REPORT
FOR THE PERIOD ENDED 1 JULY 2023
- 1 -
The directors present the strategic report for the period ended 1 July 2023.
Fair review of the business
The company’s principal activity is the sale of menswear in the UK and Southern Ireland. There have not been any significant changes in the company’s principal activities in the year under review.
As shown in the profit and loss account on page 8 sales increased by 9.4% (2022: increased by 84.4%) reflecting the continued strong performance of the company post pandemic. Operating profit has increased from £2,580,423 to an operating profit of £3,238,141.
Sales performance during the financial year was extremely strong and the company successfully navigated the downward trend experienced by many of our competitors within the retail sector in 2023, as highlighted in the retail Centre’s store league tables. The overall margin is also growing in line with our strategic objectives. Business performance by channel was evaluated, and the company decided to discontinue with products that could only be sold through one channel, to reduce risk and improve stock turn. This allowed the business to rationalise our customer base and to target higher margin opportunities. As a result, in early 2023 the business decided to exit the womenswear market as declining sales of women’s garments made it unviable to continue, at the same time as other parts of the business were significantly growing. The company also launched a collaboration with Next during the second half of 2022 and the sales performance during the year has been extremely strong, significantly outperforming sales targets.
Fixed Assets and stock levels have increased during the period as the business continued its strategy of investing in new standalone stores to expand its store portfolio and retail footprint. Three new stores opened in the last quarter of 2022.
The balance sheet on Page 9 on the financial statement shows the financial position as at the period-end is, in net asset terms, an increase to £4,172,920 from £1,814,002 which is primarily due to the increase in the retained profit.
Supply chain challenges have stabilised during the period and costs have reduced to 2019 levels, which helped the company to remain extremely competitive in a challenging market.
Principal risks and uncertainties
Competitive pressure within the UK retail sector is a continuing challenge for the company. The company aims to manage this risk by focusing on providing quality products, at highly competitive prices, whilst offering personalised, excellent customer service. The company’s long-established relationship with its supply chain is fundamental to supporting the company strategy, ensuring preferential supply from the Far East.
The company is exposed to the effects of fluctuating foreign exchange rates. It mitigates this risk by agreeing prices with suppliers in sterling. The company does not enter into foreign exchange hedging contracts owing to cost/benefit considerations.
Key performance indicators
2023 2022
Revenue £32,137,617 £29,364,286
Operating (loss)/ profit £3,238,141 £2,580,423
Cash £4,241,192 £6,486,596
NEWROSS IMPEX LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 1 JULY 2023
- 2 -
Other performance indicators
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 company continues and that the appropriate training is arranged. It is the policy of the company 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 company'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.
Post reporting date events
With inflation rates higher than target and interest rates forecast to remain around their current levels at the start of 2024, there is still downward pressure on consumer demand. The company has not been immune to the economic downturn and sales performance in the last quarter of 2023 was extremely challenging.
The Red Sea conflict has had an impact on shipping routes and costs, and we continue to monitor the situation closely to minimize the impact on the supply chain and costs.
The company is aiming to open four news stores in 2024, with the first new store due to open in May.
Paul Marlow
Director
14 March 2024
NEWROSS IMPEX LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 1 JULY 2023
- 3 -
The directors present their annual report and financial statements for the period ended 1 July 2023.
Principal activities
The principal activity of the company is the sale of menswear in the UK.
Results and dividends
The results for the period are set out on page 8.
No ordinary dividends were paid. 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:
Simon Cope
Kevin Philbin
(Resigned 19 January 2023)
Robert Siswick
Hongmei Chen
Paul Marlow
Jonathon Cope
(Resigned 31 August 2023)
David Cropper
(Appointed 19 January 2023)
Auditor
In accordance with the company's articles, a resolution proposing that BHP LLP be reappointed as auditor of the company will be put at a General Meeting.
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 company’s auditor 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 company’s auditor is aware of that information.
On behalf of the board
Paul Marlow
Director
14 March 2024
NEWROSS IMPEX LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE PERIOD ENDED 1 JULY 2023
- 4 -
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 company and of 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 judgements 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.
The directors are responsible for the maintenance and integrity of the company website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
NEWROSS IMPEX LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF NEWROSS IMPEX LIMITED
- 5 -
Opinion
We have audited the financial statements of Newross Impex Limited (the 'company') for the period ended 1 July 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the 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 the financial statements:
give a true and fair view of the state of the company's affairs as at 1 July 2023 and of its profit for the period then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the 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.
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:
the information given in the strategic report and the directors' report for the financial period 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.
NEWROSS IMPEX LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NEWROSS IMPEX LIMITED
- 6 -
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 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.
We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the risk, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
We focussed on laws and regulations, relevant to the company, which could give rise to a material misstatement in the financial statements. Our tests included agreeing the financial statement disclosures to underlying supporting documentation, enquiries with management, review of client's operation of controls within the year, in particular, cash and stock controls, and review of expenses, such as legal costs. There are inherent limitations in the audit procedures described and, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
As part of our audit, we addressed the risk of management override of internal controls, including testing of journals and review of nominal ledger. We evaluated whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
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.
NEWROSS IMPEX LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NEWROSS IMPEX LIMITED
- 7 -
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.
Ann Brown
Senior Statutory Auditor
For and on behalf of BHP LLP
14 March 2024
Chartered Accountants
Statutory Auditor
New Chartford House
Centurion Way
Cleckheaton
Bradford
West Yorkshire
BD19 3QB
NEWROSS IMPEX LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 1 JULY 2023
- 8 -
Period
Period
ended
ended
1 July
25 June
2023
2022
Notes
£
£
Turnover
3
32,137,617
29,364,286
Cost of sales
(14,811,896)
(14,860,121)
Gross profit
17,325,721
14,504,165
Distribution costs
(10,703,511)
(8,792,063)
Administrative expenses
(3,384,069)
(3,168,574)
Other operating income
36,895
Operating profit
4
3,238,141
2,580,423
Interest receivable and similar income
7
6,956
Interest payable and similar expenses
8
(289,424)
(261,704)
Profit before taxation
2,955,673
2,318,719
Tax on profit
9
(596,755)
(570,718)
Profit for the financial period
2,358,918
1,748,001
The profit and loss account has been prepared on the basis that all operations are continuing operations.
NEWROSS IMPEX LIMITED
BALANCE SHEET
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
994,472
740,803
Investments
11
100
100
994,572
740,903
Current assets
Stocks
13
6,702,751
5,742,520
Debtors
14
3,297,819
3,142,496
Cash at bank and in hand
4,241,192
6,486,596
14,241,762
15,371,612
Creditors: amounts falling due within one year
15
(7,555,175)
(9,380,274)
Net current assets
6,686,587
5,991,338
Total assets less current liabilities
7,681,159
6,732,241
Creditors: amounts falling due after more than one year
16
(3,508,239)
(4,918,239)
Net assets
4,172,920
1,814,002
Capital and reserves
Called up share capital
20
750,000
750,000
Profit and loss reserves
3,422,920
1,064,002
Total equity
4,172,920
1,814,002
The financial statements were approved by the board of directors and authorised for issue on 14 March 2024 and are signed on its behalf by:
Paul Marlow
Director
Company Registration No. 01530324
NEWROSS IMPEX LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 1 JULY 2023
- 10 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 July 2021
750,000
(683,999)
66,001
Period ended 25 June 2022:
Profit and total comprehensive income for the period
-
1,748,001
1,748,001
Balance at 25 June 2022
750,000
1,064,002
1,814,002
Period ended 1 July 2023:
Profit and total comprehensive income for the period
-
2,358,918
2,358,918
Balance at 1 July 2023
750,000
3,422,920
4,172,920
NEWROSS IMPEX LIMITED
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 1 JULY 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
25
(231,939)
6,769,650
Interest paid
(289,424)
(261,704)
Income taxes refunded
356,348
Net cash (outflow)/inflow from operating activities
(165,015)
6,507,946
Investing activities
Purchase of tangible fixed assets
(701,345)
(274,435)
Proceeds from disposal of tangible fixed assets
186,990
Loans made
(79,974)
Interest received
6,956
Net cash used in investing activities
(694,389)
(167,419)
Financing activities
Proceeds from new bank loans
2,400,000
Repayment of bank loans
(1,386,000)
(2,127,292)
Payment of finance leases obligations
(124,022)
Net cash (used in)/generated from financing activities
(1,386,000)
148,686
Net (decrease)/increase in cash and cash equivalents
(2,245,404)
6,489,213
Cash and cash equivalents at beginning of period
6,486,596
(2,617)
Cash and cash equivalents at end of period
4,241,192
6,486,596
NEWROSS IMPEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 1 JULY 2023
- 12 -
1
Accounting policies
Company information
Newross Impex Limited is a private company limited by shares incorporated in England and Wales. The registered office is New Skopes House, 2 Cross Green Garth, Cross Green Industrial Estate, Leeds, LS9 0SF.
1.1
Reporting period
As a retail business, the entity reports to the Saturday nearest to the year end, which for the current period is 1st July 2023 (prior year equivalent 25 June 2022).
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.
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, The principal accounting policies adopted are set out below.
1.3
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company 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.
1.4
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.
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.
1.5
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:
Fixtures and fittings
12.5% to 25% straight line
Motor vehicles
25% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
NEWROSS IMPEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 1 JULY 2023
1
Accounting policies
(Continued)
- 13 -
1.6
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.8
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.
NEWROSS IMPEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 1 JULY 2023
1
Accounting policies
(Continued)
- 14 -
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
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 company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
NEWROSS IMPEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 1 JULY 2023
1
Accounting policies
(Continued)
- 15 -
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, 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 company’s contractual obligations expire or are discharged or cancelled.
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
NEWROSS IMPEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 1 JULY 2023
1
Accounting policies
(Continued)
- 16 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.13
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.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.16
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.
Grants received in relation to the government Coronavirus Job Retention Scheme (Furlough) have been recognised within other operating income. The grant is accounted for on the accruals basis once the related payroll return has been submitted.
Support received in relation to the interest paid by the UK government under the Coronavirus Business Interruption Loan Scheme is recognised within other operating income on the accruals basis to match the corresponding expense.
NEWROSS IMPEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 1 JULY 2023
1
Accounting policies
(Continued)
- 17 -
1.17
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Stock
Stock is valued at the lower of cost and net realisable value. Included within stock there are various provisions for obsolete and slow moving stocks. The directors must ascertain that the provisions included have been properly calculated and reflect the true recoverable stock value as at the period end.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by geographical market
UK
29,874,485
28,021,656
Rest of Europe
2,263,132
1,342,630
32,137,617
29,364,286
2023
2022
£
£
Other revenue
Interest income
6,956
-
Grants received
-
36,895
NEWROSS IMPEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 1 JULY 2023
- 18 -
4
Operating profit
2023
2022
Operating profit for the period is stated after charging/(crediting):
£
£
Exchange losses
32,739
16,896
Government grants
-
(36,895)
Fees payable to the company's auditor for the audit of the company's financial statements
33,800
29,500
Depreciation of owned tangible fixed assets
447,676
486,428
Depreciation of tangible fixed assets held under finance leases
-
47,256
Profit on disposal of tangible fixed assets
-
(74,620)
Operating lease charges
2,213,894
1,717,847
5
Employees
The average monthly number of persons (including directors) employed by the company during the period was:
2023
2022
Number
Number
Administration
27
25
Warehousing
26
25
Selling
188
190
Total
241
240
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
5,408,201
4,976,765
Social security costs
437,660
394,247
Pension costs
87,139
69,238
5,933,000
5,440,250
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
801,523
797,052
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2022 - 3).
NEWROSS IMPEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 1 JULY 2023
6
Directors' remuneration
(Continued)
- 19 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
430,503
470,179
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
6,956
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
289,424
261,704
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
655,755
Deferred tax
Origination and reversal of timing differences
(59,000)
570,718
Total tax charge
596,755
570,718
NEWROSS IMPEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 1 JULY 2023
9
Taxation
(Continued)
- 20 -
The actual charge for the period can be reconciled to the expected charge for the period based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
2,955,673
2,318,719
Expected tax charge based on the standard rate of corporation tax in the UK of 20.00% (2022: 19.00%)
591,135
440,557
Tax effect of expenses that are not deductible in determining taxable profit
5,387
2,198
Change in unrecognised deferred tax assets
1,448
(15,083)
Other permanent differences
9,676
9,423
Remeasurement of deferred tax for changes in tax rates
(10,891)
133,623
Taxation charge for the period
596,755
570,718
10
Tangible fixed assets
Fixtures and fittings
Motor vehicles
Total
£
£
£
Cost
At 26 June 2022
5,562,402
438,304
6,000,706
Additions
679,920
21,425
701,345
Disposals
(1,742,087)
(18,439)
(1,760,526)
At 1 July 2023
4,500,235
441,290
4,941,525
Depreciation and impairment
At 26 June 2022
4,869,359
390,544
5,259,903
Depreciation charged in the period
418,491
29,185
447,676
Eliminated in respect of disposals
(1,742,087)
(18,439)
(1,760,526)
At 1 July 2023
3,545,763
401,290
3,947,053
Carrying amount
At 1 July 2023
954,472
40,000
994,472
At 25 June 2022
693,043
47,760
740,803
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Motor vehicles
19,666
NEWROSS IMPEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 1 JULY 2023
- 21 -
11
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
12
100
100
12
Subsidiaries
Details of the company's subsidiaries at 1 July 2023 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Deacondale Limited
England and Wales
Ordinary
99.00
Skopes Menswear Limited
England and Wales
Ordinary
100.00
13
Stocks
2023
2022
£
£
Finished goods and goods for resale
6,702,751
5,742,520
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,741,469
1,566,492
Corporation tax recoverable
424,137
Other debtors
512,147
431,574
Prepayments and accrued income
550,203
685,293
2,803,819
3,107,496
Deferred tax asset (note 18)
94,000
35,000
2,897,819
3,142,496
2023
2022
Amounts falling due after more than one year:
£
£
Other debtors
400,000
Total debtors
3,297,819
3,142,496
NEWROSS IMPEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 1 JULY 2023
- 22 -
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
17
1,424,000
1,400,000
Trade creditors
3,301,233
5,852,064
Amounts owed to group undertakings
100
100
Corporation tax
587,966
Other taxation and social security
996,350
1,059,912
Other creditors
916,036
805,803
Accruals and deferred income
329,490
262,395
7,555,175
9,380,274
Amounts owed to group undertakings are unsecured, interest free and have no fixed date of repayment.
The bank loan with HSBC is secured by fixed and floating charges covering all of the undertakings property, assets and rights both future and present including any uncalled capital.
16
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
17
3,506,667
4,916,667
Other borrowings
17
1,572
1,572
3,508,239
4,918,239
The bank loan with HSBC is secured by fixed and floating charges covering all of the undertakings property, assets and rights both future and present including any uncalled capital.
Amounts included above which fall due after five years are as follows:
Payable other than by instalments
1,572
1,572
17
Loans and overdrafts
2023
2022
£
£
Bank loans
4,930,667
6,316,667
Other loans
1,572
1,572
4,932,239
6,318,239
Payable within one year
1,424,000
1,400,000
Payable after one year
3,508,239
4,918,239
NEWROSS IMPEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 1 JULY 2023
17
Loans and overdrafts
(Continued)
- 23 -
Bank loans consist of:
Coronavirus Business Interruption Loan with an initial value of £5,000,000 and repayable to HSBC Bank. The loan was taken out in May 2020. This carries a fixed interest rate. The carrying value of the loan at 1 July 2023 is £2,916,667 (2022: £3,916,667).
HSBC recovery loan with an initial value of £2,400,000 and repayable to HSBC Bank. The loan was taken out in March 2022. This carries a fixed interest rate. The carrying value of the loan at 1 July 2023 is £2,014,000 (2022: £2,400,000).
Other loans relate to a shareholder loan of £1,572 (2022 £1,572) which carries no interest and does not have a repayment date.
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2023
2022
Balances:
£
£
Accelerated capital allowances
94,000
35,000
2023
Movements in the period:
£
Asset at 26 June 2022
(35,000)
Credit to profit or loss
(59,000)
Asset at 1 July 2023
(94,000)
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
87,139
69,238
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
The defined contribution liability as at 1 July 2023 was £14,484 (2022: £13,385).
NEWROSS IMPEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 1 JULY 2023
- 24 -
20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
750,000
750,000
750,000
750,000
21
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
1,763,884
1,569,942
Between two and five years
6,113,413
5,758,380
In over five years
1,456,439
1,632,217
9,333,736
8,960,539
22
Related party transactions
Transactions with related parties
During the period the company entered into the following transactions with related parties:
Purchases
Purchases
2023
2022
£
£
Other related parties
5,896,571
3,337,388
2023
2022
Amounts due to related parties
£
£
Entities with control, joint control or significant influence over the company
1,572
1,572
Other related parties
953,096
1,930,732
NEWROSS IMPEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 1 JULY 2023
- 25 -
23
Directors' transactions
Interest free loans have been granted by the company to its directors as follows:
Description
% Rate
Opening balance
Amounts advanced
Amounts repaid
Closing balance
£
£
£
£
Simon Cope -
-
79,974
30,000
(30,000)
79,974
79,974
30,000
(30,000)
79,974
24
Ultimate controlling party
The directors regard General Universal Establishment, an Anstalt existing under the laws of Liechtenstein, as the company's immediate parent undertaking.
During 2016 and for part of 2017 the ultimate controlling party of Newross Impex Limited was considered to be Mr G Cope. During 2017 Mr G Cope deceased and in the period ending 1 July 2023 his estate was being administered by legal representatives. Following the period end it was confirmed that the estate has now been settled, with Mr S Cope confirmed as the ultimate controlling party of General Universal Establishment and thus of Newross Impex Limited.
25
Cash (absorbed by)/generated from operations
2023
2022
£
£
Profit for the period after tax
2,358,918
1,748,001
Adjustments for:
Taxation charged
596,755
570,718
Finance costs
289,424
261,704
Investment income
(6,956)
Gain on disposal of tangible fixed assets
-
(74,620)
Depreciation and impairment of tangible fixed assets
447,676
533,684
Movements in working capital:
(Increase)/decrease in stocks
(960,231)
1,635,659
Increase in debtors
(520,460)
(1,062,208)
(Decrease)/increase in creditors
(2,437,065)
3,156,712
Cash (absorbed by)/generated from operations
(231,939)
6,769,650
NEWROSS IMPEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 1 JULY 2023
- 26 -
26
Analysis of changes in net funds/(debt)
26 June 2022
Cash flows
1 July 2023
£
£
£
Cash at bank and in hand
6,486,596
(2,245,404)
4,241,192
Borrowings excluding overdrafts
(6,318,239)
1,386,000
(4,932,239)
168,357
(859,404)
(691,047)
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