Company registration number 08265501 (England and Wales)
RESPOKE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
RESPOKE LIMITED
COMPANY INFORMATION
Directors
A P Dormandy
G B Farren
G M Jones
D E C Mott
D Polunina
(Appointed 12 March 2024)
N Brisbourne
(Appointed 11 January 2024)
Secretary
OHS Secretaries Limited
Company number
08265501
Registered office
9th Floor
107 Cheapside
London
EC2V 6DN
Auditor
Mercer & Hole LLP
72 London Road
St Albans
Hertfordshire
AL1 1NS
RESPOKE 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 - 24
RESPOKE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 1 -

The directors present the strategic report for the year ended 31 October 2023.

Review of the business

The company has seen growth in its sales which increased by 8.4% from £15.4m to £16.7m, whilst sustaining a gross profit margin in excess of 40%. The increase in sales is due to an increased marketing effort in the UK and US and a focus on new product development.

 

Administrative expenses decreased from £10.5m to £9.6m resulting in a reduced operating loss of £2.4m (2022 - £3.9m). Administrative expenses reduced as a result of the movement in the share options reserve and reduced marketing spend.

 

The loss for the financial year decreased from £4.3m to £2.5m.

 

Net assets decreased from £4.5m to £3.0m and there was a net cash outflow from operating activities of £2.9m (2022 - £9.3m).

Principal risks and uncertainties

Economic conditions

 

High inflation and rising costs of living are having a significant impact on spending habits in the UK and across the World. As a result, spending has diverted away from discretionary items towards essential purchases and this has meant that the UK Menswear online market declined 10% year on year.

 

Foreign exchange rate risk

 

The company operates in overseas markets and therefore there is foreign exchange risk attached. This risk is mitigated through the nature of our international business whereby suppliers are paid in local currency and products sold using funds generated by the company’s European and US stores, creating a natural currency hedge.

 

Competition risk

 

The market for retailing of fashion clothing is fast changing with high completion in the digital space. The company manages this risk by continually reviewing its product offering to ensure it is providing staple menswear products of high quality. The company is not a fast fashion business, and instead offers a range of evergreen wardrobe essentials that don’t go out of fashion.

Key performance indicators

The board regularly meets to discuss the performance of the business and uses a range of KPI’s to judge the performance.

 

The main financial KPIs are turnover growth, gross profit margin and EBITDA and Adjusted EBITDA (to adjust for exceptional expenses, non-cash items and equity items).

 

For the year ended 31 October 2023:

Future developments

The Company's trading performance has continued to improve since the year end. The Company is focusing on growing the business through new product development and by seeking new distribution channels and developing wholesale relationships.

RESPOKE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 2 -

On behalf of the board

G B Farren
Director
1 August 2024
RESPOKE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 3 -

The directors present their annual report and financial statements for the year ended 31 October 2023.

Principal activities

The principal activity of the company continued to be that of the retail of men's apparel.

Results and dividends

The results for the year 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 year and up to the date of signature of the financial statements were as follows:

A P Dormandy
G B Farren
G M Jones
D E C Mott
M Prakash
(Resigned 11 January 2024)
D Spedding
(Resigned 12 March 2024)
A J Woodhouse
(Resigned 25 October 2023)
D Polunina
(Appointed 12 March 2024)
N Brisbourne
(Appointed 11 January 2024)
Auditor

Mercer & Hole LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed 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.

Issue of share capital

On 30 March 2023 31,434 D4 Ordinary shares were issues for a nominal amount of £0.0001 per share, the total consideration was £296,108.

Additionally, share options were exercised in the year and in exchange 17,104 B Ordinary shares with a nominal value of £0.0001 were issued with an exercise price of £0.07 post year end.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

On behalf of the board
G B Farren
Director
1 August 2024
RESPOKE LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 OCTOBER 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:

 

 

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.

RESPOKE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF RESPOKE LIMITED
- 5 -
Opinion

We have audited the financial statements of Respoke Limited (the 'company') for the year ended 31 October 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:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information 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:

RESPOKE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF RESPOKE 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:

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.

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

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

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. These included, but were not limited to, the Companies Act 2006 and tax legislation.

We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements and the financial report (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate entries including journals to overstate revenue or understate expenditure and management bias in accounting estimates.

Audit procedures performed by the engagement team included:

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non- compliance and cannot be expected to detect non-compliance with all laws and regulations.

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.

RESPOKE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF RESPOKE LIMITED
- 7 -

Other matters

The prior year's financial statements are unaudited.

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.

Jolene Upshall FCA
Senior Statutory Auditor
For and on behalf of Mercer & Hole LLP
1 August 2024
Chartered Accountants
Statutory Auditor
72 London Road
St Albans
Hertfordshire
AL1 1NS
RESPOKE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2023
- 8 -
2023
2022
(Unaudited)
Notes
£
£
Turnover
3
16,708,726
15,373,583
Cost of sales
(9,453,934)
(8,694,580)
Gross profit
7,254,792
6,679,003
Administrative expenses
(9,614,164)
(10,574,247)
Operating loss
4
(2,359,372)
(3,895,244)
Interest payable and similar expenses
8
(164,884)
(378,059)
Loss before taxation
(2,524,256)
(4,273,303)
Tax on loss
9
-
0
-
0
Loss for the financial year
(2,524,256)
(4,273,303)

The profit and loss account has been prepared on the basis that all operations are continuing operations.

RESPOKE LIMITED
BALANCE SHEET
AS AT
31 OCTOBER 2023
31 October 2023
- 9 -
2023
2022
(Unaudited)
Notes
£
£
£
£
Fixed assets
Intangible assets
10
442,500
364,838
Tangible assets
11
61,667
104,419
504,167
469,257
Current assets
Stocks
12
4,594,409
4,753,764
Debtors
13
1,798,441
1,740,165
Cash at bank and in hand
671,964
2,723,822
7,064,814
9,217,751
Creditors: amounts falling due within one year
14
(3,275,409)
(5,134,062)
Net current assets
3,789,405
4,083,689
Total assets less current liabilities
4,293,572
4,552,946
Creditors: amounts falling due after more than one year
15
(1,240,473)
-
0
Net assets
3,053,099
4,552,946
Capital and reserves
Called up share capital
19
587
581
Share premium account
20
21,783,885
21,500,432
Equity reserve
21
800,000
-
0
Share-based payment reserve
706,173
765,223
Profit and loss reserves
(20,237,546)
(17,713,290)
Total equity
3,053,099
4,552,946

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The financial statements were approved by the board of directors and authorised for issue on 1 August 2024 and are signed on its behalf by:
G B Farren
Director
Company registration number 08265501 (England and Wales)
RESPOKE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2023
- 10 -
Share capital
Share premium account
Equity reserve
Share based payments reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
£
Balance at 1 November 2021
481
13,646,382
-
0
541,063
(13,439,987)
747,939
Year ended 31 October 2022:
Loss and total comprehensive income
-
-
-
-
(4,273,303)
(4,273,303)
Issue of share capital
19
100
7,854,050
-
-
-
7,854,150
Other movements
-
-
-
224,160
-
224,160
Balance at 31 October 2022
581
21,500,432
-
0
765,223
(17,713,290)
4,552,946
Year ended 31 October 2023:
Loss and total comprehensive income
-
-
-
-
(2,524,256)
(2,524,256)
Issue of share capital
19
5
283,453
-
-
-
283,458
Issue of convertible loan
-
-
800,000
-
-
800,000
Other movements
-
-
-
(59,050)
-
(59,050)
Balance at 31 October 2023
587
21,783,885
800,000
706,173
(20,237,546)
3,053,099
RESPOKE LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
26
(2,730,566)
(8,913,687)
Interest paid
(164,884)
(378,059)
Net cash outflow from operating activities
(2,895,450)
(9,291,746)
Investing activities
Purchase of intangible assets
(240,000)
(240,000)
Purchase of tangible fixed assets
(17,896)
(73,998)
Proceeds from disposal of tangible fixed assets
15,164
2,980
Net cash used in investing activities
(242,732)
(311,018)
Financing activities
Proceeds from issue of shares
297,305
8,189,688
Share issue costs
(13,847)
(335,538)
Issue of convertible loans
800,000
-
0
Proceeds from borrowings
500,000
6,374,594
Repayment of borrowings
(1,956,357)
(4,634,107)
Proceeds from new bank loans
1,500,000
-
0
Repayment of bank loans
(40,777)
-
0
Net cash generated from financing activities
1,086,324
9,594,637
Net decrease in cash and cash equivalents
(2,051,858)
(8,127)
Cash and cash equivalents at beginning of year
2,723,822
2,731,949
Cash and cash equivalents at end of year
671,964
2,723,822
RESPOKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
- 12 -
1
Accounting policies
Company information

Respoke Limited is a private company limited by shares incorporated in England and Wales. The registered office is 9th Floor, 107 Cheapside, London, EC2V 6DN.

1.1
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.

1.2
Going concern

The Board of Directors has conducted a comprehensive review of the company's financial position, cash flow forecasts, and future prospects in light of current economic conditions and potential risks. After this assessment, the Directors are confident that the company possesses sufficient financial resources and operational flexibility to remain viable for at least the next 12 months from the date of these financial statements. Therefore, the financial statements have been prepared on the going concern basis.true

1.3
Turnover

Turnover is recognised at the fair value of the consideration receivable for apparel goods provided in the normal course of business, and is shown net of value added tax and other sales related taxes.

 

The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, 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.

1.4
Research and development expenditure

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

1.5
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.

Amortisation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

Software
25% straight line
RESPOKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 13 -
1.6
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

Fixtures and fittings
33.3% straight line
Computers
33.3% straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

1.7
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

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.

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, overheads that have been incurred in bringing the stocks to their present location and condition.

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.

1.9
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.

RESPOKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 14 -
1.10
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ 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.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors and bank loans, 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.

RESPOKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 15 -
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
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.

1.13
Retirement benefits

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

1.14
Share-based payments

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

 

Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.

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

Media for equity deal

Media costs incurred under media-for-equity deals are amortised on a straight-line basis over the estimated life of the media. The amortisation is recognized in the income statement over the term of the media asset, ensuring a systematic allocation of the cost over its useful life, reflecting the consumption of economic benefits associated with the media over time.

RESPOKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 16 -
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.

Amortisation of media costs in relation to the media for equity deal

The directors recognise that estimating the amortisation of media costs requires careful assessment of market conditions, consumer behaviour, and the effectiveness of the advertising campaigns. Fluctuations in audience engagement, conversion rates, and advertising trends can impact the expected benefits derived from media placements over time. Therefore, they believe the financial statements reflect prudent estimations of amortisation expenses, acknowledging the inherent uncertainties involved in projecting the value generated from the media.

Valuation of return stock not yet processed

Stock not yet processed for the most part relates to returned items awaiting inspection, refurbishment, or resale. Estimating the value of such stock requires consideration of factors such as product condition, repair costs, market demand, and potential resale outcomes. The directors recognise the variability inherent in these factors and reflect it in the valuation methodologies.

Refund provision

The directors acknowledge the uncertainty inherent in estimating refund provisions, particularly in the case where the company provides an extended return window. They recognise that predicting the frequency and magnitude of future refund claims involves considerations such; as historic return rates at any given date, level of refunds received at estimation date, and known product issues. The directors believe that the refund provisions are based on comprehensive assessments of these factors.

Software amortisation

Estimating the amortisation of website asset requires careful consideration of expected revenue streams, usage patterns, and obsolescence risks. They acknowledge the impact of factors such as industry standards, customer preferences, and regulatory changes on the useful life of this asset. The directors believe the financial statements reflect ongoing evaluations of these uncertainties to ensure accurate reporting of amortisation expenses and capitalisation policies.

3
Turnover
2023
2022
£
£
Turnover analysed by class of business
Sales of goods
16,708,726
15,373,583
RESPOKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
3
Turnover
(Continued)
- 17 -
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
13,138,938
11,788,086
United States
2,231,025
2,205,250
Germany
377,375
550,188
Rest of European Union
961,388
830,059
16,708,726
15,373,583
4
Operating loss
2023
2022
Operating loss for the year is stated after charging/(crediting):
£
£
Exchange losses
194,884
264,840
Research and development costs
38,329
28,500
Depreciation of owned tangible fixed assets
57,683
100,578
Profit on disposal of tangible fixed assets
(12,199)
(638)
Amortisation of intangible assets
162,338
117,460
Share-based payments
(59,050)
224,160
Operating lease charges
329,657
220,642
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
14,000
-
0
6
Employees

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

2023
2022
Number
Number
46
39
RESPOKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
6
Employees
(Continued)
- 18 -

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
2,433,068
2,570,637
Social security costs
303,796
278,878
Pension costs
65,865
51,866
2,802,729
2,901,381
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
343,153
375,843
Company pension contributions to defined contribution schemes
12,006
12,610
355,159
388,453

The number of directors who are entitled to receive shares under long term incentive schemes during the year was 3 (2022 - 3).

Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
178,087
188,147
Company pension contributions to defined contribution schemes
10,685
11,289

The directors consider there to be no other key management personnel who's remuneration requires disclosure.

8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
164,884
378,059
RESPOKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 19 -
9
Taxation

The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Loss before taxation
(2,524,256)
(4,273,303)
Expected tax credit based on the standard rate of corporation tax in the UK of 22.52% (2022: 19.00%)
(568,462)
(811,928)
Tax effect of expenses that are not deductible in determining taxable profit
6,652
44,023
Tax effect of income not taxable in determining taxable profit
(12,613)
-
0
Change in unrecognised deferred tax assets
565,463
766,649
Depreciation on assets not qualifying for tax allowances
8,960
1,256
Taxation charge for the year
-
-
10
Intangible fixed assets
Software
£
Cost
At 1 November 2022
668,473
Additions
240,000
At 31 October 2023
908,473
Amortisation and impairment
At 1 November 2022
303,635
Amortisation charged for the year
162,338
At 31 October 2023
465,973
Carrying amount
At 31 October 2023
442,500
At 31 October 2022
364,838
RESPOKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 20 -
11
Tangible fixed assets
Fixtures and fittings
Computers
Total
£
£
£
Cost
At 1 November 2022
239,080
165,878
404,958
Additions
935
16,961
17,896
Disposals
-
0
(3,935)
(3,935)
At 31 October 2023
240,015
178,904
418,919
Depreciation and impairment
At 1 November 2022
175,197
125,342
300,539
Depreciation charged in the year
34,465
23,218
57,683
Eliminated in respect of disposals
-
0
(970)
(970)
At 31 October 2023
209,662
147,590
357,252
Carrying amount
At 31 October 2023
30,353
31,314
61,667
At 31 October 2022
63,883
40,536
104,419
12
Stocks
2023
2022
£
£
Finished goods and goods for resale
4,594,409
4,753,764
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
310,881
290,061
Other debtors
1,195,374
1,264,473
Prepayments and accrued income
292,186
185,631
1,798,441
1,740,165
RESPOKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 21 -
14
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
16
218,750
-
0
Other borrowings
16
284,130
1,740,487
Trade creditors
1,806,151
1,947,838
Taxation and social security
325,208
611,700
Other creditors
326,898
306,452
Accruals and deferred income
314,272
527,585
3,275,409
5,134,062
15
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
16
1,240,473
-
0
16
Loans and overdrafts
2023
2022
£
£
Bank loans
1,459,223
-
0
Other loans
284,130
1,740,487
1,743,353
1,740,487
Payable within one year
502,880
1,740,487
Payable after one year
1,240,473
-
0

During the year, a bank loan of £1.5m was obtained under the Recovery Loan Scheme. Interest is charged at 11.5% per annum and capital repayments start 12 months after the date of the first drawdown. The loans are secured by fixed and floating charges over all the property or undertakings of the company.

 

Other loans represent revenue-based fnancing loans. During the year, a loan of £500k was obtained and is repayable over 12 months. The loans are secured by fixed and floating charges over all the property or undertakings of the company.

17
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
65,865
51,866

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.

RESPOKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 22 -
18
Share-based payment transactions
Number of share options
Weighted average exercise price
2023
2022
2023
2022
Number
Number
£
£
Outstanding at 1 November 2022
740,453
712,615
1.10
1.15
Granted
126,293
27,838
0.01
0.02
Forfeited
(10,974)
-
0
0.07
-
0
Exercised
(17,104)
-
0
0.07
-
0
Outstanding at 31 October 2023
838,668
740,453
0.97
1.10
Exercisable at 31 October 2023
725,738
660,182
1.12
1.01

The weighted average share price at the date of exercise for share options exercised during the year was £0.0001 (2022 - £0).

The options outstanding at 31 October 2023 had an exercise price ranging from £0.01 to £6.82, and a remaining contractual life of between 4 and 9 years.

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

Liabilities and expenses

During the year, the company recognised total share-based payment expenses of £(59,050) (2022 - £224,160) which related to equity settled share based payment transactions.

19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
A Ordinary of 0.01p each
40,666
40,666
4
4
B Ordinary of 0.01p each
3,101,953
3,085,492
311
308
C Ordinary shares of 0.01p each
840,437
840,437
84
84
D1 Ordinary shares of 0.01p each
840,908
840,908
84
84
D2 Ordinary shares of 0.01p each
356,134
356,134
36
36
D3 Ordinary shares of 0.01p each
547,573
547,573
55
55
D4 Ordinary shares of 0.01p each
130,756
99,322
13
10
5,858,427
5,810,532
587
581

On 30 March 2023 31,434 D4 Ordinary shares were issues for a nominal amount of £0.0001 per share, the total consideration was £296,108.

Additionally, share options were exercised in the year and in exchange 17,104 B Ordinary shares with a nominal value of £0.0001 were issued with an exercise price of £0.07 post year end.

RESPOKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 23 -
20
Share premium account
2023
2022
£
£
At the beginning of the year
21,500,432
13,646,382
Issue of new shares
297,300
8,189,588
Share issue expenses
(13,847)
(335,538)
At the end of the year
21,783,885
21,500,432
21
Equity reserve
2023
2022
£
£
At the beginning of the year
-
0
-
0
Arising in the year
800,000
-
At the end of the year
800,000
-
0

The equity reserve is reserve in relation to a supplier providing media services in exchange for a convertible loan note. Under the terms of the loan note, the supplier has the option to convert the loan into equity instruments. The reserve is calculated based on the fair value of equity instruments granted.

22
Share based payments reserve
2023
2022
£
£
At the beginning of the year
765,223
541,063
Other movements
(59,050)
224,160
At the end of the year
706,173
765,223

The share based payments reserve accounts for the cumulative fair value of share options granted but not yet recognised as an expense in the income statement. There share options vest over time or upon meeting specified performance conditions, the reserve is used to track the accumulated value of these instruments until they are ultimately exercised, vested, or expired.

23
Financial commitments, guarantees and contingent liabilities

During the period, tax authorities opened an enquiry into previous R&D claims made by the company and challenged claims totaling £279,947, arising from claims made in 2018,2019 and 2020.

The company's tax advisors are confident that the submitted claims made met the relevant criteria and believe that the company will be successful in refuting the challenge.

RESPOKE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 24 -
24
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
138,724
184,965
Between two and five years
-
0
138,724
138,724
323,689
25
Ultimate controlling party

In the opinion of the directors, there is no one controlling party of the company.

26
Cash absorbed by operations
2023
2022
£
£
Loss for the year after tax
(2,524,256)
(4,273,303)
Adjustments for:
Finance costs
164,884
378,059
Gain on disposal of tangible fixed assets
(12,199)
(638)
Amortisation and impairment of intangible assets
162,338
117,460
Depreciation and impairment of tangible fixed assets
57,683
100,578
Equity settled share based payment expense
(59,050)
224,160
Movements in working capital:
Decrease/(increase) in stocks
159,356
(2,562,071)
Increase in debtors
(58,276)
(165,513)
Decrease in creditors
(621,046)
(2,732,419)
Cash absorbed by operations
(2,730,566)
(8,913,687)
27
Analysis of changes in net funds/(debt)
1 November 2022
Cash flows
31 October 2023
£
£
£
Cash at bank and in hand
2,723,822
(2,051,858)
671,964
Borrowings excluding overdrafts
(1,740,487)
(2,866)
(1,743,353)
983,335
(2,054,724)
(1,071,389)
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