The directors present the strategic report for the year ended 31 May 2023.
The group operates within the automotive industry providing a diverse range of products which are sold business to business. Our primary focus is vehicle protection products and digital marketing solutions.
The directors are pleased to report the increase in turnover for the year which has been the main area of focus for the group during the year. We acknowledge that the group has made a loss in the current year, however, this is largely due to planned increases in operational costs to support the development of longer-term growth strategies.
To provide context to the financial results of the group. one must also consider the performance, and profit made, in the same reporting period of Gardx’s insurance company Gardx Assure Ltd. All resources and costs are shared across both Gardx International Limited and Gardx Assure Limited. For this reason, since the year end, Gardx Assure has been brought into the Holdings group structure enabling a more meaningful statement of the Gardx Group performance to be produced.
The group operates in an extremely competitive environment with a number of competitors offering vehicle protection products. By developing our existing vehicle protection range, investing in our world-class technology solutions and having a collaborative and growth-focused approach with our partners, the directors believe that this differentiates us from our competitors.
Economic uncertainty and the cost of living crisis, have contributed to uncertainty in the Automotive industry posing a risk to the volumes of car sales. The directors believe that the business' market-leading approach to working with and providing technology solutions to our customers will maximise the sales opportunities and allow us to offset this risk.
The group is exposed to fluctuations in global currencies, particularly movements in the pound Sterling against the US Dollar and the Euro. In the current financial year, the group has not used forward currency contracts, however, since the year end the company now have a hedging facility in place to mitigate any future risk.
The directors have been focused on investing in future growth engines whilst transforming core business operations. Currently, the most important KPI for the business is its turnover growth.
Turnover for the year was £15,145,440 (2022: £13,848,626), an increase of 9.4%.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 May 2023.
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £500,000 The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the group has sufficient liquid resources to meet the operating needs of the business.
Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the board.
The directors believe that there are no future developments that require disclosure.
Carpenter Box were appointed as auditor to the group 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.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of Gardx Holdings Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 2023 which comprise the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
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 group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
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.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:
Obtaining an understanding of the legal and regulatory framework that the company operates in, focusing on those laws and regulations that had a direct effect on the financial statements and operations;
Obtaining an understanding of the company's policies and procedures on fraud risks, including knowledge of any actual, suspected or alleged fraud; and
Discussing among the engagement team how and where fraud might occur in the financial statements and any potential indicators of fraud through our knowledge and understanding of the company and our sector-specific experience.
As a result of these procedures, we considered the opportunities and incentives that may exist within the company for fraud. We are also required to perform specific procedures to respond to the risk of management override. As a result of performing the above, we identified the following areas as those most likely to have an impact on the financial statements: health and safety, employment law and compliance with the UK Companies Act.
In addition to the above, our procedures to respond to risks identified included the following:
Making enquiries of management about any known or suspected instances of non-compliance with laws and regulations and fraud;
Challenging assumptions and judgements made by management in their significant accounting estimates; and
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness.
Due to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to
recognise the non-compliance.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company’s profit for the year was £500,000 (2022 - £0 profit).
Gardx Holdings Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Lake House, 2 Port Way, Port Solent, Portsmouth, PO6 4TY.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £1.
The financial statements have been prepared under the historical cost convention, modified to include investment properties at fair value. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.
The consolidated financial statements incorporate those of Gardx Holdings Ltd and its subsidiaries (i.e. entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits).
All financial statements are made up to 31 May 2023. All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation.
To provide context to the financial results of the group, one must also consider the performance, and profit made, in the same reporting period of Gardx’s insurance company Gardx Assure Ltd. All resources and costs are shared across both Gardx International Limited and Gardx Assure Limited. For this reason, since the year end, Gardx Assure has been brought into the Holdings group structure enabling a more meaningful statement of the Gardx Group performance to be produced. Gardx International Ltd incurred a large loss for the year and reduction in working capital due to some market constraints as well as significant planned investments for future growth. The directors closely monitor business performance and cash flow and since the period end have made a number of changes to reduce costs. Since the period end the company has also secured an invoice financing facility of £1.5m as part of the directors plans to stabilise the business and return to profitability and the directors are therefore confident there are no material uncertainties relating to going concern.
At 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. The directors have considered relevant information, including the company’s principal risks and uncertainties, the annual budget, forecast future cash flows and the impact of subsequent events in making their assessment. Based on these assessments and having regard to the resources available to the entity, the directors have concluded that there is no material uncertainty and that they can continue to adopt the going concern basis in preparing the annual report and financial statements.
Revenue 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
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from contracts for the rendering of services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
The group enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities including trade and other accounts receivable and payable, loans from banks and loans from related parties.
Debt instruments including loans and other accounts receivable and payable are initially measured at transaction price and subsequently at amortised cost using the effective interest method; Debt instruments that are payable or receivable within one year are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity. Financial liabilities are derecognised when, and only when, the group’s obligations are discharged, cancelled, or they expire.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year.
Deferred taxation is provided in full in respect of taxation deferred by timing differences between the treatment of certain items for taxation and accounting purposes. Any deferred tax balance is not discounted.
The costs of short-term employee benefits are recognised as a liability and an expense.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
In the application of the group’s accounting policies, the 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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The directors carried out a review of the amounts that they consider will be recoverable in respect of debts due from fellow group undertakings and connected companies. Unless the directors considered that there was a strong likelihood that the debts would be recovered from the related parties (either in part of in full), provision has been made for the amounts due.
Included within the sale of goods in revenue is the sale of Car Maintenance Plans (CMP) and Tyre and Wheel alloy plans. These are a product that are sold to third-party main dealers who then provide this service to the retail customers. Amounts expected to be incurred for future liabilities and warranty claims are included in provisions.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The directors believe that the fair value of the investment property in the financial statements is £395,000 (2022: £395,000). This valuation is based on a professional valuation undertaken on 10 February 2022, taking into account any movements in property values in the local area since the last valuation date.
The provision for the CMP repair fund costs has been based on actual costs incurred so far on maintenance plans that have been sold to date taking into account expected future patterns of behavior and the professional estimation provided by Lloyds underwriters. The amount included in provisions in relation to the CMP repair fund is £2,187,658 (2022: £1,324,410).
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual credit 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:
From 1 April 2023 the corporation rate increased to 25% on taxable profits over £250,000. Taxable profits less than £50,000 have been taxed at 19% with a marginal rate applied for profits between these amounts.
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
The impairment losses in respect of financial assets are recognised in other gains and losses in the income statement.
The fair value of the investment property has been valued by the directors at the year end, with reference to the valuation carried out at 10 February 2022 by Vail Williams LLP and open market values by reference to market evidence of transaction prices for similar properties.
Details of the company's subsidiaries at 31 May 2023 are as follows:
Included in other debtors are the following non-trading loans:
The group has made a loan of £513,566 (2022 - £513,566) to a company controlled by a former director in order to purchase an inventory of stock that will support growth. There are no repayment terms, however the group is entitled to a share of profit in lieu of interest. Based on current trading performance, the directors anticipate that the loan will be repaid within 2 years. A further interest free balance of £93,338 (2022 - £93,338) is due from the director of this related party and it is anticipated that this will be repaid imminently. As these loans are outside of normal commercial terms, they are included in these accounts as repayable on demand and as such, have not been discounted.
Included in other debtors is a loan of £237,480 (2022: £237,480) to a significant customer of the group. In addition to this loan, the same customer owes the group £576,817 (2022: £1,094,839) in respect of trade debts. There is not an agreement in place in respect of interest charges or repayment terms for whether the loan or the trade debts, however, the directors of Gardx International have influence over the management of the customer's business and confirm the customer has recently won a major contract which will provide the liquid resources to repay these debts. Since the year end, the above company has become a connected company.
The security takes the form of a mortgage and a fixed and floating charge over the assets of the the relevant subsidiary company.
The relevant subsidiary company has two bank loans payable at 2.33% and 3.09% over base rate. The bank loans are repayable over 240 months and 180 months respectively. In addition it has a fixed rate loan repayable over 60 months at a rate of 4.9%.
Both bank loans have been repaid post year end, as the properties they were secured over have been sold and the loans repaid.
Other loans are in relation to COVID-19 bounce back loans.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax liability is in relation to accelerated capital allowances, and the difference in treatment surrounding revaluation gains for accounts and tax purposes. These are not anticipated to reverse in the upcoming 12 months.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
Ordinary shares have attached to them full voting, dividend and capital distribution (including on winding up) rights.
Included within retained earnings are non-distributable amounts of £128,549 (2022 - £128,528). These are made up of revaluations on investment property, less any associated deferred taxation liability.
There is a debenture over all the assets of the group in favour of Natwest.
The group has granted a guarantee of £44,000 (2022 - £44,000) in favour of the bank, in respect of a related party.
A subsidiary company has guaranteed up to £483,750 (2022 - £483,750) with another fellow subsidiary as at 31 May 2023. This guarantee shall remain in force until a long-term loan has been satisfied. There is also a debenture in place in relation to this loan and over all assets of the subsidiary company in favour of NatWest.
A connected company guarantees up to £640,000 (2022 - £640,000) with a group company as at 31 May 2023. This guarantee shall remain in force until a long-term loan has been satisfied. There is also a debenture in place in relation to this loan.
A shareholder holds two guarantees up to £725,000 (2022 - £725,000) with a group company as at 31 May 2023. This guarantee shall remain in force until the two long-term loans has been satisfied. The shareholder has also provided a guarantee of their personal property on a secondary loan within the company. The guarantee remains in place until the long-term loan has been satisfied.
A loan held by the group is secured by a cross guarantee and debenture between, two group companies and a connected company. The extent of the contingent liability at the year-end amounted to £2,050,000 (2022 - £2,050,000).
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Post year-end the investment property and a property held within the group fixed assets has been sold for £1,280,000.
In addition, since the year-end the group has secured an invoice financing facility of £1.5m
Post year-end a company that was previously a connected company under common control, has been transferred into the Gardx Holdings Limited group.
The group has loan balances due to/from other companies that are related parties by virtue of common control. There are no repayment terms for these loans and interest has not been charged, they are all treated as being repayable on demand:
At the year end, £2,256,656 (2022 - £1,089,498) was due to a company under common control. There was also a debtor in relation to a subordinated loan held for £44,000 (2022 - £44,000). There were no sales or purchases with this company in the current year,
At the year end, £741,618 (2022: £1,228,281) was due from a company under common control and £34,895 (2022: £Nil) was due to the same company. There were sales within the period totalling £45,800 (2022: £84,813) and purchases totalling £39,254 (2022:Nil) to this related party.
At the year end, £237,480 (2022: £237,480) was due from a company under common control and £44,731 (2022: £44,731) was due to the same company. There were sales during the period of £24,300 (2022:£Nil),
At the year end, £576,818 (2022: £1,098,057) was due from a company under common control. There was sales within the period totalling £478,584 (2022: £603,209).
At the year end, £277,560 (2022: £148,292) was due from a company under common control and £220,925 (2022: £45,925) was due to the same company. There were sales within the period totalling £129,267 (2022: £146,506) and purchases of £230,579 (2022: Nil).
At the year end, £47,943 (2022: £46,980) was due from a company under common control. There were no sales or purchases with this company in the current year,
At the year end, £667,899 (2022: £106,862) was due from a company under common control. There were recharges within the period to this company of £Nil (2022: £1,170,316).
At the year end, £2,990 (2022: £294) was due from a company under common control. There were sales within the period totalling £23,772 (2022: £74,800). Amounts were waivered by the company during the period amounting to £98,278 (2022: £nil).
At the year end, £94,697 (2022: £394,247) was due from a company under common control. There were no sales or purchases during this period.
At the year end, £15,000 (2022: £10,000) was due from a company under common control. There were no sales or purchases during this period.
The following directors' transactions relate to the group.