Company registration number 12732998 (England and Wales)
DISCOUNT DRAGON LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
DISCOUNT DRAGON LIMITED
COMPANY INFORMATION
Directors
Mr M J Higginson
Mr D F G Wortley
(Appointed 11 June 2024)
Company number
12732998
Registered office
Cumberland Court
80 Mount Street
Nottingham
NG1 6HH
Auditor
Haysmacintyre LLP
10 Queen Street Place
London
EC4R 1AG
DISCOUNT DRAGON LIMITED
CONTENTS
Page
Directors' report
1 - 2
Independent auditor's report
3 - 6
Statement of comprehensive income
7
Statement of financial position
8
Statement of changes in equity
9
Notes to the financial statements
10 - 21
DISCOUNT DRAGON LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of online retail sales.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr M J Higginson
Mr D F G Wortley
(Appointed 11 June 2024)
Auditor
The auditors, Haysmacintyre LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the 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;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
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.
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.
DISCOUNT DRAGON LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Small Companies Note
In preparing this report, the director has taken advantage of the small companies exemptions provided by section 415A of the Companies Act 2006.
On behalf of the board
Mr D F G Wortley
Director
15 August 2024
DISCOUNT DRAGON LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF DISCOUNT DRAGON LIMITED
- 3 -
We have audited the financial statements of Discount Dragon Limited (the 'company') for the year ended 31 December 2023 which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity 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 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).
In our opinion, except for the possible effects of the matters described in the basis for qualified opinion section of our report, the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its loss for the year 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.
Basis for qualified opinion
We were not appointed as auditor of the company until after its prior year ended 31 December 2022 and thus did not observe the counting of physical inventories at the end of the year ended 31 December 2022. We were unable to satisfy ourselves by alternative means concerning the inventory quantities held at 31 December 2022, which are included in the Statement of Financial Position at £75,947, by using other audit procedures. Consequently, in respect of the inventory balance held as at the prior year ended of 31 December 2022 and (because of the impact of opening inventory in its calculation), cost of sales for the year ended 31 December 2023, we were unable to determine whether any adjustment to these amounts were necessary.
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 qualified opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the 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.
DISCOUNT DRAGON LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF DISCOUNT DRAGON LIMITED
- 4 -
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning the inventory quantities of £75,947 held at 31 December 2022. We have concluded that where the other information refers to the inventory balance at that date or related balances such as cost of sales, it may be materially misstated for the same reason.
Opinions on other matters prescribed by the Companies Act 2006
Except for the possible effects of the matter described in the basis for qualified opinion section of our report, in our opinion, based on the work undertaken in the course of the audit:
the information given in the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the director's report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
Except for the matter described in the basis for qualified opinion section of our report, 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 director's report.
Arising solely from the limitation on the scope of our work relating to inventory, referred to above:
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:
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 director's remuneration specified by law are not made; or
the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemptions in preparing the Directors' Report and from the requirement to prepare a Strategic Report.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 1, 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.
DISCOUNT DRAGON LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF DISCOUNT DRAGON LIMITED
- 5 -
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:
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Based on our understanding of the company and industry, we have identified the principal risks of
noncompliance with laws and regulations, and we have considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, income tax, payroll tax and sales tax.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial
statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to revenue and management bias in accounting estimates. Audit procedures performed by the engagement team included:
Inspecting correspondence with regulators and tax authorities;
Discussions with management including consideration of known or suspected instances of non-compliance with laws and regulation and fraud;
Evaluating management’s controls designed to prevent and detect irregularities;
Identifying and testing journals, in particular journal entries posted with unusual account combinations, postings by unusual users or with unusual descriptions; and
Challenging assumptions and judgements made by management in their critical accounting estimates.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of noncompliance.
The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
In the previous accounting period, the directors of the Company took advantage of the audit exemption under s477 of the Companies Act. Therefore, the prior period financial statements were not subject to audit.
DISCOUNT DRAGON LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF DISCOUNT DRAGON LIMITED
- 6 -
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.
Christopher Cork
For and on behalf of Haysmacintyre LLP
Chartered Accountants
Statutory Auditor
10 Queen Street Place
London
EC4R 1AG
16 August 2024
DISCOUNT DRAGON LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
Unaudited
7 month
Year ended
period ended
31 December
31 December
2023
2022
as restated
Notes
£
£
Revenue
3
5,083,858
836,295
Cost of sales
(5,049,071)
(796,089)
Gross profit
34,787
40,206
Administrative expenses
(885,926)
(144,407)
Exceptional items
4
(144,802)
-
Loss before taxation
5
(995,941)
(104,201)
Tax on loss
8
Loss and total comprehensive income for the financial year
15
(995,941)
(104,201)
There was no other comprehensive income for 2023 (2022:£NIL).
The notes on pages 10 to 21 form part of these financial statements.
The above results relate in their entirety to continuing operations.
DISCOUNT DRAGON LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 8 -
Unaudited
2023
2022
as restated
Notes
£
£
£
£
Non-current assets
Intangible assets
9
56,915
55,276
Property, plant and equipment
10
66,432
11,875
123,347
67,151
Current assets
Inventories
11
451,434
75,947
Trade and other receivables
12
247,122
44,903
Cash and cash equivalents
29,372
52,230
727,928
173,080
Current liabilities
Trade and other payables
13
1,928,861
329,648
Taxation and social security
22,546
14,774
1,951,407
344,422
Net current liabilities
(1,223,479)
(171,342)
Net liabilities
(1,100,132)
(104,191)
Equity
Called up share capital
14
10
10
Retained earnings
15
(1,100,142)
(104,201)
Total equity
(1,100,132)
(104,191)
The financial statements were approved by the board of directors and authorised for issue on 15 August 2024 and are signed on its behalf by:
Mr D F G Wortley
Director
The notes on pages 10 to 21 form part of these financial statements.
DISCOUNT DRAGON LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
Share capital
Retained earnings
Total
Notes
£
£
£
Balance at 1 June 2022
1
-
1
Year ended 31 December 2022:
Loss and total comprehensive income for the year
-
(104,201)
(104,201)
Transactions with owners in their capacity as owners:
Issue of share capital
14
9
-
9
Balance at 31 December 2022 as restated
16
10
(104,201)
(104,191)
Year ended 31 December 2023:
Loss and total comprehensive income for the year
-
(995,941)
(995,941)
Balance at 31 December 2023
10
(1,100,142)
(1,100,132)
The notes on pages 10 to 21 form part of these financial statements.
DISCOUNT DRAGON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
1
Accounting policies
Company information
Discount Dragon Limited is a private company limited by shares incorporated in England and Wales. The registered office is Cumberland Court, 80 Mount Street, Nottingham, NG1 6HH. The company's principal activities and nature of its operations are disclosed in the directors' report.
1.1
Accounting convention
The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards and 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 prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company meets the definition of a qualifying entity under FRS 101 Reduced Disclosure Framework. These financial statements for the year ended 31 December 2023 are the first financial statements of Discount Dragon Limited prepared in accordance with FRS 101. The company transitioned FRS 102 to FRS 101 for all periods presented and the date of transition to FRS 101 was 1 June 2022.
An explanation of how transition to FRS 101 has affected the reported financial position and financial performance is given in note 16.
As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS:
presentation of a statement of cash flows and related notes;
disclosure of the objectives, policies and processes for managing capital;
disclosure of key management personnel compensation;
disclosure of the categories of financial instrument and the nature and extent of risks arising on these financial instruments;
the effect of financial instruments on the statement of comprehensive income;
disclosure of the future impact of new International Financial Reporting Standards in issue but not yet effective at the reporting date;
for financial instruments measured at fair value and within the scope of IFRS 13, the valuation techniques and inputs used to measure fair value, the effect of fair value measurements with significant unobservable inputs on the result for the period and the impact of credit risk on the fair value; and
related party disclosures for transactions with the parent or wholly owned members of the group.
1.2
Going concern
As at the year end the company has a loss after taxation of £995,941 (Seven months to 31 December 2022: £104,201) and net liabilities of £1,100,132 (31 December 2022: £104,191). The directors of the company's ultimate controlling parent, Huddled Group Plc, have confirmed their intention to provide support to allow the company to pay its liabilities as they fall due throughout the 12-month period from the date of signing. As such, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.true
DISCOUNT DRAGON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 11 -
1.3
Revenue
Revenue is recognised at the fair value of the consideration received or receivable for goods 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.
For sales to consumers via Discount Dragon's website, revenue is recognised on sales in the period in which the corresponding order is placed, at which point products purchased are allocated to that customer. There is typically no more than one week between the point when an order is placed and when the goods are received by the customer.
For wholesale sales, revenue is recognised in the period in which delivery to the wholesaler takes place.
1.4
Intangible 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 or valuation of assets less their residual values over their useful lives on the following bases:
Trademarks - 10% straight line
Software development - 33% straight line
Acquired customer databases - 33% straight line
My Planet Online assets - 33% straight line
1.5
Property, plant and equipment
Property, plant and equipment 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
33% straight line
Plant and equipment
33% straight line
Motor vehicles
20% 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 recognised in the income statement.
1.6
Impairment of tangible and intangible assets
At each reporting 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).
DISCOUNT DRAGON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset 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.
1.7
Inventory
Inventory is stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises finished goods and, where applicable, those overheads that have been incurred in bringing the inventories to their present location and condition.
1.8
Cash and cash equivalents
Cash and cash equivalents 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.
1.9
Financial assets
Financial assets are recognised in the company's Statement of Financial Position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.
At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.
The company recognises lifetime expected credit losses for trade receivables and amounts due on contracts with customers. Expected credit losses are estimated based on historical credit loss, adjusted for facts that are specific to the counterparties, general economic conditions and an assessment of both the current as well as the forecasted conditions at the reporting date, including the time value of money where appropriate. Lifetime expected credit losses are losses which will result from all possible default events over the expected life of a financial instrument.
Impairment of financial assets
Financial assets, other than those measured at fair value through profit or loss, are assessed for indicators of impairment at each reporting 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 of the investment have been affected.
Derecognition of financial assets
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.
1.10
Financial liabilities
The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
DISCOUNT DRAGON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.
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 income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary 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 income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset 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. 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.
DISCOUNT DRAGON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
2
Critical accounting estimates and judgements
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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.
Critical judgements
Valuation of inventories
The carrying value of inventories of finished products held by the Group are assessed for impairment at the end of each period. Judgment is required to assess whether the net realisable value (NRV) of inventories held is less than carrying value with reference to the expected price the inventory is likely to achieve if sold. Where items of inventory are identified as having a NRV of less than their carrying value, a provision for impairment is recognised.
Deferred tax asset
At each reporting date management make an assessment as to whether a deferred tax asset should be recognised on the accumulated tax losses. Management assess the recoverability of the losses through a review of forecasted future taxable profits.
3
Revenue
Unaudited
2023
2022
£
£
Revenue analysed by class of business
Online retail sales
5,083,858
836,295
Unaudited
2023
2022
£
£
Revenue analysed by geographical market
United Kingdom
5,083,858
836,295
4
Exceptional items
Unaudited
2023
2022
£
£
Expenditure
Costs incurred in relation to the acquisition of the My Planet Online Limited assets
144,802
-
DISCOUNT DRAGON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
4
Exceptional items
(Continued)
- 15 -
The exceptional costs in the period relate to expenditure taken on by the company to further leverage the assets acquired from My Planet Online Limited in Administration.
5
Operating loss
Unaudited
Restated
2023
2022
Operating loss for the year is stated after charging/(crediting):
£
£
Depreciation of property, plant and equipment
23,784
565
Auditors' remuneration
29,750
Amortisation of intangible assets (included within administrative expenses)
20,416
276
Cost of inventories recognised as an expense
3,068,023
524,737
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
Unaudited
2023
2022
Number
Number
Finance
2
2
Management & administration
6
5
Warehouse
33
15
Total
41
22
Their aggregate remuneration comprised:
Unaudited
2023
2022
£
£
Wages and salaries
929,571
183,111
Social security costs
78,694
9,688
Pension costs
13,645
2,926
1,021,910
195,725
DISCOUNT DRAGON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
7
Directors' remuneration
The director received remuneration of £nil (2022: £nil) in the period. The director was remunerated via the parent company Huddled Group Plc, which charges the company a management fee inclusive of an appropriate proportion of the director's remuneration.
Key management personnel received remuneration of £nil (2022: £nil) in the period.
8
Taxation
The charge for the year can be reconciled to the loss per the income statement as follows:
Unaudited
2023
2022
£
£
Loss before taxation
(995,941)
(104,201)
Expected tax credit based on a corporation tax rate of 23.52% (2022: 19.00%)
(234,251)
(19,798)
Effect of expenses not deductible in determining taxable profit
1,282
Deferred tax on losses not recognised
232,969
19,798
Taxation charge for the year
-
-
The standard rate of tax applied to reported profit on ordinary activities is 23.52% (2022: 19%). The Finance Act 2021, which was substantively enacted on 24 May 2021, created a 25% main rate, 19% small profits rate and a marginal rate effective from 1 April 2023.
There were unused tax losses of £1,156,822 at 31 December 2023 (31 December 2022: £125,289). No deferred tax asset has been recognised due to the uncertainty surrounding future profits.
DISCOUNT DRAGON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
9
Intangible fixed assets
Software Development
Trademarks
My Planet Online Assets
Acquired Customer Databases
Total
£
£
£
£
£
Cost
At 31 December 2022 (restated)
5,725
49,827
55,552
Additions
40,732
1,150
5,000
46,882
Disposals
(24,827)
(24,827)
At 31 December 2023
46,457
1,150
25,000
5,000
77,607
Amortisation and impairment
At 31 December 2022 (restated)
276
-
-
276
Charge for the year
8,329
115
11,416
556
20,416
At 31 December 2023
8,605
115
11,416
556
20,692
Carrying amount
At 31 December 2023
37,852
1,035
13,584
4,444
56,915
At 31 December 2022 (restated)
5,449
49,827
-
55,276
10
Property, plant and equipment
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
Cost
At 31 December 2022
10,097
2,343
12,440
Additions
43,203
29,138
6,000
78,341
At 31 December 2023
53,300
31,481
6,000
90,781
Accumulated depreciation and impairment
At 31 December 2022
362
203
565
Charge for the year
14,882
7,902
1,000
23,784
At 31 December 2023
15,244
8,105
1,000
24,349
Carrying amount
At 31 December 2023
38,056
23,376
5,000
66,432
At 31 December 2022
9,735
2,140
11,875
DISCOUNT DRAGON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
11
Inventories
Unaudited
2023
2022
£
£
Finished goods and goods for resale
451,434
75,947
Inventories recognised in cost of sales during the year was £3,068,919 (2022: £524,738). The Directors consider that no impairment of inventory is necessary as at 31 December 2023 (2022: £Nil).
12
Trade and other receivables
Unaudited
2023
2022
£
£
Trade receivables
72,239
29,057
VAT recoverable
41,044
-
Other receivables
11,931
13,146
Prepayments and accrued income
121,908
2,700
247,122
44,903
13
Trade and other payables
Unaudited
2023
2022
£
£
Trade payables
99,454
12,674
Amount owed to group entities
1,768,696
288,235
Accruals and deferred income
59,167
27,242
Other payables
1,544
1,497
1,928,861
329,648
14
Share capital
Unaudited
Unaudited
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
10
10
10
10
15
Retained earnings
Retained earnings includes all current and prior period retained profit and losses.
DISCOUNT DRAGON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
16
Transition adjustments
For the current accounting period the company has elected to transition from FRS102 1A to FRS 101 to align the accounting standards implemented across the group. The date of transition to FRS 101 is 1 June 2022.
An explanation of how transition to FRS 101 has affected the reported financial position and financial performance is given below.
Reconciliation of equity
Unaudited
Unaudited
1 June
31 December
2022
2022
£
£
Equity as previously reported
1
(109,640)
Adjustments arising from transition:
Recognition of software development expenditure as intangible assets
-
5,725
Amortisation of software development intangible assets
-
(276)
Equity as restated
1
(104,191)
Reconciliation of loss for the financial period
Unaudited
2022
£
Loss as previously reported
(109,650)
Adjustments arising from transition:
Recognition of software development expenditure as intangible assets
5,725
Amortisation of software development intangible assets
(276)
Loss as restated
(104,201)
DISCOUNT DRAGON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
16
Transition adjustments
(Continued)
- 20 -
Reconciliation of equity
At 1 June 2022
At 31 December 2022
Previously reported
Effect of transition
As restated
Previously reported
Effect of transition
As restated
£
£
£
£
£
£
Non-current assets
Intangible assets
-
-
-
49,827
5,449
55,276
Property, plant and equipment
-
-
-
11,875
-
11,875
-
-
-
61,702
5,449
67,151
Current assets
Inventories
-
-
-
75,947
-
75,947
Trade and other receivables
1
-
1
44,903
-
44,903
Bank and cash
-
-
-
52,230
-
52,230
1
-
1
173,080
-
173,080
Creditors due within one year
Other payables
-
-
-
(344,422)
-
(344,422)
Net current assets/(liabilities)
1
-
1
(171,342)
-
(171,342)
Total assets less current liabilities
1
-
1
(109,640)
5,449
(104,191)
Net assets
1
-
1
(109,640)
5,449
(104,191)
Equity
Share capital
1
-
1
10
-
10
Profit and loss
-
-
-
(109,650)
5,449
(104,201)
Total equity
1
-
1
(109,640)
5,449
(104,191)
Notes to reconciliations
Software development
Capitalised software development costs previously recognised as an expense now form part of intangible assets as a result of the transition to FRS 101.
DISCOUNT DRAGON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
17
Ultimate controlling party
The immediate parent company of Discount Dragon Limited is Huddled Holdings Limited, and the ultimate parent company is Huddled Group Plc. Both companies are registered in England & Wales.
The largest and smallest group in which the results of the company are consolidated is that of Huddled Group Plc, the ultimate parent company. The consolidated financial statements of Huddled Group Plc may be obtained from Cumberland Court, 80 Mount Street, Nottingham, NG1 6HH.
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