Financial Statements
CMS Distribution Limited
For the year ended 31 December 2023
Registered number: 02214562
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Company Information
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Nicholas Simon Preston (resigned 11 January 2024)
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Chartered Accountants & Statutory Audit Firm
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Squire Patton Boggs (UK) LLP
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Contents
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Directors' responsibilities statement
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Independent auditor's report
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Statement of comprehensive income
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Statement of financial position
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Statement of changes in equity
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Notes to the financial statements
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Strategic report
For the year ended 31 December 2023
The profit for the year, after taxation, is £2,168,714 (2022: profit of £768,023).
2023 was a positive year for the Company. Although revenues reduced by 11.65% to £280m. The gross profit % however increased from 7.2% to 8.3%. as validation of our Valued Added status, leaving overall Gross Profit up 2.2% on prior year. A cost reduction programme was started mid-year, and although it did have some impact on reducing costs in 2023, the larger effect will be in 2024 when the full year impact materialises
The Company continues to invest in People as a key asset in a value-added distribution business, and we have had some great achievements in this area. We are particularly proud of our Graduate program, which has brought more talent into the Company, and will be a regular program going forward.
Throughout 2023 we have added several key vendors and customers to our portfolio, and our pipeline of new vendors remain strong.
As part of our ESG programme, we continue to support local charities and organisations by matching our employees fundraising efforts. We are proud that we have made a significant contribution in 2023 despite the pandemic. We continue to invest in our ESG Strategy, a key part of our drive to increased sustainability into the future.
Aiming to provide a solid platform for future growth, we also continue to strengthen both our Board and our management team, with a combination of internal promotions, and selected external hires.
Finally, despite a challenging macroeconomic environment, and through a combination of new business wins and prudent cost management, we are cautiously optimistic for the year ahead, with a return to profitable growth in all our markets.
Principal risks and uncertainties
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The directors consider that the principal risks and uncertainties faced by the company are in the following categories:
Economic risk
The risk of increased interest rates and/or inflation having an adverse impact on served markets, adverse exchange movements, unrealistic increases in wages or infrastructural cost impacting adversely on competitiveness of the group and its principal customers. The company manage these risks by innovative product sourcing and strict control of costs.
Competition risk
The directors of the company manage competition risk through close attention to maintaining excellent customer service levels and providing innovative product offerings.
Financial risk
The company has budgetary and financial reporting procedures, supported by appropriate key performance indicators, to manage credit, liquidity and other financial risk.
Page 1
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Strategic report (continued)
For the year ended 31 December 2023
Financial key performance indicators
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The company's key financial and other performance indicators during the year were as follows:
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Profit before tax for the year
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Directors' statement of compliance with duty to promote the success of the Company
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The board of directors of CMS Distribution Limited both individually and together, confirm that they have acted in the way they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, in line with Section 172 (1) (a-f) of the Companies Act 2006, in the decisions taken during the year ended 31 December 2023. The following paragraphs summarise how the directors fulfil their
duties:
∙As the board of directors, our intention is to behave responsibly and ensure that management operate the business in a responsible manner and that the best interest of the company is at the forefront when making decisions.
∙We recognise that our employees are fundamental and core to our business and services provided by the company. We acknowledge the importance of keeping our employees motivated and engaged through a responsible approach to salary and benefit packages and through training. We ensure our staff are appropriately qualified and can continue to develop within the company through our performance system We also acknowledge that the health and safety of the employees is key to our business.
∙As the board of directors, we recognize that our suppliers are fundamental to the quality of our products and ensuring that as a business we meet the high standards of conduct that we have set. We are committed to engaging with our suppliers and customers to maintain and grow our business relationships, ensuring that we receive and provide the best service possible. We endeavour to review feedback from all our stakeholders in a timely manner and consider it prior to any decision making.
∙As our products and consumer base grows so too does our risk environment, we are committed to engaging with our stakeholders to effectively identify, evaluate, manage and mitigate the risks the company faces in a timely manner. Please see the principal risks and uncertainties in our Strategic report for further details.
∙We as directors, ensure that the board remains informed and monitors compliance with the relevant Company Law and governance standards resulting in the company maintaining a reputation for high standards of business conduct.
This report was approved by the board on 7 June 2024 and signed on its behalf.
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Tom Burke
Director
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Page 2
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Directors' report
For the year ended 31 December 2023
The directors present their report and the financial statements for the year ended 31 December 2023.
The principal activity of the company during the year was the distribution of computer products, solutions and services specifically focused upon data storage products, networking, enterprise software and consumer technology.
The profit for the year, after taxation, amounted to £2,168,714 (2022: profit of £768,023).
The directors have not recommended a dividend (2022: £Nil).
The directors who served during the year were:
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Nicholas Simon Preston (resigned 11 January 2024)
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No political donations were made and no political expenditure was incurred during the year (2022: £Nil).
It is the intention of the directors to continue its present activities of the company in the coming year.
Branches outside the United Kingdom
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There are no branches of the company outside the United Kingdom.
The success of the business is directly attributable to the people working in it. CMS Distribution have a talented and dedicated team, some who have been with the company since inception, and they are critical to the execution of the company's plans. The ability to find and retain good personnel reflects the general policy of providing good terms and conditions of employment while dealing with staff in a fair and consistent manner. Their continued loyalty and hard work is much appreciated. CMS Distribution encourages employee feedback and is committed to provide regular open communication with all employees.
The company's customers and suppliers are of critical importance to the business. A significant portion of the company's revenues are generated from recurring sales to its customer base. Monthly and quarterly business reviews ensure that the business maintains good relationships with these key stakeholders.
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Directors' report (continued)
For the year ended 31 December 2023
Greenhouse gas emissions, energy consumption and energy efficiency action
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In line with the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 our energy use and greenhouse gas (GHG) emissions are set out below.
The data relates to UK emissions for the 12-month period from 1 January 2023 to 31 December 2023.
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Total Energy consumption (kWh)
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Emissiions from combustion of gas (Scope 1)(tCO2e)
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Emissions from transport (Scope 1)(tCO2e)
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Emissions from purchased electircity (Scope 2)(tCO2e)*
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Emissions from business travel in employee-owned vehicles where the company is
responsible for purchasing the fuel or electricity (Scope 3) (tCO2e)*
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Total gross emissions (tCO2e)
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Renewable Energy generated and then used onsite (kWh)*
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Emissions avoided by renewable energy generated and then used onsite (tCO2e)
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Total annual net emissions (tCO2e)
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*Emissions from transport, business travel, and renewable energy do not appear to have been reported in the financial year ended 31 December 2022.
Quantification and Reporting Methodology:
The boundaries of this report are based on operational control. We report our emissions with reference to the latest Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (GHG Protocol). In accordance with the 2018 Regulations, the energy use and associated greenhouse gas emissions are for those within the UK only that come under the operational control boundary. Therefore, energy use and emissions are aligned with financial reporting for the UK subsidiaries and exclude the non-UK based subsidiaries that would not qualify under the 2018 Regulations in their own right. The 2023 UK Government GHG Conversion Factors for Company Reporting published by the UK Department for Environment Food & Rural Affairs (DEFRA) are used to convert energy use in our operations to emissions of CO2e. Carbon emission factors for purchased electricity calculated according to the ‘location-based grid average’ method. This reflects the average emission of the grid where the energy consumption occurs. Data sources include billing, invoices and internal systems. For transport data where actual usage data (e.g. litres) was unavailable conversions were made using average fuel consumption factors to estimate the usage.
Intensity Ratio
We have chosen to report our gross emissions against £100,000 turnover. The value for the intensity ratio in 2023 was 0.0007 tCO2e per £100k turnover.
Energy Efficiency Action:
In the period covered by the report CMS Distribution Ltd has upgraded all lighting to LEDs at the Castleford and London sites and obtained meter readings for the energy produced by the solar panels at Castleford to improve monitoring usage.
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Directors' report (continued)
For the year ended 31 December 2023
Matters covered in the Strategic report
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As permitted by s414c(11) of the Companies Act 2006, the directors have elected to disclose information required to be in the directors' report by Schedule 7 of the "Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008", in the strategic report.
As permitted by s414c(11) of the Companies Act 2006, the directors have elected to disclose information required to be in the directors' report by Schedule 7 of the "Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008", in the strategic report.
Disclosure of information to auditor
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Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
Post balance sheet events
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There have been no significant events affecting the Company since the financial year end.
The auditor, Grant Thornton, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on 7 June 2024 and signed on its behalf.
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Tom Burke
Director
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Directors' responsibilities statement
For the year ended 31 December 2023
The directors are responsible for preparing the Strategic report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the Company's financial statements and then apply them consistently;
∙make judgments 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;
∙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 to 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.
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Tom Burke
Director
7 June 2024
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Independent auditor's report to the members of CMS Distribution Limited
We have audited the financial statements of CMS Distribution Limited, which comprise the Statement of comprehensive income, the Statement of financial position, the Statement of changes in equity for the financial year ended 31 December 2023, and the related notes to the financial statements, including a summary of 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, CMS Distribution Limited's financial statements:
∙give a true and fair view in accordance with United Kingdom Generally Accepted Accounting Practice of the assets, liabilities and financial position of the Company as at 31 December 2023 and of its financial performance for the financial year then ended; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) ('ISAs (UK)') and applicable law. Our responsibilities under those standards are further described in the 'Responsibilities of the auditor 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 United Kingdom, namely the FRC's Ethical Standard and the ethical pronouncements established by Chartered Accountants Ireland, applied as determined to be appropriate in the circumstances of the entity. 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
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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 the date 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.
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Independent auditor's report to the members of CMS Distribution Limited (continued)
Other information comprises the information included in the Annual Report, other than the financial statements and our Auditor's report thereon, including the Directors' report and the Strategic Report. The directors are responsible for the other information. Our opinion on the financial statements does not cover the 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 in the financial statements, 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.
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 the audit:
∙the information given in the Directors' report and the Strategic Report for the financial year for which the financial statements are prepared is consistent with the financial statements, and
∙the Directors' report and the Strategic Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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In the light of the knowledge and understanding of the company and its environment we have obtained in the course of the audit, we have not identified material misstatements in the Directors' report and the Strategic Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors' remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
Responsibilities of management and those charged with governance for the financial statements
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Management is responsible for the preparation of the financial statements which give a true and fair view in accordance with United Kingdom Generally Accepted Accounting Practice, including FRS102 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.
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Independent auditor's report to the members of CMS Distribution Limited (continued)
Responsibilities of management and those charged with governance for the financial statements (continued)
In preparing the financial statements, management is 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 management either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
Responsibilities of the auditor for the audit of the financial statements
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The objectives of an auditor 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 their 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.
A further description of an auditor's 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.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
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. Owing to the inherent limitations of an audit, there is an unavoidable risk that material misstatement in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with ISAs (UK).
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:
Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to compliance with data protection requirements in the jurisdictions in which the company operates and holds data, non-compliance related to employment regulation in the UK and other environment regulations and we 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 and local tax legislation. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to manipulate financial performance and management bias through judgments and assumptions in significant accounting estimates, in particular in relation to significant one-off or unusual transactions. We apply professional scepticism through the audit to consider potential deliberate omission or concealment of significant transactions, or incomplete/inaccurate disclosures in the financial statements.
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Independent auditor's report to the members of CMS Distribution Limited (continued)
Responsibilities of the auditor for the audit of the financial statements (continued)
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud (continued)
In response to these principal risks, our audit procedures included but were not limited to:
∙inquiries of management on the policies and procedures in place regarding compliance with laws and regulations, including consideration of known or suspected instances of non-compliance and whether they have knowledge of any actual, suspected or alleged fraud;
∙inspection of the company’s legal correspondence and review of minutes of board meetings during the year to corroborate inquiries made;
∙gaining an understanding of the internal controls established to mitigate risk related to fraud;
∙discussion amongst the engagement team in relation to the identified laws and regulations and regarding the risk of fraud, and remaining alert to any indications of non-compliance or opportunities for fraudulent manipulation of financial statements throughout the audit;
∙identifying and testing journal entries to address the risk of inappropriate journals and management override of controls;
∙designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing, challenging assumptions and judgments made by management in their significant accounting estimates including, impairment of trade debtors, useful lives of tangible assets and goodwill, impairment of tangible assets and goodwill and impairment of investments; and
∙review of the financial statement disclosures to underlying supporting documentation and inquiries of management.
The primary responsibility for the prevention and detection of irregularities including fraud rests with those charged with governance and management. As with any audit, there remains a risk of non-detection or irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or override of internal controls.
The purpose of our audit work and to whom we owe our responsibilities
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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.
Cathal Kelly (Senior statutory auditor)
for and on behalf of
Grant Thornton
Chartered Accountants &
Statutory Audit Firm
Dublin 2
Date: 7 June 2024
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Statement of comprehensive income
For the year ended 31 December 2023
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Dividend received from subsidiary
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Interest payable and similar expenses
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Profit for the financial year
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There were no recognised gains and losses for 2023 or 2022 other than those included in the statement of comprehensive income.
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All amounts relate to continuing operations.
There was no other comprehensive income for 2023 (2022: £Nil).
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The notes on pages 14 to 30 form part of these financial statements.
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Page 11
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CMS Distribution Limited
Registered number:02214562
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Statement of financial position
As at 31 December 2023
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 7 June 2024.
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Tom Burke
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The notes on pages 14 to 30 form part of these financial statements.
Page 12
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Statement of changes in equity
For the year ended 31 December 2023
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Comprehensive income for the year
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Comprehensive income for the year
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Page 13
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Notes to the financial statements
For the year ended 31 December 2023
CMS Distribution Limited is a private company limited by shares and incorporated in the United Kingdom. The company's registered office is 2nd floor, 15 Worship Street, London, United Kingdom, EC2A 2DT.
2.Accounting policies
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Basis of preparation of financial statements
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Enter text here - user inputThe financial statements have been prepared with applicable accounting standards including Financial Reporting Standard 102 - the Financial Reporting Standard applicable in the UK and the Republic of Ireland ('FRS102') and with legislation including Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the company's accounting policies (see Note 3).
Consolidation accounts have not been prepared as the company is exempt under the obligation to prepare and deliver company accounts under section 401 of the companies Act 2006 whereby the company and all its subsidiary undertakings are included in the consolidated accounts for a larger company drawn up by its ultimate parent undertaking, Storit Limited. Consequently, the accounts present information about the company as an individual entity and not about its company.
The following principal accounting policies have been applied:
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Exemption from preparing consolidated financial statements
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The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
−the requirements of Section 7 Statement of Cash Flows;
−the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
−the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48 (a)(iv), 11.48(b), 11.48 (c);
−the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.29 and;
−the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Storit Limited as at 31 December 2023 and these financial statements may be obtained from the Companies Registration Office in Ireland.
Page 14
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Notes to the financial statements
For the year ended 31 December 2023
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
∙the Company has transferred the significant risks and rewards of ownership to the buyer;
∙the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of revenue can be measured reliably;
∙it is probable that the Company will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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Notes to the financial statements
For the year ended 31 December 2023
2.Accounting policies (continued)
Rendering of services
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
∙the amount of revenue can be measured reliably;
∙it is probable that the Company will receive the consideration due under the contract;
∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and
∙the costs incurred and the costs to complete the contract can be measured reliably.
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Statement of comprehensive income in the same period as the related expenditure.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position. The assets of the plan are held separately from the Company in independently administered funds.
Page 16
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Notes to the financial statements
For the year ended 31 December 2023
2.Accounting policies (continued)
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight-line basis to the Statement of comprehensive income over its useful economic life.
Other intangible assets
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Page 17
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Notes to the financial statements
For the year ended 31 December 2023
2.Accounting policies (continued)
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Tangible fixed assets (continued)
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Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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Long-term leasehold property
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the company becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Statement of financial position.
The company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Page 18
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Notes to the financial statements
For the year ended 31 December 2023
2.Accounting policies (continued)
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Financial instruments (continued)
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Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of comprehensive income.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the company would receive for the asset if it were to be sold at the reporting date.
Financial assets and liabilities are offset and the net amount reported in the Statement of financial position when there is an 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.
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Judgments in applying accounting policies and key sources of estimation uncertainty
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When preparing the financial statements, management undertakes a number of judgments, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses. These are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The following are significant management judgments in applying the accounting policies of the company that have the most significant effect on the financial statements.
Judgments
In the process of applying the company’s accounting policies, management has made the following judgments, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:
Page 19
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Notes to the financial statements
For the year ended 31 December 2023
3.Judgments in applying accounting policies (continued)
Classifying the company's financial instruments
The company classifies a financial instrument, or its component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual agreement and the definitions of a financial asset, a financial liability or an equity instrument. The substance of a financial instrument, rather than its legal form, governs its classification in the financial statements.
Assessing whether an agreement is a finance or operating lease
Management assesses at the inception of the lease whether an arrangement is a finance or operating lease based on who bears substantially all the risks and benefits incidental to the ownership of the leased item. The company has entered into a lease agreement for some its office premises as a lessee. Based on management’s assessment, the risks and rewards of owning the items leased by the company are retained by the lessor and therefore accounts for such agreement as an operating lease.
Estimates
Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.
Useful lives of tangible assets and goodwill
Management reviews its estimates the useful lives of its tangible and intangible assets based on the period over which the assets are expected to be available for use. The company reviews annually the estimated useful lives of tangible and intangible assets based on factors that include asset utilisation, internal technical evaluation, technological changes, environmental and anticipated use of the assets tempered by related industry benchmark information. It is possible that future results of operations could be materially affected by changes in the company's estimates brought about by changes in the factors mentioned.
Impairment of tangible and intangible fixed assets, including goodwill
The company assesses impairment on tangible and intangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The factors that the company considers important which could trigger an impairment review include the following:
∙significant under performance relative to expected historical or projected future operating results;
∙significant changes in the manner of use of the acquired assets or the strategy for overall business; and
∙significant negative industry or economic trends.
In determining the present value of estimated future cash flows expected to be generated from the continued use of the assets, the company is required to make estimates and assumptions that can materially affect the financial statements.
These assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss would be recognised whenever evidence exists that the carrying value is not recoverable. For purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.
An impairment loss is recognised and charged to profit or loss if the discounted expected future cash flows are less than the carrying amount. Fair value is estimated by discounting the expected future cash flows using a discount factor that reflects the risk-free rate of interest for a term consistent with the period of expected cash flows.
Impairment of investments
Determining whether the carrying value of financial assets has been impaired requires an estimation of the value in use of the investment in subsidiaries.
Page 20
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Notes to the financial statements
For the year ended 31 December 2023
3.Judgments in applying accounting policies (continued)
Impairment of trade debtors
The company estimates the allowance for doubtful trade receivables based on assessment of specific accounts where the company has objective evidence comprising default in payment terms or significant financial difficulty that certain customers are unable to meet their financial obligations. In these cases, judgment used was based on the best available facts and circumstances including but not limited to, the length of relationship.
Recoverability of deferred income tax assets
The company reviews the carrying amounts of deferred income tax assets at each end of the reporting period and reduces the amounts to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred income tax assets to be utilised.
In accordance with Schedule 1, p68 of SI2008/410, the directors have taken the exemption from disclosing particulars of turnover on the grounds that it would be seriously prejudicial to the company.
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The operating profit is stated after charging:
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Depreciation of tangible fixed assets
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Defined contribution pension cost
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During the year, the Company obtained the following services from the Company's auditor and its associates:
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Fees payable to the Company's auditor and its associates in respect of:
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The auditing of accounts of associates of the company pursuant to legislation
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Page 21
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Notes to the financial statements
For the year ended 31 December 2023
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Staff costs, including directors' remuneration, were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the year was as follows:
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Technical and sales staff
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Company contributions to defined contribution pension schemes
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The highest paid director received remuneration of £300,000 (2022: £517,891).
The value of the company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £12,000 (2022: £12,000).
In 2023 and 2022, 3 directors participated in the defined contribution scheme.
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Interest payable and similar expenses
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Factoring interest and charges
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Interest on the discounting of deferred consideration payable
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Page 22
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Notes to the financial statements
For the year ended 31 December 2023
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Factors affecting tax charge for the year
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The tax assessed for the year is higher than (2022: lower than) the standard rate of corporation tax in the UK of25% (per 1 April 2023, until that date -19%). The differences are explained below:
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Profit multiplied by standard rate of corporation tax in the UK of 25% (per 1 April 2023, until that date - 19%)
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Expenses not deductible for tax purposes
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Capital allowances for year in excess of depreciation
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Non trade financial losses utlised
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Adjustment in respect of previous period
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Total tax charge for the year
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Factors that may affect future tax charges
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There were no factors that may affect future tax charges.
Page 23
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Notes to the financial statements
For the year ended 31 December 2023
Page 24
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Notes to the financial statements
For the year ended 31 December 2023
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Long-term leasehold property
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Fixtures, fittings & office equipment
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The net book value of land and buildings may be further analysed as follows:
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Page 25
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Notes to the financial statements
For the year ended 31 December 2023
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Investments in subsidiary companies
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The following were subsidiary undertakings of the Company:
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Interactive Ideas Limited
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Widget Investments Limited
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TNS Distribution (UK) Limited
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During the year, the Company acquired 100% of the ordinary shares of A & GP Holdings Limited and Cables Direct Limited.
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Page 26
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Notes to the financial statements
For the year ended 31 December 2023
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Amounts owed by group undertakings
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Corporation tax repayable
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Prepayments and accrued income
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During the financial year an impairment of £406,169 (2022: impairment reversal of £194,810) was recognised against trade debtors.
Amounts due by group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
VAT recoverable represents tax paid on purchases of applicable goods, net of output VAT.
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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Deferred consideration payable
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Page 27
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Notes to the financial statements
For the year ended 31 December 2023
16.Creditors: Amounts falling due within one year (continued)
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Barclays Bank plc holds a fixed and floating charge over the assets of the company.
A creditor, Fitbit Limited, also holds a second ranking fixed and floating charge over certain assets of the company.
The company has contingent liabilities by way of cross company guarantees to Barclays Bank plc guaranteeing the full indebtedness of each company within the group-term debt and invoice discounting facility.
Disclosed under trade creditors are payable at various dates in the next three months in accordance with the supplier's usual customary credit terms.
Amounts owed to group undertakings includes £2,498,083 (2022: £1,322,112) to PDT Limited. Amounts owed to group undertakings are unsecured, interest free, have no fixed date of repayment and repayable on demand.
All taxes including social insurance are repayable at various dates over the coming months in accordance with applicable statutory provisions.
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Creditors: Amounts falling due after more than one year
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Deferred consideration payable
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Analysis of deferred consideration payment
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Additions for the financial year
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Payments made during the financial year
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Subsequent remeasurement of deferred consideration payable
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Page 28
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Notes to the financial statements
For the year ended 31 December 2023
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The deferred tax asset is made up as follows:
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Accelerated capital allowances
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Allotted, called up and fully paid
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4,316,611 (2022: 4,316,611) Ordinary shares of £1.00 each
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Share premium account
Share premium account includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium.
Revaluation reserve
Includes revaluations of tangible fixed assets in the current and prior periods.
Profit and loss account
Profit and loss account includes all current and prior period retained profits and losses.
The company operates a defined contribution pension scheme for certain employees. The assets of the scheme are held separately from those of the company in an independently administered fund (see Note 7). The pension cost charge represents contributions payable by the company to the fund and amounted to £47,074 (2022: £26,324).
Page 29
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Notes to the financial statements
For the year ended 31 December 2023
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Commitments under operating leases
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At 31 December 2023 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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Related party transactions
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The Company has availed of the exemption in FRS102 Section 33, Paragraph 33.1A which allows non-disclosure of transactions between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member (except as disclosed in Note 16).
During the financial year, PDT Limited sold goods for resale to the Company worth £1,779,604 (2022:£1,269,233). The Company also received a dividend from PDT during the year of £1,436,243.
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Post balance sheet events
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There have been no significant events affecting the Company since the financial year end.
The Company's immediate controlling party and parent undertaking is Storit Limited, a company registered in the Republic of Ireland.
The largest and smallest consolidated accounts to include the results of the company are prepared by Storit Limited and are publicly available at the Companies Registration Office, Dublin 1.
The Company's ultimate controlling party is Mr. Frank Salmon, a director and majority shareholder of the parent company, Storit Limited.
Page 30
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