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Silverfish Group Holdings Limited

Annual Report and Financial Statements
Year Ended 31 October 2023

Registration number: 13664853

 

Silverfish Group Holdings Limited

Contents

Company Information

1

Strategic Report

2 to 4

Directors' Report

5 to 6

Statement of Directors' Responsibilities

7

Independent Auditor's Report

8 to 11

Profit and Loss Account

12

Balance Sheet

13

Statement of Changes in Equity

14

Notes to the Financial Statements

15 to 26

 

Silverfish Group Holdings Limited

Company Information

Directors

Mr E G Gardiner

Mr D G Mabbott

Mr A P Metcalfe

Mr M J H Osborne

Mr B Dale

Registered office

Units 3B and 3C
Saltash Parkway Industrial Estate
Saltash
PL12 6LY

Auditors

PKF Francis Clark
Statutory Auditor
Melville Building East
Unit 18, 23 Royal William Yard
Stonehouse
Plymouth
PL1 3GW

 

Silverfish Group Holdings Limited

Strategic Report for the Year Ended 31 October 2023

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

Principal activity

The principal activity of the company is that of a management company.

Fair review of the business

The role of the company within the group is to hold the group financing and investment balances. The details below cover the activities of the group as a whole.

The year ending October 2023 posed considerable challenges for the cycling sector, as many of the macroeconomic factors highlighted in the previous year’s account continued to exert a significant influence on both supply and demand. The cost-of-living crisis significantly curtailed consumer demand throughout the year at a time when much of the delayed stock ordered during the peak demand of the Covid-19 pandemic was finally manufactured and delivered. With retailers responding to reduced consumer demand by cancelling orders, this resulted in an excess of stock throughout the supply chain, and consequently high levels of discounting across most product categories to stimulate sales. Whilst its carefully curated brand portfolio helps to mitigate some of the impact of this, Silverfish has not escaped this situation, and like many of its competitors, was forced to refinance in the year to support ongoing liquidity. This process was concluded in February 2023 with over £2m of new funds injected from existing shareholders, on top of the £2m previously injected between September and December 2022, demonstrating their continued support for the business and confidence in the long-term prospects.

In addition to the new funds injected, the bank and the shareholders agreed to write down approximately £19.6m of debt, further underscoring their support and belief in the future. Bank loans were reduced by £2.5m and shareholder loan notes by £17.1m, materially improving the balance sheet, critically into a net assets position of £4.3m (Oct 2023, net liabilities -£11.4m).

As part of the refinance process, a reforecast was prepared on the assumption that the market would start to recover during the year ending October 2024. The bank loan covenants were reset to reflect this forecast, with all historical breaches waived. However, a market recovery is yet to materialise meaning it has been necessary to revisit these assumptions. Consequently, the bank agreed to waive covenants as at the end of April 24 and has reset covenants up to and including July 25.

Silverfish sales declined by 20% year on year (2022 -14%), a performance deemed reasonable by the directors given the prevailing macroeconomic factors, highlighting the strength of Silverfish’s strategically differentiated position in the market.

Like many UK based importers and wholesalers, Silverfish continued to experience inflated import costs and consequently gross margin pressure as the strengthening of the US dollar against the UK pound made stock purchases relatively expensive. The recovery of the pound against the US dollar over the course of the year and our foreign exchange risk management policy meant much of the downside was mitigated, although the level of discounting on sales still meant there was a decline in gross margin year on year.

The market pressures on both sales and margin mean that the Silverfish Group is reporting an operating loss of -£2,210k (2022 -£1,096k). It is worth noting this loss is after accounting for £530k of goodwill amortisation (2022 £1,246k) and a £600k increase in stock provision. The provision increase is to cover the expected losses on certain stock categories, partly in light of the market conditions but mainly due to the discontinuation of certain brands and/or product ranges.

 

Silverfish Group Holdings Limited

Strategic Report for the Year Ended 31 October 2023

This performance, whilst unwelcome, was not wholly unexpected and was the driving force behind the refinance process. Critically, the new funds injected have meant that there was still £2m of cash in the business at year end despite the operating loss. The directors are also comfortable with the forward-looking cash headroom considering the prevailing market conditions, which has been supported by both capital and interest repayment holidays.

Whilst the short to medium term future continues to look turbulent, the continuing strong cash headroom (£3m at July 2024), along with the bank’s willingness to reset covenants, mean the directors remain satisfied that there is no immediate threat to the going concern of the group. Participation in cycling remains at an all-time high, and the industry sentiment is that growth will return as soon as market conditions allow.
 

The company's key financial and other performance indicators during the year were as follows:

Financial KPIs

Unit

2023

2022

Loss for the financial period

£

643,783

(11,206,216)

Investments

£

7,730,601

7,730,601

Exceptional items

The £2.25m bank loan write down has been presented as an exceptional item on the face of the P&L, although the £17.1m of shareholder loan note write down, which includes £1.5m of accrued interest, has been presented as a capital contribution in the statement of change in equity.

Principal risks and uncertainties

Competitive markets
The group is exposed to risk and uncertainties related to supplier and customer activities and economic pressures on the retail market. This is managed by ensuring the business continues to operate at the highest level by investing into the unique distribution offering that Silverfish provides to its brands, carefully managing purchasing in line with demand, closely managing existing inventory levels, and on continually improving systems and processes. Emphasis is placed on maintaining strong commercial relationships with brands, which has been pivotal in maintaining their support during the recent challenges.

Financial risks
The Groups operations exposes it to a variety of financial risks that include the effects of credit risk, liquidity risk and exposure to adverse exchange rate movements. These are each specifically managed to minimise their impact on financial performance. Credit risk is primarily attributable to trade debtors. The company has historically had few issues with bad and doubtful debts but continues to closely monitor its outstanding debts, employing a variety of traditional controls to ensure the credit risk is minimised. Towards the end of the year a major customer was placed into administration, reflective of the economic environment. Thankfully, Silverfish was able to recover most of the money owed by working in conjunction with the administrators.

The group’s exposure to foreign exchange risk is managed using forward contracts which aim to hedge for approximately half of the forward-looking currency surpluses or deficits.

 

Silverfish Group Holdings Limited

Strategic Report for the Year Ended 31 October 2023

Management of liquidity risk is managed using both long and short-range cash flows, linked to financial forecasts that are periodically updated. It is these forecasts that highlighted the need for further finance, and the resulting refinance that was concluded in February 2023. The business has approximately £3m cash in bank at July 2024, which is being carefully monitored to ensure sufficient headroom for the foreseeable future. Should the directors feel that this headroom is insufficient then they are committed to taking appropriate remedial actions to improve cash flow.

Covenant compliance
The group is subject to several financial covenants associated with the bank debt in place. As part of the refinance concluded in February 2023, any historical breaches were waived, and forward-looking covenants were reset. These were all satisfied up to and including January 2024, although the prolonged market challenges meant a waiver was agreed by the bank for April 2024, and a further reset was agreed for all test points up to and including July 2025. This includes revising the minimum EBITDA covenant test point to align with latest forecasts, increasing the minimum liquidity covenant to ensure that stock reduction and stock turn is maintained and continuing to waive the debt service cover. The directors have reviewed the headroom against these covenants and are comfortable that the chance of further breach is immaterial.

Stock obsolescence
The over stocking resulting from the ongoing market conditions continues to cause the group a higher than usual stock risk. This is managed by reviewing aged stock reports and offering discounts to customers on items that are at risk of obsolescence. Strong emphasis has been placed on reducing stock levels to help maximise cash in the business, although the heavy over stocks throughout the sector is making this difficult. That said, steady progress is being made, particularly post year end.

Legislation changes
The group can also be impacted by changes in legislation that can affect the supply and use of bicycles and associated parts. The group mitigates this risk through continued communications with brands and membership of national cycling bodies, helping to keep the business up to date with any changes.

Approved by the Board on 2 September 2024 and signed on its behalf by:

.........................................
Mr M J H Osborne
Director

   
     
 

Silverfish Group Holdings Limited

Directors' Report for the Year Ended 31 October 2023

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

Directors of the company

The directors who held office during the year were as follows:

Mr M W Coupland (resigned 23 August 2023)

Mr E G Gardiner (appointed 17 February 2023)

Mr D G Mabbott

Mr A P Metcalfe (appointed 17 February 2023)

Mr M J H Osborne

Mr B Dale (appointed 23 August 2023)

Financial instruments

Objectives and policies

The group effectively manages its working capital through a revolving credit facility with its primary lender. To mitigate exposure to fluctuations in exchange rates, the group strategically employs foreign exchange forward contracts.

Price risk, credit risk, liquidity risk and cash flow risk

The management team undertake various strategies to address the specific operational risks the group faces. These include long term forward planning with orders, benchmarking of prices across the industry, regular credit reviews and use of credit checking facilities to enhance credit control processes. Additionally, the team employs robust cash flow modelling, conducts periodic reviews of liquidity ratios, and maintains close communication with the group's finance providers.

 

Silverfish Group Holdings Limited

Directors' Report for the Year Ended 31 October 2023

Going concern

The main threat to the going concern of the group over the past year has been the turbulent market conditions associated with supply chain delays, subsequent order cancellations and a fall in demand associated to the cost-of-living crisis. Details regarding the impact of these factors on the business are outlined in the fair review of the business, included in the strategic report. Following the debt restructure in February 2023, the directors have concluded that the group is a going concern and the accounts have been prepared on this basis.

The directors considered in detail the prospects of the cycling sector in the near future, especially in conjunction with ongoing liquidity and the revised bank covenants. Given it is difficult to do this with any certainty, the directors adopted a prudent approach to ensure sufficient cash headroom for the foreseeable future. Consequently, there is an expectation of a small sales reduction in the year ending October 2024 as the cycling sector continues to normalise, but the business is forecasting a return to growth the following year. The growth in the year ending October 2025 is largely expected to come from new brands, most of which are significant bike brands, adding to the ever-growing reputation of Silverfish as the leading mountain bike distributor in the UK, and increasingly parts of the EU.

The directors' assessment of going concern has been supported by the material write down of debt at the time of refinance and the bank’s willingness to reset covenants, both at the point of refinance and subsequently in July 2024 to reflect the ongoing market challenges. This includes waiving covenants as at the end of April 2024. The existing cash headroom in the business (£3m at July 2024), along with cautious forwarding looking forecasts and the ongoing support from shareholders, bank and suppliers, collectively lead the directors to conclude that there are no material uncertainties concerning the going concern of the group.

Disclosure of information to the auditors

Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.

Approved by the Board on 2 September 2024 and signed on its behalf by:

.........................................
Mr M J H Osborne
Director

   
     
 

Silverfish Group Holdings Limited

Statement of Directors' Responsibilities

The directors acknowledge their responsibilities 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 apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

state whether applicable United Kingdom 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.

 

Silverfish Group Holdings Limited

Independent Auditor's Report to the Members of Silverfish Group Holdings Limited

Opinion

We have audited the financial statements of Silverfish Group Holdings Limited (the 'company') for the year ended 31 October 2023, which comprise the Profit and Loss Account, Balance Sheet, Statement of Changes in Equity, and 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 the financial statements:

give a true and fair view of the state of the company's affairs as at 31 October 2023 and of its profit 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 opinion

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

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the director's 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 original financial statements were authorised for issue.

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

Other information

The 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.

We have nothing to report in this regard.

 

Silverfish Group Holdings Limited

Independent Auditor's Report to the Members of Silverfish Group Holdings Limited

Opinion on other matter 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 Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.

We have nothing to report in respect of the following matters where 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 directors

As explained more fully in the Statement of Directors' Responsibilities set out on page 7, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor 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:

 

Silverfish Group Holdings Limited

Independent Auditor's Report to the Members of Silverfish Group Holdings Limited

As part of our audit planning we obtained an understanding of the legal and regulatory framework that is applicable to the entity and the sector in which it operates to identify the key laws and regulations affecting the entity. The key laws and regulations we identified were employment and health and safety legislation.

We also considered those laws and regulations that have a direct impact on the preparation of the financial statements, including, but not limited to the reporting framework (FRS 102), the Companies Act and the relevant tax compliance regulations in the UK.

As part of our planning procedures, we assessed the risk of any non-compliance with laws and regulations on the entity’s ability to continue operating and the risk of material misstatement to the accounts. Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved the following:
• Reviewed legal and professional costs to identify legal costs in respect of non compliance;
• Enquiries with management whether there have been any known instances, allegations or suspicions of fraud or non compliance with laws and regulations;
• Reviewed minutes of board meetings.

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 fraudulent financial reporting. Our proceedures involved the following;
• Review of significant accounting estimates for bias.

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. This risk increases the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements as we are less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment, collusion, omission or misrepresentation.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

 

Silverfish Group Holdings Limited

Independent Auditor's Report to the Members of Silverfish Group Holdings Limited

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

......................................
Duncan Leslie (Senior Statutory Auditor)
PKF Francis Clark, Statutory Auditor

Melville Building East
Unit 18, 23 Royal William Yard
Stonehouse
Plymouth
PL1 3GW

2 September 2024

 

Silverfish Group Holdings Limited

Profit and Loss Account

Year Ended 31 October 2023

Note

2023
£

2022
£

Turnover

3

700,000

583,333

Gross profit

 

700,000

583,333

Administrative expenses

 

(628,648)

(354,775)

Operating profit

71,352

228,558

Gain on debt write off

14

2,249,236

-

Amounts written off investments

 

-

(10,019,336)

Interest payable and similar expenses

7

(1,367,050)

(1,725,193)

   

882,186

(11,744,529)

Profit/(loss) before tax

 

953,538

(11,515,971)

Tax on profit/(loss)

8

(309,755)

309,755

Profit/(loss) for the financial year

 

643,783

(11,206,216)

The above results were derived from continuing operations.

The company has no recognised gains or losses for the year other than the results above.

 

Silverfish Group Holdings Limited

Balance Sheet

31 October 2023

Note

2023
£

2022
£

Fixed assets

 

Tangible assets

9

2,906

-

Investments

10

7,730,601

7,730,601

 

7,733,507

7,730,601

Current assets

 

Debtors

11

10,141,258

6,798,856

Cash at bank and in hand

 

2,651

11,241

 

10,143,909

6,810,097

Creditors: Amounts falling due within one year

13

(194,206)

(25,746,913)

Net current assets/(liabilities)

 

9,949,703

(18,936,816)

Total assets less current liabilities

 

17,683,210

(11,206,215)

Creditors: Amounts falling due after more than one year

13

(11,117,140)

-

Net assets/(liabilities)

 

6,566,070

(11,206,215)

Capital and reserves

 

Called up share capital

1

1

Capital contribution reserve

17,128,502

-

Profit and loss account

(10,562,433)

(11,206,216)

Shareholders' funds/(deficit)

 

6,566,070

(11,206,215)

Approved and authorised by the Board on 2 September 2024 and signed on its behalf by:
 

.........................................
Mr M J H Osborne
Director

   
     

Company Registration Number: 13664853

 

Silverfish Group Holdings Limited

Statement of Changes in Equity

Year Ended 31 October 2023

Share capital
£

Capital contribution reserve
£

Profit and loss account
£

Total
£

At 1 November 2022

1

-

(11,206,216)

(11,206,215)

Profit for the year

-

-

643,783

643,783

Total comprehensive income

-

-

643,783

643,783

Capital contribution on debt write off

-

17,128,502

-

17,128,502

At 31 October 2023

1

17,128,502

(10,562,433)

6,566,070

Share capital
£

Capital contribution reserve
£

Profit and loss account
£

Total
£

Loss for the year

-

-

(11,206,216)

(11,206,216)

Total comprehensive income

-

-

(11,206,216)

(11,206,216)

New share capital subscribed

1

-

-

1

At 31 October 2022

1

-

(11,206,216)

(11,206,215)

 

Silverfish Group Holdings Limited

Notes to the Financial Statements

Year Ended 31 October 2023

1

General information

The company is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is:
Units 3B and 3C
Saltash Parkway Industrial Estate
Saltash
PL12 6LY
England

These financial statements were authorised for issue by the Board on 2 September 2024.

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

Summary of disclosure exemptions

FRS 102 grants a qualifying entity exemptions from the full requirements of FRS 102. The following exemptions have been taken in these financial statements as the company is deemed to be a qualifying entity.

The company has taken advantage of the exemption, under FRS 102 paragraph 1.12(b), from preparing a Statement of Cash Flows on the basis that it is a qualifying entity and its ultimate parent company, Silverfish Holdings Limited, includes the company’s cash flows in its own consolidated financial statements. The company is also taking exemption from disclosure of key management personnel compensation and exemption from disclosure of related party transactions entered into between the company and other members of the Silverfish Holdings Limited Group.

Name of parent of group

These financial statements are consolidated in the financial statements of Silverfish Holdings Limited.

The financial statements of Silverfish Holdings Limited may be obtained from Companies House.

 

Silverfish Group Holdings Limited

Notes to the Financial Statements

Year Ended 31 October 2023

Group accounts not prepared

The financial statements contain information about Silverfish Group Holdings Limited as an individual company and do not contain consolidated financial information as the parent of a group.

The company is exempt under section 401 of the Companies Act 2006 from the requirement to prepare consolidated financial statements as it and its subsidiary undertakings are included by full consolidation in the consolidated financial statements of its ultimate parent, Silverfish Holdings Limited, acompany incorporated in England and Wales
.

Going concern

The main threat to the going concern of the group over the past year has been the turbulent market conditions associated with supply chain delays, subsequent order cancellations and a fall in demand associated to the cost-of-living crisis. Details regarding the impact of these factors on the business are outlined in the fair review of the business, included in the strategic report. Following the debt restructure in February 2023, the directors have concluded that the group is a going concern and the accounts have been prepared on this basis.

The directors considered in detail the prospects of the cycling sector in the near future, especially in conjunction with ongoing liquidity and the revised bank covenants. Given it is difficult to do this with any certainty, the directors adopted a prudent approach to ensure sufficient cash headroom for the foreseeable future. Consequently, there is an expectation of a small sales reduction in the year ending October 2024 as the cycling sector continues to normalise, but the business is forecasting a return to growth the following year. The growth in the year ending October 2025 is largely expected to come from new brands, most of which are significant bike brands, adding to the ever-growing reputation of Silverfish as the leading mountain bike distributor in the UK, and increasingly parts of the EU.

The directors' assessment of going concern has been supported by the material write down of debt at the time of refinance and the bank’s willingness to reset covenants, both at the point of refinance and subsequently in July 2024 to reflect the ongoing market challenges. This includes waiving covenants as at the end of April 2024. The existing cash headroom in the business (£3m at July 2024), along with cautious forwarding looking forecasts and the ongoing support from shareholders, bank and suppliers, collectively lead the directors to conclude that there are no material uncertainties concerning the going concern of the group.

 

Silverfish Group Holdings Limited

Notes to the Financial Statements

Year Ended 31 October 2023

Judgements

The company has made the significant judgement to recognise no deferred tax asset of £621,592 related to carried forward tax losses at this time.

As part of the finance restructure in year a number of significant debts were settled for £1 consideration which resulted in a gain to the company balance sheet. The gain on settlement of external bank finances is recognised in the profit and loss account. The gain on settlement of loan notes held by group shareholders is recognised as a capital contribution in the Statement of changes in equity. The allocation of gain between these two treatments is a matter of significant judgement.

Key sources of estimation uncertainty

The company holds an investment balance in the holding company Silverfish UK (Holdings) Limited. Each year the Directors complete an impairment review and when necessary consider the likely recoverable amount of the investment and whether any impairment provision is required. This is supported by a discounted cash-flow projection completed by management. The projection is subject to significant uncertainty regarding the key underlying assumptions such as discount rate and the future cash flows. The carrying amount is £7,730,601 (2022 -£7,730,601).

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the provision of management services to companies in the Silverfish Holdings Limited group. Turnover is shown net of value added tax, returns, rebates and discounts and after eliminating sales within the company. Turnover is recognised in the same period as the underlying management services are provided.

Tax

Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

Deferred tax is recognised on all timing differences at the balance sheet date unless indicated below. Timing differences are differences between taxable profits and the results as stated in the profit and loss account and other comprehensive income. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.

Tangible assets

Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Computer equipment

33% Straight line

 

Silverfish Group Holdings Limited

Notes to the Financial Statements

Year Ended 31 October 2023

Investments

Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment. Dividends on equity securities are recognised in income when receivable.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

Financial instruments

Classification
The company holds the following financial instruments:

• Short term trade and other debtors and creditors;
• Other loans;
• Bank loans; and
• Cash and bank balances.

All financial instruments are classified as basic.

 Recognition and measurement
The company has chosen to apply the recognition and measurement principles in FRS102.

Financial instruments are recognised when the company becomes party to the contractual provisions of the instrument and derecognised when in the case of assets, the contractual rights to cash flows from the assets expire or substantially all the risks and rewards of ownership are transferred to another party, or in the case of liabilities, when the company’s obligations are discharged, expire or are cancelled.

Except for bank loans, such instruments are initially measured at transaction price, including transaction costs, and are subsequently carried at the undiscounted amount of the cash or other consideration expected to be paid or received, after taking account of impairment adjustments.

Bank and others loans are initially measured at transaction price, including transaction costs, and are subsequently carried at amortised cost using the effective interest method.

 

 

Silverfish Group Holdings Limited

Notes to the Financial Statements

Year Ended 31 October 2023

3

Turnover

The analysis of the company's Turnover for the year from continuing operations is as follows:

2023
£

2022
£

Rendering of services

700,000

583,333

The analysis of the company's Turnover for the year by market is as follows:

2023
£

2022
£

UK

700,000

583,333

4

Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

2023
£

2022
£

Wages and salaries

244,230

125,134

Social security costs

26,794

13,283

Pension costs, defined contribution scheme

18,512

1,800

289,536

140,217

The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:

2023
No.

2022
No.

Administration and support

5

3

5

3

5

Directors' remuneration

The directors' remuneration for the year was as follows:

2023
£

2022
£

Remuneration

63,065

-

Contributions paid to money purchase schemes

13,883

-

76,948

-

6

Auditor's remuneration

Auditor's remuneration is borne by the trading subsidiary Silverfish UK Limited. The audit fee in relation to Silverfish Group Holdings Limited is £5,250 (2022 - £4,500).

 

Silverfish Group Holdings Limited

Notes to the Financial Statements

Year Ended 31 October 2023

7

Interest payable and similar expenses

2023
£

2022
£

Interest on bank loans

508,562

516,692

Interest on other loans

858,488

1,208,501

1,367,050

1,725,193

8

Taxation

Tax charged/(credited) in the profit and loss account

2023
£

2022
£

Deferred taxation

Arising from origination and reversal of timing differences

309,755

(309,755)

The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2022 - higher than the standard rate of corporation tax in the UK) of 22.52% (2022 - 19%).

The differences are reconciled below:

2023
£

2022
£

Profit/(loss) before tax

953,538

(11,515,971)

Corporation tax at standard rate

214,716

(2,188,034)

Effect of revenues exempt from taxation

(506,479)

-

Effect of expense not deductible in determining taxable profit (tax loss)

11,013

1,903,674

Deferred tax credit relating to changes in tax rates or laws

(30,961)

(73,140)

Increase from tax losses for which no deferred tax asset was recognised

621,592

-

Decrease from effect of tax incentives

(126)

-

Tax increase arising from group relief

-

47,745

Total tax charge/(credit)

309,755

(309,755)

Deferred tax

Deferred tax assets and liabilities

2023

Asset
£

Liability
£

Fixed asset timing difference

(727)

-

Tax losses carried forward

727

-

-

-

 

Silverfish Group Holdings Limited

Notes to the Financial Statements

Year Ended 31 October 2023

2022

Asset
£

Liability
£

Tax losses carried forward

309,755

-

309,755

-

There are £2,486,368 of unused tax losses (2022 - £Nil) for which no deferred tax asset is recognised in the balance sheet.

9

Tangible assets

Computer equipment
 £

Total
£

Cost or valuation

Additions

4,502

4,502

At 31 October 2023

4,502

4,502

Depreciation

Charge for the year

1,596

1,596

At 31 October 2023

1,596

1,596

Carrying amount

At 31 October 2023

2,906

2,906

 

Silverfish Group Holdings Limited

Notes to the Financial Statements

Year Ended 31 October 2023

10

Investments

2023
£

2022
£

Investments in subsidiaries

7,730,601

7,730,601

Subsidiaries

£

Cost or valuation

At 1 November 2022

17,749,937

At 31 October 2023

17,749,937

Provision

At 1 November 2022

10,019,336

At 31 October 2023

10,019,336

Carrying amount

At 31 October 2023

7,730,601

At 31 October 2022

7,730,601

Details of undertakings

Details of the investments (including principal place of business of unincorporated entities) in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking

Registered office

Holding

Proportion of voting rights and shares held

     

2023

2022

Subsidiary undertakings

Silverfish UK (Holdings) Limited*

Units 3B & 3C
Saltash Parkway
Industrial Estate
Saltash
England
PL12 6LY

England and Wales

Ordinary

100%

100%

Silverfish UK Limited

Units 3B & 3C
Saltash Parkway
Industrial Estate
Saltash
England
PL12 6LY

England and Wales

Ordinary

100%

100%

 

Silverfish Group Holdings Limited

Notes to the Financial Statements

Year Ended 31 October 2023

* indicates direct investment of the company

Subsidiary undertakings

Silverfish UK (Holdings) Limited*

The principal activity of Silverfish UK (Holdings) Limited* is that of a holding company.

Silverfish UK Limited

The principal activity of Silverfish UK Limited is importer and wholesaler of bicycles, bicycle clothing and accessories.

11

Debtors

Note

2023
£

2022
£

Amounts owed by group undertakings

 

10,139,495

6,486,810

Other debtors

 

1,763

2,291

Deferred tax assets

8

-

309,755

 

10,141,258

6,798,856

12

Cash and cash equivalents

2023
£

2022
£

Cash at bank

2,651

11,241

13

Creditors

Note

2023
£

2022
£

Due within one year

 

Loans and borrowings

14

-

25,617,068

Trade creditors

 

155,102

123,299

Social security and other taxes

 

38,874

6,546

Other creditors

 

230

-

 

194,206

25,746,913

Due after one year

 

Loans and borrowings

14

11,117,140

-

 

Silverfish Group Holdings Limited

Notes to the Financial Statements

Year Ended 31 October 2023

14

Loans and borrowings

2023
£

2022
£

Non-current loans and borrowings

Bank borrowings

6,284,463

-

Other borrowings

4,832,677

-

11,117,140

-

2023
£

2022
£

Current loans and borrowings

Bank borrowings

-

8,116,047

Other borrowings

-

17,501,021

-

25,617,068

Bank borrowings

Bank loan 1 is denominated in £ with a nominal interest rate of 6.5%, and the final instalment is due on 22 December 2026. The carrying amount at year end is £2,366,431 (2022 - £2,244,534).

The loan is secured by a fixed and floating charge of all property and undertakings of the company. The chargors are the 4 constituent companies of the Silverfish Holdings Limited group.

Bank loan 2 is denominated in £ with a nominal interest rate of 6.5%, and the final instalment is due on 22 December 2026. The carrying amount at year end is £4,110,682 (2022 - £6,125,000).

The loan is secured by a fixed and floating charge of all property and undertakings of the company. The chargors are the 4 constituent companies of the Silverfish Holdings Limited group.

The loans above are presented net of issue costs incurred of £192,650 (2022 - £253,487) being amortised over the life of the loans.

Other borrowings

Loan notes 1 is denominated in £ with a nominal interest rate of 8%. The carrying amount at year end is £Nil (2022 - £9,084,664).

Loan notes 2 is denominated in £ with a nominal interest rate of 10%. The carrying amount at year end is £Nil (2022 - £7,608,203).

Loan notes 3 is denominated in £ with a nominal interest rate of 12%, and the final instalment is due on 23 December 2026. The carrying amount at year end is £1,588,140 (2022 - £808,153).

Loan notes 4 is denominated in £ with a nominal interest rate of 12%, and the final instalment is due on 23 December 2026. The carrying amount at year end is £3,245,231 (2022 - £Nil).

 

Silverfish Group Holdings Limited

Notes to the Financial Statements

Year Ended 31 October 2023

Loan covenants
As at 31 October 2022 the company was in breach of the financial covenants on its bank loans resulting in the presentation of these liabilities as current.

On 17 February 2023 the company completed a restructure of its financing facilities. This resulted in a significant release of £2,249,236 of bank loans recognised as a gain on debt write off in the profit and loss account. It also resulted in the release of £17,128,502 of shareholder loan notes 1 and 2 recognised as a capital contribution in the statement of comprehensive income.

As part of this refinance the covenants on the loans were updated and reset with all historical breaches waived.

15

Share capital

Allotted, called up and fully paid shares

 

2023

2022

 

No.

£

No.

£

Ordinary shares of £1 each

1

1

1

1

         

Rights, preferences and restrictions

Ordinary shares have the following rights, preferences and restrictions:
The company has a single share class and a single issued share. The rights, preferences and restrictions are as schedule 1 of the Companies (Model Articles) Regulations 2008 as amended and adopted by subsequent articles on 22 December 2021.

16

Parent and ultimate parent undertaking

The company's immediate parent is Silverfish Holdings Limited, incorporated in England and Wales.

 The most senior parent entity producing publicly available financial statements is Silverfish Holdings Limited. These financial statements are available upon request from Companies House

 The ultimate controlling party is the ultimate shareholders of Silverfish Holdings Limited, as no individual holds overall control.

The parent of the largest and smallest group in which these financial statements are consolidated is Silverfish Holdings Limited, incorporated in England and Wales.

The address of Silverfish Holdings Limited is:
Units 3B and 3C Saltash Parkway Industrial Estate, Saltash, England, PL12 6LY.

17

Pension and other schemes

Defined contribution pension scheme

The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £18,512 (2022 - £1,800).

 

Silverfish Group Holdings Limited

Notes to the Financial Statements

Year Ended 31 October 2023

18

Related party transactions

The company has taken advantage of the exemption provided by FRS102 to not disclose transactions entered in to 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.

Transactions with directors

2023

At 1 November 2022
£

Loan notes issued to director
£

Interest incurred by company payable to director
£

Written off
£

At 31 October 2023
£

Director 1

Loan notes 2

7,391,409

-

216,199

(7,607,608)

-

Loan notes 3

808,153

633,000

146,987

-

1,588,140

 

8,199,562

633,000

363,186

(7,607,608)

1,588,140

2022

At 6 October 2021
£

Loan notes issued to director
£

Interest incurred by company payable to director
£

At 31 October 2022
£

Director 1

Loan notes 2

-

6,796,697

594,712

7,391,409

Loan notes 3

-

800,000

8,153

808,153

 

-

7,596,697

602,865

8,199,562

       

 

Loan notes are held by a Director of the company, their spouse and a Trust for which the Director and their spouse act as Trustees. The loan notes 2 incurred interest at 10% and were written off in year as part of the re-finance package. The loan notes 3 incur interest at 12% are are repayable in December 2026. Balances presented above include interest accrued at the balance sheet date.

Other transactions
During the year, the company bore total costs of £19k on behalf of a director related to the loan note write off.