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Silverfish UK Limited

Annual Report and Financial Statements
Year Ended 31 October 2023

Registration number: 04075057

 

Silverfish UK Limited

Contents

Strategic Report

1 to 3

Directors' Report

4 to 5

Statement of Directors' Responsibilities

6

Independent Auditor's Report

7 to 10

Statement of Income and Retained Earnings

11

Balance Sheet

12

Notes to the Financial Statements

13 to 28

 

Silverfish UK 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 importer and wholesaler of premium bicycles, high-end bicycle clothing, components, and accessories.

Fair review of the business

Silverfish UK Limited is the sole trading company in the wider Silverfish Group. The details below cover the activity 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 UK 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:

 

Unit

2023

2022

Turnover

£

11,980,146

15,043,349

Gross profit margin

%

20

29



Exceptional items

The £250k bank loan write down has been presented as an exceptional item on the face of the P&L.
 

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 UK 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 and authorised by the Board on 28 August 2024 and signed on its behalf by:
 

.........................................
Mr M Osborne
Director

 

Silverfish UK 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 D Mabbott

Mr M Osborne

Mr A Metcalfe (appointed 17 February 2023)

Mr E Gardiner (appointed 17 February 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.

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 UK Limited

Directors' Report for the Year Ended 31 October 2023

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 and authorised by the Board on 28 August 2024 and signed on its behalf by:
 

.........................................
Mr M Osborne
Director

 

Silverfish UK 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 UK Limited

Independent Auditor's Report to the Members of Silverfish UK Limited

Opinion

We have audited the financial statements of Silverfish UK Limited (the 'company') for the year ended 31 October 2023, which comprise the Statement of Income and Retained Earnings, Balance Sheet, 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 loss for the year then ended;

have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for 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 UK Limited

Independent Auditor's Report to the Members of Silverfish UK 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 6, 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 UK Limited

Independent Auditor's Report to the Members of Silverfish UK 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;
• Review 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 procedures involved the following;
• Review of nominal journal entries for reasonableness;
• Review of significant accounting estimates for bias;
• Review of stock sales history to test completeness of the stock provision.

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 UK Limited

Independent Auditor's Report to the Members of Silverfish UK 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
Devon
PL1 3GW

28 August 2024

 

Silverfish UK Limited

Statement of Income and Retained Earnings

Year Ended 31 October 2023

Note

2023
 £

2022
 £

Turnover

3

11,980,146

15,043,349

Cost of sales

 

(9,554,210)

(10,723,380)

Gross profit

 

2,425,936

4,319,969

Administrative expenses

 

(4,212,193)

(4,175,253)

Operating (loss)/profit

4

(1,786,257)

144,716

Gain on debt write off

 

250,764

-

Other interest receivable and similar income

8

13,205

10

Interest payable and similar charges

9

(120,690)

(111,471)

(Loss)/profit before tax

 

(1,642,978)

33,255

Taxation

10

29,759

28,782

(Loss)/profit for the financial year

 

(1,613,219)

62,037

Retained earnings brought forward

 

2,837,790

2,775,753

Retained earnings carried forward

 

1,224,571

2,837,790

There are no other movements on any components of equity.

 

Silverfish UK Limited

Balance Sheet

31 October 2023

Note

2023
£

Restated

2022
£

Fixed assets

 

Intangible assets

11

92,301

97,707

Tangible assets

12

1,064,920

1,134,981

 

1,157,221

1,232,688

Current assets

 

Stocks

13

8,877,529

9,676,815

Debtors

14

1,417,902

1,856,921

Cash at bank and in hand

 

2,008,735

458,141

 

12,304,166

11,991,877

Creditors: Amounts falling due within one year

16

(10,810,481)

(10,345,920)

Net current assets

 

1,493,685

1,645,957

Total assets less current liabilities

 

2,650,906

2,878,645

Creditors: Amounts falling due after more than one year

16

(1,426,235)

-

Provisions for liabilities

19

-

(40,755)

Net assets

 

1,224,671

2,837,890

Capital and reserves

 

Called up share capital

100

100

Profit and loss account

1,224,571

2,837,790

Shareholders' funds

 

1,224,671

2,837,890

Approved and authorised by the Board on 28 August 2024 and signed on its behalf by:
 

.........................................
Mr M Osborne
Director

Company Registration Number: 04075057

 

Silverfish UK 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 & 3C
Woodacre Court
Saltash
Cornwall
PL12 6LY

These financial statements were authorised for issue by the Board on 28 August 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 FRS102. 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 FRS102 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, included 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 UK Limited

Notes to the Financial Statements

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.

Reclassification of comparative amounts

Management have decided to present stock on the water for the year ended 31 October 2023, for which risks and rewards have transferred, within stock. For comparability a balance of £1,501,173 has been reclassified from prepayments to stock in the restated balance sheet for the year ended 31 October 2022.

Judgements

Deferred tax. The company has made the significant judgement to recognise no deferred tax asset of £423,931 related to carried forward tax losses at this time.

Key sources of estimation uncertainty

Stock provision. The company estimates the stock provision based on a risk analysis of outstanding stock at the year end and an assessment of estimated realisable value of discontinued stock. This estimate is dependent on the assumption that the future pattern of stock sales accurately reflects the past history of similar stock movement. The carrying amount is £946,085 (2022 - £525,532).

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the company’s activities. Turnover is shown net of value added tax, returns, rebates and discounts and after eliminating sales within the company.

Turnover is recognised on point of despatch on sale of goods.

 

Silverfish UK Limited

Notes to the Financial Statements

Year Ended 31 October 2023

Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on the reporting period date. Non-monetary items are carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the initial transaction dates.

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.

Intangible assets

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

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

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:

Asset class

Amortisation method and rate

Website and computer software costs

25% straight line

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 assets under construction over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Land and buildings

2% Straight line

Plant and machinery

10-33% Straight line

Motor vehicles

25% Reducing balance

Assets under construction

N/A

 

Silverfish UK Limited

Notes to the Financial Statements

Year Ended 31 October 2023

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in, first-out (FIFO) method.

At each reporting date, stocks are assessed for impairment. If stocks are impaired, the carrying amount is reduced to its selling price less costs to complete and sell; the impairment loss is recognised immediately in the Profit or Loss Account.

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the Balance Sheet as a finance lease obligation.

Lease payments are apportioned between finance costs in the Profit and Loss Account and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.

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.

 

Silverfish UK Limited

Notes to the Financial Statements

Year Ended 31 October 2023

Financial instruments

Classification
The company holds the following financial instruments:

• Short term trade and other debtors and creditors;
• Bank loans;
• Cash and bank balances; and
• Derivative forward foreign currency contracts.

All financial instruments (other than the derivatives) 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 loans are initially measured at transaction price, including transaction costs, and are subsequently carried at amortised cost using the effective interest method.

Derivative financial instruments and hedging

The group uses forward foreign currency contracts to reduce exposure to foreign exchange rates.

Derivative financial instruments are initially measured at fair value and are subsequently measured at fair value through profit or loss. When the fair value is positive the derivatives are carried as current assets; and as current liabilities when the fair value is negative. The fair value of the forward foreign currency contracts is calculated by comparing the year end spot rate or year end forward rate, which acts as an approximation for the fair value of the contracts, with the contracted rates.

 

 

Silverfish UK Limited

Notes to the Financial Statements

Year Ended 31 October 2023

3

Revenue

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

2023
£

2022
£

Sale of goods

11,980,146

15,043,349

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

2023
£

2022
£

UK

9,506,593

12,780,152

Europe

2,473,553

2,263,197

11,980,146

15,043,349

4

Operating (loss)/profit

Arrived at after charging/(crediting)

2023
£

2022
£

Depreciation expense

78,426

83,091

Amortisation expense

35,571

42,634

Foreign exchange (gains)/losses

(317,633)

568,197

Operating lease expense - property

36,667

35,208

Operating lease expense - plant and machinery

66,696

62,945

Loss on disposal of property, plant and equipment

-

81,610

 

Silverfish UK Limited

Notes to the Financial Statements

Year Ended 31 October 2023

5

Staff costs

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

2023
£

2022
£

Wages and salaries

1,749,320

1,791,428

Social security costs

179,874

171,785

Pension costs, defined contribution scheme

54,369

42,632

1,983,563

2,005,845

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

2023
No.

2022
No.

Management

4

2

Administration and support

13

13

Sales

9

9

Production and warehouse

26

26

52

50

6

Directors' remuneration

The directors' remuneration for the year was as follows:

2023
£

2022
£

Remuneration

433,632

248,761

Contributions paid to money purchase schemes

12,940

10,916

446,572

259,677

During the year the number of directors who were receiving benefits and share incentives was as follows:

2023
No.

2022
No.

Accruing benefits under defined benefit pension scheme

3

3

In respect of the highest paid director:

2023
£

2022
£

Remuneration

179,429

110,577

Company contributions to money purchase pension schemes

5,729

5,436

 

Silverfish UK Limited

Notes to the Financial Statements

Year Ended 31 October 2023

7

Auditor's remuneration

2023
£

2022
£

Audit of the financial statements

13,710

11,750


 

8

Other interest receivable and similar income

2023
£

2022
£

Interest income on bank deposits

13,205

10

9

Interest payable and similar expenses

2023
£

2022
£

Interest on bank overdrafts and borrowings

120,690

67,100

Interest on obligations under finance leases and hire purchase contracts

-

2,605

Interest expense on directors loan

-

41,766

120,690

111,471

10

Taxation

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

2023
£

2022
£

Current taxation

UK corporation tax

10,996

87

Deferred taxation

Arising from origination and reversal of timing differences

(40,755)

(28,869)

Tax receipt in the income statement

(29,759)

(28,782)

 

Silverfish UK Limited

Notes to the Financial Statements

Year Ended 31 October 2023

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

The differences are reconciled below:

2023
£

2022
£

(Loss)/profit before tax

(1,642,978)

33,255

Corporation tax at standard rate

(369,963)

6,318

Effect of revenues exempt from taxation

(56,467)

-

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

8,596

24,465

Deferred tax credit relating to changes in tax rates or laws

(44,052)

(6,841)

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

421,846

-

Decrease from effect of tax incentives

(715)

(3,778)

Increase in UK and foreign current tax from adjustment for prior periods

10,996

-

Tax decrease arising from group relief

-

(48,946)

Total tax credit

(29,759)

(28,782)

Deferred tax

Deferred tax assets and liabilities

2023

Asset
£

Liability
£

Difference between accumulated depreciation, amortisation and capital allowances

-

31,357

Tax losses carried forward

-

(31,357)

-

-

2022

Asset
£

Liability
£

Difference between accumulated depreciation, amortisation and capital allowances

-

43,349

Other short term differences

-

(2,594)

-

40,755

There are £1,684,948 of unused tax losses (2022 - £Nil) for which no deferred tax asset is recognised in the balance sheet.

 

Silverfish UK Limited

Notes to the Financial Statements

Year Ended 31 October 2023

11

Intangible assets

Website and computer software
 £

Total
£

Cost or valuation

At 1 November 2022

469,236

469,236

Additions

30,165

30,165

At 31 October 2023

499,401

499,401

Amortisation

At 1 November 2022

371,529

371,529

Amortisation charge

35,571

35,571

At 31 October 2023

407,100

407,100

Carrying amount

At 31 October 2023

92,301

92,301

At 31 October 2022

97,707

97,707

 

Silverfish UK Limited

Notes to the Financial Statements

Year Ended 31 October 2023

12

Tangible assets

Land and buildings
£

Plant and machinery
 £

Motor vehicles
 £

Total
£

Cost or valuation

At 1 November 2022

1,255,180

264,062

105,992

1,625,234

Additions

-

34,542

-

34,542

Disposals

-

-

(80,466)

(80,466)

At 31 October 2023

1,255,180

298,604

25,526

1,579,310

Depreciation

At 1 November 2022

295,082

129,672

65,499

490,253

Charge for the year

22,593

52,254

3,579

78,426

Eliminated on disposal

-

-

(54,289)

(54,289)

At 31 October 2023

317,675

181,926

14,789

514,390

Carrying amount

At 31 October 2023

937,505

116,678

10,737

1,064,920

At 31 October 2022

960,098

134,390

40,493

1,134,981

Included within the net book value of land and buildings above is £937,505 (2022 - £960,098) in respect of long leasehold land and buildings.
 

Assets held under finance leases and hire purchase contracts

The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:

 

2023
£

2022
£

Motor vehicles

-

30,847

     

Restriction on title and pledged as security

Leasehold land and buildings with a carrying amount of £937,505 (2022 - £960,098) has been pledged as security for the bank loans and overdrafts included within creditors: amounts due within one year and after one year.

13

Stocks

2023
£

2022
£

Finished goods and goods for resale

8,877,529

9,676,815

 

Silverfish UK Limited

Notes to the Financial Statements

Year Ended 31 October 2023

14

Debtors

2023
£

2022
£

Trade debtors

1,231,081

1,692,024

Other debtors

78,392

77,326

Prepayments

108,429

63,870

Accrued income

-

23,701

1,417,902

1,856,921

15

Cash and cash equivalents

2023
£

2022
£

Cash on hand

542

2,627

Cash at bank

1,998,193

445,514

Short-term deposits

10,000

10,000

2,008,735

458,141

16

Creditors

Note

2023
£

2022
£

Due within one year

 

Loans and borrowings

17

-

1,633,186

Trade creditors

 

368,913

1,356,601

Amounts due to group undertakings

 

10,118,688

6,465,309

Social security and other taxes

 

172,260

596,001

Other creditors

 

82,925

64,044

Accruals

 

67,695

230,779

 

10,810,481

10,345,920

Due after one year

 

Loans and borrowings

17

1,426,235

-

17

Loans and borrowings

2023
£

2022
£

Non-current loans and borrowings

Bank borrowings

1,426,235

-

 

Silverfish UK Limited

Notes to the Financial Statements

Year Ended 31 October 2023

2023
£

2022
£

Current loans and borrowings

Bank borrowings

-

1,600,000

Finance lease liabilities

-

33,186

-

1,633,186

Bank borrowings

Bank loan is denominated in £ with a nominal interest rate of 6.5%, and the final instalment is due on 31 January 2027. The carrying amount at year end is £1,426,235 (2022 - £1,600,000).

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.


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 as at the year end.

On 17 February 2023 the company completed a restructure of its financing facilities. This resulted in a significant release of £250,764 of bank loans recognised as a gain on debt write off in the profit and loss account. As part of this refinance the covenants on the loans were updated and reset with all historical breaches waived.

18

Obligations under leases and hire purchase contracts

Finance leases

The total of future minimum lease payments is as follows:

2023
£

2022
£

Not later than one year

-

33,186

 

Silverfish UK Limited

Notes to the Financial Statements

Year Ended 31 October 2023

Operating leases

The total of future minimum lease payments is as follows:

2023
£

2022
£

Not later than one year

65,181

64,521

Later than one year and not later than five years

36,336

26,516

101,517

91,037

The amount of non-cancellable operating lease payments recognised as an expense during the year was £103,363 (2022 - £98,152).

19

Deferred tax and other provisions

Deferred tax
£

At 1 November 2022

40,755

Increase/(decrease) in existing provisions

(40,755)

At 31 October 2023

-

20

Share capital

Allotted, called up and fully paid shares

 

2023

2022

 

No.

£

No.

£

Ordinary A shares of £1 each

50

50

50

50

Ordinary B shares of £1 each

50

50

50

50

 

100

100

100

100

Rights, preferences and restrictions

Ordinary shares have the following rights, preferences and restrictions:
All shares rank equally for voting purposes. On a show of hands, each member has one vote and on a poll, each member has one vote per share held.

Dividends may be paid to the holders of one or more classes of shares to the exclusion of the other or to all classes of shares, in each case at the same or differing rates, as determined by ordinary resolution or resolution of the directors.
 

 

Silverfish UK Limited

Notes to the Financial Statements

Year Ended 31 October 2023

21

Parent and ultimate parent undertaking

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

 The ultimate 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 parent of the largest 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 & 3C
Saltash Parkway Industrial Estate
Saltash
England
PL12 6LY

22

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 £54,369 (2022 - £42,632).

Contributions totalling £10,775 (2022 - £10,375) were payable to the scheme at the end of the year and are included in creditors.

 

Silverfish UK Limited

Notes to the Financial Statements

Year Ended 31 October 2023

23

Financial instruments

Financial liabilities measured at fair value

Forward foreign currency contracts
The fair value of the forward foreign currency contracts is calculated by comparing the year end spot rate or forward rate, which acts as an approximation for the fair value of the contracts, with the contracted rates.

The fair value is £Nil (2022 - £Nil) and the change in value included in profit or loss is £Nil (2022 - £Nil).

24

Related party transactions

The company has taken advantage of the exemption provided by FRS 102 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
Other transactions with directors
During the year a director received an asset with a net book value of £26,177. This was transferred in part consideration for the loan note write off in Silverfish Group Holdings Limited.

2022

At 1 November 2021
£

Advances to director
£

Repayments by director
£

At 31 October 2022
£

Director 1

Loan account, including interest charged at 8.39%, repayable within less than 1 year

3,672,430

(3,725,714)

53,284

-

         
       

 

Other transactions with directors
During the year a director received an asset with a net book value of £50,686 for nil consideration.