Company registration number 08628316 (England and Wales)
EPOCH-MAKING TOYS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
EPOCH-MAKING TOYS LIMITED
COMPANY INFORMATION
Directors
Mr P Hooper
(Appointed 1 September 2023)
Mr H Hayakawa
(Appointed 22 May 2023)
Secretary
Mr K Kawano
Company number
08628316
Registered office
Capital Court
30 Windsor Street
Uxbridge
London
UB8 1AB
Auditor
Harris Bassett Limited
5 New Mill Court
Phoenix Way
Enterprise Park
Swansea
SA7 9FG
Bankers
SMBC Europe Limited
99 Queen Victoria Street
London
EC4V 4EH
EPOCH-MAKING TOYS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Group income statement
8
Group statement of financial position
10
Group statement of changes in equity
11
Group statement of cash flows
12
Notes to the group financial statements
13 - 25
EPOCH-MAKING TOYS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Review of the business
The Toy industry declined 7% during 2023 as inflation and overall cost of living crisis hit UK consumers. There was a general return to the high street shopping post pandemic which saw the online sector decline significantly with growth in particular for Smyths toys and the independent sector which are key customers for Epoch Making Toys.
The company liaises and works very closely with its parent company in Japan to ensure market opportunities are maximised where possible.
Experienced National Account managers continue to develop relationships with key buyers and buying groups within the industry. To further develop these relationships, the company is located near Heathrow and the heart of the Toy industry and offer a much improved environment to present the company's products.
The company invests in TV and supporting bricks and mortar toy retail stores throughout the UK and Ireland, and is now investing extensively in digital media focusing on Influencers and YouTube campaigns. The company continues to develop new products, including licensed sets, to enhance its existing line of toys and collectables as well as arts and crafts ranges, with new products launched annually.
Principal risks and uncertainties
The cost of living crisis continues to cause issues with rising costs and less disposable income for consumers having an impact on consumer confidence and spending.
The company sources its products through its parent company based in Japan. All transactions are in GBP, therefore there is no material currency risk beyond that mentioned above.
Development and performance
The company continues to explore new markets and develop additional business with existing customers, including the use of social media and digital marketing to further expand its customer base.
Marketing activities include trade shows, product demonstration days, character mascot store visits and consumer exhibitions are also planned.
Key performance indicators
The company uses key performance indicators as a management tool. The main items of measurement are as follows:
Mr P Hooper
Director
1 May 2024
EPOCH-MAKING TOYS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company is the wholesale and sale of toys to specialised stores and other retail outlets.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr M Maeda
(Resigned 1 September 2023)
Mr D Tavender
(Resigned 1 September 2023)
Mr S Yamagata
(Resigned 1 September 2023)
Mr P Hooper
(Appointed 1 September 2023)
Mr H Hayakawa
(Appointed 22 May 2023)
Supplier payment policy
The group's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).
The group's current policy concerning the payment of trade creditors is to:
settle the terms of payment with suppliers when agreeing the terms of each transaction;
ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
pay in accordance with the company's contractual and other legal obligations.
Financial instruments
Liquidity risk
The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the group has sufficient liquid resources to meet the operating needs of the business.
Interest rate risk
The group is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans.
Foreign currency risk
The company’s principal foreign currency exposures arise from direct import sales to major customers.
Credit risk
Investments of cash surpluses and borrowings are made through banks and companies which must fulfil credit rating criteria approved by the company.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
EPOCH-MAKING TOYS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Future developments
The company continues to explore new markets and develop additional business with existing customers, including the use of social media and digital marketing to further expand its customer base.
Additional marketing activities including trade shows, product demonstration days, character mascot store visits and consumer exhibitions are also planned.
New products continue to be launched, with new licences obtained in the year, and a new craft products, popular in Japan, to be launched in the U.K. in 2024.
Auditor
In accordance with the company's articles, a resolution proposing that Harris Bassett Limited be reappointed as auditor of the company and group will be put at a General Meeting.
Statement of disclosure to auditor
Each director in office at the date of approval of this annual report confirms that:
so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware, and
the director has taken all the steps that he / she ought to have taken as a director in order to make himself / herself aware of any relevant audit information and to establish that the company's auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.
On behalf of the board
Mr P Hooper
Director
1 May 2024
EPOCH-MAKING TOYS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom. 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, International Accounting Standard 1 requires that directors:
properly select and apply accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and
make an assessment of the company's ability to continue as a going concern.
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.
EPOCH-MAKING TOYS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF EPOCH-MAKING TOYS LIMITED
- 5 -
Opinion
We have audited the financial statements of Epoch-Making Toys Limited (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2023 which comprise the group income statement, the group statement of financial position, the group statement of changes in equity, the group statement of cash flows and the group notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards.
In our opinion:
the financial statements give a true and fair view of the state of the group's affairs as at 31 December 2023 and of the group's profit for the year then ended;
the financial statements have been properly prepared in accordance with UK adopted international accounting standards; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
EPOCH-MAKING TOYS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF EPOCH-MAKING TOYS LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:
Results of our enquiries of management about their own identification and assessment of the risks of irregularities;
The nature of the industry and sector, control environment and business performance;
Any matters we identified having obtained and reviewed the company’s policies and procedures relating to:
Identifying, evaluation and complying with laws and regulations and whether they were aware of any instances of noncompliance;
Detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
The internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
The matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in revenue recognition. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act and local tax legislation.
EPOCH-MAKING TOYS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF EPOCH-MAKING TOYS LIMITED
- 7 -
Audit response to risks identified
Our procedures to respond to risks identified included the following:
Enquiry of management around potential litigation and claims.
Enquiry of entity staff to identify any instances of non-compliance with laws and regulations.
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud.
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness; and assessing whether the judgements made in making accounting estimates are indicative of a potential bias.
Our audit testing typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.
We also communicated relevant laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or noncompliance with laws and regulations throughout the audit.
A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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.
Nicholas Bassett (Senior Statutory Auditor)
For and on behalf of Harris Bassett Limited
1 May 2024
Chartered Accountants
Statutory Auditor
5 New Mill Court
Phoenix Way
Enterprise Park
Swansea
SA7 9FG
EPOCH-MAKING TOYS LIMITED
GROUP INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Revenue
2
15,132,790
16,399,571
Cost of sales
(8,905,610)
(10,562,930)
Gross profit
6,227,180
5,836,641
Distribution costs
(2,624,649)
(3,641,334)
Administrative expenses
(2,209,826)
(1,732,776)
Operating profit
3
1,392,705
462,531
Finance costs
7
(443,502)
(197,111)
Profit before taxation
949,203
265,420
Income tax expense
8
(205,494)
(113,884)
Profit and total comprehensive income for the year
743,709
151,536
Profit for the financial year is all attributable to the owners of the parent company.
EPOCH-MAKING TOYS LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
£
£
Profit for the year
743,709
151,536
Other comprehensive income:
Total comprehensive income for the year
743,709
151,536
Total comprehensive income for the year is all attributable to the owners of the parent company.
EPOCH-MAKING TOYS LIMITED
GROUP STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
Non-current assets
Property, plant and equipment
9
65,944
103,841
Deferred tax asset
16
26,571
17,030
92,515
120,871
Current assets
Inventories
11
237,134
289,540
Trade and other receivables
12
10,081,681
12,410,915
Cash and cash equivalents
3,134,306
2,403,786
13,453,121
15,104,241
Current liabilities
Trade and other payables
15
8,405,986
11,025,999
Current tax liabilities
224,295
18,207
8,630,281
11,044,206
Net current assets
4,822,840
4,060,035
Non-current liabilities
Borrowings
14
5,000,000
5,000,000
Deferred tax liabilities
16
14,116
23,376
5,014,116
5,023,376
Net liabilities
(98,761)
(842,470)
Equity
Called up share capital
18
100,000
100,000
Retained earnings
(198,761)
(942,470)
Total equity
(98,761)
(842,470)
The financial statements were approved by the board of directors and authorised for issue on 1 May 2024 and are signed on its behalf by:
Mr P Hooper
Director
Company registration number 08628316 (England and Wales)
EPOCH-MAKING TOYS LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
Share capital
Retained earnings
Total
£
£
£
Balance at 1 January 2022
100,000
(1,094,006)
(994,006)
Year ended 31 December 2022:
Profit and total comprehensive income
-
151,536
151,536
Balance at 31 December 2022
100,000
(942,470)
(842,470)
Year ended 31 December 2023:
Profit and total comprehensive income
-
743,709
743,709
Balance at 31 December 2023
100,000
(198,761)
(98,761)
EPOCH-MAKING TOYS LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
21
1,218,057
(1,334,785)
Interest paid
(443,502)
(197,111)
Income taxes paid
(18,207)
(16,000)
Net cash inflow/(outflow) from operating activities
756,348
(1,547,896)
Investing activities
Purchase of property, plant and equipment
(25,828)
(71,530)
Proceeds from disposal of property, plant and equipment
2,937
Proceeds from disposal of subsidiaries, net of cash disposed
3,000
Net cash used in investing activities
(25,828)
(65,593)
Net increase/(decrease) in cash and cash equivalents
730,520
(1,613,489)
Cash and cash equivalents at beginning of year
2,403,786
4,017,275
Cash and cash equivalents at end of year
3,134,306
2,403,786
EPOCH-MAKING TOYS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
1
Accounting policies
Company information
Epoch-Making Toys Limited is a private company limited by shares incorporated in England and Wales. The registered office is Capital Court, 30 Windsor Street, Uxbridge, London, UB8 1AB. The company's principal activities and nature of its operations are disclosed in the directors' report.
The group consists of Epoch-Making Toys Limited and all of its subsidiaries.
1.1
Accounting convention
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.
The financial statements are prepared in sterling, which is the functional currency of the group. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, except for the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
Basis of consolidation
The consolidated group financial statements consist of the financial statements of the parent company Epoch-Making Toys Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
1.3
Going concern
The directors have at the time of approving the financial statements, a reasonable expectation that the truegroup has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.4
Revenue
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The group recognises revenue when it transfers control of a product or service to a customer.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
The group recognises revenue from the following major sources:
EPOCH-MAKING TOYS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
The nature, timing of satisfaction of performance obligations and significant payment terms of the group's major sources of revenue are as follows:
Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the group and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.5
Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Fixtures and fittings
25 - 33.3% straight line
Plant and equipment
33.3% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
1.6
Non-current investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the parent company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the group holds a long-term interest and has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
1.7
Impairment of tangible and intangible assets
At each reporting end date, the group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.
EPOCH-MAKING TOYS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.8
Inventories
Inventories are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition.
Inventories held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
1.9
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
Financial assets
Financial assets are recognised in the group's statement of financial position when the group becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.
At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.
Financial assets at fair value through profit or loss
When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are recognized initially at fair value and any transaction costs are recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting period in which it arises.
EPOCH-MAKING TOYS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Financial assets are classified as at FVTPL when the financial asset is held for trading. This is the case if:
the asset has been acquired principally for the purpose of selling in the near term, or
on initial recognition it is part of a portfolio of identified financial instruments that the company manages together and has a recent actual pattern of short-term profit taking, or
it is a derivative that is not designated and effective as a hedging instrument.
Financial assets at FVTPL are stated at fair value with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset. Interest and dividends are included in 'Investment income' and gains and losses on remeasurement included in 'other gains and losses' in the statement of comprehensive income.
Financial assets held at amortised cost
Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.
Financial assets at fair value through other comprehensive income
Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the group’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.
The parent company has made an irrevocable election to recognize changes in fair value of investments in equity instruments through other comprehensive income, not through profit or loss. A gain or loss from fair value changes will be shown in other comprehensive income and will not be reclassified subsequently to profit or loss. Equity instruments measured at fair value through other comprehensive income are recognized initially at fair value plus transaction cost directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognized through other comprehensive income are directly transferred to retained earnings when the equity instrument is derecognized or its fair value substantially decreased. Dividends are recognized as finance income in profit or loss.
Impairment of financial assets
Financial assets carried at amortised cost and FVOCI are assessed for indicators of impairment at each reporting end date.
The expected credit losses associated with these assets are estimated on a forward-looking basis. A broad range of information is considered when assessing credit risk and measuring expected credit losses, including past events, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
EPOCH-MAKING TOYS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.11
Financial liabilities
The group recognises financial debt when the group becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
Other financial liabilities
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the group’s obligations are discharged, cancelled, or they expire.
1.12
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.13
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
EPOCH-MAKING TOYS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
1.14
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of inventories or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.15
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.16
Leases
At inception, the group assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the group recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.
The group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
2
Revenue
2023
2022
£
£
Revenue analysed by class of business
Sale of goods
15,087,287
16,399,520
Other income
45,503
51
15,132,790
16,399,571
2023
2022
£
£
Revenue analysed by geographical market
U.K.
13,619,511
14,474,295
Ireland
1,513,279
1,925,276
15,132,790
16,399,571
3
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses
25,743
15,047
Depreciation of property, plant and equipment
63,725
83,656
Cost of inventories recognised as an expense
8,786,381
10,423,885
EPOCH-MAKING TOYS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
4
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
21,980
21,050
Audit of the financial statements of the company's subsidiaries
4,510
4,375
26,490
25,425
5
Employees
The average monthly number of persons (including directors) employed by the group during the year was:
2023
2022
Number
Number
25
25
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,157,760
1,191,579
Social security costs
108,779
131,532
Pension costs
66,578
68,813
1,333,117
1,391,924
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
161,387
123,566
Company pension contributions to defined contribution schemes
7,439
6,980
168,826
130,546
7
Finance costs
2023
2022
£
£
Other interest payable
443,502
197,111
EPOCH-MAKING TOYS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
8
Income tax expense
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
224,295
18,207
Deferred tax
Origination and reversal of temporary differences
(18,801)
95,677
Total tax charge
205,494
113,884
The charge for the year can be reconciled to the profit per the income statement as follows:
2023
2022
£
£
Profit before taxation
949,203
265,420
Expected tax charge based on a corporation tax rate of 25.00% (2022: 19.00%)
237,301
50,430
Effect of expenses not deductible in determining taxable profit
13,547
67,756
Utilisation of tax losses not previously recognised
-
(96,709)
Unutilised tax losses carried forward
(4,461)
14,583
Effect of change in UK corporation tax rate
(15,383)
-
Permanent capital allowances in excess of depreciation
(6,709)
(17,853)
(18,801)
677
-
95,000
Taxation charge for the year
205,494
113,884
9
Property, plant and equipment
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2022
355,094
218,724
31,000
604,818
Additions
71,530
71,530
Disposals
(17,334)
(1,316)
(31,000)
(49,650)
At 31 December 2022
337,760
288,938
626,698
Additions
25,828
25,828
At 31 December 2023
337,760
314,766
652,526
EPOCH-MAKING TOYS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
9
Property, plant and equipment
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
(Continued)
- 21 -
Accumulated depreciation and impairment
At 1 January 2022
277,853
177,061
31,000
485,914
Charge for the year
48,310
35,346
83,656
Eliminated on disposal
(14,397)
(1,316)
(31,000)
(46,713)
At 31 December 2022
311,766
211,091
522,857
Charge for the year
19,048
44,677
63,725
At 31 December 2023
330,814
255,768
586,582
Carrying amount
At 31 December 2023
6,946
58,998
-
65,944
At 31 December 2022
25,994
77,847
-
103,841
10
Subsidiaries
Details of the company's subsidiaries at 31 December 2023 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Forever Toys Limited
U.K.
Ordinary
100.00
11
Inventories
2023
2022
£
£
Finished goods
237,134
289,540
12
Trade and other receivables
2023
2022
£
£
Trade receivables
10,669,213
12,173,315
Provision for bad and doubtful debts
(1,175,169)
(625,248)
9,494,044
11,548,067
Amount owed by parent undertaking
6,757
Other receivables
117,251
614,095
Prepayments
463,629
248,753
10,081,681
12,410,915
EPOCH-MAKING TOYS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
13
Trade receivables - credit risk
Fair value of trade receivables
The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.
No significant receivable balances are impaired at the reporting end date.
Movement in the allowances for doubtful debts
2023
2022
£
£
Balance at 1 January 2023 and at 31 December 2023
1,175,169
625,248
14
Borrowings
Non-current
2023
2022
£
£
Borrowings held at amortised cost:
Loans from fellow group undertakings
5,000,000
5,000,000
The £2,000,000 loan from group undertakings is unsecured and interest is charged at 1.2% per annum.
The £3,000,000 loan from group undertakings is unsecured and interest is charged at 1.62% per annum.
15
Trade and other payables
2023
2022
£
£
Trade payables
154,198
337,772
Amount owed to parent undertaking
1,579
Amounts owed to fellow group undertakings
7,648,208
8,167,044
Accruals
345,312
1,860,410
Social security and other taxation
258,268
659,194
8,405,986
11,025,999
16
Deferred taxation
Liabilities
Assets
2023
2022
2023
2022
£
£
£
£
Deferred tax balances
14,116
23,376
26,571
17,030
Deferred tax assets are expected to be recovered after more than one year
The following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current and prior reporting period.
EPOCH-MAKING TOYS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
16
Deferred taxation
(Continued)
- 23 -
Accelerated capital allowances
£
Liability at 1 January 2022
21,669
Deferred tax movements in prior year
Charge/(credit) to profit or loss
79,677
Liability at 1 January 2023
23,376
Asset at 1 January 2023
(17,030)
Deferred tax movements in current year
Charge/(credit) to profit or loss
(18,801)
Liability at 31 December 2023
14,116
Asset at 31 December 2023
(26,571)
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
66,578
68,813
The group operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
100,000
100,000
100,000
100,000
19
Other leasing information
Lessee
Amounts recognised in profit or loss as an expense during the period in respect of lease arrangements are as follows:
2023
2022
£
£
Expense relating to short-term leases
18,147
-
EPOCH-MAKING TOYS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
19
Other leasing information
(Continued)
- 24 -
Set out below are the future cash outflows to which the lessee is potentially exposed that are not reflected in the measurement of lease liabilities:
2023
2022
Land and buildings
£
£
Within one year
88,562
108,996
Between two and five years
183,938
27,249
272,500
136,245
2023
2022
Operating leases apart from land and buildings
£
£
Within one year
29,823
11,766
Between two and five years
23,596
692
In over five years
11,798
-
65,217
12,458
20
Capital risk management
The group is not subject to any externally imposed capital requirements.
21
Cash generated from/(absorbed by) operations
2023
2022
£
£
Profit for the year before income tax
949,203
265,420
Adjustments for:
Finance costs
443,502
197,111
Depreciation and impairment of property, plant and equipment
63,725
83,656
Movements in working capital:
Decrease/(increase) in inventories
52,406
(127,397)
Decrease in contract assets
-
16,000
Decrease/(increase) in trade and other receivables
2,329,234
(1,699,889)
Decrease in trade and other payables
(2,620,013)
(69,686)
Cash generated from/(absorbed by) operations
1,218,057
(1,334,785)
EPOCH-MAKING TOYS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
22
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
23
23
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,157,760
1,191,579
Social security costs
108,779
131,532
Pension costs
66,578
68,813
1,333,117
1,391,924
23
Share capital
Refer to note 18 of the group financial statements.
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