Company registration number SC041435 (Scotland)
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
CONTENTS
Page
Company information
1
Strategic report
2 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 24
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
COMPANY INFORMATION
- 1 -
Directors
B Toward
D Toward
Company number
SC041435
Hillington Industrial Estate
Glasgow
United Kingdom
G52 4NG
Auditor
Consilium Audit Limited
169 West George Street
Glasgow
Scotland
G2 2LB
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
The directors present the strategic report for the year ended 31 December 2023.
In 1963, Wholesale Domestic opened the doors of its business for the first time and set about providing the customers with an unparalleled choice of bathroom products at the best value prices. 60 years on, Wholesale Domestic has built on the early ideals of choice, value and style by continually seeking out the most stylish, and in many cases exclusive, products from all around the world and displaying them in physical bathroom stores in Glasgow, Aberdeen and Edinburgh, and also via our Ecommerce website.
Review of the business
During the year under review revenue has increased by 7.1% to £20.6m. Profitability has increased overall in the year to 31 December 2023 with gross profit margin increasing to 57.0% (2022: 51.6%) and operating margin increasing to 11.8% (2022: 11.1%).
Principal risks and uncertainties
The board sets out below the principal risks and uncertainties that it considers to be associated with the running of the company and operating in the home improvement industry. These risks are regularly reviewed internally by management.
Each risk when identified is analysed to determine the likelihood of the risk occurring, the potential impact of it on the company if it did occur, and the steps that have been or should be taken to reduce the likelihood of occurrence and mitigate the impact if it did occur. Management personnel are responsible for managing these risks and the required steps to be taken are subject to the direction and on-going review by management and directors.
The directors consider that the principal risks to the performance of the business continue to fall under the following headings:
Currency fluctuations
Volatility in the trading rates of the GBP: USD and the GBP: EUR presents an element of risk to the company and this year saw continued downward pressure on the GBP against the USD for most of the year. The start of the year saw downward pressure on the GBP against the EUR, but this eased slightly towards the end of the year. The business has sought to mitigate this as far as possible by working extremely closely with our finance partners to ensure rates achieved are as strong as we possibly can in the market. The directors take full responsibility for the execution of all currency trades and therefore fully control this risk throughout the year.
Freight costs
The start of 2023 saw the impact of Brexit and the Coronavirus pandemic reduce which brought freight prices down, although not to pre-pandemic levels. The end of the year saw the impact of the turmoil in the Red Sea increasing the freight costs due to the journey taking the container ships around Africa to avoid the risks of the Suez Canal. The group moves a significant majority of its global trade via container sea freight and as such has experienced fluctuations in freight costs. This risk is mitigated slightly due to working well with the freight forwarders, however retail price increases and stock availability challenges have been inevitable.
Competition
The UK bathroom market continues to remain very competitive despite several high-profile causalities. These are typically offset by the emergence of new entrants into the industry. The group mitigate this risk by building on our longevity and security of name and maximize this whenever we can. As we continue to group, we also acquire significant numbers of new customers and our focus on service and personal approach continues to develop and impress. Our size and strength of cashflow allows us to trade in well-valued products and hold them in the required quantities to back up the pledge of service.
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
B Toward
Director
9 September 2024
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of the sale of bathroom products.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £182,000 (2022: £1,182,000). 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:
B Toward
D Toward
Auditor
Consilium Audit Limited is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
On behalf of the board
B Toward
Director
9 September 2024
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
- 6 -
Opinion
We have audited the financial statements of Wholesale Domestic Equipment Company Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 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 December 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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.
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
- 7 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the 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, 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 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 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's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
We ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations.
We identified the laws and regulations applicable to the company through discussions with directors and management and from our knowledge of the regulatory environment relevant to the company.
We assessed the extent of compliance with laws and regulations through making enquiries of management and inspecting legal correspondence.
We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by making enquiries of management as to where they considered there was susceptibility to fraud and their knowledge of actual, suspected and alleged fraud.
To address the risk of fraud through management bias and override of controls, we tested journal entries to identify unusual transactions, we assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias and we investigated the rationale behind significant or unusual transactions.
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
- 8 -
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence.
Material misstatements that arise due to fraud can be harder to detect than those arisen from error as they may involve deliberate concealment or collusion.
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.
Brian Thomson BA(Hons) CA
Senior Statutory Auditor
For and on behalf of Consilium Audit Limited
Statutory Auditor
169 West George Street
Glasgow
Scotland
G2 2LB
9 September 2024
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
20,630,927
19,256,590
Cost of sales
(8,876,456)
(9,317,795)
Gross profit
11,754,471
9,938,795
Distribution costs
(6,594,097)
(5,466,367)
Administrative expenses
(2,742,846)
(2,343,114)
Operating profit
4
2,417,528
2,129,314
Interest receivable and similar income
8
11,825
2,516
Interest payable and similar expenses
9
(281,605)
(126,721)
Profit before taxation
2,147,748
2,005,109
Tax on profit
10
(645,971)
(371,173)
Profit for the financial year
1,501,777
1,633,936
The profit and loss account has been prepared on the basis that all operations are continuing operations.
The notes on pages 12 to 24 form part of these financial statements.
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
12
114,630
177,341
Tangible assets
13
5,347,701
5,370,553
5,462,331
5,547,894
Current assets
Stocks
14
2,970,330
3,298,235
Debtors
15
9,846,973
6,504,829
Cash at bank and in hand
74,286
325,674
12,891,589
10,128,738
Creditors: amounts falling due within one year
16
(6,009,708)
(4,696,836)
Net current assets
6,881,881
5,431,902
Total assets less current liabilities
12,344,212
10,979,796
Creditors: amounts falling due after more than one year
17
(3,873,156)
(3,920,000)
Provisions for liabilities
Deferred tax liability
20
653,646
562,163
(653,646)
(562,163)
Net assets
7,817,410
6,497,633
Capital and reserves
Called up share capital
22
668
668
Profit and loss reserves
7,816,742
6,496,965
Total equity
7,817,410
6,497,633
The notes on pages 12 to 24 form part of these financial statements.
The financial statements were approved by the board of directors and authorised for issue on 9 September 2024 and are signed on its behalf by:
B Toward
Director
Company Registration No. SC041435
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2022
668
6,045,029
6,045,697
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
1,633,936
1,633,936
Dividends
11
-
(1,182,000)
(1,182,000)
Balance at 31 December 2022
668
6,496,965
6,497,633
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
1,501,777
1,501,777
Dividends
11
-
(182,000)
(182,000)
Balance at 31 December 2023
668
7,816,742
7,817,410
The notes on pages 12 to 24 form part of these financial statements.
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information
Wholesale Domestic Equipment Company Limited is a private company limited by shares incorporated in Scotland. The registered office is 406 Hillington Road, Hillington Industrial Estate, Glasgow, United Kingdom, G52 4NG. The company's registration number is SC041435.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
Copies of the consolidated financial statements are available from the Registrar of Companies, Companies House, Crown Way, Cardiff, CF14 3UZ.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company 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.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
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 entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.4
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Website
20% straight line
1.5
Tangible fixed assets
Tangible fixed assets 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:
Freehold property
2% straight line
Long-term leasehold property
20% straight line
Fixtures and fittings
25% straight line
Motor vehicles
25% reducing balance
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 credited or charged to the profit and loss account.
1.6
Stocks
Stocks 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 stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in the profit and loss account. Reversals of impairment losses are also recognised in the profit and loss account.
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and 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.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in the profit and loss account, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in the profit and loss account in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit and loss account. Debt instruments may be designated as being measured at fair value through the profit and loss account to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
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.
1.10
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 profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing 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 profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
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 stock or fixed 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 company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
1.13
Leases
Assets held under hire purchase agreements are capitalised and disclosed under tangible fixed assets at their fair value, and are depreciated in accordance with the above depreciation policies.
Future instalments payable under such agreements, net of finance charges, are included within creditors. Rentals payable are apportioned between the capital element, which reduces the outstanding obligation included within creditors, and the finance element, which is charged to the profit and loss account on a straight line basis.
Rentals payable under operating leases, including any lease incentives received, are charged to the profit and loss account on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.14
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in the profit and loss account.
1.15
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Assessing indicators of impairment
In assessing whether there have been any indicators of impaired assets, the directors have considered both external and internal sources of information such as market conditions, counterparty credit ratings and experience of recoverability. There have been no indicators of impairment identified during the current financial year.
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 17 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Determining residual values and useful economic lives of tangible and intangible assets
The company depreciates tangible and intangible assets over their estimated useful lives. The estimation of the useful lives of tangible and intangible assets is based on historic performance as well as expectations about future use and therefore requires estimates and assumptions to be applied. The actual lives of these assets can vary depending on a variety of factors, including technological innovation, product life cycles and maintenance and programmes.
Judgement is also applied, when determining the residual values of fixed assets. When determining the residual value, the directors have assessed the amount that the company would currently obtain for the disposal of the asset, if it were already of the condition expected at the end of its useful life. Where possible this is done with reference to external market prices.
3
Turnover and other revenue
The turnover and profit before taxation are attributable to the company's principal activity.
All turnover is generated in the United Kingdom.
2023
2022
£
£
Other revenue
Incentivised switching scheme
-
2,516
4
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Exchange losses
42,436
173,189
Depreciation of owned tangible fixed assets
365,505
462,956
Depreciation of tangible fixed assets held under hire purchase
54,958
Amortisation of intangible assets
62,711
11,026
Operating lease charges
169,503
183,967
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
20,475
19,500
For other services
Taxation compliance services
3,250
3,250
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Directors
2
2
Other employees
102
106
Total
104
108
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,020,309
2,759,052
Social security costs
242,364
235,091
Pension costs
308,914
91,685
3,571,587
3,085,828
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
17,887
19,388
Company pension contributions to defined contribution schemes
238,332
20,000
256,219
39,388
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
11,825
2,516
9
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
273,131
126,721
Interest on finance leases and hire purchase contracts
8,474
-
281,605
126,721
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
554,488
392,578
Deferred tax
Origination and reversal of timing differences
91,483
(21,405)
Total tax charge
645,971
371,173
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
2,147,748
2,005,109
Expected tax charge based on the standard rate of corporation tax in the UK of 23.50% (2022: 19.00%)
504,721
380,971
Tax effect of expenses that are not deductible in determining taxable profit
5,018
9,050
Group relief
(33,692)
Fixed asset differences
44,308
(10,791)
Remeasurement of deferred tax for changes in tax rates
91,483
25,635
Other differences leading to an increase/(decrease) in the tax charge
441
Taxation charge for the year
645,971
371,173
Factors that may affect future tax charges:
There is an increase in the UK corporate tax rate from 19% to 25% (effective from 1 April 2023) which was enacted on 11 March 2021. The UK corporate tax has been charged at 23.5% (2022 - 19%). The deferred tax liability as at the balance sheet date has been calculated at 25%.
11
Dividends
2023
2022
£
£
Final paid
182,000
1,182,000
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
12
Intangible fixed assets
Website
£
Cost
At 1 January 2023 and 31 December 2023
188,367
Amortisation and impairment
At 1 January 2023
11,026
Amortisation charged for the year
62,711
At 31 December 2023
73,737
Carrying amount
At 31 December 2023
114,630
At 31 December 2022
177,341
13
Tangible fixed assets
Freehold property
Long-term leasehold property
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2023
5,445,373
986,717
1,156,982
120,002
7,709,074
Additions
51,327
20,530
369,419
441,276
Disposals
(85,507)
(85,507)
Transfers
(7,611)
7,611
At 31 December 2023
5,489,089
1,014,858
1,156,982
403,914
8,064,843
Depreciation and impairment
At 1 January 2023
905,280
501,752
877,958
53,531
2,338,521
Depreciation charged in the year
122,391
116,989
113,438
67,645
420,463
Eliminated in respect of disposals
(41,842)
(41,842)
At 31 December 2023
1,027,671
618,741
991,396
79,334
2,717,142
Carrying amount
At 31 December 2023
4,461,418
396,117
165,586
324,580
5,347,701
At 31 December 2022
4,540,093
484,965
279,024
66,471
5,370,553
Included within the net book value is £314,461 (2022: £nil) relating to assets held under hire purchase agreements. The depreciation charged to the financial statements in the year in respect of such assets amounted to £54,958 (2022: £nil).
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
14
Stocks
2023
2022
£
£
Finished goods and goods for resale
2,970,330
3,298,235
15
Debtors
2023
2022
Amounts falling due within one year:
£
£
Amounts owed by group undertakings
7,404,124
5,561,872
Other debtors
254,526
75,402
Prepayments and accrued income
2,188,323
867,555
9,846,973
6,504,829
Amounts owed by group undertakings are interest free and repayable on demand.
16
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
18
280,000
280,000
Bills of exchange
18
289,150
153,731
Obligations under hire purchase
19
74,979
Payments received on account
654,281
514,998
Trade creditors
2,809,232
2,106,040
Corporation tax
300,492
572,521
Other taxation and social security
346,661
609,307
Other creditors
625,412
436,083
Accruals and deferred income
629,501
24,156
6,009,708
4,696,836
The hire purchase creditors are secured on the assets to which they relate.
17
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
18
3,640,000
3,920,000
Obligations under hire purchase
19
233,156
3,873,156
3,920,000
The hire purchase creditors are secured on the assets to which they relate.
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
18
Loans and overdrafts
2023
2022
£
£
Bank loans
3,920,000
4,200,000
Payable within one year
280,000
280,000
Payable after one year
3,640,000
3,920,000
Bank loans are secured by a floating charge over the company's assets.
The company bank loans repayment commenced on 31 January 2023. Bank loans incur interest based on a minimum margin of 2% per annum on the floating rate basis. The maturity date of the loan is the 23 November 2025.
19
Hire purchase obligations
2023
2022
Future minimum lease payments due under hire purchase:
£
£
Within one year
74,979
In two to five years
233,156
308,135
Hire purchase payments represent rentals payable by the company for certain items of motor vehicles. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
20
Deferred taxation
The following are the major deferred tax liabilities recognised by the company and movements thereon:
2023
2022
Balances:
£
£
Accelerated capital allowances
653,646
562,163
2023
Movements in the year:
£
Liability at 1 January 2023
562,163
Charge to profit or loss
91,483
Liability at 31 December 2023
653,646
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
20
Deferred taxation
(Continued)
- 23 -
The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
21
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
308,914
91,685
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
22
Share capital
2023
2022
£
£
Ordinary share capital
Issued and fully paid
667 Ordinary A shares of £1
667
667
1 Ordinary B shares of £1
1
1
668
668
Ordinary A shares have the right to one vote per share, dividends may be declared in respect of one class of shares and not another and may be declared at different rates on different classes of share, members are not entitled to return of capital and they are non-redeemable.
Ordinary B shares hold no right to vote, dividends may be declared in respect of one class of shares and not another and may be declared at different rates on different classes of share, members are not entitled to return of capital and they are non-redeemable.
23
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
158,626
158,626
Between two and five years
483,004
541,630
In over five years
233,333
333,333
874,963
1,033,589
WHOLESALE DOMESTIC EQUIPMENT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
24
Related party transactions
The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.
No further transactions with related parties were undertaken such as are required to be disclosed under the provisions of Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland".
25
Ultimate controlling party
Wholesale Domestic Holdings Limited is regarded by the directors as the ultimate parent company.
The ultimate controlling party is B Toward by virtue of his shareholding in the ultimate parent company, Wholesale Domestic Holdings Limited.
The company is included, by full consolidation, in the consolidated financial statements of Wholesale Domestic Holdings Limited, registered in Scotland, at the same address at the company.
Copies of the consolidated financial statements are available from the Registrar of Companies, Companies House, Crown Way, Cardiff, CF14 3UZ.
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