Company registration number 04608351 (England and Wales)
UPGRADE BIKES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
UPGRADE BIKES LIMITED
COMPANY INFORMATION
Directors
Mr D H Mason
Mr M E Ryley
Secretary
Mr M E Ryley
Company number
04608351
Registered office
Amelia House
Crescent Road
Worthing
West Sussex
BN11 1QR
Auditor
Sumer Audit
Amelia House
Crescent Road
Worthing
West Sussex
BN11 1RL
Business address
Units A - B
Star Road Trading Estate
Partridge Green
West Sussex
RH13 8RA
UPGRADE BIKES LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Statement of financial position
9
Statement of changes in equity
10
Notes to the financial statements
11 - 20
UPGRADE BIKES 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 business worked through and experienced the toughest market and trading conditions since we started. It was a challenging year with many casualties within our industry and the directors suspect there may still be more to come in 2024. The directors expected a post-COVID-19 normalisation for our industry, however they did not predict it to drop to the level it did. 

2023 saw the closure of three of our largest customers. ProBike Kit, Chain Reaction Cycles and Wiggle. Their combined purchases in 2022 were £2.3m (approx. 22% of 2022 turnover). The UK cycle market also saw the closure of some of our competitors, signaling the tough trading conditions that exist. However, this has meant that we have been able to pick up some new brands for distribution within the UK, we are confident that this will help boost our turnover and overall profitability.

 

The UK cycle market in 2023 remained flooded with excess stock and this has caused gridlock with some dealers and cashflow problems for many others, and we experienced a downturn in orders placed and revenue in 2023.

 

Revenue for the year was £7.95m compared to £10.87m achieved in the comparative period, a 26.9% decrease, and gross profit margin fell from 17.39% in 2022 to 12.88% in 2023. These KPI's were affected significantly as a result of the above comments.

 

The directors will continue to explore strategies to increase market share with continued investment in advertising, and are planning a strong presence at trade shows and other biking events in 2024 and beyond.

 

Our in-house brands, DMR and Kinesis UK, continue to perform consistently, accounting for about 30% of total sales. The business will continue to invest in R&D for these two brands. We will also be investing in the development of our B2B eCommerce infrastructure in 2024.

 

Stock levels are closely monitored, and provisions made where necessary for old and slow-moving stock.

 

Unfortunately, Brexit has undoubtedly had a negative effect on our business and our sales and in the short term at least, we will struggle to sell into Ireland and mainland Europe.

 

We are optimistic that, starting in 2024, the medium to long term outlook for our business is positive as people continue to enjoy riding bikes, as working from home begins to decline as people return to the office and seek more affordable commute options. Plus, with more and more e-bike/e-cargo options becoming available and affordable, we expect people will look to replace their car or at least one of the family’s cars for a bike. The directors strongly believe the market will rebound, and global targets for carbon reduction and people seeking healthier lifestyle options should give us huge opportunities to grow in the years ahead.

On behalf of the board

Mr M E Ryley
Director
12 June 2024
UPGRADE BIKES 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 continued to be that of the distribution of racing and mountain bicycles and bicycle parts.

Results and dividends

The results for the year are set out on page 8.

Ordinary dividends were declared amounting to £3,388,924 (2022 - £168,924). 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 D H Mason
Mr M E Ryley
Financial instruments
Treasury operations and financial instruments

The company operates a treasury function which is responsible for managing the liquidity and foreign currency risks associated with the company’s activities.

 

The company’s principal financial instruments include derivative financial instruments, the purpose of which is to manage currency risks arising from the company’s activities. In addition, the company has various other financial assets and liabilities such as trade receivables and trade payables arising directly from its operations. Derivative transactions which the company enters into principally comprise forward exchange contracts. In accordance with the company’s treasury policy, derivative instruments are not entered into for speculative purposes.

Liquidity risk

The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.

Foreign currency risk

The company’s principal foreign currency exposures arise from trading with overseas companies. Company policy permits but does not demand that these exposures may be hedged in order to fix the cost in sterling. This hedging activity involves the use of foreign exchange forward contracts.

Credit risk

Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board.

 

All customers who wish to trade on credit terms are subject to credit verification procedures. Trade receivables are monitored on an ongoing basis and provision is made for doubtful debts where necessary.

Research and development

The company aims to produce bikes and parts at certain price points and performance standards. Research and development is carried out across a number of products and always involves the commercial assessment of the designs, production of prototypes and performance testing.

Future developments

The directors believe that there are currently no major future developments requiring disclosure.

UPGRADE BIKES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Auditor

The auditor, Sumer Audit, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

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.

On behalf of the board
Mr M E Ryley
Director
12 June 2024
UPGRADE BIKES 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 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:

 

 

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.

UPGRADE BIKES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF UPGRADE BIKES LIMITED
- 5 -
Opinion

We have audited the financial statements of Upgrade Bikes Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the statement of financial position, 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:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor'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.

Other information

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:

UPGRADE BIKES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF UPGRADE BIKES LIMITED
- 6 -
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:

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.

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, our procedures included the following:

 

 

As a result of these procedures, we considered the opportunities and incentives that may exist within the company for fraud. We are also required to perform specific procedures to respond to the risk of management override. As a result of performing the above, we identified the following areas as those most likely to have an impact on the financial statements: health & safety, employment law and compliance with the UK Companies Act.

In addition to the above, our procedures to respond to risks identified included the following:

 

UPGRADE BIKES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF UPGRADE BIKES LIMITED
- 7 -

Due to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.

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.

Use of our report

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

Alex Chidwick FCCA (Senior Statutory Auditor)
For and on behalf of Sumer Audit
13 June 2024
Chartered Accountants
Statutory Auditor
Worthing
Sumer Audit is the trading name of Sumer Auditco Limited
UPGRADE BIKES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Revenue
3
7,945,990
10,873,911
Cost of sales
(6,922,236)
(8,983,425)
Gross profit
1,023,754
1,890,486
Distribution costs
(494,096)
(498,061)
Administrative expenses
(1,240,916)
(133,432)
Operating (loss)/profit
4
(711,258)
1,258,993
Investment income
24,199
818
Finance costs
-
0
(103)
Fair value gains and losses on foreign exchange contracts
116,416
(136,526)
(Loss)/profit before taxation
(570,643)
1,123,182
Tax on (loss)/profit
7
120,280
(243,500)
(Loss)/profit for the financial year
(450,363)
879,682
Other comprehensive income
Revaluation of property, plant and equipment
1,529,372
-
0
Total comprehensive income for the year
1,079,009
879,682

The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

UPGRADE BIKES LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Non-current assets
Intangible assets
1
1
Property, plant and equipment
9
84,394
1,196,212
84,395
1,196,213
Current assets
Inventories
11
3,462,139
4,823,834
Trade and other receivables
12
1,996,348
1,679,722
Cash and cash equivalents
2,373,187
2,682,605
7,831,674
9,186,161
Current liabilities
13
(1,122,314)
(1,267,004)
Net current assets
6,709,360
7,919,157
Total assets less current liabilities
6,793,755
9,115,370
Provisions for liabilities
Deferred tax liability
14
16,000
27,700
(16,000)
(27,700)
Net assets
6,777,755
9,087,670
Equity
Called up share capital
16
6,000
6,000
Capital redemption reserve
1
1
Retained earnings
6,771,754
9,081,669
Total equity
6,777,755
9,087,670

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The financial statements were approved by the board of directors and authorised for issue on 12 June 2024 and are signed on its behalf by:
Mr D H Mason
Mr M E Ryley
Director
Director
Company registration number 04608351 (England and Wales)
UPGRADE BIKES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Revaluation reserve
Capital redemption reserve
Retained earnings
Total
Notes
£
£
£
£
£
Balance at 1 January 2022
6,000
-
0
1
8,370,911
8,376,912
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
-
879,682
879,682
Dividends
8
-
-
-
(168,924)
(168,924)
Balance at 31 December 2022
6,000
-
0
1
9,081,669
9,087,670
Year ended 31 December 2023:
Loss for the year
-
-
-
(450,363)
(450,363)
Other comprehensive income:
Revaluation of property, plant and equipment
-
1,529,372
-
-
1,529,372
Total comprehensive income for the year
-
0
1,529,372
-
0
(450,363)
1,079,009
Dividends
8
-
-
-
(3,388,924)
(3,388,924)
Transfers
-
(1,529,372)
-
1,529,372
-
Balance at 31 December 2023
6,000
-
0
1
6,771,754
6,777,755
UPGRADE BIKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information

Upgrade Bikes Limited is a private company limited by shares incorporated in England and Wales. The registered office is Amelia House, Crescent Road, Worthing, West Sussex, BN11 1QR.

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 £1.

The financial statements have been prepared on the historical cost convention, modified to include the revaluation of certain financial instruments at fair value. 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:

 

1.2
Going concern

At 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. The directors have considered relevant information, including the company’s principal risks and uncertainties, forecast future cash flows and the impact of subsequent events in making their assessment.true

 

Based on these assessments and having regard to the resources available to the entity, the directors have concluded that there is no material uncertainty and that they can continue to adopt the going concern basis in preparing the annual report and financial statements.

1.3
Revenue

Revenue is recognised to the extent that the company obtains the right to consideration in exchange for its performance. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, VAT and other sales taxes or duty. The following criteria must also be met before revenue is recognised:

 

Sales 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 entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Commissions receivable

Revenue from commissions receivable is recognised when the individual transaction, for which the commission is earned, has been completed.

1.4
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.

UPGRADE BIKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -

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 land and buildings
2% straight line - buildings element only
Improvements to property
10% straight line
Plant and machinery
25% diminishing balance
Fixtures, fittings and equipment
25% diminishing balance
Computer equipment
33% straight line
Motor vehicles
25% diminishing 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 profit or loss. In the prior year, the building element of freehold land and buildings was depreciated down to its residual value.

1.5
Impairment of non-current assets

At each reporting end date, the company 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).

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.

1.6
Inventories

Inventories are stated at the lower of cost and estimated selling price less costs to complete and sell.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of inventories over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.7
Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits held at call with banks.

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 statement of financial position when the company becomes party to the contractual provisions of the instrument.

 

The company enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities including trade and other accounts receivable and payable, loans from banks and loans from related parties.

 

Debt instruments including loans and other accounts receivable and payable are initially measured at transaction price and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received.

 

The company also enters into other financial instruments in the use of forward foreign currency contracts in order to reduce exposure to foreign exchange rates.

UPGRADE BIKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -

Derivative financial instruments are initially measured at fair value on the date on which a derivative contract is entered into and are subsequently measured at fair value through profit or loss. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.

 

The fair value of the forward currency contracts is calculated by reference to current forward exchange contracts with similar maturity profiles and carried out by a third party.

 

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. Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.

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 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 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.

1.11
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense.

1.12
Retirement benefits

For defined contribution schemes the amount charged to the profit and loss account in respect of pension costs and other post-retirement benefits is the contributions payable in the year. Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments in the balance sheet.

1.13
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 profit or loss.

UPGRADE BIKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
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.

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.

Inventory impairment

The directors have made key assumptions in determining the appropriate impairment provision against inventory items held at the end of the reporting period, based on the ageing of inventory lines purchased in excess of 18 months prior to the statement of financial position date, as well as any adjustments for specific identified items.

Freehold land and buildings

The directors revalued freehold land and buildings to fair value on 31 July 2023, prior to the transfer of the assets to the parent company via a dividend in specie, Upgrade Group Limited. This valuation was based on a the results of an independent professional valuation which took place on 15 November 2021.

3
Revenue

An analysis of the company's revenue is as follows:

2023
2022
£
£
Revenue analysed by class of business
Sales of goods
7,918,432
10,707,916
Commissions receivable
27,558
165,995
7,945,990
10,873,911
2023
2022
£
£
Revenue analysed by geographical market
United Kingdom
7,248,375
8,838,054
Europe
276,908
822,885
Rest of world
420,707
1,212,972
7,945,990
10,873,911
UPGRADE BIKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 15 -
4
Operating (loss)/profit
2023
2022
Operating (loss)/profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
239,830
(505,235)
Fees payable to the company's auditor for the audit of the company's financial statements
14,000
13,000
Depreciation of owned property, plant and equipment
45,782
55,067
Operating lease charges
111,329
7,766
5
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
Directors
2
2
Administration
7
7
Marketing, IT and design
6
6
Warehouse
6
7
Sales
10
10
Total
31
32

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
998,580
1,008,832
Social security costs
104,802
108,628
Pension costs
163,416
40,163
1,266,798
1,157,623
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
13,182
13,182
Company pension contributions to defined contribution schemes
120,000
-
133,182
13,182

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2). The directors are considered to be the only key management personnel of the company.

 

 

UPGRADE BIKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
7
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
-
0
250,000
Adjustments in respect of prior periods
(108,580)
(800)
Total current tax
(108,580)
249,200
Deferred tax
Origination and reversal of timing differences
(11,700)
(5,700)
Total tax (credit)/charge
(120,280)
243,500

The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
(Loss)/profit before taxation
(570,643)
1,123,182
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
(108,422)
213,405
Tax effect of expenses that are not deductible in determining taxable profit
(21,950)
33,357
Adjustments in respect of prior years
-
0
(800)
Group relief
13,885
-
0
Permanent capital allowances in excess of depreciation
-
0
(1,100)
Depreciation on assets not qualifying for tax allowances
159
783
Other non-reversing timing differences
(2,652)
(795)
Effect of changes in local deferred tax rate
(1,300)
(1,350)
Taxation (credit)/charge for the year
(120,280)
243,500
8
Dividends
2023
2022
£
£
Interim paid
3,388,924
168,924

Included within dividends paid is a dividend in specie of £2,600,000 to transfer freehold land and buildings and property improvements to the parent company, Upgrade Group Limited. See note 9.

UPGRADE BIKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
9
Property, plant and equipment
Freehold land and buildings
Improvements to property
Plant and machinery
Fixtures, fittings and equipment
Computer equipment
Motor vehicles
Total
£
£
£
£
£
£
£
Cost or valuation
At 1 January 2023
1,144,000
98,779
34,108
23,741
181,023
148,401
1,630,052
Additions
-
0
-
0
2,260
-
0
2,332
-
0
4,592
Disposals
(2,673,372)
(98,779)
-
0
-
0
-
0
-
0
(2,772,151)
Revaluation
1,529,372
-
0
-
0
-
0
-
0
-
0
1,529,372
At 31 December 2023
-
0
-
0
36,368
23,741
183,355
148,401
391,865
Depreciation and impairment
At 1 January 2023
101,053
65,640
28,156
22,680
143,804
72,507
433,840
Depreciation charged in the year
-
0
5,458
1,599
265
19,487
18,973
45,782
Eliminated in respect of disposals
(101,053)
(71,098)
-
0
-
0
-
0
-
0
(172,151)
At 31 December 2023
-
0
-
0
29,755
22,945
163,291
91,480
307,471
Carrying amount
At 31 December 2023
-
0
-
0
6,613
796
20,064
56,921
84,394
At 31 December 2022
1,042,947
33,139
5,952
1,061
37,219
75,894
1,196,212
UPGRADE BIKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -

Freehold land and buildings, including property improvements, with a carrying amount of £1,070,628 were revalued by the directors at 31 July 2023. The revaluation was based on an independent valuation by SHW at 12 November 2021.The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.

 

Subsequently, the property was transferred to the parent company, Upgrade Group Limited, via a dividend in specie of £2,600,000.

10
Financial instruments
2023
2022
£
£
Carrying amount of financial liabilities
Instruments measured at fair value through profit or loss
-
116,416

The company purchases forward foreign currency contracts to manage currency exposure on future commitments. The fair values of the assets and liabilities held at fair value through profit and loss at the statement of financial position date are determined using quoted prices. At the statement of financial position date the company has agreed forward contracts totalling £nil (2022 - £3,631,144) for the purchase of foreign currency.

11
Inventories
2023
2022
£
£
Finished goods and goods for resale
3,462,139
4,823,834

The replacement cost of stock as at the reporting date is estimated at £4,022,000 (2022 - £5,710,000).

12
Trade and other receivables
2023
2022
Amounts falling due within one year:
£
£
Trade receivables
792,530
1,518,340
Corporation tax recoverable
493,232
-
0
Other receivables
6,914
6,914
Prepayments and accrued income
703,672
154,468
1,996,348
1,679,722
UPGRADE BIKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
13
Current liabilities
2023
2022
£
£
Trade payables
427,053
374,439
Amounts owed to group undertakings
468,741
477,521
Corporation tax
-
0
11,973
Other taxation and social security
109,747
228,036
Derivative financial instruments
-
0
116,416
Other payables
5,329
5,329
Accruals and deferred income
111,444
53,290
1,122,314
1,267,004
14
Deferred taxation

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
16,000
27,700
2023
Movements in the year:
£
Liability at 1 January 2023
27,700
Credit to profit or loss
(11,700)
Liability at 31 December 2023
16,000
15
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
163,416
40,163

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.

UPGRADE BIKES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
16
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of £1 each
2,000
2,000
2,000
2,000
Ordinary B shares of £1 each
4,000
4,000
4,000
4,000
6,000
6,000
6,000
6,000

Ordinary A shares have attached to them full voting, dividend and capital distribution (including on winding up) rights.

 

Ordinary B shares are non-voting shares and hold no rights but may be considered separately by the directors when declaring dividends.

17
Operating lease commitments

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
203,000
-
0
Between two and five years
727,417
-
0
930,417
-
0
18
Parent company

The ultimate parent company is Upgrade Group Limited, a company incorporated in England and Wales.

 

Upgrade Group Limited prepares consolidated financial statements which are available from Companies House, Cardiff.

UPGRADE BIKES LIMITED
MANAGEMENT INFORMATION
FOR THE YEAR ENDED 31 DECEMBER 2023
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