Registered number: 05799205
WATER SPRITE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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WATER SPRITE LIMITED
COMPANY INFORMATION
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WATER SPRITE LIMITED
CONTENTS
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Independent auditors' report
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Consolidated statement of income and retained earnings
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Consolidated statement of financial position
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Company statement of financial position
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Consolidated statement of cash flows
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Notes to the financial statements
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WATER SPRITE LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The director presents his strategic report together with the audited financial statements for the year to 31st of December 2023.
The Group was established in 2006 and has become a multi-channel retail business renowned for high quality cashmere under the N.Peal brand. The principal activity of the Group throughout the year was the design and sale of luxury cashmere clothing.
The Group operates through the following channels:
- Retail stores: the brand operates 12 stores across the UK, USA, Germany and Ireland
- Online: the brand operates a scalable and growing web business in three currencies (UK£, US$ and Euro€)
- Wholesale: the brand operates as a wholesaler to selected brands.
The director is pleased to report another year of strong growth across the business with sales of £27.7m (2022:£23.9m) up 15.57% on the previous year. Investment in senior management and the company infrastructure has continued, in order to prepare the Group for the next phase of growth over the coming five years.
During the year, the director made significant progress in implementing its strategies by:
- Investment in the update of the Harriet Street store in June 2023.
- Delivering significant growth across our Retail Portfolio. Maintaining growth in the Ecommerce channel, by replacing the sales generated by the latest Bond movie. Sales peaked in 2021 and continued into 2022 and 2023, on a diminishing basis.
- Development of new brand collaborations with third parties.
- Investment in new Product Categories
- Investment in the Head Office management team and developing & improving processes and systems.
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WATER SPRITE LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Principal risks and uncertainties
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The Director understands the need for robust risk management and continue to monitor trading performance on a regular basis.
The Director considers the following matters to be the principal risks and uncertainties to the Group:
• Economic Climate: As a luxury retail business, N.Peal will always be exposed to the impact of local economic conditions within the markets in which it operates. As the Group expands further globally, the impact of any local concern will become less significant for the Group as a whole.
• Production risk: The Group continues to build its business through all of its channels to mitigate the effect of each channel and develop a broad range of products to mitigate the decline of individual product categories.
• Foreign Currency Risk: International manufacturers are part of our supply chain so the business is exposed to currency movements in USD and EUR. To mitigate this risk, the business hedges some of its exposure, monitors exchange rates and reviews its overall exchange exposure on a regular basis.
• The principal internal risk arises from the growth of the business putting pressure on key resources. The Group depends on its ability to manage its people and infrastructure. The Group regularly reviews its future requirements for people, space and systems to understand the impact on the business.
• The management of the supply chain from sourcing through to the Group's distribution center is key to the business. The Group continually reviews the management of product delivery to ensure any problems are managed appropriately and in a timely manner.
• Brexit: Although the exit from the EU is now complete, there remains some uncertainty about the impact on long term trading relationships and there was an increase in freight costs into the EU from the start of 2021. The Group has developed an updated distribution model to mitigate these risks and we do not believe there is any significant overall risk to our business model.
Position of the Group's business at the end of the year
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The key KPI’s for the business are:
- Adjusted Earnings Before Interest, Tax, Depreciation, Amortisation and Exceptional Items (EBITDA)
- Gross margin % and margin growth.
- Like for Like (LFL) growth in retail and on-line sales.
For the year ended 31 December 2023:
- Adjusted EBITDA was £3.64m (2022: £3.14m).
- Gross margin% was 50.46% (2022: 49%)
- LFL increase in sales was +11.4% across the business.
The director feels that the business is in a strong position for the next phase of growth.
The directors expect that turnover for 2024 will show an increase on 2023. The Group will continue to focus on developing a multi-channel offering with a continued emphasis to growing the online channel to full potential through investment, online marketing and continuous development of our ecommerce platform. Marketing efforts remain focused on direct to consumer sales channels. The Group will continue to invest in people, processes and systems to help deliver business growth.
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WATER SPRITE LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
This report was approved by the board on 12 September 2024 and signed on its behalf.
Mr Adam Holdsworth
Director
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WATER SPRITE LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The director presents his report and the financial statements for the year ended 31 December 2023.
Director's responsibilities statement
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The director is responsible for preparing the Group strategic report, the Director's report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the director is required to:
∙select suitable accounting policies for the Group's financial statements 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 Group will continue in business.
The director is 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 the Group and to enable him to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £2,179,920 (2022 - £2,161,511).
The particulars of recommended dividends are detailed in the notes to the financial statements.
The director who served during the year was:
Mr Adam Holdsworth (appointed 16 May 2006)
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Matters covered in the Strategic Report
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Certain information is not shown in the director's report because it is shown in the strategic report instead under s414C (11). The strategic report includes a business review, principal risks and uncertainties and financial key performance indicators.
Disclosure of information to auditors
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The director at the time when this Director's report is approved has confirmed that:
∙so far as he is aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and
∙he has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditors are aware of that information.
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WATER SPRITE LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Post balance sheet events
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There have been no significant events affecting the Group since the year end.
Under section 487(2) of the Companies Act 2006, Sagars Accountants Ltd will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
This report was approved by the board on 12 September 2024 and signed on its behalf.
Mr Adam Holdsworth
Director
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WATER SPRITE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WATER SPRITE LIMITED
We have audited the financial statements of Water Sprite Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2023, which comprise the Consolidated statement of income and retained earnings, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
∙give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 December 2023 and of the Group's 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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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
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In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the 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 director with respect to going concern are described in the relevant sections of this report.
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WATER SPRITE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WATER SPRITE LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The director is 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.
Opinion on other matters prescribed by the Companies Act 2006
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In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the Director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the Director's report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Director's 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 director's 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
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As explained more fully in the Director's responsibilities statement set out on page 4, the director is 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 director determines 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 director is responsible for assessing the Group's and 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 director either intends to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
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WATER SPRITE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WATER SPRITE LIMITED (CONTINUED)
Auditors' responsibilities for the audit of the financial statements
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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 Auditors' 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 Group 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:
We considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas: timing of recognition of contract income and posting of unusual journals along with complex transactions. We discussed these risks with client management, designed audit procedures to test the timing of contract income, tested a sample of journals, selected on a risk basis, to confirm they were appropriate and reviewed areas of judgement and estimation for indicators of management bias to address these risks.
The organisation is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified health and safety as the area most likely to have such an effect. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and other management and inspection of regulatory and legal correspondence, if any.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
∙Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
∙Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company's internal control.
∙Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the director.
∙Conclude on the appropriateness of the director's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
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WATER SPRITE LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WATER SPRITE LIMITED (CONTINUED)
∙Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
∙Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' report
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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 Auditors' 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.
Helen Daniels LLB FCA CTA (Senior statutory auditor)
for and on behalf of
Sagars Accountants Ltd
Statutory Auditor
Leeds (Statutory Auditor)
16 September 2024
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WATER SPRITE LIMITED
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Interest payable and similar expenses
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Retained earnings at the beginning of the year
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Profit for the year and total comprehensive income
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Dividends declared and paid
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Retained earnings at the end of the year
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There were no recognised gains and losses for 2023 or 2022 other than those included in the consolidated statement of income and retained earnings.
All the activities of the company are from continuing operations.
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The notes on pages 14 to 30 form part of these financial statements.
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WATER SPRITE LIMITED
REGISTERED NUMBER: 05799205
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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Capital redemption reserve
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 12 September 2024.
The notes on pages 14 to 30 form part of these financial statements.
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WATER SPRITE LIMITED
REGISTERED NUMBER: 05799205
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Profit and loss account brought forward
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Other changes in the profit and loss account
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Profit and loss account carried forward
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 12 September 2024.
The notes on pages 14 to 30 form part of these financial statements.
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WATER SPRITE LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
Cash flows from operating activities
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Profit for the financial year
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Amortisation of intangible assets
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Depreciation of tangible assets
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Decrease/(increase) in stocks
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(Decrease) in creditors and accruals
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of intangible assets
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Purchase of tangible assets
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Proceeds from sale of tangible assets
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Net cash from investing activities
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Cash flows from financing activities
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Net cash used in financing activities
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Net increase/(decrease) in cash and cash equivalents
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Cash and cash equivalents at beginning of year
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Cash and cash equivalents at the end of year
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Cash and cash equivalents at the end of year comprise:
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The principal actviity of the company was the licensing of a trademark and the group was that of retailing of clothing and licensing of a trademark.
The company is a private company by shares, registered in England and Wales (No. 05799205). The address of the registered office is The Vineries, Broughton Hall, Broughton, Skipton, BD23 3AE.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of income and retained earnings in these financial statements.
The following principal accounting policies have been applied:
The Company is exposed to trading risk in a competitive retail sector. The Company is susceptible to a possible downturn in consumer spending, influenced by factors such as a reduction in disposable income and increases in interest rates. Despite the risks and having assessed the Company's financial position, budgets and cashflow forecasts for the period ending 31 December 2025, the Director has a reasonable expectation that the Company has adequate resources to continue in operational existence for more than a year from the signing of these accounts. Accordingly, the Director continues to adopt the going concernbasis of accounting in preparing the financial statements.
The director has further considered the risks and uncertainties facing the company in the Strategic Report.
The parent company satisfies the criteria of being a qualifying entity as defined in FRS 102. As such, advantage has been taken of the following reduced disclosures available under FRS102:
(a) Disclosures in respect of each class of share capital have not been presented.
(b) No cash flow statement has been presented for the company.
(c) Disclosures in respect of financial instruments have not been presented.
(d) No disclosure has been given for aggregate remuneration of key management personnel.
The financial statements consolidate the financial statements of the Group and all of its subsidiary undertakings.
The parent company has applied the exemption contained in section 408 of the Companies Act 2006 and has not included its individual statement of comprehensive income.
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated statement of income and retained earnings within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
∙the Group has transferred the significant risks and rewards of ownership to the buyer;
∙the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of revenue can be measured reliably;
∙it is probable that the Group will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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Operating leases: the Group as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Consolidated statement of income and retained earnings in the same period as the related expenditure.
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.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position. The assets of the plan are held separately from the Group in independently administered funds.
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Group keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.
Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company and the Group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
Page 17
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives.
Depreciation is provided on the following basis:
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20% and 25% and 100% Straight line
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33% and 50% and 100% Straight line
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Investments in subsidiaries are measured at cost less accumulated impairment.
Investments in unlisted Group shares, whose market value can be reliably determined, are remeasured to market value at each reporting date. Gains and losses on remeasurement are recognised in the Consolidated statement of income and retained earnings for the period. Where market value cannot be reliably determined, such investments are stated at historic cost less impairment.
Page 18
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a weighted average basis. Work in progress and finished goods include labour and attributable overheads.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the Consolidated statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
A financial asset or a financial liability is recognised only when the entity becomes a party to the contractual provisions of the instrument.
Basic financial instruments are initially recognised at the transaction price, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
Debt instruments are subsequently measured at amortised cost.
Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss immediately.
For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets are either assessed individually or grouped on the basis of similar credit risk characteristics.
Page 19
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
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Judgements in applying accounting policies and key sources of estimation uncertainty
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The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and
the amounts reported for revenues and expenses during the year. However, the nature of estimation
means that actual outcomes could differ from those estimates. Details of these judgements are set out in
the accounting policies.
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An analysis of turnover by class of business is as follows:
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Analysis of turnover by country of destination:
The turnover is attributable to the one principal activity of the group. An analysis of turnover by the geographical markets that substantially differ from each other is given above.
Page 20
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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The operating profit is stated after charging:
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Amortisation of intangible assets
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Depreciation of tangible assets
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During the year, the Group obtained the following services from the Company's auditors:
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Fees payable to the Company's auditors for the audit of the consolidated and parent Company's financial statements
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Fees payable to the Company's auditors in respect of:
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Staff costs, including director's remuneration, were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the director, during the year was as follows:
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Page 21
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Group contributions to defined contribution pension schemes
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During the year retirement benefits were accruing to no directors (2022 - NIL) in respect of defined contribution pension schemes.
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Interest payable and similar expenses
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Other loan interest payable
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Page 22
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
11.Taxation (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is higher than (2022 - higher than) the standard rate of corporation tax in the UK of 23.52% (2022 - 19%). The differences are explained below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.52% (2022 - 19%)
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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
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Adjustments to tax charge in respect of prior periods
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Fixed asset timing differences
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Effect of revenue exempt from tax
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Remeasurement of deferred tax for changes in tax rates
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Deferred tax not recognised
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Overseas entities taxed outside of the UK
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Total tax charge for the year
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Factors that may affect future tax charges
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The standard rate of corporation tax in the UK increased from 1 April 2023 to 25% on profits greater than
£250,000.
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Dividends on equity shares
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Divdends were paid during the year (excluding those for which a liability existed at the end of the prior year).
Page 23
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Charge for the year on owned assets
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Page 24
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
13.Intangible assets (continued)
Page 25
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Charge for the year on owned assets
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The company has no tangible assets.
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The group has no investments.
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Investments in subsidiary companies
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Page 26
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Subsidiaries, associates and other investments
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Details of the investments in which the parent company has an interest of 20% or more are as follows:
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Inner Mongolia Pure Peal Trading Corporation Limited*
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*Blue Sky Cashmere Limited is the parent company of Inner Mongolia Pure Peal Trading Corporation Limited.
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Finished goods and goods for resale
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Page 27
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Amounts owed by group undertakings
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Called up share capital not paid
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Prepayments and accrued income
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Bank Loans and overdrafts
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Other taxation and social security
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Accruals and deferred income
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Liabilities of £Nil (2022: £1,001,637) disclosed within other creditors falling due within one year are secured by the group.
HSBC bank borrowings are secured by a debenture including a fixed and floating charge over all current and future assets of the company. The bank also has a legal right of set-off incorporated in an unlimited, multilateral gurantee with the group.
Page 28
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Creditors: Amounts falling due after more than one year
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Liabilities of £584,000 (2022: £364,000) disclosed within other creditors falling due in more than one year are secured by the company.
HSBC bank borrowngs are secured by a debenture including a fixed and floating charge over all current and future assets of the company. The bank also has a legal right of set-off incorporated in an unlimited multilateral guarantee with the group.
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Allotted, called up and fully paid
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2 (2022 - 2) Ordinary shares shares of £1.00 each
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Capital redemption reserve
This reserve records the nominal value of shares repurchased by the company.
Profit and loss account
This reserve records retained earnings and accumulated losses.
Page 29
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WATER SPRITE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Commitments under operating leases
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At 31 December 2023 the Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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Transactions with directors
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Included in debtors is £168,247 due from Mr A Holdsworth (2022: Creditor balance of £426,966)
The group was under the control of Mr A N C Holdsworth throughout the current and previous year.
Page 30
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