CCHG Ltd SC415497 false 2023-01-01 2023-12-31 2023-12-31 The principal activity of the company is retailing of electronic cigarettes through wholly owned and franchised operations. Digita Accounts Production Advanced 6.30.9574.0 true true true true false false true SC415497 2023-01-01 2023-12-31 SC415497 2023-12-31 SC415497 bus:Director3 2023-12-31 SC415497 bus:OrdinaryShareClass2 bus:Non-cumulativeShares 2023-12-31 SC415497 bus:Consolidated 2023-12-31 SC415497 core:AcceleratedTaxDepreciationDeferredTax 2023-12-31 SC415497 core:RevaluationInvestmentPropertyDeferredTax 2023-12-31 SC415497 core:OtherMiscellaneousReserve 2023-12-31 SC415497 core:OtherReservesSubtotal 2023-12-31 SC415497 core:RetainedEarningsAccumulatedLosses 2023-12-31 SC415497 core:ShareCapital 2023-12-31 SC415497 core:SharePremium 2023-12-31 SC415497 core:CurrentFinancialInstruments 2023-12-31 SC415497 core:CurrentFinancialInstruments core:WithinOneYear 2023-12-31 SC415497 core:DevelopmentCostsCapitalisedDevelopmentExpenditure 2023-12-31 SC415497 core:Goodwill 2023-12-31 SC415497 core:OtherResidualIntangibleAssets 2023-12-31 SC415497 core:BetweenTwoFiveYears 2023-12-31 SC415497 core:MoreThanFiveYears 2023-12-31 SC415497 core:WithinOneYear 2023-12-31 SC415497 core:ConstructionInProgressAssetsUnderConstruction 2023-12-31 SC415497 core:FurnitureFittingsToolsEquipment 2023-12-31 SC415497 core:MotorVehicles 2023-12-31 SC415497 core:OtherPropertyPlantEquipment 2023-12-31 SC415497 core:DeferredTaxation 2023-12-31 SC415497 core:Share-basedArrangement1 2023-12-31 SC415497 bus:FRS102 2023-01-01 2023-12-31 SC415497 bus:Audited 2023-01-01 2023-12-31 SC415497 bus:FullAccounts 2023-01-01 2023-12-31 SC415497 bus:RegisteredOffice 2023-01-01 2023-12-31 SC415497 bus:CompanySecretaryDirector1 2023-01-01 2023-12-31 SC415497 bus:Director1 2023-01-01 2023-12-31 SC415497 bus:Director3 2023-01-01 2023-12-31 SC415497 bus:Director5 2023-01-01 2023-12-31 SC415497 bus:Director8 2023-01-01 2023-12-31 SC415497 bus:HighestPaidDirector 2023-01-01 2023-12-31 SC415497 bus:OrdinaryShareClass2 bus:Non-cumulativeShares 2023-01-01 2023-12-31 SC415497 bus:Consolidated 2023-01-01 2023-12-31 SC415497 bus:PrivateLimitedCompanyLtd 2023-01-01 2023-12-31 SC415497 3 2023-01-01 2023-12-31 SC415497 core:OtherMiscellaneousReserve 2023-01-01 2023-12-31 SC415497 core:RetainedEarningsAccumulatedLosses 2023-01-01 2023-12-31 SC415497 core:ShareCapital 2023-01-01 2023-12-31 SC415497 core:SharePremium 2023-01-01 2023-12-31 SC415497 core:AssetsNotYetAvailableForUseIntangibles 2023-01-01 2023-12-31 SC415497 core:ComputerSoftware 2023-01-01 2023-12-31 SC415497 core:DevelopmentCostsCapitalisedDevelopmentExpenditure 2023-01-01 2023-12-31 SC415497 core:Goodwill 2023-01-01 2023-12-31 SC415497 core:OtherResidualIntangibleAssets 2023-01-01 2023-12-31 SC415497 core:Buildings 2023-01-01 2023-12-31 SC415497 core:ConstructionInProgressAssetsUnderConstruction 2023-01-01 2023-12-31 SC415497 core:FurnitureFittingsToolsEquipment 2023-01-01 2023-12-31 SC415497 core:MotorVehicles 2023-01-01 2023-12-31 SC415497 core:OtherPropertyPlantEquipment 2023-01-01 2023-12-31 SC415497 core:PlantMachinery 2023-01-01 2023-12-31 SC415497 core:DeferredTaxation 2023-01-01 2023-12-31 SC415497 core:OtherRelatedParties 2023-01-01 2023-12-31 SC415497 core:Share-basedArrangement1 2023-01-01 2023-12-31 SC415497 core:Subsidiary1 2023-01-01 2023-12-31 SC415497 core:Subsidiary1 1 2023-01-01 2023-12-31 SC415497 core:UKTax 2023-01-01 2023-12-31 SC415497 1 2023-01-01 2023-12-31 SC415497 countries:Scotland 2023-01-01 2023-12-31 SC415497 2022-12-31 SC415497 core:OtherMiscellaneousReserve 2022-12-31 SC415497 core:RetainedEarningsAccumulatedLosses 2022-12-31 SC415497 core:ShareCapital 2022-12-31 SC415497 core:SharePremium 2022-12-31 SC415497 core:DevelopmentCostsCapitalisedDevelopmentExpenditure 2022-12-31 SC415497 core:Goodwill 2022-12-31 SC415497 core:OtherResidualIntangibleAssets 2022-12-31 SC415497 core:CostValuation 2022-12-31 SC415497 core:ConstructionInProgressAssetsUnderConstruction 2022-12-31 SC415497 core:FurnitureFittingsToolsEquipment 2022-12-31 SC415497 core:MotorVehicles 2022-12-31 SC415497 core:OtherPropertyPlantEquipment 2022-12-31 SC415497 core:DeferredTaxation 2022-12-31 SC415497 core:Share-basedArrangement1 2022-12-31 SC415497 2022-01-01 2022-12-31 SC415497 2022-12-31 SC415497 bus:OrdinaryShareClass2 bus:Non-cumulativeShares 2022-12-31 SC415497 core:AcceleratedTaxDepreciationDeferredTax 2022-12-31 SC415497 core:RevaluationInvestmentPropertyDeferredTax 2022-12-31 SC415497 core:OtherReservesSubtotal 2022-12-31 SC415497 core:RetainedEarningsAccumulatedLosses 2022-12-31 SC415497 core:ShareCapital 2022-12-31 SC415497 core:SharePremium 2022-12-31 SC415497 core:CurrentFinancialInstruments 2022-12-31 SC415497 core:CurrentFinancialInstruments core:WithinOneYear 2022-12-31 SC415497 core:DevelopmentCostsCapitalisedDevelopmentExpenditure 2022-12-31 SC415497 core:Goodwill 2022-12-31 SC415497 core:OtherResidualIntangibleAssets 2022-12-31 SC415497 core:BetweenTwoFiveYears 2022-12-31 SC415497 core:MoreThanFiveYears 2022-12-31 SC415497 core:WithinOneYear 2022-12-31 SC415497 core:ConstructionInProgressAssetsUnderConstruction 2022-12-31 SC415497 core:FurnitureFittingsToolsEquipment 2022-12-31 SC415497 core:MotorVehicles 2022-12-31 SC415497 core:OtherPropertyPlantEquipment 2022-12-31 SC415497 core:Share-basedArrangement1 2022-12-31 SC415497 bus:HighestPaidDirector 2022-01-01 2022-12-31 SC415497 3 2022-01-01 2022-12-31 SC415497 core:OtherMiscellaneousReserve 2022-01-01 2022-12-31 SC415497 core:RetainedEarningsAccumulatedLosses 2022-01-01 2022-12-31 SC415497 core:ShareCapital 2022-01-01 2022-12-31 SC415497 core:SharePremium 2022-01-01 2022-12-31 SC415497 core:Share-basedArrangement1 2022-01-01 2022-12-31 SC415497 core:Subsidiary1 1 2022-01-01 2022-12-31 SC415497 core:UKTax 2022-01-01 2022-12-31 SC415497 2021-12-31 SC415497 core:OtherMiscellaneousReserve 2021-12-31 SC415497 core:RetainedEarningsAccumulatedLosses 2021-12-31 SC415497 core:ShareCapital 2021-12-31 SC415497 core:SharePremium 2021-12-31 SC415497 core:Share-basedArrangement1 2021-12-31 iso4217:GBP xbrli:pure xbrli:shares

Registration number: SC415497

CCHG Ltd

Annual Report and Financial Statements

for the Year Ended 31 December 2023

 

CCHG Ltd

Contents

Company Information

1

Strategic Report

2 to 5

Directors' Report

6 to 7

Statement of Directors' Responsibilities

8

Independent Auditor's Report

9 to 11

Profit and Loss Account

12

Statement of Comprehensive Income

13

Balance Sheet

14

Statement of Changes in Equity

15

Statement of Cash Flows

16

Notes to the Financial Statements

17 to 32

 

CCHG Ltd

Company Information

Directors

C R Henderson

G G Fowler

I Henderson

D Mutter

M R Tahir

Company secretary

I Henderson

Registered office

1 Huly Hill Road
Newbridge
Edinburgh
EH28 8PH

Accountants

Deans Accountants And Business Advisors Ltd
Chartered Accountants and Business Advisors
27 North Bridge Street
Hawick
Scottish Borders
TD9 9BD

Auditor

Johnston Carmichael LLP
Chartered Accountants and Registered Auditors
7-11 Melville Street
Edinburgh
EH3 7PE

 

CCHG Ltd

Strategic Report for the Year Ended 31 December 2023

The directors present their strategic report for the year ended 31 December 2023.

Fair review of the business

The company, trading as VPZ, operates the largest independent chain of electronic cigarette stores in the United Kingdom, through a mix of wholly owned and franchised stores throughout towns and cities across the whole of the UK, with retail operations supported by online and wholesale propositions.

As of December 2023, the company operated 163 stores, 133 owned and 30 franchise, an increase of 9 stores on the December 2022 figure of 154. The company has delivered strong, profitable growth in the year, to the extent that store sales in December 2023 were up 21.1% on a like-for-like basis compared to December 2022.

Vaping prevalence in the UK grew in 2023. According to a study by the anti-smoking charity Action on Smoking and Health (ASH) in August 2023, the proportion of the adult population in Great Britain using e-cigarettes has increased this year to 9.1%, the highest rate ever and an increase of 0.8 percentage points from 8.3% in 2022. This equates to approximately 4.7 million people (2022: 4.3 million). However, it is estimated that there are still over 6 million traditional cigarette smokers in the UK. This coupled with the UK governments ‘smoke free’ target by 2030, represents a significant opportunity to maintain business growth through converting these traditional cigarette users to vaping.

2023 has seen the continued recent trend in the UK of the increase in use of disposable vapes, which are becoming increasingly popular due to their convenience, simplicity and availability. The most commonly used type of e-cigarette device in the UK remains a refillable tank system, with 50% of current vapers reporting this type as their main device. However, disposable vapes have grown significantly again in 2023 (31% of vapers), compared with 2022 (15%). In response to this market shift, the company has continued to develop and extend its own range of refillable pod systems, which we consider offers the same benefits in terms of simplicity and convenience as disposable vapes, but with what we believe is a better vaping experience and significant cost savings compared to disposable vapes. This has allowed the company to not only participate in the disposable category growth, but to offer a more environmentally friendly and economically advantageous product to consumers.

In late 2023, the UK government launched a consultation into its twin goals of creating a smokefree generation and tackling youth vaping. Following the consultation, in January 2024 the government set out plans to outlaw the sale of disposable vapes, while taking on new powers to limit the range of flavours on offer, measures to ensure manufacturers produce plainer packaging, and change how vapes are displayed in shops. Additionally, the government announced plans in its March 2024 Budget to introduce Excise Duty on e-cigarettes in October 2026, along with a simultaneous one-off increase in Tobacco Duty to maintain the price differential. The company will continue to monitor the consultation process and developments in these areas to adhere to changes in the legislative and excise environments.

The company considers its key performance indicators to be sustainable turnover, gross margin and operating profit. Sustainable turnover, was up 28.6% from £36.0m to £46.3m, driven by a combination of an enhanced product offering in store, vaping category growth and new store openings. Gross margin rate improved to 55.0% (2022: 54.1%) due primarily to increased sales of own product compared to third party product, along with the mix of owned compared to franchise stores. Operating profit before tax was up significantly in 2023 at £3,371k compared to £859k in 2022. This was driven by increased revenues, improved margin rate and tight control of costs.

 

CCHG Ltd

Strategic Report for the Year Ended 31 December 2023

Principal risks and uncertainties

There are a number of risks and uncertainties which could impact on the performance of the company. The board reviews its risk management process on a periodic basis which identifies, evaluates and prioritises risk and uncertainties and reviews mitigation activities.

Sales and Profit Growth:
The principle risk is considered to be continued sales and profit growth, which could be impacted by economic conditions, consumer preferences, competitor activity, cost of raw materials and general level of inflation amongst other factors. 2023 saw the UK economy continue to experience signs of stress, with high inflation and interest rates, continued uncertainty and the prospect of recession. Although this remains a time of significant uncertainty for the economy as a whole and for the vaping category in particular, given the like-for-like sales figures above, along with increasing vaping prevalence in the UK, the directors believe the company is well positioned to continue to grow profitably in the future.

Legislative Risks:
The primary pieces of legislation covering the sale of e-cigarettes in the UK are the Tobacco and related Products Regulations (TRPR), and the Tobacco Products and Nicotine Inhaling Products (Amendment) (EU Exit) Regulations 2020. The Medicines and Healthcare products Regulatory Agency (MHRA) is the competent authority for a notification scheme for e-cigarettes, and the company has processes in place to ensure all the necessary regulations are met. The company continues to monitor closely the recent proposals to implement Excise Duty on e-cigarettes and ban disposable vapes.

Currency Risk:
The company is exposed to the risk of exchange rate movements, primarily US Dollars, on purchases of hardware imports. Sterling was less volatile against the Dollar during 2023 in comparison to the last few years, operating in a range between 1.18 to 1.31 £/$, with the lower rates negatively impacting on the import cost of goods. Currency fluctuations continue to be a risk, which the company mitigates to an extent by the use of exchange rate hedging products. The company does not use any other financial instruments as part of its financial risk management.

Inflation Risk:
Inflation rates reached a peak of 11% in early 2023 but have decreased steadily since then, however this period of inflation has had a direct impact on our cost base, notably payroll, energy, and raw material costs. The inflation risk is mitigated to the largest extent possible by regular review of supplier arrangements and tendering to ensure competitive pricing.

Liquidity Risk:
The company generated positive cashflows in 2023, and liquidity is managed by carefully monitoring the usage of banking and credit facilities, and evaluating payback periods of investments to balance against working capital.

Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. The amounts presented in the balance sheet are net of allowances for doubtful debts.

Trade creditors liquidity risk is managed by ensuring sufficient funds are available to meet amounts due.

 

CCHG Ltd

Strategic Report for the Year Ended 31 December 2023

Section 172(1) statement

Large private companies are required to report on how the directors have complied with their statutory duties under S172 of the Companies Act. These duties include acting in good faith in a way they consider would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so, have regards to:
• the likely consequence of any decision in the long term.
• the interests of the company’s employees.
• the need to foster the company’s business relationships with suppliers, customers and others.
• the impact of the company’s operations on the community and the environment.
• the desirability of the company maintaining a reputation for high standards of business conduct.
• the need to act fairly as between members of the company.
Our policies and procedures with regards to our key stakeholders are explained in more detail below:

Customers: Our foremost priority is to our customers who support the business by selecting VPZ as their destination of choice for vaping products. We aim to offer the highest levels of customer service, striving to ensure all customers leave our stores with more product knowledge than they came in with. Customers are always front of mind when considering product range and new product development, driving us to offer the best range and quality of vaping products.

Suppliers: The company places great importance in maintaining strong relationships with their suppliers. We seek to act ethically and fairly to create long-standing relationships that are mutually beneficial.

Environment: The company is committed to preventing pollution and minimising the impact of its operations on the environment. Particularly, the last two years has seen a significant shift in the vaping sector in the UK with the increased popularity of disposable vapes. During this time, VPZ has been calling on the UK and Scottish governments for tighter licencing and controls for selling vaping products to tackle the unregulated access and the impact of disposables on youth uptake and the environment. VPZ welcomes and fully supports the government’s proposals outlined in January 2024 to ban single-use vapes across the UK. We believe that the proposed ban would provide a strong and robust solution to tackling these issues and ensuring vaping continues to help more smokers throughout the UK quit. We strongly believe that vaping has a key role to play in nation’s 2030 Smoke-Free goal, through utilising reusable vapes, which we have already been promoting instore to customers as they are more cost-effective, sustainable, and better for the environment.

As the UK's largest vaping specialist, during 2023 VPZ partnered with a leading waste management provider, WasteCare, to launch a nationwide recycling service for disposable vapes. Disposable vapes contain lithium batteries and plastic and when littered they can cause harm to the local environment.
The recycling service is now live in VPZ’s network of over 160 stores throughout the country and involves WasteCare collecting, treating and recovering disposable vapes and reusable hardware devices, meaning that vapers can now recycle their vape devices, both disposable and reusable, at a VPZ store in a safe and responsible way.

Employees: The company aims to offer fair rewards and promote from within wherever possible. We seek to recruit not just individuals with a passion for our products, but those with enthusiasm and the best attributes for the role. The company engages with our employees in a variety of ways. We run bi-annual company-wide surveys to gain insight into employee engagement, identifying areas where we can improve our performance. The results of this are published company-wide and form the basis for our people strategy each year. Weekly bulletins are sent to all stores informing staff of operational updates, along with periodic newsletters giving wider insight into the company operations.

Shareholders: Two of the three shareholders are active members of the board and are involved in the day-to-day operations of the company. The board are responsible for setting business objectives and implementing future strategy, and meet regularly to discuss all key business matters.

Likely consequences of any decision in the long-term: The directors consider both short- and long-term consequences in their decision making. Store openings and significant capital expenditures are always supported by long term return on investment and payback calculations, and are considered within the boundaries of our future working capital facilities and cashflow projections. Likewise, if we consider closing a store, it is with a view that it would have a positive impact on the company’s overall profitability in the long term. Further we believe continued investment in technology to drive efficiency and operational improvements will benefit in the long-term.

 

CCHG Ltd

Strategic Report for the Year Ended 31 December 2023

Streamlined Energy and Carbon Report

The Total Carbon Emissions for CCHG Limited for the year ended 31 December 2023 was 582 Tonnes CO2e.

Under the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 and the changes introduced by the 2018 Regulations, we are obliged to report our annual UK energy use, associated greenhouse gas emissions and related information for the financial year ended 31 December 2023, along with our future for energy efficiency. The aim of the report is to further incentivise energy efficiency with the aim of reducing carbon emissions to meet climate change targets.

The data collected includes the emissions for the UK operations of CCHG Ltd. UK Government (Greenhouse Gas) Conversion Factors were used to calculate carbon emissions and offsets, from primary data (meter readings and invoices). These figures have been converted into an intensity ratio which enables us to track our progress going forward. The chosen intensity measure is kg CO2e per £100 of revenue and we consider this to be the most relevant to our energy consuming activities and provides a good comparison of performance year on year.

The table below summarises the GHG market-based emissions for reporting years December 2022 and 2023.

We have considered the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) when preparing this report. These recommendations encourage businesses to increase disclosure of climate-related information, with an emphasis on financial disclosure. CCHG Ltd supports these recommendations and are committed to disclosing the relevant information which can be found below.

Units

2023

2022

Electricity

kwh

1,853,953

1,610,348

Gas

kwh

265,834

285,244

Transport

kwh

598,219

516,401

Direct emissions from combustion of natural gas in stationary/mobile equipment

Tonnes CO2e

48

51

Direct emissions from combustion of fuel in company owned vehicles

Tonnes CO2e

150

132

Emissions from purchased electricity

Tonnes CO2e

384

311

           

Intensity ratio

During the year ended 31 December 2023 this was 1.26 (2022 - 1.38).

The 2022 financial period will be used as the base period going forward, and we are delighted to have reduced our intensity ratio by 9% during the year from 1.38 last year to 1.26 this year.

We have engaged with a leading 3rd party energy consultancy for our compliance with the Energy Savings Opportunity Scheme, and for identifying energy savings opportunities. Energy consumption is monitored monthly, with each of our stores providing monthly readings and consumption data which enables us to identify unusual consumption patterns.

Approved and authorised by the Board on 18 September 2024 and signed on its behalf by:
 

.........................................
C R Henderson
Director

 

CCHG Ltd

Directors' Report for the Year Ended 31 December 2023

The directors present their report and the financial statements for the year ended 31 December 2023.

Principal activity

The principal activity of the company is retailing of electronic cigarettes through wholly owned and franchised operations.

An overview of the business results, and its principal risks and uncertainties, has been included in the strategic report as set out on page 2.

Directors of the company

The directors who held office during the year were as follows:

C R Henderson

G G Fowler (appointed 23 November 2023)

I Henderson - Company secretary and director

D Mutter

M R Tahir

Results and dividends

The net profit for the year amounted to £2,292,221 (2022 : £465,977). During the current year a final dividend of £491,881 (2022: £979,352) was paid.

Strategic report

The company has chosen, in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch.7 to be contained in the directors' report. This has been done in respect of financial risk management which is covered in the principal risks section.

Auditor

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

Disclosure of information to the auditor

Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.

Future developments

For 2024, the company expects to grow both retail and e-commerce sales despite an economic backdrop of cost price inflation and economic uncertainty. The company plans to continue to invest in its retail estate, both by opening new stores and refurbishing the current estate, along with continuing investment in its infrastructure and people to deliver the next phase of growth for the business.

Employee involvement

The company's policy is to consult and discuss with employees, through regular bulletins and staff meetings, matters likely to affect employees' interests. Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the company's performance.

Employment of disabled persons

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

 

CCHG Ltd

Directors' Report for the Year Ended 31 December 2023

Approved by the Board on 18 September 2024 and signed on its behalf by:

.........................................
C R Henderson
Director

   
     
 

CCHG Ltd

Statement of Directors' Responsibilities

The directors acknowledge their responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

select suitable accounting policies and apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

CCHG Ltd

Independent Auditor's Report to the Members of CCHG Ltd

Opinion

We have audited the financial statements of CCHG Ltd (‘the company’) for the year ended 31 December 2023, which comprise the Profit and Loss, Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Statement of Cash Flows, and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the year then ended;

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

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the 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 original financial statements were authorised for issue.

Our responsibilities and the responsibilities of the Directors' with respect to going concern are described in the relevant sections of this report.

Other information

The 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.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of 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 and 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:

 

CCHG Ltd

Independent Auditor's Report to the Members of CCHG Ltd

adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

the financial statements are not in agreement with the accounting records and returns; or

certain disclosures of directors’ remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Responsibilities of Directors

As explained more fully in the Directors' responsibility statement (set out on page 8), the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor Responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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 auditor's report.

Extent the audit was considered capable of detecting irregularites, including fraud

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 assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.

All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

We obtained an understanding of the legal and regulatory frameworks that are applicable to company and the sector in which it operates, focusing on those provisions that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:

• Companies Act 2006;
• Corporation tax legislation;
• VAT legislation;
• UK Generally Accepted Accounting Practice;
• Tobacco and Related Products Regulations; and
• Tobacco Products an Nicotine Inhaling Products Regulations.

We gained an understanding of how the company is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of relevant correspondence with regulatory bodies.

 

CCHG Ltd

Independent Auditor's Report to the Members of CCHG Ltd

We assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. We identified a heightened fraud risk in relation to:

• Management override of controls
• Revenue recognition
 

In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
• Reviewing the level of and reasoning behind the company’s procurement of legal and professional services;
• Performing audit work procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing judgements made by management in their calculation of accounting estimates for potential management bias;
• Agreeing income received via banking to store till receipts and to the sales system for store sales recorded;
• For other revenue streams we vouched from source documentation to the recording of the revenue in the general ledger;
• Completion of appropriate checklists and use of our experience to assess the Company’s compliance with the Companies Act 2006; and
• Agreement of the financial statement disclosures to supporting documentation.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
 

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.
 

......................................
Barry Masson (Senior Statutory Auditor)
For and on behalf of Johnston Carmichael LLP
Statutory Auditor

7-11 Melville Street
Edinburgh
EH3 7PE
United Kingdom

20 September 2024

 

CCHG Ltd

Profit and Loss Account for the Year Ended 31 December 2023

Note

2023
£

2022
£

Turnover

3

46,275,731

35,960,164

Cost of sales

 

(20,820,856)

(16,501,884)

Gross profit

 

25,454,875

19,458,280

Administrative expenses

 

(22,356,361)

(18,860,106)

Other operating income

4

306,632

264,582

Operating profit

5

3,405,146

862,756

Net loss on financial liabilities at fair value through profit and loss

 

(55,316)

-

Other interest receivable and similar income

6

21,780

291

Interest payable and similar expenses

7

-

(3,902)

   

(33,536)

(3,611)

Profit before tax

 

3,371,610

859,145

Tax on profit

11

(1,079,389)

(393,168)

Profit for the financial year

 

2,292,221

465,977

The above results were derived from continuing operations.

The company has no recognised gains or losses for the year other than the results above.

 

CCHG Ltd

Statement of Comprehensive Income for the Year Ended 31 December 2023

2023
£

2022
£

Profit for the year

2,292,221

465,977

Total comprehensive income for the year

2,292,221

465,977

 

CCHG Ltd

(Registration number: SC415497)
Balance Sheet as at 31 December 2023

Note

2023
£

2022
£

Fixed assets

 

Intangible assets

12

8,482,046

9,503,603

Tangible assets

13

1,730,763

1,322,904

Investment property

14

195,000

195,000

Investments

15

990

990

 

10,408,799

11,022,497

Current assets

 

Stocks

16

6,961,627

7,648,787

Debtors

17

1,938,989

1,317,307

Cash at bank and in hand

 

4,091,684

898,669

 

12,992,300

9,864,763

Creditors: Amounts falling due within one year

19

(7,878,524)

(7,280,200)

Net current assets

 

5,113,776

2,584,563

Total assets less current liabilities

 

15,522,575

13,607,060

Provisions for liabilities

21

(288,648)

(173,473)

Net assets

 

15,233,927

13,433,587

Capital and reserves

 

Called up share capital

29

11,797

11,797

Share premium reserve

29

11,468,791

11,468,791

Other reserves

29

93,150

93,150

Retained earnings

29

3,660,189

1,859,849

Shareholders' funds

 

15,233,927

13,433,587

Approved and authorised by the Board on 18 September 2024 and signed on its behalf by:
 

.........................................
C R Henderson
Director

.........................................
I Henderson
Company secretary and director

 

CCHG Ltd

Statement of Changes in Equity for the Year Ended 31 December 2023

Share capital
£

Share premium
£

Non-distributable reserve
£

Profit and loss account
£

Total
£

At 1 January 2023

11,797

11,468,791

93,150

1,859,849

13,433,587

Profit for the year

-

-

-

2,292,221

2,292,221

Total comprehensive income

-

-

-

2,292,221

2,292,221

Dividends

-

-

-

(491,881)

(491,881)

At 31 December 2023

11,797

11,468,791

93,150

3,660,189

15,233,927

Share capital
£

Share premium
£

Non-distributable reserve
£

Profit and loss account
£

Total
£

At 1 January 2022

11,797

11,468,791

93,150

2,373,224

13,946,962

Profit for the year

-

-

-

465,977

465,977

Total comprehensive income

-

-

-

465,977

465,977

Dividends

-

-

-

(979,352)

(979,352)

At 31 December 2022

11,797

11,468,791

93,150

1,859,849

13,433,587

 

CCHG Ltd

Statement of Cash Flows for the Year Ended 31 December 2023

Note

2023
£

2022
£

Cash flows from operating activities

Profit for the year

 

2,292,221

465,977

Adjustments to cash flows from non-cash items

 

Depreciation and amortisation

5

1,932,471

2,136,892

Finance income

6

(21,780)

(291)

Finance costs

7

-

3,902

Income tax expense

11

1,079,389

393,168

 

5,282,301

2,999,648

Working capital adjustments

 

Decrease/(increase) in stocks

 

687,160

(1,206,585)

(Increase)/decrease in debtors

 

(621,682)

462,772

Increase in creditors

 

359,074

554,531

(Decrease)/increase in deferred income, including government grants

 

(359,113)

234,856

Cash generated from operations

 

5,347,740

3,045,222

Income taxes paid

 

(365,851)

(605,692)

Net cash flow from operating activities

 

4,981,889

2,439,530

Cash flows from investing activities

 

Interest received and similar income

 

21,780

291

Acquisitions of tangible assets

(1,108,696)

(641,160)

Proceeds from sale of tangible assets

 

2,142

3,077

Acquisition of intangible assets

12

(212,219)

(248,735)

Net cash used by investing activities

 

(1,296,993)

(886,527)

Cash flows from financing activities

 

Interest paid

7

-

(3,902)

Repayment of other borrowing

 

-

(2,907,108)

Dividends paid

(491,881)

(979,352)

Net cash from financing activities

 

(491,881)

(3,890,362)

Net increase/(decrease) in cash and cash equivalents

 

3,193,015

(2,337,359)

Cash and cash equivalents at 1 January

 

898,669

3,236,028

Cash and cash equivalents at 31 December

18

4,091,684

898,669

 

CCHG Ltd

Notes to the Financial Statements for the Year Ended 31 December 2023

1

General information

The company is a private company limited by share capital, domiciled and incorporated in Scotland.

The address of its registered office is:
1 Huly Hill Road
Newbridge
Edinburgh
EH28 8PH
Scotland

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' ("FRS 102") and the requirements of the Companies Act 2006.

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value. The company has not prepared consolidated accounts as its subsidiary no longer trades, and all assets were transferred to the parent company in December 2020.

The company is not directly impacted by Brexit.

The company has suffered financially from the pandemic. Where appropriate, government support in the forms of grants and loans were used to mitigate the impact of lockdowns etc. The directors will continue to assess the impact of the pandemic and make decisions accordingly.

The financial statements are presented in Sterling (£) and rounded to the nearest £1.

Going concern

At the time of approving the financial statements, the directors are not aware of any material uncertainties affecting the company and have a reasonable expectation that the company has adequate resources to continue in operational existence for a period of at least twelve months from the date of approval of these financial statements. Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

 

CCHG Ltd

Notes to the Financial Statements for the Year Ended 31 December 2023

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 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:

Stock provisioning

The company’s stock is reviewed regularly for evidence of obsolescence. Management’s estimate of the required stock provision is based on the ageing of stock, physical inspection for obsolescence and other factors such as changes in legislation.

Carrying value of goodwill

The useful life is based on management’s expectations of future economic benefits. The carrying value is reviewed annually for evidence of any potential changes which would indicate impairment.

Useful life of tangible assets

The annual depreciation charge for tangible assets is sensitive to change in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on economic utilisation, and the physical condition of the assets.

Accrued loyalty scheme costs

Management must estimate the potential cost of outstanding loyalty scheme customer benefits at the year end in order to determine the appropriate accrual in respect of the scheme costs at the balance sheet date. This requires a number of estimates relating to redemption rates and costs. These are reviewed annually.

Revenue recognition

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

Sale of goods – Retail
Sale of goods are recognised at the point of delivery to the customer in store. Retail sales are usually by cash, credit or payment card.

Sale of goods – wholesale and internet based transactions
Sale of goods held in stock are recognised at the point of order.

Franchises
Non - refundable licence fees are recognised in full on invoice at the time a new franchise agreement is signed. Ongoing royalties and support fees are recognised on invoice monthly, in line with the applicable sales period.

Foreign currency transactions and balances

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

Non-monetary items measured in terms of historic cost in a foreign currency are not retranslated.

Tax

The tax expense represents the sum of the tax currently payable and deferred tax.

 

CCHG Ltd

Notes to the Financial Statements for the Year Ended 31 December 2023

Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it related to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

Tangible assets

Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

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

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to the profit and loss account.

Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

CCHG Ltd

Notes to the Financial Statements for the Year Ended 31 December 2023

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Furniture, fittings and equipment

25% straight line.

Motor vehicles

25% reducing balance.

Property improvements

20% straight line.

Plant and machinery

25% reducing balance.

Investment property

Investment property relates to property held by the company to earn rental income or capital appreciation or both, rather than for use in the production or supply of goods or services or for administrative purposes.

Investment property is carried at fair value, derived from the current market prices for comparable release date. The value used observable market prices, adjusted if necessary for any difference in the nature, location or condition of the specific asset. Changes in fair value are recognised in the profit and loss.

Business combinations

Business combinations are accounted for using the purchase method. The consideration for each acquisition is measured at the aggregate of the fair values at acquisition date of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquired, plus any costs directly attributable to the business combination. When a business combination agreement provides for an adjustment to the cost of the combination contingent on future events, the group includes the estimated amount of that adjustment in the cost of the combination at the acquisition date if the adjustment is probable and can be measured reliably.

Goodwill

Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

Amortisation

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

Asset class

Amortisation method and rate

Goodwill

Over 10 years.

Software

Over 3 years.

Assets under construction

not currently subject to amortisation.

Investments

Investments in equity shares which are publicly traded or where the fair value can be measured reliably are initially measured at fair value, with changes in fair value recognised in profit or loss. Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.

Interest income on debt securities, where applicable, is recognised in income using the effective interest method. Dividends on equity securities are recognised in income when receivable.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

 

CCHG Ltd

Notes to the Financial Statements for the Year Ended 31 December 2023

Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company’s balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets
Basic financial assets, which include trade and other debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method. Financial assets classified as receivable within one year are not amortised.

Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments are not publicly traded and whose fair policies cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets
Financial assets, other than those held at fair value through the profit and loss account, are assessed for indicators or impairment at each reporting end date.

Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities
Basic financial liabilities, including creditors that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Stocks

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

The cost of finished goods and work in progress comprises direct materials and, where applicable, those overheads that have been incurred in bringing the inventories to their present location and condition. At each reporting date, stocks are assessed for impairment. If stocks are impaired, the carrying amount is reduced to its selling price less costs to complete and sell; the impairment loss is recognised immediately in profit or loss.

 

CCHG Ltd

Notes to the Financial Statements for the Year Ended 31 December 2023

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the profit and loss account so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to income on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Share based payments

The fair value of equity-settled share based payments to employees is determined at the date of the grant and is expensed on a straight-line basis over the vesting period based on the company’s estimate of shares or options that will eventually vest. Where this charge would be immaterial, no adjustment is made.

Dividends

Dividend distribution to the company’s shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

Employee Benefits

The costs of short-term employment benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

Where material, the cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Derivative financial instruments and hedging

Derivatives
The company uses derivative financial instruments to reduce exposure to foreign exchange risk. The company does not hold or issue derivative financial instruments for speculative purposes. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Changes in the fair value of derivatives are recognised in the profit or loss in finance costs or income as appropriate.

 Hedging
The company does not currently apply hedge accounting for foreign exchange derivatives.
 

 

CCHG Ltd

Notes to the Financial Statements for the Year Ended 31 December 2023

3

Turnover

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

2023
£

2022
£

Sale of goods, UK

46,154,981

35,960,164

Sale of goods, rest of world

120,750

-

46,275,731

35,960,164

4

Other operating income

The analysis of the company's other operating income for the year is as follows:

2023
£

2022
£

Management charges receivable

60,445

60,446

Rent receivable

246,187

204,136

306,632

264,582

5

Operating profit

Arrived at after charging

2023
£

2022
£

Amortisation expense

1,233,776

1,180,316

Auditor's remuneration

26,250

23,050

Depreciation expense

698,695

956,576

Foreign currency (gains)

(39,725)

(3,830)

Operating lease expense - other assets

9,592

21,126

Loss/(Profit) on disposal of tangible fixed assets

512

(223)

Rent

3,245,355

3,221,598

6

Other interest receivable and similar income

2023
£

2022
£

Interest income on bank deposits

21,780

291

7

Interest payable and similar expenses

2023
£

2022
£

Interest expense on other finance liabilities

-

3,902

 

CCHG Ltd

Notes to the Financial Statements for the Year Ended 31 December 2023

8

Staff costs

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

2023
 £

2022
 £

Wages and salaries

 

10,413,581

8,246,590

Social security costs

 

967,773

702,358

Other short-term employee benefits

 

2,596

812

Pension costs, defined contribution scheme

 

177,258

133,934

 

11,561,208

9,083,694

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

2023
No.

2022
No.

Administration and support

72

54

Sales

406

341

478

395

9

Directors' remuneration

The directors' remuneration for the year was as follows:

2023
£

2022
£

Remuneration

135,292

251,468

In respect of the highest paid director:

2023
£

2022
£

Remuneration

107,250

134,000

10

Auditor's remuneration

2023
£

2022
£

Audit of the financial statements

26,250

23,050


 

 

CCHG Ltd

Notes to the Financial Statements for the Year Ended 31 December 2023

11

Taxation

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

2023
£

2022
£

Current taxation

UK corporation tax

964,214

365,851

UK corporation tax adjustment to prior periods

-

(12,938)

964,214

352,913

Deferred taxation

Arising from origination and reversal of timing differences

115,175

40,255

Tax expense in the income statement

1,079,389

393,168

The tax on profit before tax for the year is the same as the standard rate of corporation tax in the UK (2022 - the same as the standard rate of corporation tax in the UK) of 23.53% (2022 - 19%).

The differences are reconciled below:

2023
£

2022
£

Profit before tax

3,371,610

859,145

Corporation tax at standard rate

793,171

163,238

Effect of expense not deductible in determining taxable profit

171,043

202,613

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

-

(12,938)

Tax increase from other short-term timing differences

115,175

40,255

Total tax charge

1,079,389

393,168

Deferred tax

Deferred tax assets and liabilities

2023

Asset
£

Liability
£

Accelerated capital allowances

-

259,898

Revaluation of investment properties

-

28,750

-

288,648

2022

Asset
£

Liability
£

Accelerated capital allowances

-

144,723

Revaluation of investment properties

-

28,750

-

173,473

 

CCHG Ltd

Notes to the Financial Statements for the Year Ended 31 December 2023

12

Intangible assets

Goodwill
 £

Software
 £

Assets under construction
 £

Total
£

Cost or valuation

At 1 January 2023

11,622,588

64,123

248,735

11,935,446

Transfers

-

248,735

(248,735)

-

Additions

-

212,219

-

212,219

At 31 December 2023

11,622,588

525,077

-

12,147,665

Amortisation

At 1 January 2023

2,375,466

56,377

-

2,431,843

Amortisation charge

1,162,259

71,517

-

1,233,776

At 31 December 2023

3,537,725

127,894

-

3,665,619

Carrying amount

At 31 December 2023

8,084,863

397,183

-

8,482,046

At 31 December 2022

9,247,122

7,746

248,735

9,503,603

 

CCHG Ltd

Notes to the Financial Statements for the Year Ended 31 December 2023

13

Tangible assets

Furniture, fittings and equipment
 £

Motor vehicles
 £

Property improvements
£

Plant and machinery
£

Total
£

Cost or valuation

At 1 January 2023

3,759,878

179,065

1,995,148

141,432

6,075,523

Additions

800,203

164,711

139,387

4,395

1,108,696

Disposals

(46,670)

(22,943)

(42,612)

-

(112,225)

At 31 December 2023

4,513,411

320,833

2,091,923

145,827

7,071,994

Depreciation

At 1 January 2023

2,704,250

100,014

1,823,391

124,964

4,752,619

Charge for the year

544,235

39,520

109,546

5,395

698,696

Eliminated on disposal

(46,670)

(20,802)

(42,612)

-

(110,084)

At 31 December 2023

3,201,815

118,732

1,890,325

130,359

5,341,231

Carrying amount

At 31 December 2023

1,311,596

202,101

201,598

15,468

1,730,763

At 31 December 2022

1,055,628

79,051

171,757

16,468

1,322,904

 

CCHG Ltd

Notes to the Financial Statements for the Year Ended 31 December 2023

14

Investment properties

2023
£

At 1 January 2023

195,000

At 31 December 2023

195,000

Investment property is valued at open market value.

The property was valued by Paul Carr MRICS BSc (Hons) for and on behalf of Hardies Property & Construction Consultants on 14 January 2016.

The directors continue to be satisfied that the valuation continues to be appropriate at the balance sheet date.

15

Investments

2023
£

2022
£

Investments in subsidiaries

990

990

Subsidiaries

£

Cost or valuation

At 1 January 2023

990

Carrying amount

At 31 December 2023

990

At 31 December 2022

990

Details of undertakings

Details of the investments (including principal place of business of unincorporated entities) in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking

Registered office

Holding

Proportion of voting rights and shares held

     

2023

2022

Subsidiary undertakings

RT812 Limited

1 Huly Hill Road,
Newbridge,
Edinburgh,
EH28 8PH
Scotland

Ordinary

100%

100%

Subsidiary undertakings

RT812 Limited

The principal activity of RT812 Limited is now dormant. The company ceased to trade in December 2020. Its financial period end is 31 October. The profit for the financial period of RT812 Limited was £nil and the aggregate amount of capital and reserves at the end of the period was £990.

 

CCHG Ltd

Notes to the Financial Statements for the Year Ended 31 December 2023

16

Stocks

2023
£

2022
£

Finished goods for resale

6,961,627

7,648,787

Impairment of stocks

Stock is stated net of a provision for impairment of £883,293 (2022 - £904,170).

17

Debtors

Current

2023
£

2022
£

Trade debtors

440,873

122,352

Other debtors

779,517

533,704

Prepayments

718,599

661,251

 

1,938,989

1,317,307

18

Cash and cash equivalents

2023
£

2022
£

Cash at bank

4,091,684

898,669

19

Creditors

Note

2023
£

2022
£

Due within one year

 

Trade creditors

 

1,991,183

2,417,129

Amounts due to related parties

27

633,217

612,059

Social security and other taxes

 

1,378,169

943,953

Outstanding defined contribution pension costs

 

51,704

38,208

Other payables

 

1,302,479

1,078,126

Accruals

 

1,485,420

1,393,623

Corporation tax liability

 

1,008,484

410,121

Deferred income

 

27,868

386,981

 

7,878,524

7,280,200

20

Loans and borrowings

A cross-company composite guarantee exists in favour of HSBC Bank UK over CCHG Ltd and 2 of its related parties. HSBC Bank UK also hold a floating charge over CCHG Ltd.

21

Deferred tax and other provisions

Deferred tax
£

Total
£

At 1 January 2023

173,473

173,473

Charge to profit and loss

115,175

115,175

At 31 December 2023

288,648

288,648

 

CCHG Ltd

Notes to the Financial Statements for the Year Ended 31 December 2023

22

Pension and other schemes

Defined contribution pension scheme

The company operates a defined contribution pension scheme for qualifying employees. The assets of the scheme are held separately from those of the company. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £177,258 (2022 - £133,934).

Contributions totalling £51,704 (2022 - £38,208) were payable to the scheme at the end of the year and are included in creditors.

23

Share capital

Allotted, called up and fully paid shares

 

2023

2022

 

No.

£

No.

£

A Ordinary Shares of £0.01 each

1,179,658

11,797

1,179,658

11,797

         

24

Obligations under leases and hire purchase contracts

Operating leases

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:

2023
£

2022
£

Not later than one year

3,109,329

3,172,588

Later than one year and not later than five years

4,623,811

5,187,216

Later than five years

176,272

195,180

7,909,412

8,554,984

 

CCHG Ltd

Notes to the Financial Statements for the Year Ended 31 December 2023

25

Share-based payments

EMI Share Option Scheme

Scheme details and movements

The company has an Enterprise Management Incentives scheme for certain employees. Options totalling 11,389 Ordinary Shares of £0.01 were outstanding at 31 December 2023 at a weighted average exercise price of £9.32 per share. The options will generally only be exercisable on the sale of the company or its listing on a recognised investment exchange. The options lapse when employees leave the company. Certain of these options are also subject to individual employee performance conditions.

The movements in the number of share options during the year were as follows:

2023
Number

2022
Number

Outstanding, start of period

13,965

34,703

Forfeited during the period

(2,576)

(20,738)

Outstanding, end of period

11,389

13,965

The movements in the weighted average exercise price of share options during the year were as follows:

2023
£

2022
£

Outstanding, start of period

7.60

8.88

Outstanding, end of period

8.50

7.60

26

Analysis of changes in net debt

At 1 January 2023
£

Cash flows of the entity
£

At 31 December 2023
£

Cash

898,669

3,193,015

4,091,684

 

898,669

3,193,015

4,091,684

27

Related party transactions

The key management personnel are the directors, refer to above notes for details of remuneration and benefits.

During the year certain directors advanced loans to the company, these loans are repayable on demand. At the balance sheet date the amount due to these directors was £nil (2022 - £64).

During the year certain directors were advanced loans from the company, these loans are repayable on demand. At the balance sheet date the amount due from these directors was £nil (2022 - £1,455).

During the year dividends were paid to the directors who are also shareholders totalling £320,852 (2022 - £603,320)

Summary of transactions with other related parties

During the year CCHG Limited lent monies to certain other companies controlled by the directors. The loans are repayable on demand. At the balance sheet date the amount due from these companies was £597,599 (2022 - £422,246). During the year CCHG Limited borrowed monies from certain companies controlled by the directors. The loans are repayable on demand. At the balance sheet date the amount due to these companies was £633,217 (2022 - £611,995). During the year CCHG Limited purchased goods from other companies controlled by the directors totalling £8,161,044 (2022 - £5,346,027). During the year CCHG Limited sold goods to other companies controlled by the directors totalling £501,979 (2022 - £407,624). CCHG Limited also recharged rent and management charges to companies controlled by the directors during the year totalling £157,452 (2022 - £157,453).

 

CCHG Ltd

Notes to the Financial Statements for the Year Ended 31 December 2023

28

Financial instruments

Currency contracts

The fair value of derivative financial instruments, measured at fair value through profit or loss, at 31 December 2023 is a liability of £59,425 (2022 - £4,109).

The amount of the change in fair value recognised in profit or (loss) for the period is £(55,316) (2022 - £Nil).

The company enters into forward currency contracts to mitigate the exchange rate risk to certain foreign currency payables. At 31 December 2023 the outstanding contracts all mature within 12 months of the year end. As at 31 December 2023 the company was committed to buy US$ 500,000 and pay a fixed sterling amount.

Fair value is determined using valuation techniques that utilise observable inputs. The key assumptions used in valuing the derivatives are the forward exchange rates for GBP:USD.

The company has no interest rate derivative financial instruments.

29

Reserves

Called up Share Capital
This represents the nominal value of shares that have been issued.

Profit and Loss
Represents current year and prior period retained profits and losses.

Other Reserves
Represents non-distributable gains on investment property net of tax, recognised in the profit and loss account.

Share Premium Reserve
Represents the amount over the nominal value of shares issued.

30

Parent and ultimate parent undertaking

In the opinion of the directors there is no single controlling party.