Company registration number 08807852 (England and Wales)
AHMAD TEA (UK) LIMITED
ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
AHMAD TEA (UK) LIMITED
COMPANY INFORMATION
Directors
Mr A R Afshar
Dr A Afshar
Dr E Afshar
Mr M Afshar
Dr A K Afshar
Secretary
Dr A Afshar
Company number
08807852
Registered office
Ahmad Tea Estate
Winchester Road
Chandler's Ford
Eastleigh
Hampshire
SO53 2PZ
Auditor
HJS Accountants Limited
Tagus House
9 Ocean Way
Southampton
Hampshire
United Kingdom
SO14 3TJ
AHMAD TEA (UK) LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 6
Directors' responsibilities statement
7
Independent auditor's report
8 - 10
Group statement of comprehensive income
11
Group balance sheet
12 - 13
Company balance sheet
14 - 15
Group statement of changes in equity
16
Company statement of changes in equity
17
Group statement of cash flows
18
Company statement of cash flows
19
Notes to the financial statements
20 - 41
AHMAD TEA (UK) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

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

Fair review of the business

The principal activities of the Company are set out in the directors’ report on page 2.

The year commencing 2023 continued with similar challenges seen throughout 2021 and 2022. Many markets were significantly impacted by high inflation and currency devaluation which has impacted on overall sales turnover for 2023. The business also continues to see its costs affected by inflationary increases, however has benefitted from freight costs normalizing throughout 2023. Ahmad Tea has continued to grow the business and global brand, whilst remaining profitable and remaining true to our core values of sustainable growth and an firm ethos and agenda of corporate social responsibility.

The Groups 2023 turnover has decreased to $152Mil from $154Mil seen throughout 2022, a 1.38% decrease over the year, although net KG sales remained on par. The Geographical split in turnover has predominantly remained in line with those results seen throughout 2022. Although there still continued some decline in North America sales, for which re-organisation plans put in place throughout 2022 remain to come to fruition. It is expected that this will recover throughout 2024. Final operating profit for the year ended 2023 on decreased from $18.8Mil 9FY22) to $9.9Mil (FY23).

 

Trading performance and KPIs

Gross profit margins throughout 2023 have increased compared with 2022. From 25.23% to 25.64%. This has largely been due to the cost of freight returning to pre-pandemic rates.

Marketing costs continue to be a dominate overhead in line with the strategic growth plans. Marketing costs as a percentage of sales have decreased from 5% seen in 2022 to 4.72% throughout 2023, this largely remains consistent.

Overhead expenses for 2023 as a percentage of Turnover have increased from 14.78% to 19% over the year, driven by inflationary pressures and book XE variances. This equates to an additional cost over the year of $5.9Mil.

 

AHMAD TEA (UK) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Financial instruments and risk management

The Companies’ financial assets and liabilities consist of trade debtors and creditors, cash balances, and bank overdrafts. The company has no commercial loans.

The Company takes a proactive approach to the management of various risks that it faces and risk management is an integral part of the Group’s strategy. Commercial risks include fluctuations in raw Tea pricing which is managed through close and longstanding supplier relationships. Operationally the company has some risk associated with the supply of product through bulk and co-packers of packers of Tea although much of this has been diversified away. The Companies’ primary financial risk is from currency fluctuations in relation to import and export revenues, this currency exchange risk is managed through careful treasury management. The Group does not trade speculatively in hedging products or similar instruments.

The Directors of Ahmad Tea recognise the importance of robust control measures to govern the group activities and consolidation of financial results.

The company ensures that the supervision of accounting and treasury are duly organised. The Board decides on policy, procedures, reporting, and qualitative and quantitative indicators used to assess operational efficiency and performance.

The business has a system of internal meetings with a formal agenda, including financial information, monitoring and decisions related to financial and operational matters. The quality of the financial reporting processes and internal controls is assessed by Group Finance regularly as part of the quality assurance of reporting. Reconciliation between company and group transactions is closely monitored and confirmed between reporting entities.

Ahmad Tea has a clearly defined uniform group-wide internal control system; which is based on five key components that facilitate good internal control. Control environment, Risk management, Control activities, Information and reporting, and Monitoring and continuous improvement.

 

Identified Risks

It is anticipated that Revenue and profit forecasts for 2024 will continue to be difficult to achieve, although inflation rises across many markets have already started to normalise. It is also anticipated that the high freight costs seen throughout 2021 and 2022 may return with further trouble in shipping and the Suez canal.

The company endeavours to keep any customer price increases to the minimum so as not to impact the end consumer. The company aims to consistently improve efficiency while ensuring the very high quality of the product and long term sustainability of the business.

Ahmad Tea continues to accelerate direct-to-customer sales and online capabilities in partnership with distributors.

The Charitable, Social and environmental ethos remains at the very core of all of the company’s ‘Infused with impact’ plans. With continued progress made in the removal of plastic packaging, compostable filter papers and a circular supply chain, achieving the Ecovadis Gold-standard rating at our primary production facility.

 

AHMAD TEA (UK) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Section 172 (1) Statement

The Board of Directors confirm that during the year under review, It has acted to promote the long term success of the Company for the benefit of the shareholders, while having due regard to matters set out in section 172 (1) of the companies Act 2006.

  1. The likely consequences of any decision in the long term;

  2. The interest’s of the company employees;

  3. The need to foster the company’s business relationships with suppliers, customers and others;

  4. The impact of the company’s operations on the community and the environment;

  5. The desirability of the company maintaining a reputation for high standards of business conduct; and

  6. The need to act fairly as between members of the company

The company reviews its approach to corporate governance and decision making, engagement with stakeholders and the Company’s impact on the environment.

The company has demonstrated this by their strategic approach underpinned by the operational and functional business plans in their duty to fulfil Section 172.

The company has a clear Purpose underpinned by its core values in its approach to its multi stakeholder model, to include Employees, Consumers, Customers, Suppliers and Distributors, and in its approach to Environmental sustainability, The wider society, and its shareholders.

This has been manged through Employee development and reward initiatives supported by employee engagement reviews and employee metrics including robust Health and Safety operating procedures.

The Ahmad Tea ethos is to embed long term partnership agreements, with all parties within the supply chain who are expected to uphold the same high standards of business ethics and agreement charters to ensure adherence to modern slavery, human rights and corruption policies.

Corporate social responsibility, environmental sustainability, and charitable endeavours around the globe is at the very core of the Cultures and Values of the organisation and will continue to be so.

On behalf of the board

Dr E Afshar
Director
23 September 2024
AHMAD TEA (UK) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -

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

Principal activities

The principal activities of the company continued to be that of the acquisition, blending, packing and distribution of quality tea and tea products.

 

Results and dividends

The results for the year are set out on 11.

Ordinary dividends were paid amounting to $2,276,524. The Directors do not recommend payment of a further dividend.

Directors

The Directors who held office during the year and up to the date of signature of the financial statements were as follows:

Mr A R Afshar
Dr A Afshar
Dr E Afshar
Mr M Afshar
Dr A K Afshar
Liquidity risk

This is the risk that the company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset

Management monitors its cash flows to determine its cash requirements to meet its payment obligations on time. If necessary, funds are made available by the shareholders to ensure that the payments obligations are met on time.

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 group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

Employee involvement

The Companies policy is to consult and discuss with employees, through staff councils and at meetings, matters likely to affect employee’s interests. Information of matters of concern to employees is given through information bulletins and reports which seek to achieve common awareness on the part of all employees of the financial and economic factors affecting the Company’s performance.

Auditor

HJS Accountants Limited were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

Energy and carbon report

The UK Government’s Streamlined Energy and carbon Reporting (SECR) policy was implemented on 1 April 2019, the Company first adopted the disclosure on energy and Carbo in the accounts ending 31 December 2020. The table below represents Ahmad Tea Limited’s energy use and associated greenhouse gas (GHG) emissions from electricity and fuel for the single UK site for the year ended 31 December 2023.

 

AHMAD TEA (UK) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
Energy consumption
kWh
kWh
Aggregate of energy consumption in the year
- Gas combustion
97,616
- Heating, cooling, lighting of the UK head office only
148,680
246,296
Emissions of CO2 equivalent
Metric tonnes
Metric tonnes
Scope 1 - direct emissions
- Gas combustion
30,788.00
- Fuel consumed for owned transport
-
30,788.00
Scope 2 - indirect emissions
- Electricity purchased
17,821.00
Total gross emissions
48,609.00
Intensity ratio
Tonnes CO2e per employees
113.30
Quantification and reporting methodology

The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting

Intensity measurement
Measures taken to improve energy efficiency

Estimated Solar savings for full year installation - 2022 Usage

Solar Savings

kWh Produced

-

67,440

Energy conversion factors

 

 

0.392

 

 

 

 

 

 

Total gross solar produced in metric tonnes CO2e

- 26,436

 

 

 

 

 

 

 

Net Total gross Emissions in KG's of CO2e 18,381

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

 

Going concern

The financial statements have been drawn up on going concern basis since the directors are satisfied the Companies equity position remains stable.

AHMAD TEA (UK) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -

This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.

On behalf of the board
Dr E Afshar
Director
23 September 2024
AHMAD TEA (UK) LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -

The directors are responsible for preparing the strategic report, the directors’ report and the accounts in accordance with applicable law and regulations.

Company law requires the directors to prepare accounts for each financial year. Under that law the directors have elected to prepare the accounts 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 accounts 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 accounts, the directors are required to;

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

 

AHMAD TEA (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF AHMAD TEA (UK) LIMITED
- 8 -
Opinion

We have audited the financial statements of Ahmad Tea (UK) Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company 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:

Basis for opinion

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

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

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

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The Directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

AHMAD TEA (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF AHMAD TEA (UK) LIMITED
- 9 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of Directors

As explained more fully in the Directors' responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

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

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of UK regulatory principles, such as those governed by the relevant Hygiene Standards authorities within the UK. We also considered the laws and regulations which have a direct impact on the financial statements such as the Companies Act 2006.

We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to management bias in accounting estimates and judgemental areas of the financial statements.

Audit procedures performed by the audit engagement team included:

 

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, 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 deliberate concealment by, for example, forgery or intentional misrepresentations, or though collusion.

AHMAD TEA (UK) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF AHMAD TEA (UK) LIMITED
- 10 -

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

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

Angela Trainor (Senior Statutory Auditor)
For and on behalf of HJS Accountants Limited
23 September 2024
Chartered Accountants and Statutory Auditor
Tagus House
9 Ocean Way
Southampton
Hampshire
United Kingdom
SO14 3TJ
AHMAD TEA (UK) LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
Notes
$
$
Turnover
3
151,947,661
154,070,319
Cost of sales
(112,992,186)
(115,193,224)
Gross profit
38,955,475
38,877,095
Administrative expenses
(28,753,605)
(22,778,445)
Other operating income
70,146
1,555,355
Operating profit
4
10,272,016
17,654,005
Share of profits of associates and joint ventures
34,930
1,449,988
Interest receivable and similar income
7
20,862
33,461
Interest payable and similar expenses
8
(329,138)
(371,639)
Profit before taxation
9,998,670
18,765,815
Tax on profit
9
(591,275)
(401,788)
Profit for the financial year
9,407,395
18,364,027
Profit for the financial year is all attributable to the owners of the parent company.
Total comprehensive income for the year is all attributable to the owners of the parent company.

The profit and loss account has been prepared on the basis that all operations are continuing operations.

AHMAD TEA (UK) LIMITED
GROUP BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 12 -
2023
2022
Notes
$
$
$
$
Fixed assets
Negative goodwill
11
(1,143,709)
(572,332)
Other intangible assets
11
23,467
20,104
Total intangible assets
(1,120,242)
(552,228)
Tangible assets
12
27,895,243
30,356,242
Investment property
13
15,422,236
15,422,236
Investments
14
8,173,303
7,346,447
50,370,540
52,572,697
Current assets
Stocks
18
41,459,038
35,410,825
Debtors
19
32,398,121
33,608,014
Investments
20
1,119,808
1,086,551
Cash at bank and in hand
9,380,635
16,783,560
84,357,602
86,888,950
Creditors: amounts falling due within one year
21
(14,303,105)
(21,569,266)
Net current assets
70,054,497
65,319,684
Total assets less current liabilities
120,425,037
117,892,381
Creditors: amounts falling due after more than one year
22
(47,799,700)
(53,998,777)
Provisions for liabilities
Provisions
24
934,716
788,499
Deferred tax liability
25
38,067
19,272
(972,783)
(807,771)
Net assets
71,652,554
63,085,833
Capital and reserves
Called up share capital
27
155,842
155,842
Capital redemption reserve
352,000
352,000
Profit and loss reserves
71,144,712
62,577,991
Total equity
71,652,554
63,085,833
AHMAD TEA (UK) LIMITED
GROUP BALANCE SHEET (CONTINUED)
AS AT
31 DECEMBER 2023
31 December 2023
- 13 -
The financial statements were approved by the board of directors and authorised for issue on 23 September 2024 and are signed on its behalf by:
Dr E Afshar
Director
Company registration number 08807852 (England and Wales)
AHMAD TEA (UK) LIMITED
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023
- 14 -
2023
2022
Notes
$
$
$
$
Fixed assets
Investments
14
12,285,492
12,321,170
Current assets
Debtors
19
8,458,033
3,316,072
Cash at bank and in hand
24,053
130,777
8,482,086
3,446,849
Creditors: amounts falling due within one year
21
(3,036)
(242,643)
Net current assets
8,479,050
3,204,206
Total assets less current liabilities
20,764,542
15,525,376
Creditors: amounts falling due after more than one year
22
(10,868,373)
(9,615,255)
Net assets
9,896,169
5,910,121
Capital and reserves
Called up share capital
27
155,842
155,842
Profit and loss reserves
9,740,327
5,754,279
Total equity
9,896,169
5,910,121
AHMAD TEA (UK) LIMITED
COMPANY BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2023
- 15 -

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was $4,826,721 (2022 - $45,534 profit).

The financial statements were approved by the board of directors and authorised for issue on 23 September 2024 and are signed on its behalf by:
Dr E Afshar
Director
Company registration number 08807852 (England and Wales)
AHMAD TEA (UK) LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
Notes
$
$
$
$
Balance at 1 January 2022
206,400
352,000
45,125,332
45,683,732
Year ended 31 December 2022:
Profit and total comprehensive income
-
-
18,364,027
18,364,027
Dividends
10
-
-
(1,500,000)
(1,500,000)
Transfers
-
-
588,632
588,632
Other movements
(50,558)
-
-
(50,558)
Balance at 31 December 2022
155,842
352,000
62,577,991
63,085,833
Year ended 31 December 2023:
Profit and total comprehensive income
-
-
9,407,395
9,407,395
Dividends
10
-
-
(2,276,524)
(2,276,524)
Transfers
-
-
1,435,850
1,435,850
Balance at 31 December 2023
155,842
352,000
71,144,712
71,652,554
AHMAD TEA (UK) LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
Share capital
Profit and loss reserves
Total
Notes
$
$
$
Balance at 1 January 2022
206,400
6,620,113
6,826,513
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
45,534
45,534
Dividends
10
-
(1,500,000)
(1,500,000)
Transfers
-
588,632
588,632
Other movements
(50,558)
-
(50,558)
Balance at 31 December 2022
155,842
5,754,279
5,910,121
Year ended 31 December 2023:
Profit and total comprehensive income
-
4,826,722
4,826,722
Dividends
10
-
(2,276,524)
(2,276,524)
Transfers
-
1,435,850
1,435,850
Balance at 31 December 2023
155,842
9,740,327
9,896,169
AHMAD TEA (UK) LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
2023
2022
Notes
$
$
$
$
Cash flows from operating activities
Cash (absorbed by)/generated from operations
33
(1,088,701)
11,555,358
Interest paid
(329,138)
(371,639)
Income taxes (paid)/refunded
(437,382)
199,776
Net cash (outflow)/inflow from operating activities
(1,855,221)
11,383,495
Investing activities
Purchase of intangible assets
853,606
-
Purchase of tangible fixed assets
(881,471)
(2,880,091)
Proceeds from disposal of tangible fixed assets
99,267
-
Proceeds from disposal of associates
97,085
-
Proceeds from disposal of investments
(922,268)
(1,332,039)
Repayment of loans
-
1,552,155
Interest received
20,862
33,461
Net cash used in investing activities
(732,919)
(2,626,514)
Financing activities
Repayment of borrowings
(3,973,068)
409,593
Repayment of bank loans
-
(2,819,950)
Dividends paid to equity shareholders
(2,276,524)
(1,500,000)
Net cash used in financing activities
(6,249,592)
(3,910,357)
Net (decrease)/increase in cash and cash equivalents
(8,837,732)
4,846,624
Cash and cash equivalents at beginning of year
16,779,611
11,394,913
Effect of foreign exchange rates
1,435,850
538,074
Cash and cash equivalents at end of year
9,377,729
16,779,611
Relating to:
Cash at bank and in hand
9,380,635
16,783,560
Bank overdrafts included in creditors payable within one year
(2,906)
(3,949)
AHMAD TEA (UK) LIMITED
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
2023
2022
Notes
$
$
$
$
Cash flows from operating activities
Cash absorbed by operations
34
(5,443,608)
(8,677,347)
Income taxes paid
(3,170)
(6,473)
Net cash outflow from operating activities
(5,446,778)
(8,683,820)
Investing activities
Proceeds from disposal of associates
35,678
-
0
Dividends received
4,891,932
29,054
Net cash generated from investing activities
4,927,610
29,054
Financing activities
Repayment of borrowings
1,253,118
9,615,255
Dividends paid to equity shareholders
(2,276,524)
(1,500,000)
Net cash (used in)/generated from financing activities
(1,023,406)
8,115,255
Net decrease in cash and cash equivalents
(1,542,574)
(539,511)
Cash and cash equivalents at beginning of year
130,777
132,214
Effect of foreign exchange rates
1,435,850
538,074
Cash and cash equivalents at end of year
24,053
130,777
AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
1
Accounting policies
Company information

Ahmad Tea (UK) Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Ahmad Tea Estate, Winchester Road, Chandler's Ford, Eastleigh, Hampshire, SO53 2PZ.

 

The group consists of Ahmad Tea (UK) Limited and all of its subsidiaries.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in US Dollars, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest $. A closing rate of 1.27356 dollars for each pound has been used with and average rate of 1.24791 dollars for each pound used where required.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

1.2
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company Ahmad Tea (UK) Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

 

All financial statements are made up to 31 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.

AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 21 -

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. In the group financial statements, joint ventures are accounted for using the equity method. Under this method an equity investment is initially recognised at the transaction price (including transaction costs) and is subsequently adjusted to reflect the investor's share of the profit or loss, other comprehensive income and equity of the joint venture. The consolidated profit and loss includes the groups share of the post-tax results and the consolidated balance sheet includeds the groups share of the identifiable net assets.

1.4
Going concern

At the time of approving the financial statements, the Directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the Directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Company

 

The Company has a sterling denominated debt to its UK subsidiary for the US$ equivalent of $9,770,213 (2022: $9,615,255) at the balance sheet date which creates a net current liability position. This debt is interest-free and repayable on demand, and is eliminated on consolidation. Although the Company does not have the resources to pay this debt, the directors have confirmed that there is no intention to seek settlement in the foreseeable future. Accordingly, no going concern risk to the Company regarding this debt is considered to exist.

 

Group

 

The financial statements have been drawn up on a going concern basis since the directors are satisfied that the Group’s equity position remains sound and that this tea supplier will continue to give the financial support necessary.

 

The directors acknowledge that given the currently rapidly changing business and social environment. There are likely to be significant unknown factors which may present themselves.

 

The financial statements have been drawn up on a going concern basis since the directors are satisfied that the Groups’ equity position remains stable.

1.5
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

 

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 22 -
1.6
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business 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 5 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.

1.7
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Software
15 years
1.8
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Freehold land and buildings
2% staight line
Plant and machinery
over the lease term
Fixtures and fittings
between 15% reducing balance and 20% straight line

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

1.9
Investment property

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 23 -
1.10
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

 

Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.

 

Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.

 

In the parent company financial statements, investments in associates are accounted for at cost less impairment.

Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

1.11
Impairment of fixed assets

At each reporting period end date, the group 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.

 

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 24 -

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.12
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

 

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

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

1.13
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.14
Financial instruments

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

 

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

 

Financial assets and liabilities are offset and 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 debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

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

AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 25 -
Impairment of financial assets

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

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

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

Basic financial liabilities

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

 

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

 

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

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 26 -
Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.15
Equity instruments

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

1.16
Derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

 

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.

1.17
Taxation

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

Current tax

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

Deferred tax

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

 

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

1.18
Provisions

Provisions are recognised when the group has a legal or constructive present obligation as a result of a past event, it is probable that the group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

 

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 27 -
1.19
Employee benefits

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

 

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

 

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

1.20
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.21
Leases

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

1.22
Foreign exchange

Transactions in currencies other than US dollars are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.

1.23

End-of-service gratuities

Provision is made for end-of-service gratuities that have accrued to staff at the balance sheet date in accordance with local labour laws in an overseas territory. In accordance with section 4.7 of FRS 102, the amount so accrued is recorded as a liability falling due within one year.

AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 28 -
2
Judgements and key sources of estimation uncertainty

In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Critical judgements
Impairment of investments in joint ventures

Due to the events of February 2022, an impairment review has been conducted by the directors on Group investments in both Russia and the Ukraine.

 

The position remains similar inFY2023

Kazakhstan – Operations through the Kazakhstan company ceased throughout 2020 and the investment has divested throughout 2022.

These operations are kept under close review and assessed according to their improvement or deterioration in operating conditions

 

 

Treatment of joint ventures

Despite owning shareholdings in excess of 50% in the investments of Ahmad Tea Factory LLC, Premium Production LLC and Ahmad Tea (Nanchang) these have been accounted for in line with the treatment for joint ventures for the following reasons:

 

 

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.

Depreciation of tangible fixed assets

Tangible fixed assets other than freehold land are depreciated over their economic useful lives taking into account local factors affecting operating longevity and residual values where appropriate. The actual lives of the assets and the residual values, particularly in overseas territories, are considered annually by the directors and may vary depending upon a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of assets and expected disposal values.

Provision for doubtful debts

The directors consider that a general provision against trade debtors is required because of the inherent risks in the geographical spread of its customers. This provision is currently set at 3.5% of trade debts due from customers (excluding related parties).

3
Turnover and other revenue

An analysis of the group's turnover is as follows:

AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Turnover and other revenue
(Continued)
- 29 -
2023
2022
$
$
Turnover analysed by geographical market
UK
5,383,275
4,051,629
Europe
70,888,055
63,438,013
Asia, far east and Australia
55,316,726
62,479,894
North America
14,949,029
15,719,402
Rest of world
5,410,576
8,381,381
151,947,661
154,070,319
2023
2022
$
$
Other revenue
Interest income
20,862
33,461
4
Operating profit
2023
2022
$
$
Operating profit for the year is stated after charging/(crediting):
Exchange losses/(gains)
2,270,342
(443,118)
Depreciation of owned tangible fixed assets
3,259,916
2,995,128
Profit on disposal of tangible fixed assets
(16,713)
-
Amortisation of intangible assets
574
-
Release of negative goodwill
(286,166)
(286,166)
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
$
$
For audit services
Audit of the financial statements of the group and company
44,458
36,988
Audit of the financial statements of the company's subsidiaries
7,799
7,706
52,257
44,694
AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 30 -
6
Employees

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

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Administration
198
139
-
-
Manufacturing
224
224
-
-
Total
422
363
-
0
-
0

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
$
$
$
$
Wages and salaries
10,167,107
9,131,606
-
0
-
0
Social security costs
399,980
383,832
-
-
Pension costs
445,958
193,667
-
0
-
0
11,013,045
9,709,105
-
0
-
0
7
Interest receivable and similar income
2023
2022
$
$
Interest income
Interest on bank deposits
20,862
33,461
2023
2022
Investment income includes the following:
$
$
Interest on financial assets not measured at fair value through profit or loss
20,862
33,461
8
Interest payable and similar expenses
2023
2022
$
$
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
329,138
371,639
AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 31 -
9
Taxation
2023
2022
$
$
Current tax
UK corporation tax on profits for the current period
572,714
420,097
Adjustments in respect of prior periods
-
0
(6,448)
Total UK current tax
572,714
413,649
Foreign current tax on profits for the current period
-
0
2,258
Total current tax
572,714
415,907
Deferred tax
Origination and reversal of timing differences
18,561
(14,119)
Total tax charge
591,275
401,788

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

2023
2022
$
$
Profit before taxation
9,998,670
18,765,815
Expected tax charge based on the standard rate of corporation tax in the UK of 23.50% (2022: 19.00%)
2,349,687
3,565,505
Tax effect of expenses that are not deductible in determining taxable profit
129,219
18,141
Tax effect of income not taxable in determining taxable profit
(40,695)
(83,358)
Under/(over) provided in prior years
-
0
(6,448)
Foreign exchange differences
(9,659)
(84,192)
Profits of overseas subsidiary not taxable
(1,705,311)
(2,696,643)
Elimination of Intercompany profits in stock
(123,758)
(58,785)
Group share of profits in joint ventures
(8,208)
(252,432)
Taxation charge
591,275
401,788
10
Dividends
2023
2022
Recognised as distributions to equity holders:
$
$
Final paid
2,276,524
1,500,000
AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 32 -
11
Intangible fixed assets
Group
Negative goodwill
Software
Total
$
$
$
Cost
At 1 January 2023
(1,430,830)
20,104
(1,410,726)
Additions
(857,543)
3,937
(853,606)
At 31 December 2023
(2,288,373)
24,041
(2,264,332)
Amortisation and impairment
At 1 January 2023
(858,498)
-
0
(858,498)
Amortisation charged for the year
(286,166)
574
(285,592)
At 31 December 2023
(1,144,664)
574
(1,144,090)
Carrying amount
At 31 December 2023
(1,143,709)
23,467
(1,120,242)
At 31 December 2022
(572,332)
20,104
(552,228)
The company had no intangible fixed assets at 31 December 2023 or 31 December 2022.
12
Tangible fixed assets
Group
Freehold land and buildings
Plant and machinery
Fixtures and fittings
Total
$
$
$
$
Cost
At 1 January 2023
21,531,680
34,457,195
4,912,931
60,901,806
Additions
-
0
723,085
158,386
881,471
Disposals
-
0
(10,702)
(239,842)
(250,544)
At 31 December 2023
21,531,680
35,169,578
4,831,475
61,532,733
Depreciation and impairment
At 1 January 2023
7,070,574
19,573,798
3,901,192
30,545,564
Depreciation charged in the year
614,981
2,548,745
96,190
3,259,916
Eliminated in respect of disposals
-
0
(10,702)
(157,288)
(167,990)
At 31 December 2023
7,685,555
22,111,841
3,840,094
33,637,490
Carrying amount
At 31 December 2023
13,846,125
13,057,737
991,381
27,895,243
At 31 December 2022
14,461,106
14,883,397
1,011,739
30,356,242
The company had no tangible fixed assets at 31 December 2023 or 31 December 2022.
AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 33 -
13
Investment property
Group
Company
2023
2023
$
$
Fair value
At 1 January 2023 and 31 December 2023
15,422,236
-

Investment properties have been valued by the Directors at the year end based on valuations carried out post year end.

14
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
$
$
$
$
Investments in subsidiaries
15
-
0
-
0
5,746,919
5,746,919
Investments in associates
-
0
97,085
-
0
35,678
Investments in joint ventures
16
7,003,712
6,968,782
6,538,573
6,538,573
Unlisted investments
1,169,591
280,580
-
0
-
0
8,173,303
7,346,447
12,285,492
12,321,170
Movements in fixed asset investments
Group
Shares in associates and joint ventures
Other investments
Total
$
$
$
Cost or valuation
At 1 January 2023
7,065,867
280,580
7,346,447
Additions
-
889,011
889,011
Share of profits
34,930
-
34,930
Disposals
(97,085)
-
(97,085)
At 31 December 2023
7,003,712
1,169,591
8,173,303
Carrying amount
At 31 December 2023
7,003,712
1,169,591
8,173,303
At 31 December 2022
7,065,867
280,580
7,346,447

On the 20th December 2022 the company disposed of it's interest in the associate of SDC Ecom Central Asia.

AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
14
Fixed asset investments
(Continued)
- 34 -
Movements in fixed asset investments
Company
Shares in subsidiaries, associates and joint ventures
$
Cost or valuation
At 1 January 2023
12,321,170
Disposals
(35,678)
At 31 December 2023
12,285,492
Carrying amount
At 31 December 2023
12,285,492
At 31 December 2022
12,321,170
15
Subsidiaries
Name of undertaking
Address
Class of
% Held
shares held
Direct
Indirect
Ahmad Tea FZ LLC
1
Ordinary shares
99.00
-
Ahmad Tea Limited
2
Ordinary shares
100.00
-
Ahmad Tea Cay ithalat Ve Ticaret Limited Sirketi
3
Ordinary shares
100.00
-
Ahmad Tea CIS LLC
4
Ordinary shares
-
100.00
Ahmad Tea Investments FZ LLC
1
Ordinary shares
100.00
-
Ahmad Tea USA 2 Corp
5
Ordinary shares
100.00
-
Ahmad Tea's Ukrainian Tea
6
Ordinary shares
100.00
-

Registered office addresses (all UK unless otherwise indicated):

1
PO Box 35730 - Ras al Khaimah - United Arab Emirates
2
Ahmad Tea Estate, Winchester Road, Eastleigh, SO53 2PZ
3
Saray Mah. Dr.Adnan Buyukdeniz cad. Cessas PlazaSi.2.Blok No:4/41 Umraniye, Istanbul
4
8, Fabrichnaya St., build. 3, Ptitsefabriki settlement, Mytishchinsky District, Moscow Region,141051
5
444 W Pasadena Blvd., Ste B, Deer Park, TX 77536
6
61172, Kharkiv, Rohanska St. 165
16
Joint ventures

Details of joint ventures at 31 December 2023 are as follows:

AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
16
Joint ventures
(Continued)
- 35 -
Name of undertaking
Registered office
Interest
% Held
held
Direct
Ahmad Tea Factory LLC
8, Fabrichnaya St., build. 3, Ptitsefabriki settlement, Mytishchinsky District, Moscow Region,141051
Ordinary Shares
60.00
Premium Production LLC
8, Fabrichnaya St., build. 3, Ptitsefabriki settlement, Mytishchinsky District, Moscow Region,141051
Ordinary Shares
0
Ahmad Tea (Nanchang)
No. 81 Xingye Avenue, Changleng Foreign Invt Ind Park, Xinjian County, Nanchang, Jiangxi 330100
Ordinary Shares
75.00
-
17
Financial instruments
Group
Company
2023
2022
2023
2022
$
$
$
$
Carrying amount of financial assets
Debt instruments measured at amortised cost
31,098,197
32,663,381
8,458,033
3,316,072
Carrying amount of financial liabilities
Measured at amortised cost
61,429,618
75,126,328
3,036
242,643
18
Stocks
Group
Company
2023
2022
2023
2022
$
$
$
$
Raw materials and consumables
29,189,991
23,783,527
-
-
Work in progress
800,970
969,752
-
-
Finished goods and goods for resale
11,468,077
10,657,546
-
0
-
0
41,459,038
35,410,825
-
-
AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 36 -
19
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
$
$
$
$
Trade debtors
27,070,605
31,680,141
-
0
-
0
Amounts owed by group undertakings
2,437,196
295,901
7,948,363
3,316,072
Other debtors
1,590,396
687,339
509,670
-
0
Prepayments and accrued income
1,299,571
944,633
-
0
-
0
32,397,768
33,608,014
8,458,033
3,316,072
Amounts falling due after more than one year:
Deferred tax asset (note 25)
353
-
0
-
0
-
0
Total debtors
32,398,121
33,608,014
8,458,033
3,316,072
20
Current asset investments
Group
Company
2023
2022
2023
2022
$
$
$
$
Unlisted investments
1,119,808
1,086,551
-
-
21
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
$
$
$
$
Bank loans and overdrafts
23
2,906
3,949
-
0
-
0
Payments received on account
4,966,095
8,449,678
-
0
-
0
Trade creditors
4,578,977
9,285,456
3,036
3,690
Amounts owed to group undertakings
252,037
80,752
-
0
-
0
Corporation tax payable
555,550
420,099
-
0
-
0
Other taxation and social security
117,637
21,616
-
-
Other creditors
8,900
76,319
-
0
-
0
Accruals and deferred income
3,821,003
3,231,397
-
0
238,953
14,303,105
21,569,266
3,036
242,643
AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 37 -
22
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
$
$
$
$
Other borrowings
23
8,060,498
12,033,566
10,868,373
9,615,255
Trade creditors
36,140,565
41,965,211
-
0
-
0
Other creditors
3,598,637
-
0
-
0
-
0
47,799,700
53,998,777
10,868,373
9,615,255
23
Loans and overdrafts
Group
Company
2023
2022
2023
2022
$
$
$
$
Bank overdrafts
2,906
3,949
-
0
-
0
Loans from group undertakings
-
0
-
0
10,868,373
9,615,255
Other loans
8,060,498
12,033,566
-
0
-
0
8,063,404
12,037,515
10,868,373
9,615,255
Payable within one year
2,906
3,949
-
0
-
0
Payable after one year
8,060,498
12,033,566
10,868,373
9,615,255
24
Provisions for liabilities
Group
Company
2023
2022
2023
2022
$
$
$
$
Provisions
934,716
788,499
-
-
Movements on provisions:
Provisions
Group
$
Additional provisions in the year
934,716
AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 38 -
25
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Group
$
$
$
$
Accelerated capital allowances
38,067
19,272
353
-
The company has no deferred tax assets or liabilities.
There were no deferred tax movements in the year.

The current rate of tax in the UK is 19%. At the budget on 3 March it was announced that the rate would increase to 25% from 1 April 2023. This was substantially enacted in the Finance Act 2021 on 10 June 2021. The deferred tax has been calculated at 19% on the basis it is expected to clear before the new rate comes into force.

 

The general provision for doubtful debts is not deductible for tax purposes, thereby creating a deferred asset.

26
Retirement benefit schemes
2023
2022
Defined contribution schemes
$
$
Charge to profit or loss in respect of defined contribution schemes
445,958
193,667

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

27
Share capital
Group and company
2023
2022
Ordinary share capital
$
$
Issued and fully paid
129,000 Ordinary of £1 each
155,842
155,842
28
Financial commitments, guarantees and contingent liabilities
Group
2023
2022
$
$
Bank letters of payment guarantees
-
217,686
The payment guarantees are issued to Dubai Customs.
AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 39 -
29
Operating lease commitments

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

Group
Company
2023
2022
2023
2022
$
$
$
$
Within one year
446,534
420,256
-
-
Between two and five years
2,400,411
2,315,543
-
-
In over five years
3,091,405
3,571,488
-
-
5,938,350
6,307,287
-
-
30
Related party transactions
Transactions with related parties

The company has taken advantage of the exemption available under FRS 102 paragraph 33.1a whereby it has not disclosed transactions with any wholly owned subsidiary undertaking of the group.

31
Events after the reporting date

2024 revenue is forecast to return a 9% increase over the 2023 figures, with these returns being fully realised throughout the first half of 2024. Although inflation rates have generally stabilised, Freight rates have remained high throughout 2024 as expected and customer lead times continued to be impacted by the restrictions to shipping routes. It is forecast that this trend will continue into 2025. The company remains committed to ensuring the very highest level of quality of product and operating procedures

 

 

Markets

2024 Revenue is forecast to see a 9% increase over the 2023 results. Ahmad Tea continues to accelerate direct-to-customer sales and online capabilities in partnership with local distributors.

 

 

Future

The Charitable, Social and environmental ethos remains at the very core of all of the company’s plans. With particular progress made in the removal of plastic packaging, waste management and a circular supply chain

 

 

32
Controlling party

The ultimate control persons are the Afshar family.

AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 40 -
33
Cash (absorbed by)/generated from group operations
2023
2022
$
$
Profit for the year after tax
9,407,395
18,364,027
Adjustments for:
Share of results of associates and joint ventures
(34,930)
(1,449,988)
Taxation charged
591,275
401,788
Finance costs
329,138
371,639
Investment income
(20,862)
(33,461)
Gain on disposal of tangible fixed assets
(16,713)
-
Amortisation and impairment of intangible assets
(285,592)
(286,166)
Depreciation and impairment of tangible fixed assets
3,259,916
2,995,128
Increase in provisions
146,217
58,738
Movements in working capital:
Increase in stocks
(6,048,213)
(4,260,962)
Decrease/(increase) in debtors
1,210,246
(2,551,952)
Decrease in creditors
(9,626,578)
(2,053,433)
Cash (absorbed by)/generated from operations
(1,088,701)
11,555,358
34
Cash absorbed by operations - company
2023
2022
$
$
Profit for the year after tax
4,826,722
45,534
Adjustments for:
Taxation charged
3,170
-
0
Investment income
(4,891,932)
(29,054)
Movements in working capital:
Increase in debtors
(5,141,961)
(2,164,895)
Decrease in creditors
(239,607)
(6,528,932)
Cash absorbed by operations
(5,443,608)
(8,677,347)
AHMAD TEA (UK) LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 41 -
35
Analysis of changes in net funds - group
1 January 2023
Cash flows
Exchange rate movements
31 December 2023
$
$
$
$
Cash at bank and in hand
16,783,560
(8,838,775)
1,435,850
9,380,635
Bank overdrafts
(3,949)
1,043
-
(2,906)
16,779,611
(8,837,732)
1,435,850
9,377,729
Borrowings excluding overdrafts
(12,033,566)
3,973,068
-
(8,060,498)
4,746,045
(4,864,664)
1,435,850
1,317,231
36
Analysis of changes in net debt - company
1 January 2023
Cash flows
Exchange rate movements
31 December 2023
$
$
$
$
Cash at bank and in hand
130,777
(1,542,574)
1,435,850
24,053
Borrowings excluding overdrafts
(9,615,255)
(1,253,118)
-
(10,868,373)
(9,484,478)
(2,795,692)
1,435,850
(10,844,320)
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