The directors present the strategic report for the year ended 31 December 2023.
At MYEE group, our strategic business statement encapsulates our commitment to excellence, innovation, and responsibility within the vaping industry. As a leading player in the market, we aim to deliver exceptional products prioritising the development and distribution of high-quality vaping products that meet the diverse needs and preferences of our customers. From e-liquids to devices, our offerings are crafted with precision and innovation, ensuring a satisfying vaping experience.
Our success is built on strong partnerships with suppliers, retailers, and customers alike. We prioritise transparent communication, mutual respect, and collaboration, fostering long-term relationships that drive mutual growth and prosperity. Innovation is at the core of our business ethos.
We adhere to the highest ethical and regulatory standards, ensuring full compliance with industry regulations and requirements. Integrity and accountability are central to everything we do, earning the trust and confidence of our customers and partners. While maintaining a strong presence in our core markets, we actively seek opportunities for expansion and growth. Through strategic partnerships, market research, and innovative marketing initiatives, we aim to reach new customers and territories, solidifying our position as a global leader in the vaping industry.
In summary, our strategic business statement reflects our unwavering commitment to excellence, innovation, responsibility, and customer-centricity. By staying true to these principles, we aim to drive sustainable growth, create value for all stakeholders, and make a positive impact on the vaping industry and beyond.
MYEE group encounters various significant risks and uncertainties that could influence its operations and success. These include regulatory compliance, where changes in vaping regulations present legal and financial risks. Additionally, intense competition may undermine MYEE group market position. Ensuring product safety and quality is vital for maintaining customer trust, while disruptions in the global supply chain can result in production delays and increased costs. MYEE group closely monitors currency exchanges, as fluctuations and economic instability can impact financial performance. Moreover, cybersecurity poses a new threat, with data breaches and cyberattacks posing risks to sensitive customer data and internal systems. To address these challenges while remaining true to its core values and objectives, MYEE group implements effective risk management strategies and contingency plans.
In 2023, MYEE group experienced significant development and performance across various aspects of its operations, culminating in a strong position by the year's end.
MYEE group demonstrated robust financial performance throughout 2023, with notable growth in revenue and profitability. This success can be attributed to strategic pricing strategies, effective cost management initiatives, and successful product launches. MYEE group expanded its market presence both domestically and internationally during the year. The company successfully penetrated new geographic regions, tapping into previously untapped markets, and diversifying its customer base. Innovation remained a key focus for MYEE group in 2023. The company introduced several new products to cater to evolving consumer preferences. This commitment to innovation helped MYEE group stay ahead of competitors and maintain its position as a market leader. MYEE group navigated evolving regulatory landscapes effectively, ensuring compliance with all relevant vaping regulations. Proactive measures were taken to address any regulatory changes, mitigating potential risks to the business and maintaining operational continuity.
MYEE group optimized its supply chain management processes to enhance efficiency and resilience. Strategic partnerships were forged with key suppliers, ensuring a stable and reliable supply of raw materials and components despite global supply chain disruptions. The company continued to prioritise building and safeguarding its brand reputation in 2023/24 MYEE group's commitment to product quality, customer satisfaction, and corporate responsibility enhanced its brand image and fostered greater consumer trust and loyalty.
MYEE group invested in its workforce throughout the year, focusing on employee development, training, and well-being initiatives. A motivated and skilled workforce contributed significantly to the company's overall performance and success. MYEE group remained actively engaged with its local communities through various corporate social responsibility initiatives. These efforts not only strengthened the company's ties with its communities but also contributed to its positive brand perception.
Overall, the year 2023 was marked by significant growth, innovation, and strategic advancement for MYEE group. The company's strong financial performance, expanding market presence, commitment to product excellence, regulatory compliance, supply chain resilience, brand reputation, employee engagement, and community involvement position it favourably for continued success in the future.
The group's key financial and other performance indicators during the period were:
2023 2022
Sales £154,336,933 £52,491,463
Gross margin 25.3% 20.0%
Profit before tax £23,115,066 £4,142,447
Overview of MYEE group
Emerging from humble beginnings in Northwest Bolton, Lancashire, MYEE group has evolved into one of the UK’s largest independent vape distributors, boasting a robust team of 200 professionals. With over 90 years of collective experience in wholesale and grocery, our team possess a proven track record in supplying leading multi-brands and OEM within the grocery and convenience sectors. We are pioneers in innovative display solutions and exhibit agility in introducing new product development to market swiftly.
As master distributors for numerous prominent vape brands, MYEE group ensures direct supply routes and unwavering commitment to excellence. Operating from distribution centres and offices in Bolton and Peterborough, MYEE group manufacture in ISO clean rooms, ensuring unparalleled product quality and safety. Renowned as the premier vape company in the FMCG market.
Additionally, our retail arm comprises of 27 stores under the Ecig Wizard brand, allowing us to cater to diverse channels and routes to market comprehensively. MYEE group stands as a testament to relentless innovation, unwavering commitment to quality, and steadfast dedication to meeting the needs of our valued customers.
MYEE group Directors have guided the company in 2023 towards actions aimed at sustained success, prioritising stakeholders' interests such as staff, retailers, distributors, and consumers. MYEE group operate transparently within a framework outlining our responsibilities and undergo continuous training to meet regulatory obligations, including S172 compliance.
In our decision-making roles, Directors prioritise actions benefiting MYEE group's success, with a focus on consumers and employees. Key considerations include:
Pursuing strategies for long-term viability amid market dynamics and regulatory changes.
Ensuring product accessibility across diverse retail platforms, with a presence in approximately 15,000 UK touchpoints.
Advocating vaping as a safer alternative to smoking, reducing strain on healthcare systems.
Conducting awareness campaigns to educate smokers and dispel misinformation.
Upholding industry-leading quality standards and fostering sector growth.
Combatting misinformation about vaping's health implications and seeking support from the public health community for harm reduction.
Employee-Centric Approach
MYEE group values its employees as crucial to its success. Directors recognise the importance of employees in achieving strategic goals. They assess decisions' implications on employees and prioritise fair treatment, diversity, safety, and workplace environment. Directors engage with employees through surveys and direct interactions to understand their needs and concerns.
ISO45001 Certification
We're proud of our safe and healthy work environment. This certification reduces accidents and promotes employee well-being. MYEE group actively involves employees in product testing and decision-making processes to ensure their voices are heard and valued.
Suppliers
Suppliers are vital to maintaining our product quality and ethical standards. Our engagement methods include. Regular meetings between MYEE group's global buying function and category leaders ensure effective communication. Participation in trade fairs and factory visits/audits in China, Europe, and the UK facilitate supplier assessment. Some audits are conducted by third-party entities to ensure impartial assessments and supply chain integrity. MYEE group values strong partnerships with suppliers, fostering lasting relationships and securing Master Distributor status with many.
Environment
MYEE group prioritises environmental responsibility and has obtained ISO 14001 certification for its environmental management system. This certification demonstrates MYEE group's commitment to environmental responsibility, enhancing its image as a socially and environmentally conscious business. MYEE group ensures awareness and compliance with environmental laws and regulations, reducing the risk of legal issues and penalties. We identify opportunities for efficiency improvement, waste reduction, and resource conservation, leading to cost savings in energy, materials, and waste management.
MYEE group acknowledges its impact on the community and actively engages in initiatives for its betterment. We encourage diversity by welcoming individuals from all backgrounds, ages, nationalities, and abilities. We actively support local and national charities, football teams, and community events. Our alignment with community values ensures business practices align with the values and needs of the community, fostering positive relationships. MYEE group's commitment to environmental responsibility and community engagement reflects its dedication to sustainable and responsible business practices.
Manufacturing
MYEE group adheres to CLP (Classification, Labelling, and Packaging) regulations, ensuring safety and compliance for vape products. Key points include Chemical Classification, Labelling Requirements, Packaging and Notification Requirements. Staying informed about regional regulations is vital to ensure safety and legal compliance. Adhering to CLP and local requirements safeguards users and prevents market restrictions. MYEE group proudly holds ISO17025 approval at our Peterborough bottling plant. This international standard ensures competence in testing an calibration laboratories, offering several benefits: Quality assurance, Compliance, Competitive advantage, Risk management, Global recognition, Customer confidence, Efficiency and Effectiveness. Adapting ISO17025 principles to our unique needs, is crucial for enhancing quality, reliability, and efficiency in our operations.
Commitment to Ethical Business Conduct
MYEE group is dedicated to upholding the highest standards of business conduct, emphasising integrity, transparency, and ethical behaviour. Key points include Core Values, Corporate Philosophy, Ethical Guidelines, Code of Conduct, Training and Communication.
MYEE group is a proud member of UKVIA, Britain’s leading trade association for the vaping sector. UKVIA represents the dynamic vaping industry, advocating for evidence-based public health benefits.
MYEE group products are regulated by the MHRA (Medicines and Healthcare Regulatory Agency), ensuring safety and quality. Key points include Regulatory Compliance, Product Authorisation, Consumer Safety, Marketing and Advertising and Post Market Surveillance. Compliance with MHRA regulations is crucial for legal operation and consumer trust. Non compliance can lead to fines, recalls, or legal consequences, highlighting the commitment to product safety and quality.
MYEE group partners with Arcus Compliance to navigate evolving regulations and enhance efficiency, allowing internal teams to focus on complex tasks. Arcus provides tools, resources, and product stewardship support, ensuring regulatory compliance and operational effectiveness.
Reputation
MYEE group prioritises transparency to uphold high business conduct standards. We provide accurate and timely information to stakeholders, ensuring financial reporting adheres to the highest standards and promptly addressing concerns or queries. MYEE group is committed to corporate social responsibility and sustainability. We engage in environmentally friendly practices, support local communities, and contribute to charitable causes. By aligning with sustainable development goals, we aim to create a positive impact on society while enhancing our reputation as a responsible corporate citizen.
MYEE group maintains high business conduct standards through ongoing review and enhancement of policies, procedures, and practices. Internal and external audits ensure compliance exceeds expectations, reinforcing our commitment to excellence. In conclusion, MYEE group embraces Section 172 as a guiding principle for business conduct excellence. Our dedication to integrity and ethical behaviour extends beyond legal compliance, reflecting genuine concern for stakeholders and communities. We remain steadfast in upholding and enhancing our reputation, recognising it as essential for sustainable success in the ever-changing business environment. MYEE group prioritises fairness across all stakeholders, aligning with responsible governance and sustainable practices. Through our partnership with Citation, a legal consultancy with ISO27001 certification, we ensure expert support in HR and Health and Safety matters. We foster equity and equality among our diverse members, valuing their contributions. As stewards of shareholder interests, we uphold transparent communication and facilitate their participation in decision-making processes, ensuring fairness in corporate governance.
In conclusion, MYEE group's adherence to Section 172 underscores its commitment to fairness. By prioritising equality, transparency, and inclusivity, we create a corporate environment valuing the contributions of all members. MYEE group remains dedicated to fostering collaboration and promoting the well-being of shareholders, employees, and stakeholders.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 14.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
MYEE group has invested into ‘Big Puff’ vape technology which it recognises as a new emerging category. These TPD Compliant products offer the consumer a self-contained unit which has a large capacity giving anywhere between 2400 and 5000 puffs.
The following figures represent the UK operations of MYEE group for the year to 31st December 2023. They have been calculated by collating expense data and converting the collated data to kWh to C02e using the UK Government Greenhouse Gas (GHG) Conversion Factors for 2023.
2023
kWh C02e
Gas 41,281 8,057
Electricity 423,148 87,623
Total 464,429 95,680
Spar Tradeshow 25th April 2024
National Convenience Show – NEC Birmingham 30th April – 1st May 2024
Meet the Buyer 8th May 2024
Vaper Expo – NEC Birmingham 10th – 12th May 2024
Bargain Booze Tradeshow 15th May 2024
We build strong relationships with our suppliers to develop mutually beneficial and lasting partnerships. Engagement with suppliers is primarily through a series of interactions and formal reviews and we also host regular conferences to bring suppliers and customers together to discuss shared goals and build relationships. Key areas of focus include innovation, product development, health and safety and sustainability. The Board recognises that relationships with suppliers are important to the Group’s long-term success and is briefed on supplier feedback and issues on a regular basis.
We have managed to secure Master Distributor status with many of our suppliers ensuring direct supply routes and competitive pricing to support our consumer building strategy and relationships. We have won many supplier awards.
Our ambition is to deliver best-in-class service to our customers. We build strong lasting relationships and spend considerable time to understand their needs and views and listen to how we can improve our offer and service. We use this knowledge to inform our decision-making, for example to tailor our proposition to suit customer demands, with fixed range/fixed price models for small trade customers, and more flexible access to a wider product range with volume-related discounting in the Merchant businesses.
Aquavape's major clientele consists of prominent retailers in the UK, and these connections are strengthened by enduring, well-established relationships that are continuously fostered through ongoing engagement.
Our daily interactions with customers occur at various levels, often through face-to-face meetings, events, and exhibitions. These engagements serve to comprehend customer needs, gather feedback, and promote collaborative working practices. Conversations with our customers encompass topics such as brand and category strategy, as well as new product development. We diligently monitor daily like-for-like sales performance and Electronic Point of Sale (EPOS) data shared by customers, enabling us to initiate relevant and timely engagements based on this information.
We have audited the financial statements of Myee Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the group profit and loss account, 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 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the 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:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made.
we have not received all the information and explanations we require for our audit.
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 company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
The objectives of our audit, in respect to fraud, are: to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and its management.
Our approach was as follows:
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussion with the directors and other management (as required by auditing standards), and discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations;
We considered the legal and regulatory frameworks directly applicable to the financial statements reporting framework (FRS 102 and the Companies Act 2006) and the relevant tax compliance regulations in the UK;
We considered the nature of the industry, the control environment and business performance, including the key drivers for management’s remuneration;
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit;
We considered the procedures and controls that the company has established to address risks identified, or that otherwise prevent, deter and detect fraud; and how senior management monitors those programmes and controls.
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Where the risk was considered to be higher, we performed audit procedures to address each identified fraud risk. These procedures included: testing manual journals; reviewing the financial statement disclosures and testing to supporting documentation; performing analytical procedures; and enquiring of management, and were designed to provide reasonable assurance that the financial statements were free from fraud or error.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
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.
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 £2,699,555 (2022 - £3,931 loss).
Myee Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Lynstock House, Lynstock Way, Lostock, Bolton, England, BL6 4SA.
The group consists of Myee Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Myee 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.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
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.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
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.
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.
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.
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.
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.
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, 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, 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.
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.
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.
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, 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.
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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
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.
The tax expense represents the sum of the tax currently payable and deferred 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 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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss 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 leased asset are consumed.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Stocks carry an inherent risk factor relating to obsolescence, returns and warranties. Directors have provided for impairment over the year end stock balance based on historical data and/ or anticipated future effects based on the most relevant reliable information available to them.
Trade debtors carry an inherent risk factor related to recoverability. The directors have provided for a bad debt provision over the year end trade debtors balance based on their knowledge of the customer, past experience and the most relevant reliable information available to them.
The revenue and profit before taxation are attributable to the principle activities of the group.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
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:
Details of the company's subsidiaries at 31 December 2023 are as follows:
UK E-Labs Limited was exempt from requirements of an audit in accordance with Section 479A of the Companies Act 2006.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The reversal of deferred taxation timing differences is not expected to be significant in the forthcoming year.
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.
The share premium account is used to record the aggregate amount or value of premiums paid when the Company's shares are issued at an amount in excess of nominal value.
Merger reserve
The merger reserve represents the difference between the cost of investment and the fair value of consideration paid for business combinations.
Profit and loss reserve
The profit and loss account includes all retained profits of the Group.
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:
Summary of transactions with key management
During the year key management were loaned £5,750. At the balance sheet date the amount due from key management was £188,690 (2022 - £182,940). This loan is interest free. The directors and key management are the same.
Summary of transactions with related parties
During the year the group repaid £1,500,000 and loaned £2,500,000 to Dawood Holdings Limited. At the balance sheet date the group were owed from Dawood Holdings Limited £2,500,000 (2022 - group owed Dawood Holdings Limited £1,500,00) in the form of an interest free loan.
During the year the group repaid £276,000 to Makan Investments Limited. At the balance sheet date the group owed Makan Investments Limited £2,750,000 (2022 - £3,001,000) in the form of an interest free loan.
During the year the group repaid £786,210 to Northwold Investments Limited. At the balance sheet date the group owed Northwold Investments Limited £250,000 (£1,036,210) in the form of an interest free loan.