Company Registration No. 09427505 (England and Wales)
BURNING SKY LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
PM+M Solutions for Business LLP
Chartered Accountants
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
BURNING SKY LIMITED
COMPANY INFORMATION
Directors
Mr SJ Caunce
Mrs LJ Caunce
Company number
09427505
Registered office
Croston Hall
Grape Lane
Croston
PR26 9HB
Auditor
PM+M Solutions for Business LLP
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
BURNING SKY LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 7
Group profit and loss account
8
Group statement of comprehensive income
9
Group balance sheet
10 - 11
Company balance sheet
12
Group statement of changes in equity
13
Company statement of changes in equity
14
Group statement of cash flows
15
Notes to the financial statements
16 - 34
BURNING SKY LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 1 -
The directors present the strategic report for the year ended 30 June 2023.
Review of the business
In the year to 30 June 2023, the group delivered £31.8m in revenue with a £9.5m loss for the financial year end and a net asset position of £7.5m. The group faced market challenges off the back of COVID, increases in freight costs, USD rates and a slower market. The directors, however, remain confident in the ongoing success of the company and have forecast that there are sufficient resources in the group to continue with its current strategy.
The appointment of a new executive team with Danny Barrasso and Julia Barnes joining Value Lights as CEO and Ecommerce director respectively, investment into improved ecommerce platforms and back-office order processing tools and a business transformation exercise to rightsize the company. Continued operational and IT infrastructure investment into Hedges Direct has seen the business becomes operationally strong with the capacity to significant grow the business going forwards.
Across the group there was a significant investment in new and improved IT and operational systems, building up of the executive and management teams and a focus further aligning the groups brands with the increased focus on customer experience. Due to the investment in people and systems the group companies are now operationally capable of delivering far higher order volumes and with a better customer experience than ever before.
There has been a further exercise both during this year and post year end to restructure the cost base and return the group to profitability within the next 24 months.
Principal risks and uncertainties
Financial risk management
Across the group there are strong financial controls around cash flow, foreign exchange and working capital management. Cash flow and stock management are particular focuses, and the group considers this a vital area to continue to control.
Economic and market risk
The group companies saw a boost in revenue and performance through the COVID-19 pandemic given the move toward online transactions and increase in home improvement spending levels. Post COVID-19 and in light of the cost of living crisis do present difficult trading conditions for all group companies, however, the group subsidiaries have put in place strategies to continue to increase market share in spite of a market downturn.
Mr SJ Caunce
Director
2 October 2024
BURNING SKY LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 2 -
The directors present their annual report and financial statements for the year ended 30 June 2023.
Principal activities
The principal activity of the company during the period was that of a holding company. The principal activity of the group was that of the online retailing and wholesaling.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
No preference dividends were paid. The directors do not recommend payment of a final 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 SJ Caunce
Mrs LJ Caunce
Financial instruments
The business' principal financial instruments comprise bank balances, bank loans, trade creditors and other loans. The main purpose of these instruments is to finance the business' operations and the development of its e-commerce platform. Purchase prices are monitored by the buying department; the group is not dependent on any single supplier.
In respect of bank balance, the group has strong controls around cash flow, foreign exchange, creditors and debtors in order to manage these effectively. These daily controls allow the company to monitor its working capital position and therefore mitigate liquidity risk.
Credit risk is minimal as very little credit is given in the business and most orders are paid for before being despatched.
Auditor
The auditor, PM+M Solutions for Business LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
BURNING SKY LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 3 -
Statement of directors' responsibilities
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the ;
prepare the on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
Mr SJ Caunce
Director
BURNING SKY LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF BURNING SKY LIMITED
- 4 -
Opinion
We have audited the financial statements of Burning Sky Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 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 Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the group's and the parent company's affairs as at 30 June 2023 and of the group's loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the 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.
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.
BURNING SKY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BURNING SKY LIMITED
- 5 -
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:
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; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' 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.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.
BURNING SKY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BURNING SKY LIMITED
- 6 -
Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we have considered the following:
the nature of the industry and sector, control environment and business performance including the design of the Group's remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
results of our enquiries of management about their own identification and assessment of the risks of irregularities;
the matters discussed among the audit engagement team including significant component audit teams and involving relevant specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud;
any matters we identified having obtained and reviewed the Group's documentation of their policies and procedures relating to:
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas: timing of recognition of commercial income, posting of unusual journals and complex transactions; and manipulating the Group's performance profit measures and other key performance indicators to meet remuneration targets and externally communicated targets. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included UK Companies Act, employment law, health and safety regulations, pensions legislation and tax legislation.
Audit response to risks identified
Our procedures to respond to risks identified included the following:
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
enquiring of management concerning actual and potential litigation and claims;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
reading minutes of meetings of those charged with governance and reviewing correspondence with HMRC; and
in addressing the identified risks of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
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. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
BURNING SKY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BURNING SKY LIMITED
- 7 -
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.
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.
Christopher Johnson FCA (Senior Statutory Auditor)
For and on behalf of PM+M Solutions for Business LLP
2 October 2024
Chartered Accountants
Statutory Auditor
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
BURNING SKY LIMITED
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
31,752,045
33,311,148
Cost of sales
(18,006,954)
(19,460,253)
Gross profit
13,745,091
13,850,895
Distribution costs
(6,360,283)
(6,506,645)
Administrative expenses
(18,154,847)
(13,887,343)
Other operating income
1,234,781
-
Operating loss
5
(9,535,258)
(6,543,093)
Interest receivable and similar income
8
250,382
17,746
Interest payable and similar expenses
9
(114,648)
(120,512)
Loss before taxation
(9,399,524)
(6,645,859)
Tax on loss
10
94,042
520,741
Loss for the financial year
24
(9,305,482)
(6,125,118)
Loss for the financial year is attributable to:
- Owners of the parent company
(6,610,104)
(3,916,503)
- Non-controlling interests
(2,695,378)
(2,208,615)
(9,305,482)
(6,125,118)
The notes on pages 16 to 34 form part of these financial statements.
BURNING SKY LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
- 9 -
2023
2022
£
£
Loss for the year
(9,305,482)
(6,125,118)
Other comprehensive income
Cash flow hedges (loss)/gain arising in the year
(431,939)
428,306
Total comprehensive income for the year
(9,737,421)
(5,696,812)
Total comprehensive income for the year is attributable to:
- Owners of the parent company
(7,042,043)
(3,669,407)
- Non-controlling interests
(2,695,378)
(2,027,405)
(9,737,421)
(5,696,812)
The notes on pages 16 to 34 form part of these financial statements.
BURNING SKY LIMITED
GROUP BALANCE SHEET
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
12
13,675,917
16,495,955
Other intangible assets
12
347,332
276,614
Total intangible assets
14,023,249
16,772,569
Tangible assets
13
4,090,891
4,621,055
18,114,140
21,393,624
Current assets
Stocks
16
4,654,368
7,875,925
Debtors
17
1,855,827
1,753,753
Cash at bank and in hand
537,108
1,010,939
7,047,303
10,640,617
Creditors: amounts falling due within one year
18
(17,549,862)
(14,176,959)
Net current liabilities
(10,502,559)
(3,536,342)
Total assets less current liabilities
7,611,581
17,857,282
Creditors: amounts falling due after more than one year
19
(61,470)
(488,951)
Provisions for liabilities
Deferred tax liability
21
14,576
95,375
(14,576)
(95,375)
Net assets
7,535,535
17,272,956
Capital and reserves
Called up share capital
23
15,185,110
15,185,110
Hedging reserve
24
(49,711)
382,228
Profit and loss reserves
24
(10,557,250)
(3,947,146)
Equity attributable to owners of the parent company
4,578,149
11,620,192
Non-controlling interests
2,957,386
5,652,764
7,535,535
17,272,956
The notes on pages 16 to 34 form part of these financial statements.
These financial statements have been prepared in accordance with the provisions relating to medium-sized groups.
BURNING SKY LIMITED
GROUP BALANCE SHEET (CONTINUED)
- 11 -
The financial statements were approved by the board of directors and authorised for issue on 2 October 2024 and are signed on its behalf by:
02 October 2024
Mr SJ Caunce
Director
Company registration number 09427505 (England and Wales)
BURNING SKY LIMITED
COMPANY BALANCE SHEET
AS AT 30 JUNE 2023
30 June 2023
- 12 -
2023
2022
Notes
£
£
£
£
Fixed assets
Investments
14
8,503,319
7,613,252
Current assets
Debtors
17
18,653,636
13,924,345
Creditors: amounts falling due within one year
18
(10,115,029)
(6,274,292)
Net current assets
8,538,607
7,650,053
Net assets
17,041,926
15,263,305
Capital and reserves
Called up share capital
23
15,185,110
15,185,110
Profit and loss reserves
24
1,856,816
78,195
Total equity
17,041,926
15,263,305
The notes on pages 16 to 34 form part of these financial statements.
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 £1,778,621 (2022 - £49,128 profit).
The financial statements were approved by the board of directors and authorised for issue on 2 October 2024 and are signed on its behalf by:
02 October 2024
Mr SJ Caunce
Director
Company registration number 09427505 (England and Wales)
BURNING SKY LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 13 -
Share capital
Hedging reserve
Profit and loss reserves
Total controlling interest
Non-controlling interest
Total
£
£
£
£
£
£
Balance at 1 July 2021
15,185,110
(46,078)
150,567
15,289,599
3,197,278
18,486,877
Year ended 30 June 2022:
Loss for the year
-
-
(3,916,503)
(3,916,503)
(2,208,615)
(6,125,118)
Other comprehensive income:
Cash flow hedges gains
-
428,306
-
428,306
-
428,306
Amounts attributable to non-controlling interests
-
-
(181,210)
(181,210)
181,210
-
Total comprehensive income
-
428,306
(4,097,713)
(3,669,407)
(2,027,405)
(5,696,812)
Transfers
-
-
(621,818)
(621,818)
-
(621,818)
Acquisition of subsidiary
-
-
-
-
4,482,891
4,482,891
Other movements
-
-
621,818
621,818
-
621,818
Balance at 30 June 2022
15,185,110
382,228
(3,947,146)
11,620,192
5,652,764
17,272,956
Year ended 30 June 2023:
Loss for the year
-
-
(6,610,104)
(6,610,104)
(2,695,378)
(9,305,482)
Other comprehensive income:
Cash flow hedges losses
-
(431,939)
-
(431,939)
-
(431,939)
Total comprehensive income
-
(431,939)
(6,610,104)
(7,042,043)
(2,695,378)
(9,737,421)
Balance at 30 June 2023
15,185,110
(49,711)
(10,557,250)
4,578,149
2,957,386
7,535,535
The notes on pages 16 to 34 form part of these financial statements.
BURNING SKY LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 14 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 July 2021
15,185,110
29,067
15,214,177
Year ended 30 June 2022:
Profit and total comprehensive income for the year
-
49,128
49,128
Balance at 30 June 2022
15,185,110
78,195
15,263,305
Year ended 30 June 2023:
Profit and total comprehensive income
-
1,778,621
1,778,621
Balance at 30 June 2023
15,185,110
1,856,816
17,041,926
The notes on pages 16 to 34 form part of these financial statements.
BURNING SKY LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
- 15 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash absorbed by operations
30
(2,236,575)
(1,883,077)
Interest paid
(1,173,308)
Income taxes (paid)/refunded
(4,961)
21,430
Net cash outflow from operating activities
(2,241,536)
(3,034,955)
Investing activities
Purchase of business
-
283,311
Purchase of intangible assets
(285,363)
(174,255)
Purchase of tangible fixed assets
(713,361)
(394,064)
Proceeds from disposal of tangible fixed assets
343,528
1,313
Interest received
250,382
17,746
Net cash used in investing activities
(404,814)
(265,949)
Financing activities
Loans from directors
2,600,000
4,012,082
Repayment of borrowings
-
(1,862,662)
Payment of finance leases obligations
(427,481)
996,777
Interest paid
(60,009)
Net cash generated from financing activities
2,172,519
3,086,188
Net decrease in cash and cash equivalents
(473,831)
(214,716)
Cash and cash equivalents at beginning of year
1,010,939
1,225,655
Cash and cash equivalents at end of year
537,108
1,010,939
The notes on pages 16 to 34 form part of these financial statements.
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 16 -
1
Accounting policies
Company information
Burning Sky Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Croston Hall, Grape Lane, Croston, PR26 9BH.
The group consists of Burning Sky 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 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. 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 Burning Sky Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 30 June 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.
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 17 -
1.4
Going concern
The directors have considered the financial stability of the group, including the preparation of detailed profit and cash flow projections, for a period of at least 12 months from the date of signing these accounts. The group continues to perform strongly post year end, with a constant focus on liquidity due to he current economic uncertainty.
The directors consider it appropriate that the accounts are prepared on the going concern basis. These accounts do not include any adjustments that may be required should the going concern basis of preparation not be appropriate.
The directors have provided written confirmation that they will continue to support the group for the foreseeable future.
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.
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.
1.6
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
1.7
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 10 years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.8
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:
Website development
3 years straight line
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 18 -
1.9
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:
Leasehold improvements
5 years straight line
Plant and equipment
4 years straight line
Fixtures and fittings
4 years straight line
Computers
3 years straight line
Motor vehicles
4 years 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.
1.10
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 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.
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.
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.
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.
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 19 -
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.
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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 20 -
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.
Hedge accounting
The Company uses foreign currency forward contracts to hedge its exposure to variability in cashflow and fair values on stock purchases in foreign currencies. These purchases are either firm commitments or highly probable forecast transactions in the currency of the forward contract. These derivatives are measured at fair value at each balance sheet date.
Fair value gains or losses on the derivatives at the balance sheet date are recognised as an asset or liability with a corresponding gain or loss in other comprehensive income and are recorded in a specific cashflow hedging reserve. On completion of the hedged stock purchase transaction; the cumulative hedging gain is recognised in the initial cost of the stock.
1.16
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.
1.17
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.
1.18
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 21 -
1.19
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, 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.
1.20
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
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.
The key source of estimation uncertainty that have an effect on the amounts recognised in the financial statements are stock provisioning and tangible and intangible fixed asset economic lives.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Sale of electric light fittings and bulbs
17,155,668
15,630,002
Sale of third party logistics
492,518
792,739
Retail sale of plants
14,103,859
16,888,407
31,752,045
33,311,148
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
3
Turnover and other revenue
(Continued)
- 22 -
2023
2022
£
£
Turnover analysed by geographical market
UK
31,733,088
31,900,283
Rest of World
18,957
1,410,865
31,752,045
33,311,148
2023
2022
£
£
Other revenue
Interest income
250,382
17,746
Other operating income
1,234,781
-
A loan amount of £113,202 due to a related party, has been written off during the year.
The remainder of the above is disclosed in further detail in note 27.
4
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
12,000
17,000
Audit of the financial statements of the company's subsidiaries
43,600
55,790
Fees paid to previous auditors for the audit of the financial statements of the company's subsidiaries
-
15,710
55,600
88,500
5
Operating loss
2023
2022
£
£
Operating loss for the year is stated after charging/(crediting):
Exchange gains
-
(44,507)
Depreciation of owned tangible fixed assets
694,077
262,519
Depreciation of tangible fixed assets held under finance leases
206,718
210,990
(Profit)/loss on disposal of tangible fixed assets
(798)
935
Amortisation of intangible assets
2,140,136
2,069,509
Impairment of intangible assets
894,547
Profit on disposal of intangible assets
(140,758)
Operating lease charges
996,777
701,115
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 23 -
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
Directors
14
14
2
2
Sales and admin
161
166
-
-
Distribution
31
26
-
-
Total
206
206
2
2
Their aggregate remuneration comprised:
Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
6,733,842
5,156,752
Social security costs
644,449
393,411
Pension costs
150,538
224,747
7,528,829
5,774,910
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
1,049,714
1,111,826
Company pension contributions to defined contribution schemes
32,237
85,079
1,081,951
1,196,905
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
318,821
256,129
Company pension contributions to defined contribution schemes
10,375
9,255
During the period two directors had benefits accruing under a defined contribution pension scheme.
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 24 -
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
4,826
Other interest income
245,556
17,746
Total income
250,382
17,746
9
Interest payable and similar expenses
2023
2022
£
£
Other interest on financial liabilities
11,624
28,630
Interest on finance leases and hire purchase contracts
94,672
81,382
Other interest
8,352
10,500
Total finance costs
114,648
120,512
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
(351,303)
Adjustments in respect of prior periods
(136,165)
Total current tax
(487,468)
Deferred tax
Origination and reversal of timing differences
(77,324)
(33,273)
Adjustment in respect of prior periods
(16,718)
Total deferred tax
(94,042)
(33,273)
Total tax credit
(94,042)
(520,741)
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
10
Taxation
(Continued)
- 25 -
The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Loss before taxation
(9,399,524)
(6,645,859)
Expected tax credit based on the standard rate of corporation tax in the UK of 20.50% (2022: 19.00%)
(1,926,515)
(1,262,713)
Tax effect of expenses that are not deductible in determining taxable profit
124,680
(190,564)
Adjustments in respect of prior years
(136,165)
Amortisation on assets not qualifying for tax allowances
394,727
365,843
Other non-reversing timing differences
(81,884)
Other permanent differences
204
Tax relief on share options
1,366
Deferred tax adjustments in respect of prior years
(16,718)
(33,273)
Fixed asset timing differences
9,409
280,932
Remeasurement of deferred tax
(131,585)
(92,880)
Losses carried back
151,941
Deferred tax asset not recognised
1,268,411
476,656
Impairment of goodwill
183,345
-
Taxation credit
(94,042)
(520,741)
11
Impairments
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
2023
2022
Notes
£
£
In respect of:
Goodwill
12
894,547
-
Recognised in:
Administrative expenses
894,547
-
The impairment losses in respect of financial assets are recognised in other gains and losses in the profit and loss account.
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 26 -
12
Intangible fixed assets
Group
Goodwill
Website development
Total
£
£
£
Cost
At 1 July 2022
19,254,907
471,802
19,726,709
Additions
285,363
285,363
At 30 June 2023
19,254,907
757,165
20,012,072
Amortisation and impairment
At 1 July 2022
2,758,952
195,188
2,954,140
Amortisation charged for the year
1,925,491
214,645
2,140,136
Impairment losses
894,547
894,547
At 30 June 2023
5,578,990
409,833
5,988,823
Carrying amount
At 30 June 2023
13,675,917
347,332
14,023,249
At 30 June 2022
16,495,955
276,614
16,772,569
The company had no intangible fixed assets at 30 June 2023 or 30 June 2022.
More information on impairment movements in the year is given in note 11.
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 27 -
13
Tangible fixed assets
Group
Leasehold improvements
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 July 2022
606,813
96,000
3,800,115
630,704
10,209
5,143,841
Additions
212,701
127,317
105,697
232,665
34,981
713,361
Disposals
(136,540)
(44,874)
(195,075)
(126,335)
(34,981)
(537,805)
At 30 June 2023
682,974
178,443
3,710,737
737,034
10,209
5,319,397
Depreciation and impairment
At 1 July 2022
143,679
13,428
216,855
144,485
4,339
522,786
Depreciation charged in the year
137,292
35,648
382,182
342,610
3,063
900,795
Eliminated in respect of disposals
(195,075)
(195,075)
At 30 June 2023
280,971
49,076
403,962
487,095
7,402
1,228,506
Carrying amount
At 30 June 2023
402,003
129,367
3,306,775
249,939
2,807
4,090,891
At 30 June 2022
463,134
82,572
3,583,260
486,219
5,870
4,621,055
The company had no tangible fixed assets at 30 June 2023 or 30 June 2022.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Group
Company
2023
2022
2023
2022
£
£
£
£
Fixtures and fittings
1,847,456
1,130,446
14
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
15
-
-
4,753,623
4,753,623
Loans to subsidiaries
15
-
-
3,749,696
2,859,629
8,503,319
7,613,252
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
14
Fixed asset investments
(Continued)
- 28 -
Movements in fixed asset investments
Company
Shares in subsidiaries
Loans to subsidiaries
Total
£
£
£
Cost or valuation
At 1 July 2022
4,753,623
2,859,629
7,613,252
Unwinding of discount
-
890,067
890,067
At 30 June 2023
4,753,623
3,749,696
8,503,319
Carrying amount
At 30 June 2023
4,753,623
3,749,696
8,503,319
At 30 June 2022
4,753,623
2,859,629
7,613,252
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 29 -
15
Subsidiaries
Details of the company's subsidiaries at 30 June 2023 are as follows:
Name of undertaking
Address
Nature of business
Class of
% Held
shares held
Direct
Indirect
Fresh Carnation Limited
1
Ordinary
81.00
-
Hedges Direct Group Ltd
1
Dormant company
Ordinary
-
100.00
Euxton Group Ltd
1
Dormant company
Ordinary
-
100.00
Impact Plants Ltd
1
Dormant company
Ordinary
-
100.00
HD Plants Limited
1
Ordinary
-
100.00
Best4Hedging Limited
1
Dormant company
Ordinary
-
100.00
ValueLights Limited
3
Ordinary
-
100.00
ValueLights Group Limited
2
Ordinary
-
100.00
Value Logistic Solutions Limited
3
Ordinary
-
100.00
ValueLights Holdings Limited
2
Ordinary
57.10
-
The Lighting Factoring Shop
2
Dormant company
Ordinary
-
100.00
LSE Group Limited
2
Dormant company
Ordinary
-
100.00
Minisun Lighting Limited
2
Dormant company
Ordinary
-
100.00
Minisun Limited
2
Dormant company
Ordinary
-
100.00
Iconic Lights Limited
2
Dormant company
Ordinary
-
100.00
ValueLights Europe Limited
2
Dormant company
Ordinary
-
100.00
1
York House, Foxhole Road, Chorley, PR7 1NY
2
4 Omega Drive, Irlam, Manchester, England, M44 5GR
3
The Light Hub 4 Omega Drive, Irlam, Manchester, England, M44 5GR
The companies noted as dormant above have not been consolidated.
16
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Finished goods and goods for resale
4,654,368
7,875,925
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 30 -
17
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
331,627
553,002
Corporation tax recoverable
150,775
137,532
Amounts owed by group undertakings
-
-
15,647,517
5,031,824
Derivative financial instruments
-
348,725
-
-
Other debtors
454,214
31,389
6,119
3,918
Prepayments and accrued income
919,211
683,105
1,855,827
1,753,753
15,653,636
5,035,742
Amounts falling due after more than one year:
Amounts owed by group undertakings
-
-
3,000,000
8,888,603
Total debtors
1,855,827
1,753,753
18,653,636
13,924,345
Included within amounts due from group, there is an amount of £6,090,921 due from subsidiaries that is interest free and repayable on demand.
In 2022, an amount of £15,185,009 was loaned to a subsidiary company, at interest rate of 0.25% above base rate. During the year, a further amount of £6,090,021 was loaned to subsidiary companies, at interest rate of 3% above base rate. Due to the loan being under market interest rate, this has been accounted for using the amortised cost method.
18
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Obligations under finance leases
20
507,826
507,826
Trade creditors
2,839,061
2,323,782
Corporation tax payable
4,961
4,961
Other taxation and social security
1,494,896
1,044,845
-
-
Derivative financial instruments
49,711
Other creditors
10,341,695
8,035,069
10,109,139
6,257,441
Accruals and deferred income
2,316,673
2,260,476
5,890
11,890
17,549,862
14,176,959
10,115,029
6,274,292
The groups derivative financial instruments are forward exchange contracts hedging stock purchases over the next 12 months.
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
18
Creditors: amounts falling due within one year
(Continued)
- 31 -
Included within other creditors in the company is an amount of £10,109,139 (2022 : £6,257,441) relating to director's loan account.
Included within other creditors in the group is an amount of £10,319,137 (2022 : £7,645,501) relating to director's loan account. See note 27 for further detail.
19
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Obligations under finance leases
20
61,470
488,951
20
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
552,829
507,826
In two to five years
69,062
488,951
621,891
996,777
-
-
Less: future finance charges
(52,595)
569,296
996,777
Hire purchase and finance lease liabilities are secured on the assets to which they relate.
21
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
Liabilities
Liabilities
2023
2022
Group
£
£
Accelerated capital allowances
14,576
152,622
Tax losses
-
(57,247)
14,576
95,375
The company has no deferred tax assets or liabilities.
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
21
Deferred taxation
(Continued)
- 32 -
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 1 July 2022
95,375
-
Credit to profit or loss
(80,799)
-
Liability at 30 June 2023
14,576
-
22
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
150,538
224,747
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.
An amount of £41,701 (2022- £45,314) was outstanding at the year end and is included in creditors.
23
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100
100
100
100
2023
2022
2023
2022
Preference share capital
Number
Number
£
£
Issued and fully paid
Preference shares of £1 each
15,185,010
15,185,010
15,185,010
15,185,010
Preference shares classified as equity
15,185,010
15,185,010
Total equity share capital
15,185,110
15,185,110
The ordinary shares have full voting, dividends and capital distribution rights.
The preference shares have no voting, dividend or capital distribution rights.
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 33 -
24
Reserves
Equity reserve
The profit and loss reserves include all current and prior period retained profits.
Hedging reserve
During 2023 the company entered into cash flow hedges to mitigate foreign exchange risk on firm commitments payable in US Dollars, by committing to buy US Dollars over the period 03 July 2023 to 31 December 2024 at a range of pre-determined exchange rates.
At June 2023, the fair value of hedging instruments was an liability of £49,711.
25
Financial commitments, guarantees and contingent liabilities
At the year end, the group had entered into forward currency contracts and had a commitment to purchase €nil (2022 - €1,450,000), at a pre agreed exchange rate.
26
Operating lease commitments
Lessee
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
1,049,061
1,203,071
-
-
Between two and five years
3,755,067
4,058,681
-
-
In over five years
7,344,000
8,262,000
-
-
12,148,128
13,523,752
-
-
27
Related party transactions
At the year end the group was owed £nil (2022: £507,808) from Clicksit App Limited. The loan was subject to interest at 10% per annum.
28
Directors' transactions
Description
% Rate
Opening balance
Amounts advanced
Amounts repaid
Amounts waived
Closing balance
£
£
£
£
£
Director Loan Account
-
7,645,501
4,268,192
(472,970)
(1,121,586)
10,319,137
7,645,501
4,268,192
(472,970)
(1,121,586)
10,319,137
29
Controlling party
The groups ultimate controlling party is Mr Stephen James Caunce.
BURNING SKY LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 34 -
30
Cash absorbed by group operations
2023
2022
£
£
Loss for the year after tax
(9,305,482)
(6,125,118)
Adjustments for:
Taxation credited
(94,042)
(520,741)
Finance costs
114,648
120,512
Investment income
(250,382)
(17,746)
(Gain)/loss on disposal of tangible fixed assets
(798)
935
Gain on disposal of intangible assets
(140,758)
Amortisation and impairment of intangible assets
3,034,683
2,069,509
Depreciation and impairment of tangible fixed assets
900,795
473,509
Increase in provisions
662,034
621,818
Movements in working capital:
Decrease in stocks
3,221,557
370,406
(Increase)/decrease in debtors
(437,556)
430,951
(Decrease)/increase in creditors
(82,032)
833,646
Cash absorbed by operations
(2,236,575)
(1,883,077)
31
Analysis of changes in net funds/(debt) - group
1 July 2022
Cash flows
Market value movements
30 June 2023
£
£
£
£
Cash at bank and in hand
1,010,939
(473,831)
-
537,108
Borrowings excluding overdrafts
-
(274,536)
274,536
-
Obligations under finance leases
(996,777)
427,481
-
(569,296)
14,162
(320,886)
274,536
(32,188)
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