Period from 31 December 2022 to
Registration number:
Harding Retail IHC Ltd
Contents
Company Information |
|
Strategic Report |
|
Directors' Report |
|
Statement of Directors' Responsibilities |
|
Independent Auditor's Report |
|
Consolidated Profit and Loss Account |
|
Consolidated Balance Sheet |
|
Balance Sheet |
|
Consolidated Statement of Changes in Equity |
|
Statement of Changes in Equity |
|
Consolidated Statement of Cash Flows |
|
Notes to the Financial Statements |
Harding Retail IHC Ltd
Company Information
Directors |
N G Harding A O A Pourchet M Coupe C J Matthews W J Showalter |
Registered office |
|
Bankers |
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Auditors |
|
Harding Retail IHC Ltd
Strategic Report
The directors present their strategic report for the period from 31 December 2022 to 31 December 2023.
Principal activity
The principal activity of the Company is that of an investment holding company where the principal activity of its subsidiary undertakings continues to be the provision of retail operations on cruise ships as a concessionaire for cruise-line customers.
Strategy
The Group’s strategy is to grow the business in a profitable and sustainable way. The Group intends to expand its specialist retail proposition through best-in-class retail execution and strong partnership with the cruise lines, and with its key vendors.
Business review
The Group is pleased to have delivered strong revenue growth with turnover of £296m for the year 2023, up from £190m in 2022. This growth was the result of our strong partnership with the cruise lines resulting in an increased number of trading ships, as well as high occupancy onboard.
For 2023 as a whole, the Group was loss making and reported a loss before tax of £22.6m (2022 - loss before tax of £13.6m). 2023 was a year of transition post-covid where the Group returned to operating at full capacity and increased significantly in scale. The year was also characterised by high inflation in terms of costs of goods, logistics costs and labour costs which affected the Group’s profits during the first half of the year 2023.
During the second half of 2023, the Group successfully renegotiated its cost base with key suppliers and cruise lines. As a result, Group performance since September 2023 has been profitable.
The business also continued to benefit from a very strong underlying cruise market as passengers continue to return to ships and the market is enjoying significant growth.
Successful completion and closing of the 2021 CVA
During 2023, the Group continued to repay its creditors in relation to the Company Voluntary Arrangement (CVA) that was launched in 2021 as a result of COVID-19. The final CVA repayments were completed in January 2024, in advance of the required timeline, and the Group has now successfully extinguished all of its financial obligations in connection with the 2021 CVA.
Capital increase
During 2023, the Group’s parent company, Burlington Loan Management DAC (Burlington), provided additional funds to support the Group’s growth and subsequently, in September 2023, Burlington converted £40.0m of loan balance into equity, as seen in the Statement of Changes in Equity.
As a result, the Group’s shareholders’ funds have significantly increased, and its financial liabilities significantly reduced. The shareholders' funds of the Group at year-end 2023 returned to positive £1.0m (2022 - deficit of £16.4m).
Harding Retail IHC Ltd
Strategic Report
Impairment reversal
In December 2023, an impairment reversal of £14.8m has been recognised in the company in respect of the investments held in subsidiaries.
The investments had been impaired in December 2022 as a result of adverse market conditions post-Covid. The impairment reversal is a reflection of much improved market conditions and improved financial projections considering renegotiated terms with our cruiseline customers as well as with key suppliers.
There was no impact upon the consolidated financial performance or position in respect of either the 2022 impairment or 2023 reversal.
Unrecognised deferred tax asset
The Group has unrecognised deferred tax assets of £16.0m, in relation to losses (2022 - £ 11.1m) as the directors do not consider there to be virtual certainty regarding sufficient taxable profits in the future to utilise the tax asset, given existing legislation governing the utilisation of carried forward tax losses.
Key financial performance indicators
The group's key financial and other performance indicators during the period were as follows:
Financial KPIs |
Unit |
2023 |
2022 |
No. of ships (at the year end) |
No. |
90.00 |
84.00 |
Passengers |
Millions |
59.60 |
34.20 |
Occupancy |
% |
95.00 |
73.00 |
PPD (Revenue per Passenger Day) |
£ |
4.97 |
5.55 |
Turnover |
£m |
296.00 |
189.90 |
EBITDA (loss) |
£m |
(7.60) |
(3.50) |
Principal Risks and uncertainties
Liquidity risk
The Group manages its liquidity via an asset-backed lending arrangement with Breal Zeta Commercial Finance Designated Activity Group ("BZ") whereby BZ would fund up to £70m, secured upon and subject to levels of inventory and account receivables. During the year ended 31 December 2023, and in light of the challenging trading conditions experienced, certain of the financial covenants attached to the lending arrangement were breached. Subsequent to the year-end BZ have provided a covenant breach waiver (covering each breach) confirmation reflective of their ongoing support for the Group. This facility is due to expire on 30 June 2025, but the Group has no concerns regarding the extension of this facility beyond June 2025. The Group is in current discussions to extend the facility to June 2026, which BZ support subject to terms being agreed.
During the first half of the year, where the Group was not cash generative through operations, the Group raised £21.3m of cash via loan from its parent company, Burlington Loan Management DAC.
This was agreed to be converted to equity in September 2023, where a total loan balance of £40,035,121 was converted to equity, as seen in the Statement of Changes in Equity. The Group has been cash generative since September 2023 with strong liquidity, and forecasts show no further cash injection from the parent is necessary.
Harding Retail IHC Ltd
Strategic Report
Going concern
The Group relies on the support of its ultimate parent Group, and its affiliated asset-lending platform, Breal Zeta Commercial Finance Designated Activity Group. (“BZ”). The directors have received written confirmation of this ongoing support from each of the ultimate parent and BZ. The Group has strong relationships with its cruiseline partners, with a significant proportion of contracts for ship operations going in to 2027.
Challenging trading conditions in the first half of 2023 led the Group to restructure its cost base by negotiating with key suppliers and cruiseline partners, and as a result has been profitable and cash generative since September 2023.
During the year ended 31 December 2023, and in light of the challenging trading conditions experienced, certain of the financial covenants attached to the BZ lending arrangement were
breached. Subsequent to the year-end BZ have provided a covenant breach waiver (covering each breach) confirmation reflective of their ongoing support for the Group.
The directors’ assessment of the cash-flows, forecast sensitivities, risks and the above-mentioned mitigating factors lead them to conclude that with the support of the ultimate parent Group, as confirmed in writing, it is appropriate to prepare the accounts on a going concern basis.
Legislative risks
Tax and duty-free retailing are subject to restrictions under EU legislation when ships operate exclusively within the EU. In addition to this, some cruise lines will offer domestic cruises in countries such as Australia and Iceland. It is harder to offer a compelling consumer offer where sales taxes apply and as such revenues on these cruises are lower than duty-free cruises. The duty-free retailing sector generally (including international airports, border shops and ferries) is therefore subject to any further widening of co-operation between states to limit tax and duty-free sales.
Competitive risks
The cruise ship tax and duty-free retail marketplace is highly competitive with a small number of operators. Market information on future tenders is good and as such when contracts are coming to an end the competition for them can be high. This represents both a risk and an opportunity. The Group has developed several unique approaches that it believes offer customers a more comprehensive portfolio of services than its competitors and as such it tries to differentiate itself on a number of levels, as well as being 100% cruise retail focused and possessing associated specialist knowledge and skills.
Foreign currency risk
This represents the impact of adverse movements in foreign currency exchange rates in respect of revenues denominated in currencies other than the reporting currency. Whilst the business tries wherever possible to create a natural hedge by purchasing and selling in the same currencies there remains an exposure. At the reporting date the Group held no hedging in respect of this risk as the directors considered the risk to be low, however activities are expected in 2024 to better manage the Group’s foreign currency risk.
Harding Retail IHC Ltd
Strategic Report
Credit risk
The Group trades mainly with large, publicly quoted companies. The risk of these counterparties failing to make payments when due is considered by the directors to be much lower than average. Group will continue to minimise credit terms and operate a rigorous process of credit control. No customer has a material overdue balance at the reporting date.
Interest rate risk
Interest rate risk is reviewed by the directors. At the current time the directors see a benign interest rate outlook over the repayment period of the current facility and as such have placed no hedging against increases in interest rates. They keep this position under review and should this outlook change then due consideration will be given to protecting against this risk.
Inflation risk
Inflation rates within the geographies that the Group trades within were high during 2023, although these have reduced throughout the year. Inflation risk is high, where rising inflation may impact the disposable income of cruise line guests. A reduction in general disposable income could lead to fewer luxury purchases or less travel in general. The Group is paying close attention to the changing inflation rates.
Section 172(1) statement
The Directors are aware of their responsibilities to promote the success of the Group in accordance with section 172 of the Companies Act 2006 (the Act). In accordance with this responsibility, the board adopts a long-term mindset with regard to decision making and stakeholder relationships. Set out below are some specific examples of the boards approach to stakeholder engagement and how that stakeholder engagement has influenced the Directors decisions during the year.
Customers
Customer satisfaction is critical to the success of the business. To deliver the best possible offering to our customers, it was decided that the business should undertake a “Customer Transformation Plan” (CTP).
The purpose of the CTP is to review several key pillars of the business to ensure the passengers onboard are engaged and satisfied with their shopping experience. Towards the end of 2023, the business began mapping the key pillars of the CTP - to allow changes to be designed and embedded through 2024 and early 2025.
Key focuses of the CTP include: Stock Availability, Pricing & Promotions and People. The detailed work on these areas did not begin until early 2024, but the decision to undertake the project, and the high-level definition of that project, took place in 2023.
Harding Retail IHC Ltd
Strategic Report
Employee engagement
The Directors recognise that the success of the Group, is largely underpinned by a strong workplace culture and effective people strategy. During the year, the Group undertook “pulse” surveys via a third-party tool to obtain feedback from colleagues covering a broad range of areas, including: reward, autonomy, enablement, leadership and engagement. Sessions were held with departments to gain a better understanding of the survey results, to allow departments to provide suggestions and action plans to remedy areas where scores vary to the Group average, or the previous pulse survey.
All employees are also invited to attend a monthly business update, led by the executive and senior leadership teams. These updates include the latest financial information, progress updates on various underway projects, and spotlights on different areas of the business. These updates provide employees with the opportunity to ask anonymous questions, to ensure the employees are getting response to their areas of interest.
The Group also introduced a group of “Mental Health First Aiders”, to give employees a safe environment to discuss both work and non-work-related issues that they would like to discuss or receive support on. The Group funded external training for these first aiders, to give them the best tools to support their colleagues.
Suppliers
Building and maintaining trusted partnerships with the Group’s suppliers and cruise-line partners is fundamental to the long-term success of the Group. During 2023, the Board engaged with a large number of the business key suppliers, to forge closer partnerships that work towards an improved combined result for both the Group and its suppliers. As a result of these exchanges, several key contracts were renegotiated to strengthen the Group’s financials.
Management structure
Key changes were made to the Group’s management structure during the year. These changes include the appointment of a new CEO, Chris Matthews, and a new CFO, Bill Showalter. Both bring a significant amount of retail expertise and deep commercial experience and functional expertise to the business.
Approved by the
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Harding Retail IHC Ltd
Directors' Report
The directors present their report and the for the period from 31 December 2022 to 31 December 2023.
Directors of the group
The directors who held office during the period were as follows:
Non-financial and sustainability information
Environmental report
We have considered the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) when preparing this report. These recommendations encourage businesses to increase disclosure of climate-related information, with an emphasis on financial disclosure. Harding Retail IHC Ltd supports these recommendations and are committed to disclosing the relevant information which relates to the subsidiary company, Harding Brothers Retail Limited, and can be found below.
Statement of carbon emissions is in compliance with Streamlined Energy and Carbon Reporting (SECR) covering energy use and associated greenhouse gas emissions relating to gas, electricity and transport, intensity ratios and information relating to energy efficiency actions.
The table below shows carbon dioxide equivalent tonnes (tCO2e) of emissions under scopes 1, 2 and 3.
Emissions and energy consumption
Methodology
1. ESOS methodology (as specified in Complying with the Energy Savings Opportunity Scheme version 6, published by the Environment Agency 28/10/2019) used in conjunction with Government GHG reporting conversion factors.
2. Intensity ratios calculated using square footage - Kg CO2e per square foot of total site area.
3. The calculations have been approved by a PAS51215 compliant body.
4. Data estimation - none.
Harding Retail IHC Ltd
Directors' Report
Summary of scope 2 (indirect) greenhouse gas emissions for the period from 31 December 2022 to 31 December 2023:
2023 |
2022 |
|
Total emissions generated through use of purchased electricity (tCO2e) |
45.00 |
46.30 |
Total emissions generated through use of purchased gas (tCO2e) |
193.10 |
99.60 |
Summary of scope 3 (other indirect) greenhouse gas emissions for the period from 31 December 2022 to 31 December 2023:
2023 |
2022 |
|
Total emissions generated through business travel (tCO2e) |
27.30 |
66.60 |
Summary of energy consumption for the period from 31 December 2022 to 31 December 2023:
2023 |
2022 |
|
Total gross emissions (tCO2e) |
265.40 |
212.50 |
Intensity ratio (total gross emissions in kg CO2e per square foot) |
6.80 |
5.50 |
Total energy use covering electricity, gas, other fuels and transport (kWh) |
250542 |
366061 |
Energy efficiency actions
We are committed to responsible energy management and will practise energy efficiency throughout the Group, wherever it is cost effective. We recognise that climate change is one of the most serious environmental challenges currently threatening the global community and we understand we have a role to play in reducing greenhouse gas emissions.
The Group manages its logistics operation by trying to consolidate deliveries as much as reasonably possible to reduce carbon emissions. The Group also reviews its product range, sourcing more sustainable environmentally friendly products wherever possible.
Future developments
The Group is launching its Customer Transformation Plan (CTP) in 2024, as noted in the strategic report. It is expected this project will incur up front costs, with benefits starting to crystallise in the later half of 2024. The Group is expecting to see strong performance with a positive EBITDA, given the restructure of key supplier contracts in the latter half of 2023.
Harding Retail IHC Ltd
Directors' Report
Going concern
The Group relies on the support of its ultimate parent company, and its affiliated asset-lending platform, Breal Zeta Commercial Finance Designated Activity Company (“BZ”). The directors have received written confirmation of this ongoing support from each of the ultimate parent and BZ.
During the year ended 31 December 2023, and in light of the challenging trading conditions experienced, certain of the financial covenants attached to the BZ lending arrangement were breached. Subsequent to the year end BZ have provided a covenant breach waiver (covering each breach) confirmation reflective of their ongoing support for the group. The BZ lending arrangement facility was renewed in July 2023.
The director’s assessment of the cashflows, taking into account recently signed agreements, with forecast sensitivities and risks, lead them to conclude that with the support of the ultimate parent company, it is appropriate to prepare the accounts on a going concern basis.
In the period from 1 January to 11 September 2023, an additional £21.25m of loan facility was granted to Harding Retail IHC Limited by Burlington Loan Management DAC by way of an amendment to the Shareholder Loan Agreement originally dated 9 July 2021 for the purpose of providing additional funding to the group. The full amount of additional funding was drawn down by Harding Retail IHC Limited and made available to Harding Brothers Holdings Limited and subsequently Harding Brothers Retail Limited through issue and allotment of ordinary shares.
In September 2023, Burlington Loan Management converted the total loan balance of £40,035,121 to equity.
Directors' liabilities
The Group have made qualifying third-party indemnity provisions, by way of insurance, for the benefit of its directors, which were made during the year and remain in force at the date of this report.
Disclosure of information to the auditor
Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.
Approved by the
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Harding Retail IHC Ltd
Statement of Directors' Responsibilities
The directors acknowledge their responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with Financial Reporting Standard 102 (FRS 102) issued by the Financial Reporting Council. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
• |
select suitable accounting policies and apply them consistently; |
• |
make judgements and accounting estimates that are reasonable and prudent; |
• |
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and |
• |
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group's and the company's transactions and disclose with reasonable accuracy at any time the financial position of the group and the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Harding Retail IHC Ltd
Independent Auditor's Report to the Members of Harding Retail IHC Ltd
Opinion
We have audited the financial statements of Harding Retail IHC Ltd (the 'parent company') and its subsidiaries (the 'Group') for the year ended 31 December 2023, which comprise the Consolidated Profit and Loss Account, Consolidated Balance Sheet, Balance Sheet, Consolidated Statement of Changes in Equity, Statement of Changes in Equity, Consolidated Statement of Cash Flows, and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
• | give a true and fair view of the state of the group's and the parent company's affairs as at 31 December 2023 and of the group's loss for the period then ended; |
• | have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and |
• | have been prepared in accordance with the requirements of the Companies Act 2006. |
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group and parent company's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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.
Harding Retail IHC Ltd
Independent Auditor's Report to the Members of Harding Retail IHC Ltd
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• |
the information given in the Strategic Report and Directors' Report for the financial period for which the financial statements are prepared is consistent with the financial statements; and |
• |
the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.
We have nothing to report in respect of the following matters 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; or |
• | we have not received all the information and explanations we require for our audit. |
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities set out on page 10, 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 group’s and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Harding Retail IHC Ltd
Independent Auditor's Report to the Members of Harding Retail IHC Ltd
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.
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.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
• we identified the laws and regulations applicable to the company through discussions with directors and other management, or from our commercial knowledge, experience of the retail and travel sector and by reviewing the company website and commercial terms and conditions;
• we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company and group, including the Companies Act 2006, taxation legislation, The General Data Protection Regulation (“GDPR”), anti-bribery, employment, and health and safety legislation;
• we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
• identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
• making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
• considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
Harding Retail IHC Ltd
Independent Auditor's Report to the Members of Harding Retail IHC Ltd
We also evaluated management’s incentives and opportunities for management bias, override of controls and manipulation of the financial statements. The key incentive identified is to manipulate revenue and we determined that the principal risks were related to the understatement of loss, either through overstating revenue, understating expenditure. To address the risk, we:
• performed analytical procedures to identify any unusual or unexpected relationships;
• tested journal entries to identify unusual transactions;
• performed procedures with regards to completeness and accuracy of revenue;
• reviewed cut-off in respect of income and expenditure;
• assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
• investigated the rationale behind significant or unusual transactions
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
• agreeing financial statement disclosures to underlying supporting documentation;
• reading the minutes of meetings of those charged with governance;
• enquiries of management regarding their knowledge of any non-compliance with laws and regulations that could affect the financial statements. As part of these enquiries we also discussed with management whether there have been any known instances of fraud, of which there were none;
• review of the company’s GDPR policy and enquiries to the Data Protection Officer as to the occurrence and outcome of any reportable breaches;
• Conducting a search for ICO enforcement actions against the company on the ICO website with respect to GDPR;
• review of the legal and professional costs to identify any possible non compliance or legal costs in respect of non compliance.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements. This risk increases the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements as we are less likely to be come aware of instances of non-compliance. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment, collusion, omission or misrepresentation.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Harding Retail IHC Ltd
Independent Auditor's Report to the Members of Harding Retail IHC Ltd
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.
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90 Victoria Street
Redcliffe
BS1 6DP
Harding Retail IHC Ltd
Consolidated Profit and Loss Account
Year ended 31 December 2023
Note |
2023 |
2022 |
|
Turnover |
|
|
|
Cost of sales |
( |
( |
|
Gross profit |
|
|
|
Administrative expenses |
( |
( |
|
Operating loss before exceptional administrative expenses |
( |
( |
|
Exceptional administrative expenses |
- |
(200,465) |
|
Supplier settlements |
- |
73,226 |
|
Operating loss |
(12,770,225) |
(8,964,033) |
|
Other interest receivable and similar income |
|
|
|
Interest payable and similar expenses |
( |
( |
|
Loss before tax |
( |
( |
|
Tax on loss |
( |
( |
|
Loss for the financial period |
( |
( |
|
Loss attributable to: |
|||
Owners of the company |
( |
( |
The above results were derived from continuing operations.
The group has no recognised gains or losses for the period other than the results above.
Harding Retail IHC Ltd
Consolidated Balance Sheet
31 December 2023
Note |
2023 |
2022 |
|
Fixed assets |
|||
Tangible assets |
|
|
|
Current assets |
|||
Stocks |
|
|
|
Debtors |
|
|
|
Cash at bank and in hand |
|
|
|
|
|
||
Creditors: Amounts falling due within one year |
( |
( |
|
Net current liabilities |
( |
( |
|
Net assets/(liabilities) |
|
( |
|
Capital and reserves |
|||
Called up share capital |
4,962 |
1,194 |
|
Share premium reserve |
46,745,795 |
6,714,442 |
|
Foreign currency translation reserve |
(31,394) |
(31,394) |
|
Merger reserve |
980 |
980 |
|
Profit and loss account |
(45,740,810) |
(23,086,324) |
|
Equity attributable to owners of the company |
979,533 |
(16,401,102) |
|
Shareholders' funds/(deficit) |
979,533 |
(16,401,102) |
Approved and authorised by the
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Company Registration Number: 12421641
Harding Retail IHC Ltd
Balance Sheet
31 December 2023
Note |
2023 |
(As restated) |
|
Fixed assets |
|||
Investments |
|
- |
|
Debtors |
|
|
|
|
|
||
Current assets |
|||
Debtors |
|
|
|
Creditors: Amounts falling due within one year |
- |
( |
|
Net current assets/(liabilities) |
|
( |
|
Net assets/(liabilities) |
|
( |
|
Capital and reserves |
|||
Called up share capital |
4,962 |
1,194 |
|
Share premium reserve |
46,745,795 |
6,714,442 |
|
Profit and loss account |
(4,035,121) |
(15,937,038) |
|
Shareholders' funds/(deficit) |
42,715,636 |
(9,221,402) |
As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these financial statements.
The company made a profit after tax for the financial period of £11,901,917 (2022 - loss after tax for the financial period of £15,731,147)
Approved and authorised by the
......................................... |
......................................... |
Company Registration Number: 12421641
Harding Retail IHC Ltd
Consolidated Statement of Changes in Equity
Year ended 31 December 2023
Share capital |
Share premium |
Foreign currency translation |
Merger reserve |
Profit and loss account |
Total equity |
|
At 31 December 2022 |
|
|
( |
|
( |
( |
Loss for the period |
- |
- |
- |
- |
( |
( |
Total comprehensive income |
- |
- |
- |
- |
( |
( |
New share capital subscribed |
|
|
- |
- |
- |
|
At 31 December 2023 |
|
|
( |
|
( |
|
Share capital |
Share premium |
Foreign currency translation |
Merger reserve |
Profit and loss account |
Total equity |
|
At 1 January 2022 |
|
|
( |
|
( |
|
Loss for the period |
- |
- |
- |
- |
( |
( |
Total comprehensive income |
- |
- |
- |
- |
( |
( |
At 30 December 2022 |
|
|
( |
|
( |
( |
Harding Retail IHC Ltd
Statement of Changes in Equity
Year ended 30 December 2022
Share capital |
Share premium |
Profit and loss account |
Total |
|
At 31 December 2022 |
|
|
( |
( |
Profit for the period |
- |
- |
|
|
New share capital subscribed |
|
|
- |
|
At 31 December 2023 |
|
|
( |
|
Share capital |
Share premium |
Profit and loss account |
Total |
|
At 1 January 2021 |
|
|
( |
|
Loss for the period |
- |
- |
( |
( |
Total comprehensive income |
- |
- |
( |
( |
At 30 December 2022 |
|
|
( |
( |
Harding Retail IHC Ltd
Consolidated Statement of Cash Flows
Year ended 31 December 2023
Note |
2023 |
2022 |
|
Cash flows from operating activities |
|||
Loss for the period |
( |
( |
|
Adjustments to cash flows from non-cash items |
|||
Depreciation |
|
|
|
Loss on disposal of tangible assets |
|
|
|
Finance income |
( |
( |
|
Finance costs |
|
|
|
Income tax expense |
|
|
|
Impairment loss/reversal on PPE |
1,124,653 |
- |
|
( |
( |
||
Working capital adjustments |
|||
Decrease/(increase) in stocks |
|
( |
|
Decrease/(increase) in trade debtors |
|
( |
|
(Decrease)/increase in trade creditors |
( |
|
|
Increase in deferred income |
|
|
|
Cash generated from operations |
( |
( |
|
Income taxes paid |
( |
( |
|
Net cash flow from operating activities |
( |
( |
|
Cash flows from investing activities |
|||
Interest received |
|
|
|
Acquisitions of tangible assets |
( |
( |
|
Net cash flows from investing activities |
( |
( |
|
Cash flows from financing activities |
|||
Interest paid |
( |
( |
|
Proceeds from issue of ordinary shares, net of issue costs |
|
- |
|
Proceeds/(repayment) from bank borrowing draw downs |
|
|
|
Repayment of bank borrowing |
( |
- |
|
Repayment of other borrowing |
( |
- |
|
Effect of exchange rate fluctuations on cash held |
- |
52,947 |
|
Net cash flows from financing activities |
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
( |
|
Cash and cash equivalents at 1 January |
|
|
|
Cash and cash equivalents at 31 December |
3,229,608 |
253,081 |
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
General information |
The company is a private company limited by share capital, incorporated in England and Wales.
These financial statements were authorised for issue by the
The registered office address is disclosed within Company Information (Page 1).
Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Statement of compliance
These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.
Basis of preparation
These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.
The functional currency of the Group is considered to be Pounds Sterling, due to the prevailing economic environment it operates in. The financial statements are also presented in Pounds Sterling.
Monetary amounts in these financial statements are rounded to the nearest pound.
Basis of consolidation
The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 31 December 2023.
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
A subsidiary is an entity controlled by the company. Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the Profit and Loss Account from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the group.
The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill.
Inter-company transactions, balances and unrealised gains on transactions between the company and its subsidiaries, which are related parties, are eliminated in full.
Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the consolidated financial statements.
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Going concern
Having taken into consideration the loss for the year of £22,654,485 (2022 - £21,025,512), net assets of £979,534 (2022 - net liabilities of £14,401,102) and cash flow during the year to 31 December 2023, and the forecast for the coming years, the Directors are satisfied that the Group remains a going concern. This is as a result of making all necessary inquiries, including receiving undertakings of support from the equity and debt funders of the Group and reviewing the forecasts for a period of at least 12 months from the date of approval of these financial statements.
In making this assessment, the directors have considered the following key factors in particular.
The Group relies on the support of its new ultimate parent Group, and its affiliated asset-lending platform, Breal Zeta Commercial Finance Designated Activity Group. (“BZ”). The directors have received written confirmation of this ongoing support from each of the ultimate parent and BZ. The directors expect an extension to the BZ facility in June 2025.
Challenging trading conditions in the first half of 2023 led the Group to restructure its cost base by negotiating with key suppliers and cruiseline partners, and as a result has been profitable and cash generative since September 2023.
The Group has strong relationships with its cruiseline partners, with contracts for ship operations going in to 2027.
During the year ended 31 December 2023, and in light of the challenging trading conditions experienced, certain of the financial covenants attached to the BZ lending arrangement were breached. Subsequent to the year-end BZ have provided a covenant breach waiver (covering each breach) confirmation reflective of their ongoing support for the Group.
The directors’ assessment of the cash-flows, forecast sensitivities, risks and the above-mentioned mitigating factors lead them to conclude that with the support of the ultimate parent Group, it is appropriate to prepare the accounts on a going concern basis.
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Key accounting judgements and critical sources of estimation uncertainty
In the application of the company's accounting policies management is required to make judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. |
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Stock provision
The directors have assessed the value of the Group's stock and have determined where provisions are required. Changes to these assumptions and estimates in future periods reflecting the information available at that point in time may result in outcomes that are materially different. The carrying amount of stock is £63,734,615 (2022 - £63,747,555). The total provision applied to stock is £5,306,152 (2022 - £4,830,241).
Intercompany debtors
Debtors due from subsidiary undertakings are carried at cost less any provision for doubtful debt which requires estimation. The carrying value of amounts due from subsidiary undertakings is £6,500,000 (2022 - £6,500,000) and there is £Nil (2022 - £Nil) provision for doubtful debt in relation to those balances.
Deferred tax asset
The directors have assessed the recoverability of the deferred tax asset of £13,849,824 (2022 - £11,051,173) and at 31 December 2023, do not consider there to be sufficient certainty over future taxable profits to utilise the tax asset. As a result, a deferred tax asset of £415,514 (2022 - £976,976) has been recognised within these accounts which has offset the deferred tax liability.
Revenue recognition
Revenue is recognised to the extent that the company obtains the right to consideration in exchange for ownership of goods. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, VAT and other sales taxes or duty.
The group recognises revenue when:
The significant risks and rewards of ownership of the goods have passed to the buyer;
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.
Revenue is earned from acting in the capacity of an agent rather than as the principal in some transactions, for example trunk sales. The net amount of commission earned is recognised as revenue.Trunk sales are sales for which a local vendor boards the cruise and sells their products in the groups shops. In this context the group acts as an agent and will be entitled to a pre-agreed margin.
Foreign currency transactions and balances
Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.
Tax
Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
The current corporation tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the group operates and generates taxable income.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date.
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
Tangible assets
Tangible assets, excluding shop fixture and fittings, are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Shop fixture and fittings are shown as cost less income received in order to cover the cost of installation.
The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.
Depreciation
Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:
Asset class |
Depreciation method and rate |
Short leasehold |
term of the lease |
Plant and machinery |
5 years |
Fixtures and fittings |
the shorter of the contract term and 5 years |
Computer equipment |
3 or 5 years |
Improvements to property |
term of lease |
Shop fixtures and fittings |
related vessel contract term |
Investments
Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.
Interest income on debt securities, where applicable, is recognised in income using the effective interest method. Dividends on equity securities are recognised in income when receivable.
Stocks
Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow-moving items.
At each reporting date, stocks are assessed for impairment. If stocks are impaired, the carrying amount is reduced to its selling price less costs to sell; the impairment loss is recognised immediately in profit or loss.
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Provisions
A provision is recognised when the Company has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation.
Leases
Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the group has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Financial instruments
Classification
• Short term trade and other debtors and creditors;
• Asset-based lending; and
• Cash and bank balances.
All financial instruments are classified as basic.
Recognition and measurement
Financial instruments are recognised when the group becomes party to the contractual provisions of the instrument and derecognised when in the case of assets, the contractual rights to cash flows from the assets expire or substantially all the risks and rewards of ownership are transferred to another party, or in the case of liabilities, when the group's obligations are discharged, expire or are cancelled.
Except for asset-based lending, such instruments are initially measured at transaction price, including transaction costs, and are subsequently carried at the undiscounted amount of the cash or other consideration expected to be paid or received, after taking account of impairment adjustments.
Asset-based lending is initially measured at transaction price, including transaction costs, and are subsequently carried at amortised cost using the effective interest method.
Impairment
The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. Non-financial assets that have been previously impaired are reviewed at each year end date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Turnover |
The analysis of the group's Turnover for the period from continuing operations is as follows:
2023 |
2022 |
|
Sale of goods |
|
|
Trunk sales |
|
|
|
|
It is not appropriate to split the revenue into geographical locations as the majority of sales are made in international waters.
Operating loss before exceptional administrative expenses |
Arrived at after charging/(crediting)
2023 |
2022 |
|
Depreciation expense |
|
|
Impairment loss of fixed assets |
|
- |
Write-down of stocks to net realisable value |
|
- |
Foreign exchange losses |
|
|
Operating lease rentals |
|
|
Loss on disposal of property, plant and equipment |
|
|
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Staff costs |
The aggregate payroll costs (including directors' remuneration) were as follows:
2023 |
2020 |
|
Wages and salaries |
|
|
Social security costs |
|
|
Pension costs, defined contribution scheme |
|
|
Fundamental reorganisation costs |
- |
200,465 |
|
|
The staff costs relating to the fundamental reorganisation are included within the total cost of £Nil (2022 - £200,465) as shown in exceptional items, note 8.
The average number of persons employed by the group (including directors) during the period, analysed by category was as follows:
2023 |
2022 |
|
Administration and support |
|
|
|
|
Directors' remuneration |
The directors' remuneration for the period was as follows:
2023 |
2022 |
|
Remuneration |
|
|
In respect of the highest paid director:
2023 |
2022 |
|
Remuneration |
|
|
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Auditor's remuneration |
2023 |
2022 |
|
Audit of these financial statements |
12,310 |
11,500 |
Audit of the financial statements of subsidiaries of the company pursuant to legislation |
72,920 |
42,900 |
|
|
|
Other fees to auditors |
||
Taxation compliance services |
|
|
All other assurance services |
|
|
|
|
Exceptional items |
2023 |
2022 |
|
Exceptional items - staff costs |
- |
200,465 |
- |
|
The fundamental reorganisation costs include staff costs of £Nil (2022 - £200,465), as shown in note 5.
Exceptional income |
2022
|
2021
|
|
Supplier settlements |
- |
73,226 |
During 2021 Harding Brothers Retail Limited launched a Company Voluntary Arrangement (CVA) with the purpose of restructuring its debt. The CVA was successful, and it was agreed that compromised creditors would receive 80% of the debt. The balance showing as supplier settlements is the 20% of the compromised debt that was agreed to be written off, as well as 100% of the debt of some suppliers that did not claim a debt. Following the final payment to creditors in January 2024 the CVA has now closed.
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Other interest receivable and similar income |
2023 |
2022 |
|
Interest income on bank deposits |
- |
|
Other finance income |
|
|
|
|
Interest payable and similar expenses |
2023 |
2022 |
|
Interest on borrowings |
|
|
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Taxation |
Tax charged/(credited) in the profit and loss account
2022 |
2021 |
|
Foreign tax |
|
|
Deferred taxation |
||
Arising from origination and reversal of timing differences |
- |
|
Tax expense in the income statement |
|
|
On 1 April 2023 there was an increase in the main rate of corporation tax to 25%, with the rate prior to that date being 19%. Consequently there has been an increase in the applicable tax rate to 23.5% (2022 - 19%), being the average rate for the year.
The tax on profit before tax for the period is lower than the standard rate of corporation tax in the UK (2022 - higher than the standard rate of corporation tax in the UK) of
The differences are reconciled below:
2023 |
2022 |
|
Loss before tax |
( |
( |
Corporation tax at standard rate |
( |
( |
Effect of revenues exempt from taxation |
- |
( |
Effect of expense not deductible in determining taxable profit (tax loss) |
|
|
UK deferred tax credit relating to changes in tax rates or laws |
( |
( |
Deferred tax expense from unrecognised tax loss or credit |
|
|
Deferred tax credit from unrecognised temporary difference from a prior period |
( |
( |
Tax (decrease)/increase from effect of capital allowances and depreciation |
( |
|
Other tax effects for reconciliation between accounting profit and tax expense (income) |
- |
( |
Total tax charge |
|
|
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Deferred tax
Group
Deferred tax assets and liabilities
2023 |
Asset |
Liability |
Accelerated tax depreciation |
- |
|
Tax losses carry-forwards |
|
- |
|
|
2022 |
Asset |
Liability |
Accelerated tax depreciation |
- |
|
Tax losses carry-forwards |
|
- |
|
|
The directors do not consider there to be sufficient certainty over future taxable profits to utilise the tax asset in full. As a result of this the group has unrecognised deferred tax assets of £13,434,310 in relation to losses (2022 - £11,051,173).
Deferred tax
Group
Deferred tax assets and liabilities
2023 |
Asset |
Liability |
Accelerated tax depreciation |
- |
|
Tax losses carry-forwards |
|
- |
|
|
2022 |
Asset |
Liability |
Accelerated tax depreciation |
- |
|
Tax losses carry-forwards |
|
- |
|
|
The directors do not consider there to be sufficient certainty over future taxable profits to utilise the tax asset in full. As a result of this the group has unrecognised deferred tax assets of £13,434,310 in relation to losses (2022 - £11,051,173).
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Tangible assets |
Group
Short leasehold |
Improvements to property |
Plant and machinery |
Fixtures and fittings |
Shop fixtures and fittings |
Computer equipment |
Total |
|
Cost or valuation |
|||||||
At 31 December 2022 |
|
|
|
|
|
|
|
Reclassifications |
- |
- |
- |
( |
- |
|
- |
Additions |
|
- |
- |
|
|
|
|
Disposals |
- |
- |
( |
( |
( |
( |
( |
At 31 December 2023 |
|
|
|
|
|
|
|
Depreciation |
|||||||
At 31 December 2022 |
|
|
|
|
|
|
|
Charge for the period |
|
|
|
|
|
|
|
Eliminated on disposal |
- |
- |
( |
( |
( |
( |
( |
Impairment |
- |
- |
- |
- |
|
- |
|
At 31 December 2023 |
|
|
|
|
|
|
|
Carrying amount |
|||||||
At 31 December 2023 |
|
- |
|
|
|
|
|
At 31 December 2022 |
|
|
|
|
|
|
|
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Impairment
Shop fixtures and fittings
Investments |
Company
2023 |
2022 |
|
Investments in subsidiaries |
|
- |
Subsidiaries |
£ |
Cost or valuation |
|
At 31 December 2022 |
|
Additions |
|
At 31 December 2023 |
|
Provision |
|
At 31 December 2022 |
|
Write back impairment provision |
( |
At 31 December 2023 |
- |
Carrying amount |
|
At 31 December 2023 |
|
The £14,781,975 of investments held in subsidiaries was fully impaired as at 30 December 2022 as a result of adverse market conditions during 2022 driven by increased inflation during the period of recovery from the pandemic, and in light of management's cashflow forecasts based, in accordance with the requirements of FRS102, on conditions which existed at the 2022 reporting date. However, in the second half of 2023, the principal trading subsidiary, Harding Brothers Retail Limited, entered into new trading arrangements with certain key customers. These arrangements are forecast to improve the Group’s profit and cash generation significantly in the immediate future, and when assessing the carrying value of investments, the directors consider there is no longer a requirement for a provision for impairment as at 31 December 2023 and the provision has been reversed.
Details of undertakings
Details of the investments in which the company holds 20% or more of the nominal value of any class of share capital are as follows:
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Undertaking |
Registered office |
Holding |
Proportion of voting rights and shares held |
||||
2023 |
2022 |
||||||
Subsidiary undertakings |
|||||||
|
Avonmouth Way, Avonmouth, Bristol, BS11 8DD England and Wales |
|
|
|
|||
|
Avonmouth Way, Avonmouth, Bristol, BS11 8DD England and Wales |
|
|
|
|||
|
Avonmouth Way, Avonmouth, Bristol, BS11 8DD England and Wales |
|
|
|
|||
|
Avonmouth Way, Avonmouth, Bristol, BS11 8DD incorporated in USA |
|
|
|
|||
|
Australian Business Nominees Pty Limited, MLC Centre Level 53, 19-29 Martin Place, Sydney NSW 2000, Sydney incorporated in Australia |
|
|
|
Subsidiary undertakings |
Harding Brothers Holdings Limited The principal activity of Harding Brothers Holdings Limited is |
Harding Brothers Retail Limited The principal activity of Harding Brothers Retail Limited is |
Harding Brothers Retail Operations Limited The principal activity of Harding Brothers Retail Operations Limited is |
Harding Brothers Inc. The principal activity of Harding Brothers Inc. is |
Harding Brothers Australia Pty Limited The principal activity of Harding Brothers Australia Pty Limited is |
Note: All entities other than Harding Brothers Holdings Limited are controlled under indirect holding.
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Loans to group undertakings
Company
Loans to group undertakings |
Total |
|||
£ |
£ |
|||
Cost |
||||
At 31 December 2022 |
- |
- |
||
Restatement |
6,500,000 |
6,500,000 |
||
At 31 December 2022 (as restated) and 2023 |
6,500,000 |
6,500,000 |
||
Provisions for impairment |
||||
At 31 December 2022 and 2023 |
- |
- |
||
Carrying amount |
||||
At 31 December 2023 |
6,500,000 |
6,500,000 |
||
At 30 December 2022 (as restated) |
6,500,000 |
6,500,000 |
||
Adjustment to prior period: £6,500,000 of loans owed by group undertakings has been reclassified from 'current assets' to 'non-current assets'. Although amounts owed by group undertakings is repayable on demand it is not expected that the amount will be realised within the next 12 months and as such are held on a continuing basis.
Stocks |
Group |
Company |
|||
2023 |
2022 |
2023 |
2022 |
|
Finished goods and goods for resale |
|
|
- |
- |
Debtors |
Group |
Company |
|||
Current |
2023 |
2022 |
2023 |
(As restated) |
Trade debtors |
|
|
- |
- |
Other debtors |
|
|
|
|
Prepayments |
|
|
- |
- |
Income tax asset |
|
|
- |
- |
|
|
|
|
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Details of non-current trade and other debtors
Group
£Nil (2022 - £22,450) of prepayments is classified as non current.
Group |
Company |
|||
Non-current |
2023 |
2022 |
2023 |
(As restated) |
Amounts owed by group undertakings |
- |
- |
|
|
Adjustment to prior period: £6,500,000 of loans owed by group undertakings has been reclassified from 'current assets' to 'non-current assets'. Although amounts owed by group undertakings is repayable on demand it is not expected that the amount will be realised within the next 12 months and as such are held on a continuing basis.
Cash and cash equivalents |
Group |
Company |
|||
2023 |
2022 |
2023 |
2022 |
|
Cash on hand |
- |
|
- |
- |
Cash at bank |
|
|
- |
- |
|
|
- |
- |
Creditors |
Group |
Company |
||||
Note |
2023 |
2022 |
2023 |
2022 |
|
Due within one year |
|||||
Loans and borrowings |
|
|
- |
- |
|
Trade creditors |
|
|
- |
- |
|
Amounts owed to parent company |
- |
15,905,063 |
- |
15,905,063 |
|
Corporation tax |
6,724 |
6,857 |
- |
- |
|
Social security and other taxes |
|
|
- |
- |
|
Outstanding defined contribution pension costs |
|
|
- |
- |
|
Other creditors |
|
|
- |
- |
|
Accruals and deferred income |
|
|
- |
- |
|
|
|
- |
|
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Loans and borrowings |
Group |
Company |
|||
2023 |
2022 |
2023 |
2022 |
|
Current loans and borrowings |
||||
Bank borrowings |
|
|
- |
- |
Amounts owed to parent company |
- |
|
- |
|
|
|
- |
|
Bank borrowings
The asset-based lending agreement was entered in to on 31 January 2020 and amended and restated on 17 November 2020, 2 February 2021, 17 November 2021, 29 March 2022 and 29 November 2022. This facility was renewed on 30 June 2023 to increase the loan cap to £70m and amended and restated on 27 October 2023. The carrying amount at period end is £59,040,765 (2022 - £57,234.543).
In relation to advances and/or other amounts denominated in GBP, interest of 6% per annum above Bank Base Rate provided that if at any time Bank Base Rate is less than 1%, Bank Base Rate shall be deemed to be 1%;
In relation to advances and/or other amounts denominated in USD, interest of 7% per annum provided that if and for so long as the Screen Rate for US LIBOR is higher than 173bps, the Interest Rate for Advances denominated in USD shall be increased by the number of basis points by which the Screen Rate exceeds 173bps;
In relation to advances and/or other amounts denominated in EUR, interest of 6% per annum above EURIBOR provided that if at any time EURIBOR is less than 1%, EURIBOR shall be deemed to be 1%;
In relation to advances and/or other amounts denominated in AUD, interest of 6% per annum above the BBSW rate provided that if at any time the BBSW rate is less than 1% the BBSW rate shall be deemed to be 1%; or
In relation to an over advance denominated in GBP, interest of 15% per annum or in relation to any amount drawn under the overdraft facility in GBP or USD, 15% per annum.
Multiple financial covenants with respect to this agreement have been breached in the financial year. However, a waiver with respect to these breaches has been obtained post year end.
The facility is due to expire on 30 June 2025 and security is held by BZ over the assets of Harding Brothers Retail Limited.
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Obligations under leases |
Group
Operating leases
The total of future minimum lease payments is as follows:
2023 |
2022 |
|
Not later than one year |
|
|
Later than one year and not later than five years |
|
|
|
|
The amount of non-cancellable operating lease payments recognised as an expense during the period was £
Pension schemes |
Defined contribution pension scheme
The group operates a defined contribution pension scheme. The pension cost charge for the period represents contributions payable by the group to the scheme and amounted to £
Contributions totalling £
Share capital |
Allotted, called up and fully paid shares
2023 |
2022 |
|||
No. |
£ |
No. |
£ |
|
|
|
3,947.73 |
|
179.71 |
|
|
864.26 |
|
864.26 |
|
|
150.00 |
|
150.00 |
|
|
0.03 |
|
0.03 |
|
|
|
|
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
On 29 September 2023, the company issued 18,840,057 A Ordinary shares of £0.0002 each at a premium of £2.12 per share.
Rights, preferences and restrictions
Ordinary shares have the following rights, preferences and restrictions: |
A Ordinary shares have the following rights, preferences and restrictions: |
B Ordinary shares have the following rights, preferences and restrictions: |
C Ordinary shares have the following rights, preferences and restrictions: |
D Ordinary shares have the following rights, preferences and restrictions: |
Other long-term employment and termination benefits |
Director Payment in Lieu of Notice
|
Ex-gratia Payment
|
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Analysis of changes in net debt |
Group
At 31 December 2022 |
Financing cash flows |
At 31 December 2023 |
|
Cash and cash equivalents |
|||
Cash and cash equivalents |
253,081 |
2,976,527 |
3,229,608 |
Borrowings |
|||
Short term borrowings |
(57,234,543) |
(1,806,222) |
(59,040,765) |
|
|||
( |
|
( |
Parent and ultimate parent undertaking |
The ultimate parent is
Walkers Global Shareholding Services Limited does not prepare consolidated financial statements.
The company is ultimately beneficially owned by five charities registered in the Republic of Ireland with no single ultimate controlling party. Walkers Global Shareholding Services Limited hold the shares on trust on behalf of the five Irish charities.
Harding Retail IHC Ltd
Notes to the Financial Statements
Year ended 31 December 2023
Related party transactions |
Group
The total remuneration for the key management personnel for the year totalled £1,102,326 (2022 - £1,156,142).
A director of the Company is also a director of Harding Bros (Shipping Contractors) Limited, a company incorporated in England and Wales. During the year Harding Brothers Retail Limited rented property from Harding Bros (Shipping Contractors) Limited, at the cost of £217,800 (2022 - £212,857). At the end of the year Harding Brothers Retail Limited owed £Nil (2022 - £Nil). The amounts received from Harding Bros (Shipping Contractors) Limited for sales made during the year was £63,975 (2022 - £58,455). At the end of the year Harding Brothers Retail Limited was owed £80,169 (2022 - £16,194).
A director of the Company is also a director of Admiral Harding Limited, a company incorporated in England and Wales. During the year, Harding Brothers Retail Limited purchased goods and provisions from Admiral Harding Limited at the cost of £26,654 (2022 - £24,916). At the end of the year Harding Brothers Retail Limited owed £3,440 (2022 - £18,199). The income from Admiral Harding Limited for sales made during the year was £369 (2022 - £1,724). At the end of the year Harding Brothers Retail Limited was owed £Nil (2022 - £1,407).
Harding Brothers Retail Limited and Breal Zeta (BZ) Commercial Finance Designated Activity Company entered into a loan facility that is secured against 85% of trade receivables and 85% of inventory as part of the group restructure. BZ is a connected party through common ownership. Under the agreement, BZ agreed to lend to Harding Brothers Retail Limited up to £30m, with the option to increase up to £40m.This facility has been renewed during the year to increase the loan cap to £70m. The outstanding amount at balance sheet date is £59,040,765 (2022 - £57,234,542).
Harding Retail IHC Limited has a loan facility with Burlington Loan Management Designated Activity Company (DAC), a company incorporated in Ireland. Burlington Loan Management DAC is a majority shareholder of Harding Retail IHC Limited. Under the agreement, Burlington Loan Management DAC agreed to lend to Harding Retail IHC Limited up to £3,500,000. This facility has been renewed during the year to increase the loan cap to £18.5m. The outstanding amount at balance sheet date is £Nil (2022 - £15,905,063).
At the year end, the Company was owed £96,839 (2022 - £96,839) from directors of the company. The interest rate of all loans is 2.25% per annum and they are repayable in full on sale of the company's shares.