Consolidated Financial Statements
RGHVBRM Limited
For the financial year ended 31 December 2023
Registered number: 11550898
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Company Information
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Chartered Accountants & Statutory Auditors
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Contents
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Director's responsibilities statement
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Independent auditor's report
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Consolidated statement of comprehensive income
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Consolidated statement of financial position
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Company statement of financial position
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Consolidated statement of changes in equity
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Company statement of changes in equity
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Consolidated statement of cash flows
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Consolidated analysis of net debt
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Notes to the financial statements
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Group strategic report
For the financial year ended 31 December 2023
The directors present their report and the financial statements for the year ended 31 December 2023.
Principal activity and business review
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The principal activity of the group during the year was the marketing and distribution of a range of products for the leisure and garden products market.
The directors' aim to present a balanced and comprehensive review of the development and performance of the business during the year and it’s position at the year end. Their review is consistent with the size and nature of the business and is written in the context of the risks and uncertainties they face. As with many businesses of their size, the business environment in which they operate continues to be challenging. With this in mind, the directors are aware that any plans for the future development of the business may be subject to unforeseen future events outside of their control.
There were no significant changes in the activities of the Group during the year.
The directors consider that the key performance indicators (KPIs) are turnover, gross margin and EBITDA and these indicators are closely monitored. These KPIs allow the directors to assess both the growth and profitability of the group against competitors and the internal and external factors that affect the business. The directors are satisfied with the performance in respect of these KPIs.
The performance of the group was as follows:
The directors are pleased with the overall performance of the business. The results of the Group for the year show a profit before tax of £609,514 (2022: £3,286,185). The shareholders' funds of the Company total £12,606,211 (2022: £12,247,177). The group has reported a profit with an decrease in turnover during the period mainly as a result of normalisation of trading following positive trading trends from Covid-19. The directors continue to expect the company's performance to improve in the succeeding periods based on budgets and projections and actions taken by the company to address any risks affecting the business. They will continue to identify and develop new business opportunities within the industry sector with the view to continued growth.
Page 1
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Group strategic report (continued)
For the financial year ended 31 December 2023
Principal risks and uncertainties
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The directors consider that the principal risks and uncertainties faced by the group are in the following categories:
Economic risk
Uncertainty about global economic conditions due to the current economic climate could result in difficulties for the Company.
Brexit risk
The group sources the vast majority of goods from the Far East and as such, there is some degree of risk reduction from Brexit depending on the trade negotiations with the Far East by the UK Government. As such the group does not anticipate a major change to existing trade tariffs on its imported goods.
Competition risk
The directors of the group and company manage competition risk through close attention to customer service levels.
Financial risk
All key financial figures are monitored on an ongoing basis.
People in our business
The continued success of the group and company has been achieved by the people working in it. There are many long serving members of staff and the relatively low turnover of personnel reflects the general policy of providing good terms and conditions of employment while dealing with staff as well as other stakeholders in the business, in a fair and consistent manner. Their continued loyalty and hard work is much appreciated.
The group plans to continue and grow its present activities.
Financial key performance indicators
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The company considers the following measures to be important indicators of the underlying performance of the business:
Gross Margin
Gross margin for the year was 32.1% (2022: 26.5%).
This report was approved by the board and signed on its behalf.
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R.P. Grimmer
Director
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Page 2
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Director's report
For the financial year ended 31 December 2023
The director presents his report and the financial statements for the financial year ended 31 December 2023.
The principal activity of the group during the year was that of a holding company as well as marketing and distribution of a range of products for the leisure and garden products market. The financial statements cover the 12 month period ending 31 December 2023.
The profit for the financial year, after taxation, amounted to £419,034 (2022 - £2,670,039).
The director has recommended a dividend of £60,000 for the year (2022: £92,321).
The director who served during the financial year was:
The group plans to continue with the current activities indefinitely.
Research and development activities
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The Group engaged in research and development costs of £886,606 (2022: £1,207,982) during the year.
Matters covered in the Group strategic report
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As permitted by Section 414 (c) (11) of the Companies Act 2006, the director has elected to disclose information required to be in the director's report by Schedule 7 of the "Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008", in the Group Strategic report.
Disclosure of information to auditor
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The director at the time when this Director's report is approved has confirmed that:
∙so far as he is aware, there is no relevant audit information of which the company and the Group's auditor is unaware, and
∙he has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the company and the Group's auditor is aware of that information.
Post balance sheet events
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There have been no events affecting the Group since the financial year end.
Page 3
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Director's report (continued)
For the financial year ended 31 December 2023
The auditor, Grant Thornton, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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R.P. Grimmer
Director
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Page 4
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Director's responsibilities statement
For the financial year ended 31 December 2023
The director is responsible for preparing the Group strategic report, the Director's report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the director is required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments 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;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and the Group and to enable him to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
On behalf of the board,
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R.P. Grimmer
Director
Date 17 December 2024
Page 5
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Independent auditor's report to the members of RGHVBRM Limited
We have audited the financial statements of RGHVBRM Limited (the 'parent company') and its subsidiaries (the 'Group'), which comprise the Consolidated Statement of comprehensive income, the Consolidated and company Statement of changes in equity, and the Consolidated Statement of cash flows for the financial year ended 31 December 2023, the consolidated and company Statement of financial position as at 31 December 2021, and the related 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, RGHVBRM Limited's financial statements:
∙give a true and fair view in accordance with United Kingdom Generally Accepted Accounting Practice of the assets, liabilities and financial position of the Group's and the company as at 31 December 2023 and of the Group financial performance and cash flows for the financial year then ended; 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 'Responsibilities of the auditor for the audit of the financial statements' section of our report. We are independent of the Group and company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, namely the FRC's Ethical Standard and the ethical pronouncements established by Chartered Accountants Ireland, applied as determined to be appropriate in the circumstances of the entity. 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
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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's or the parent company's ability to continue as a going concern for a period of at least twelve months from the date when the financial statements are authorised for issue.
Our responsibilities, and the responsibilities of the director, with respect to going concern are described in the relevant sections of this report.
Page 6
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Independent auditor's report to the members of RGHVBRM Limited (continued)
Other information comprises the information included in the annual report, other than the financial statements and our Auditor's report thereon, including the Director's report and the Strategic Report. The director are responsible for the other information. Our opinion on the financial statements does not cover the information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
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 in the financial statements, 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.
Opinions on other matters 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 Director's report and the Strategic Report for the financial year for which the financial statements are prepared is consistent with the financial statements, and
∙the Director's report and the Strategic Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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In the light of the knowledge and understanding of the company and its environment we have obtained in the course of the audit, we have not identified material misstatements in the Director's report and the Strategic 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 , or returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of director's remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
Page 7
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Independent auditor's report to the members of RGHVBRM Limited (continued)
Responsibilities of management and those charged with governance for the financial statements
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Management is responsible for the preparation of the financial statements which give a true and fair view in accordance with United Kingdom Generally Accepted Accounting Practice, including FRS102 and for such internal control as the director 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, management is responsible for assessing the Group and 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 management either intend to liquidate the Group and company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group and company's financial reporting process.
Responsibilities of the auditor for the audit of the financial statements
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The objectives of an auditor 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 their opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of an auditor's responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Explanation as to what extent 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. Owing to the inherent limitations of an audit, there is an unavoidable risk that material misstatement in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with ISAs (UK).
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:
Based on our understanding of the group's industry, we identified that the principal risks of non-compliance with laws and regulations related to compliance with data protection and Employment laws, Health and Safety Regulation, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulation that have a direct impact on the preparation of the financial statements such as the Companies Act 2006 and UK tax legislation. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to manipulate financial performance and management bias through judgements and assumptions in significant accounting estimates, in particular in relation to significant one-off or unusual transactions. We apply professional scepticism through the audit to consider potential deliberate omission or concealment of significant transactions, or incomplete/inaccurate disclosures in the financial statements.
Page 8
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Independent auditor's report to the members of RGHVBRM Limited (continued)
Responsibilities of the auditor for the audit of the financial statements (continued)
In response to these principal risks, our audit procedures included but were not limited to:
∙inquiries of management and board on the policies and procedures in place regarding compliance with laws and regulations, including consideration of known or suspected instances of non-compliance and whether they have knowledge of any actual, suspected or alleged fraud;
∙inspection of the Company’s legal correspondence and review of minutes of board meetings during the year to corroborate inquiries made;
∙gaining an understanding of the internal controls established to mitigate risk related to fraud;
∙discussion amongst the engagement team in relation to the identified laws and regulations and regarding the risk of fraud, and remaining alert to any indications of non-compliance or opportunities for fraudulent manipulation of financial statements throughout the audit;
∙identifying and testing journal entries to address the risk of inappropriate journals and management override of controls;
∙designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing;
∙challenging assumptions and judgements made by management in their significant accounting estimates, including useful lives of depreciable assets, estimating allowance for impairment losses in intangible and tangible fixed assets and allowances for impairment of trade and other debtors; and
∙review of the financial statements disclosures to underlying supporting documentation and inquiries of management.
The primary responsibility for the prevention and detection of irregularities including fraud rests with those charged with governance and management. As with any audit, there remains a risk of non-detection or irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or override of internal controls.
The purpose of our audit work and to whom we owe our responsibilities
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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.
Tracey Sullivan (Senior statutory auditor)
for and on behalf of
Grant Thornton
Chartered Accountants &
Statutory Auditors
Dublin 2
17 December 2024
Page 9
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Consolidated statement of comprehensive income
For the financial year ended 31 December 2023
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Exceptional distribution costs
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Exceptional other operating charges
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Interest payable and similar expenses
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Profit for the financial year
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Profit for the financial year attributable to:
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Owners of the parent company
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There were no recognised gains and losses for 2023 or 2022 other than those included in the consolidated statement of comprehensive income.
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There was no other comprehensive income for 2023 (2022: £NIL).
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The notes on pages 19 to 37 form part of these financial statements.
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Page 10
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RGHVBRM Limited
Registered number:11550898
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Consolidated statement of financial position
As at 31 December 2023
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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Net assets excluding pension asset
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Equity attributable to owners of the parent company
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Page 11
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RGHVBRM Limited
Registered number:11550898
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Consolidated statement of financial position (continued)
As at 31 December 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
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R.P. Grimmer
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The notes on pages 19 to 37 form part of these financial statements.
Page 12
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RGHVBRM Limited
Registered number:11550898
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Company statement of financial position
As at 31 December 2023
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
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R.P. Grimmer
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The notes on pages 19 to 37 form part of these financial statements.
Page 13
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Consolidated statement of changes in equity
For the financial year ended 31 December 2023
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Comprehensive income for the financial year
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Profit for the financial year
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Contributions by and distributions to owners
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Dividends: Equity capital
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The notes on pages 19 to 37 form part of these financial statements.
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Consolidated statement of changes in equity
For the financial year ended 31 December 2022
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Comprehensive income for the year
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Contributions by and distributions to owners
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Dividends: Equity capital
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The notes on pages 19 to 37 form part of these financial statements.
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Page 14
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Company statement of changes in equity
For the financial year ended 31 December 2023
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Comprehensive income for the year
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Profit for the financial year
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Total comprehensive income for the financial year
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Company statement of changes in equity
For the financial year ended 31 December 2022
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Comprehensive income for the year
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Contributions by and distributions to owners
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Dividends: Equity capital
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The notes on pages 19 to 37 form part of these financial statements.
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Page 15
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Consolidated statement of cash flows
For the financial year ended 31 December 2023
Cash flows from operating activities
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Profit for the financial year
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Amortisation of intangible assets
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Depreciation of tangible assets
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Decrease/(increase) in stocks
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Corporation tax received/(paid)
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of intangible fixed assets
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Purchase of tangible fixed assets
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Net cash from investing activities
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Cash flows from financing activities
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Repayment of/new finance leases
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Net cash used in financing activities
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Net increase/(decrease) in cash and cash equivalents
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Cash and cash equivalents at beginning of financial year
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Cash and cash equivalents at the end of financial year
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Cash and cash equivalents at the end of financial year comprise:
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Page 16
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Consolidated statement of cash flows (continued)
For the financial year ended 31 December 2023
The notes on pages 19 to 37 form part of these financial statements.
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Page 17
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Consolidated Analysis of Net Debt
For the financial year ended 31 December 2023
The notes on pages 19 to 37 form part of these financial statements.
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Page 18
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Notes to the financial statements
For the financial year ended 31 December 2023
RGHVBRM Limited is a members limited company which is registered and incorporated in the United Kingdom. The company's registered address is Dewmead Farm, New Inn Road, Hinxworth, Hertfordshire, SG7 5HG, United Kingdom.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The consolidated financial statements present the results of the company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Consolidated Statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
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Foreign currency translation
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Functional and presentation currency
The company's functional and presentational currency is GBP (£).
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
Page 19
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Notes to the financial statements
For the financial year ended 31 December 2023
2.Accounting policies (continued)
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Foreign currency translation (continued)
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On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
∙the Group has transferred the significant risks and rewards of ownership to the buyer;
∙the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of revenue can be measured reliably;
∙it is probable that the Group will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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Operating leases: the Group as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
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Leased assets: the Group as lessee
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Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to profit or loss so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
Page 20
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Notes to the financial statements
For the financial year ended 31 December 2023
2.Accounting policies (continued)
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the Consolidated statement of comprehensive income over its remaining useful economic life of 10 years.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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Long-term leasehold property
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Over the life of the lease (6 years)
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
Page 21
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Notes to the financial statements
For the financial year ended 31 December 2023
2.Accounting policies (continued)
Investments in subsidiaries are measured at cost less accumulated impairment.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the Consolidated statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Group has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
Financial instruments are recognised in the Group's Statement of financial position when the Group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Page 22
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Notes to the financial statements
For the financial year ended 31 December 2023
2.Accounting policies (continued)
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Financial instruments (continued)
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Basic financial assets
Basic financial assets, which include trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
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 the deduction of all its liabilities.
Basic financial liabilities, which include trade and other creditors, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest, discounting is omitted where the effect of discounting is immaterial.
Page 23
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Notes to the financial statements
For the financial year ended 31 December 2023
2.Accounting policies (continued)
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Financial instruments (continued)
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Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade creditors are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Page 24
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Notes to the financial statements
For the financial year ended 31 December 2023
2.Accounting policies (continued)
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position. The assets of the plan are held separately from the Group in independently administered funds.
A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the reporting date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the reporting date.
All borrowing costs are recognised in profit or loss in the financial year in which they are incurred.
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Current and deferred taxation
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The tax expense for the financial year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income 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 company and the Group operate and generate income.
Page 25
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Notes to the financial statements
For the financial year ended 31 December 2023
2.Accounting policies (continued)
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Current and deferred taxation (continued)
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Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
Exceptional items are transactions that fall within the ordinary activities of the Group but are presented separately due to their size or incidence.
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Judgments in applying accounting policies and key sources of estimation uncertainty
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When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses:
Doubtful debts
The company estimates allowances for doubtful trade and other debtors based on assessment of specific trading accounts where the company has objective evidence default on payment terms or significant financial difficulty that certain customers are unable to meet their financial obligations. In these cases judgement used is based on the best available facts and circumstances.
Estimating useful lives of depreciable assets
Tangible fixed assets, other than investments properties, are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on the number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
Estimating allowance for impairment losses in intangible and tangible assets
The company assesses impairment on intangible and tangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The factors that the company considers important which could trigger an impairment review include the following:
Page 26
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Notes to the financial statements
For the financial year ended 31 December 2023
3.Judgments in applying accounting policies and key sources of estimation uncertainty (continued)
1)Significant underperformance relative to expected historical or projected future operating results
2)Significant changes in the manner of use of the acquired assets or the strategy for overall business; and
3)Significant negative industry or economic trends.
In determining the present value of estimated future cashflows expected to be generated from the continued use of the assets, the company is required to make estimates and assumptions that can materially affect the financial statements.
These assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. An impairment loss would be recognised whenever evidence exists that the carrying value is not recoverable. For purposes of assessing impairment, assets are grouped at the lowest levels of which there are separately identifiable cashflows.
An impairment loss is recognised and charged to profit or loss if the discounted expected future cash flows are less than the carrying amount. Fair value is estimated by discounting the expected future cashflows using a discount factor that reflects the risk-free rate of interest for a term consistent with the period of expected cashflows.
The whole of the turnover is attributable to its principal activity. The director considers it to be seriously prejudicial to the interests of the company to disclose information regarding turnover, therefore the fact that such information has not been disclosed must be stated in accordance with SI2008/410, schedule 1(68).
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The operating profit is stated after charging:
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Depreciation of tangible fixed assets
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Amortisation of intangible assets, including goodwill
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Fees payable to the Group's auditor and its associates for the audit of the Company's annual financial statements
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Fees payable to the Group's auditor and its associates for the non-audit services:
- corporation tax compliance
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Cost of defined contribution scheme
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Page 27
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Notes to the financial statements
For the financial year ended 31 December 2023
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Management performed an assessment of exceptional costs. In the prior year, these arose from once off legal costs incurred by the company. In the current year, exceptional costs arose from the closure of one of the Company’s warehouses.
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Staff costs, including director's remuneration, were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the director, during the financial year was as follows:
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Number of administration and warehouse staff
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The highest paid director received remuneration of £186,831 (2022 - £150,800).
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The value of the Group's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £10,978 (2022 - £10,556).
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The number of directors to whom pension benefits are accruing is 5 (2022: 5).
Director's remuneration includes amounts paid to directors of subsidiary entities.
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Page 28
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Notes to the financial statements
For the financial year ended 31 December 2023
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Interest payable and similar expenses
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Finance leases and hire purchase contracts
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Factors affecting tax charge for the financial year
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The tax assessed for the financial year is lower than (2022 - lower than) the standard rate of corporation tax in the UK of 23.5% (2022 - 19%). The differences are explained below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.5% (2022 - 19%)
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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
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Capital allowances for financial year in excess of depreciation
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Adjustments to tax charge in respect of prior periods
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Total tax charge for the financial year
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Page 29
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Notes to the financial statements
For the financial year ended 31 December 2023
10.Taxation (continued)
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Factors that may affect future tax charges
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There are no factors affecting future tax charges.
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Parent company profit for the year
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The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements. The profit after tax of the parent company for the financial year was £505,000 (2022 - £92,321).
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Charge for the financial year on owned assets
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Page 30
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Notes to the financial statements
For the financial year ended 31 December 2023
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Investments in subsidiary companies
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The following were subsidiary undertakings of the company:
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Leisuregrow Products Limited
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Dewmead Farm, New Inn Road, Hinxworth, Baldock, Hertfordshire, SG7 5HG
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Dewmead Farm, New Inn Road, Hinxworth, Baldock, Hertfordshire, SG7 5HG
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Dewmead Farm, New Inn Road, Hinxworth, Baldock, Hertfordshire, SG7 5HG
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Dewmead Farm, New Inn Road, Hinxworth, Baldock, Hertfordshire, SG7 5HG
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An additional £505,000 in consideration was paid in 2023 for the acquisition of Atkins & Thyme.
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Page 31
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