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REGISTERED NUMBER: 04281144 (England and Wales)




















Strategic Report, Report of the Directors and

Financial Statements

for the Year Ended 31 July 2023

for

Toolstream Limited

Toolstream Limited (Registered number: 04281144)






Contents of the Financial Statements
for the Year Ended 31 July 2023




Page

Company Information 1

Strategic Report 2

Report of the Directors 7

Statement of Directors' Responsibilities 9

Report of the Independent Auditors 10

Income Statement 13

Other Comprehensive Income 14

Balance Sheet 15

Statement of Changes in Equity 16

Notes to the Financial Statements 17


Toolstream Limited

Company Information
for the Year Ended 31 July 2023







DIRECTORS: D J Morris
S P Bird





REGISTERED OFFICE: Boundary Way
Lufton Trading Estate
Yeovil
Somerset
BA22 8HZ





REGISTERED NUMBER: 04281144 (England and Wales)

Toolstream Limited (Registered number: 04281144)

Strategic Report
for the Year Ended 31 July 2023

The directors present their strategic report for the year ended 31 July 2023.

REVIEW OF BUSINESS
The company's aim is to increase shareholder value and the directors intend to continue with the strategy of achieving sustainable growth by focusing on expansion through awareness of the brands sold by Toolstream whilst maintaining cost control and promoting the company reputation of offering the best value to the customer. The measure to the extent by which this goal has been achieved is demonstrated by using EBITDA, as a measure of how well the money invested in the business is providing a return to shareholders. Recent results are:

EBITDA 2023 loss £9,428,000 (2022 loss £772,000).

In the 2021 year the sector benefitted from the working from home phenomenon. However, in the 2022 and 2023 years the company has suffered from the global supply crisis initially leading to lack of stock availability, rising shipping costs and then latterly overstocking and stretching of working capital facilities. The Ukraine war and the subsequent economic slowdown has led to a reduction in consumer demand. These headwinds have resulted in turnover reducing in 2023 by 18% to £57,775,000 (2022 by 25.0% to £70,344,000 and as a result gross profit has reduced by 52.5% (2022: 27.6% to £23,411,000).

Following completion of the trade deal with Europe, sterling has recovered to normal levels against the US dollar and has been more stable protecting the business from sudden increases in cost as we purchase most of our goods in US dollars.

The company made a loss before tax of £12,945,000 (2022: loss £3,068,000). This was largely caused by reduction in turnover and gross margin not covering the distribution and overhead costs. The company has continued to supply good value products to our customers, preserving tight cost controls and improving operating efficiencies.

Interest cover is -5.21 (2022: -3.39x).


Toolstream Limited (Registered number: 04281144)

Strategic Report
for the Year Ended 31 July 2023

PRINCIPAL RISKS AND UNCERTAINTIES
Management believe their unique offering of value for money, customer service and high product availability will allow the group to expand and take market share. The business has a broad base of diverse customers and is not reliant on any one customer or supplier.

The company has in place business continuity and disaster recovery plans throughout the business and these are periodically reviewed with areas of risk considered at monthly board meetings.

The Brexit decision brought attendant uncertainties and the company established a warehouse in Holland and formed a Dutch subsidiary to more effectively service European trade post Brexit.

Much of the company's product is paid for in US dollars and fluctuations in the exchange rate with Sterling can cause fluctuations in buying costs. These risks are minimised by operating a cautious policy in relation to buying dollars forward in respect of purchases and constant review of buying and selling prices. A significant proportion of the company's sales is denominated in euros which reduces the exposure to the US dollar/GBP foreign exchange rate on our US dollar purchases. The company is constantly reviewing pricing policy within the overall strategy of offering best value prices to the customer.

The Directors acknowledge their overall responsibility for the company's system of internal control and for reviewing its effectiveness and there are ongoing procedures in place for identifying, evaluating and managing the significant risks faced by the company.

The directors have reviewed the major risks affecting the group and the effectiveness of the system of internal control.

The overhaul of the IT function including the move to a new Finance and Operations system in March 2021, Microsoft D365, along with the implementation of our supply chain management system, Slimstock in 2022, means that the group now has a modern operating base to support the future growth of the business.

The principal risks and uncertainties are detailed below:


Trading risk

The market for tools and associated hardware continues to be highly competitive. The company seeks to maintain and grow its business by concentrating on developing its brands further through the continual focus and improvement on quality, service and value.

The UK economy is expected to grow modestly in 2025 with inflationary pressures expected to ease, allowing interest rates to fall to around 4%.

The group sold its Scruffs brand of workwear in September 2023 and used the receipts to repay bank and creditor debt and invest in stock. However, the working capital left to fund stock was not sufficient to maintain sufficient levels of stock, being out of stock of many of our best-selling lines' resulted in lost sales and market share. We remain confident that demand for our products remains strong, the shareholder investment explained in the going concern section provides the resource to return to an optimum stock holding position.


Foreign exchange risk

The company is significantly reliant on production overseas with substantial supplies of goods denominated in US dollars and sales in Euro's. The company's policy is to manage the risk associated with purchases denominated in currencies other than Sterling by using appropriate forward foreign currency contracts.


Cash flow risk

The company monitors its cashflow requirements on a regular basis to manage liquidity. The company has financial assets and liabilities which are exposed to changes in both foreign exchange rates and market interest rates. Changes in interest rates primarily impact deposits, loans and borrowings by changing their future cash flows. Management does not currently have a formal policy of determining how much the company's exposure should be at fixed or variable rates and the company does not use interest rate hedging instruments to reduce its exposure. However, at the time of taking new loans or borrowing management, uses its judgement to determine whether it believes that a fixed or variable rate would be more favourable for the company over the expected period to maturity. Sensitivity analysis has not been provided due to the level of loans and borrowings within the company, however the company's significant interest bearing assets and liabilities are disclosed in notes 17 to 19.




Toolstream Limited (Registered number: 04281144)

Strategic Report
for the Year Ended 31 July 2023


Liability risk

The company maintains usual commercial insurance policies for a business of its type. The company undertakes an annual review of all coverage limits.


Global Supply Chain

The significant global supply chain issues reported above led to stock levels initially falling to a level where stock availability affected sales. Following the outbreak of war in Ukraine falling demand led to overstocks and pressure on our bank facilities as well as exceptional costs as a result of off-site storage costs and demurrage.


Toolstream Limited (Registered number: 04281144)

Strategic Report
for the Year Ended 31 July 2023

SECTION 172(1) STATEMENT
Section 172 of The Companies Act 2006 states that a director of a company must act in the way it considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole. In doing so a director of a company must have regard (amongst other matters) to:-
(a) The likely consequences of any decision in the long term;
(b) The interests of the company's employees;
(c) The need to foster the company's business relationships with suppliers, customers and others;
(d) The impact of the company's operations on the community and the environment;
(e) The desirability of the company maintaining a reputation for high standards of business conduct; and
(f) The need to act fairly as between members of the company.

The Directors have been made aware of the additional reporting requirements introduced by the Companies Act (Miscellaneous Reporting) Regulations 2018. The following summarises how the company's Board fulfils its duties under Section 172.

Decision Making
The Board fulfils its duties to act in good faith to promote the success of the company through its implementation of the Company Strategy which states that the company's key objective is to be a trusted supplier of market-leading brands to DIY, trade and the serious hobbyist, offering great value and customer service.

The company's strategic initiatives are considered with the company's five supporting pillars in mind; deliver great product; more customers spending more; satisfied customers; great place to work; and a sustainable business.

The Board reviews and considers its various stakeholders when arriving at recommended business decisions consistent with the strategy.

Examples of the Board's decision-making during the year ended 31 July 2023 included:

- the development and approval of a long-term business plan;
- exiting a warehouse that was surplus to requirements, and;
- disposing of the Scruffs brand to support the recovery of the business.


Employee Engagement
The company's employees are invaluable to its success and their importance is recognised in one of the key supporting pillars being 'great place to work'. We place great emphasis on colleague health, safety, wellbeing and engagement.

The company offers a breadth of roles, experiences and opportunities which enable colleagues to grow through coaching and development. The company encourages internal mobility and succession and is committed to creating an agile, collaborative and empowered workforce. We aim to be a responsible and fair employer with respect to colleague pay and benefits.

Examples of colleague engagement focused activity during the year included:
- regular all-colleague briefings led by the company's directors to provide key business updates and the opportunity for colleagues to ask questions and contribute;
- senior staff and directors being visible and accessible to all colleagues; and
- company directors proactively seeking feedback on their performance in order to bring about improvements.

Business Relationships
The Board engages with a variety of stakeholders, including principally customers, consumers, suppliers and regulators, to build long-term, effective relationships and to inform the company's strategy. In making decisions the Board considers the potential impact on stakeholders as well as the importance of fulfilling the company's strategy and maintaining its integrity, brand and reputation.

Examples of the Board's engagement with stakeholders during 2023 include:
- direct engagement with customers by the sales team and senior management team;
- the operation of a customer service function to solve our customers' problems and obtain feedback on our products and service;
- interaction with consumers through the use of social media, brand promotions activities, monitoring product reviews and tracking net promoter scores;
- quality control audits of suppliers' factories in order to ensure compliance with manufacturing and quality standards, and to build stronger relationships with suppliers.

Community and Environment
The company recognises the importance of sustainability and environmental care and is actively working towards embedding their principles in the company's business, including product design, energy-saving initiatives, recycling, reduced use of plastics, reduced packaging and employee inductions and training. We report on carbon usage in the group's directors' report.

Toolstream Limited (Registered number: 04281144)

Strategic Report
for the Year Ended 31 July 2023


Corporate Social Responsibility is important to the company and the board receives regular updates on this matter. Compliance with existing standards such as Waste Electrical and Electronic Equipment Regulations 2013 (as amended) is already in place and the board is delighted to report that it was recently assessed to be compliant with ISO14001, a standard designed to help organisations improve their environmental performance. The company has increased awareness of modern slavery through annual training and has increased its focus on equality in the workplace, both of which are monitored at our suppliers' factories.

The Board is committed to leading the company in such a way that it contributes to wider society and actively supports employees to support local or national charities.

Culture and values
The company's culture continues to evolve, led by the Board and senior management team.

Customers and colleagues are at the heart of the business and the organisational culture is one of responsibility, respect and trust. Lawful conduct and fair competition are integral to its business activities and an important condition for maintaining a reputation for high standards of business conduct. The company has a people-centric philosophy with transparent, fair and simple processes that benefit all key stakeholders but particularly customers and colleagues.

Values such as collaboration, innovation, boldness and accountability can be seen in action and there is further potential across the company to define, recognise and embed its values. The company recognises and embraces the true value, including the commercial benefits, of diversity, agility, sustainability and continuous improvement throughout the organisation.

Acting fairly as between members of the company
The company is a private limited company and has a limited number of members. A shareholder agreement exists to protect the interests of the respective members and this sets out such matters as the rights and obligations of each shareholder party and corporate governance in respect of certain material matters.

FUTURE EVENTS
The company has faced difficulty recovering from the Covid-19 pandemic, which caused significant disruption to working practices, supply chain and the markets in which we operate in.

These operational and market issues continued to have a lasting impact into FY24 and resulted in a weaker trading performance. As a result of this deterioration the company has needed new investment to stabilise the business and return it to growth.

Subsequent to the 31 July 2024, the shareholders and bank have provided a package of financial support to the business which provides the necessary resources to invest in stock needed to support sales. The shareholders recognise the need to bring additional investment into the business to support growth. They plan to attract an equity investment of £5M early in 2025.

The financial statements have been prepared on a going concern basis, as explained in note 4 to the financial statements.

ON BEHALF OF THE BOARD:





D J Morris - Director


28 January 2025

Toolstream Limited (Registered number: 04281144)

Report of the Directors
for the Year Ended 31 July 2023

The directors present their report with the financial statements of the company for the year ended 31 July 2023.

DIVIDENDS
A dividend of £nil was declared to the parent company during the year ended 31 July 2023 (2022: £nil).

FUTURE DEVELOPMENTS
Future developments have been described in the strategic report on page 6.

POST BALANCE SHEET EVENTS
Subsequent to the 31 July 2024 the shareholders and bank have provided a package of financial support to the business which provides the necessary resources to invest in stock needed to support sales. Additionally, the shareholders are confident in attracting new investment, a deal is expected to be completed during January 2025.

DIRECTORS
The directors shown below have held office during the whole of the period from 1 August 2022 to the date of this report.

D J Morris
S P Bird

Other changes in directors holding office are as follows:

R M Wilson - resigned 30 November 2022

R A O'Donnell ceased to be a director after 31 July 2023 but prior to the date of this report.

GOING CONCERN
The company's business activities, together with the factors likely to affect its future developments, its financial position, financial risk management objectives, details of its financial instruments and derived activities and its exposure to price, liquidity and cash flow risk are described in the strategic report on pages 2 and 3.

The financial statements have been prepared on a going concern basis, as explained in note 4 to the financial statements.

FINANCIAL RISK MANAGEMENT
The company purchases a significant proportion of stock in US Dollars. To reduce the profit and loss impact because of GBP USD exchange rate movements the company enters into foreign exchange forward contracts to purchase US dollars. These forward contracts aim to reduce the volatility of the forecast US Dollar purchases over the next 6 months.

ENGAGEMENT WITH EMPLOYEES
DISABLED EMPLOYEES
All applications for employment by disabled persons are always fully considered whilst ensuring the aptitudes of the applicant concerned. In the event of members of staff becoming disabled every effort is made to ensure that their employment with the company continues. It is the company's policy that training, career development and promotion of disabled persons be, as far as possible, identical to that of other employees.

EMPLOYEE CONSULTATION AND INVOLVEMENT
Consultation with employees or their representatives has continued at all levels, with the aim of ensuring that views are taken into account when decisions are made that are likely to affect their interests. The company holds quarterly meetings with the whole business and there is the opportunity to ask questions directly to the board and receive updates on ongoing initiatives that are being put into action. The main communication forum is via the company's intranet site which posts regular news about the business as well as any vacancies within the business. There is also a platform to allow any staff member to post questions or suggestions to the business. In addition to these platforms there are other software programmes that allow easy multi-directional communication across the company to help views to be heard and responses to be made.

STREAMLINED ENERGY AND CARBON REPORTING
The company takes advantage of the subsidiaries exception in relation to the energy and carbon reporting.

DISCLOSURE IN THE STRATEGIC REPORT
Principal risks and uncertainties have been described in the strategic report.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company auditor are unaware, and each director has taken all steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the auditor are aware of the information.

Toolstream Limited (Registered number: 04281144)

Report of the Directors
for the Year Ended 31 July 2023


AUDITORS
Pursuant to section 487 of the Companies Act 2006, the auditor will be deemed to be re-appointed and Saffery LLP will therefore continue in office.

ON BEHALF OF THE BOARD:





D J Morris - Director


28 January 2025

Toolstream Limited (Registered number: 04281144)

Statement of Directors' Responsibilities
for the Year Ended 31 July 2023

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. 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 their profit or loss for that period. In preparing these financial statements, the directors are required to:

-select suitable accounting policies and then apply them consistently;
-make judgements and 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;
-assess the company's ability to continue as a going concern, disclosing, as applicable, matters related to going
concern; and
-use the going concern basis of accounting unless they either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities.

Report of the Independent Auditors to the Members of
Toolstream Limited

Opinion
We have audited the financial statements of Toolstream Limited (the 'company') for the year ended 31 July 2023 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity 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 company's affairs as at 31 July 2023 and of its loss for the year then ended;
-have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-have been prepared in accordance with the requirements of the Companies Act 2006.

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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty relating to going concern
We draw attention to Note 4 - Going Concern in the financial statements, which indicates that there is material uncertainty relating to going concern due to the refinancing of the loan facilities along with the need to receive further investment. As stated in Note 4, the going concern status of the company is reliant on key assumptions, notably including revenue increasing to previous levels, cost savings of £1.0m per year, continued support from the bank and outside investment being obtained. This, along with other matters as set forth in Note 4, indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

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

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 in the Strategic Report, the Report of the Directors and the Statement of Directors' Responsibilities, but does not include the financial statements and our Report of the Auditors 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.

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 this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
- the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception
In the light of the 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 or the Report of the Directors.

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, 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 directors' remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.

Report of the Independent Auditors to the Members of
Toolstream Limited


Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities set out on page nine, 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 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 company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

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

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

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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.

Identifying and assessing risks related to irregularities:
We assessed the susceptibility of the company's financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the company by discussions with directors and updating our understanding of the sector in which the company operates.

Laws and regulations of direct significance in the context of the company include The Companies Act 2006, and UK Tax legislation.

Audit response to risks identified:
We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of financial statement disclosures. We reviewed the company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.

During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner's review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

A further description of our 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 Report of the Auditors.

Report of the Independent Auditors to the Members of
Toolstream Limited


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 a Report of the Auditors 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.




Neil Davies (Senior Statutory Auditor)
for and on behalf of Saffery LLP
St Catherine's Court
Berkeley Place
Clifton
Bristol
BS8 1BQ

28 January 2025

Toolstream Limited (Registered number: 04281144)

Income Statement
for the Year Ended 31 July 2023

2023 2022
Notes £'000 £'000 £'000 £'000

TURNOVER 5 57,775 70,344

Cost of sales 46,497 46,933
GROSS PROFIT 11,278 23,411

Distribution costs 5,389 6,463
Administrative expenses 18,731 20,379
24,120 26,842
(12,842 ) (3,431 )

Other operating income 6 1,981 1,267
OPERATING LOSS 8 (10,861 ) (2,164 )

Interest receivable and similar income 21 -
(10,840 ) (2,164 )

Interest payable and similar expenses 10 2,105 904
LOSS BEFORE TAXATION (12,945 ) (3,068 )

Tax on loss 11 (3,304 ) (192 )
LOSS FOR THE FINANCIAL YEAR (9,641 ) (2,876 )

Toolstream Limited (Registered number: 04281144)

Other Comprehensive Income
for the Year Ended 31 July 2023

2023 2022
Notes £'000 £'000

LOSS FOR THE YEAR (9,641 ) (2,876 )


OTHER COMPREHENSIVE INCOME - -
TOTAL COMPREHENSIVE INCOME FOR
THE YEAR

(9,641

)

(2,876

)

Toolstream Limited (Registered number: 04281144)

Balance Sheet
31 July 2023

2023 2022
Notes £'000 £'000 £'000 £'000
FIXED ASSETS
Intangible assets 12 1,831 2,173
Tangible assets 13 897 1,521
2,728 3,694

CURRENT ASSETS
Stocks 14 17,809 43,214
Debtors 15 27,622 28,324
Cash in hand 1 1
45,432 71,539
CREDITORS
Amounts falling due within one year 16 47,211 63,855
NET CURRENT (LIABILITIES)/ASSETS (1,779 ) 7,684
TOTAL ASSETS LESS CURRENT
LIABILITIES

949

11,378

CREDITORS
Amounts falling due after more than one
year

17

194

982
NET ASSETS 755 10,396

CAPITAL AND RESERVES
Called up share capital 23 1 1
Retained earnings 754 10,395
SHAREHOLDERS' FUNDS 755 10,396

The financial statements were approved by the Board of Directors and authorised for issue on 28 January 2025 and were signed on its behalf by:





D J Morris - Director


Toolstream Limited (Registered number: 04281144)

Statement of Changes in Equity
for the Year Ended 31 July 2023

Called up
share Retained Total
capital earnings equity
£'000 £'000 £'000
Balance at 1 August 2021 1 13,271 13,272

Changes in equity
Total comprehensive income - (2,876 ) (2,876 )
Balance at 31 July 2022 1 10,395 10,396

Changes in equity
Total comprehensive income - (9,641 ) (9,641 )
Balance at 31 July 2023 1 754 755

Toolstream Limited (Registered number: 04281144)

Notes to the Financial Statements
for the Year Ended 31 July 2023

1. GENERAL INFORMATION

The principal activity of Toolstream Limited (the 'Company') is the distribution of tools within both the UK and Europe.

2. STATUTORY INFORMATION

Toolstream Limited (the 'Company') is a private company limited by share capital which is registered, incorporated and domiciled in England and Wales in the UK. The company's registered number and registered office address can be found on the Company Information page.

3. STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006.

4. ACCOUNTING POLICIES

Summary of significant accounting policies
The principal accounting policies applied in the preparation of the financial statements is set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparation

The financial statements have been prepared under the historical cost convention, as modified by the recognition of certain financial assets and liabilities at fair value, comprising derivative financial instruments.

The presentation currency of these financial statements in Sterling. All amounts in the financial statements have been rounded to the nearest £'000.

Going concern

Subsequent to the 31 July 2023 the group entered into a strategic partnership with Greatstar United Kingdom Ltd. This agreement resulted in the sale of the Scruffs brand to Greatstar for £14M. In addition to the sale, Greatstar have awarded the group a 5-year worldwide exclusive distribution agreement for Scruffs. The sale of the Scruffs brand has allowed the group to reduce its borrowing by £6M, reduce legacy creditors by £3.4M and invest £4M in stock.

Subsequent to the 31 July 2024 the shareholders reached agreement with HSBC which has resulted in a package of financial support being made available to the business. The shareholders have made new non-interest bearing loans of £4.625M to the business, with HSBC providing a £0.5M overdraft facility on condition that the Intellectual Property held in Switzerland is transferred to the UK and forms part of the banks security. Existing shareholder loan accrued interest of £1.4M has been written off and shareholder loans subordinated to HSBC as part of this agreement. Subsequent to this investment, the majority shareholder acquired the preference shares held by the minority shareholder (25% of total equity) regaining full control of the business.

The new loans were used to bring the company and group's stock holding back to an appropriate level to support sales which will return the business to profit. The shareholders are supportive of the business and are aware that the business requires further investment to support growth. They are confident of attracting an equity investment of £5M early in 2025. This additional funding and a return to profit will allow the company and group to refinance, leveraging additional funding from its assets (property, stock and debtors). This exercise is planned to complete to complete in the Summer of 2025 and is expected to raise a further £1.5M to support working capital. Whilst the Directors are confident that the funds available will underpin the company and group's return to profit, the timing and uncertainty of obtaining proposed investments and the refinance means that there is material uncertainty that may cast significant doubt over the company and group's ability to continue as a going concern. The financial statements have been prepared on a going concern basis. The financial statements do not include the adjustments that would result if the group was unable to continue as a going concern.

As at 31 July 2024 the group had cash of £0.3M, and total assets less net current liabilities of £17.7M. In addition, the group had total outstanding loans of £23.2M. During the year ended 31 July 2024 the group made an operating profit of £0.9M as it managed low levels of cash which limited stock levels and consequently sales.






Toolstream Limited (Registered number: 04281144)

Notes to the Financial Statements - continued
for the Year Ended 31 July 2023

The group has produced cash flow forecasts through to 31 July 2025 which showed that the group will become profitable and remain a going concern. The forecast included the following assumptions:

i) The group returns to EBITDA profit in March 2025 and produces EBITDA profits each month thereafter in FY25.

ii) Revenue growth arises from restoring stock to levels appropriate for a wholesaler, giving customers confidence in our ability to fulfil their orders in full. We expect to be able to offer our customers 96% stock availability of our best-selling products by March 2025. This will allow us to return to 2023 revenue levels.

iii) Margins will be restored by a combination of improved product mix and targeted price increases ensuring our products remain competitive.

iv) There are forecast overhead savings of £1.0M compared to FY24. This will be achieved by cost cutting steps already taken and further actions including disposing of a surplus office building, exiting leases of two satellite offices and a staff restructure in our Chinese subsidiary.

v) The group will receive continued support from HSBC in line with the new facilities agreed in August 2024.

The group has looked beyond the forecast period, and in the year ending 31 July 2026 the group expects to record a profit before tax of £4.9M on sales of £60M.

After reviewing the company and group's forecasts and having taken steps to rebalance its cost base the Directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future, being a period of at least twelve months from the date of approval of these financial statements. The company continues to adopt the going concern basis in preparing its financial statements.

Financial Reporting Standard 102 - reduced disclosure exemptions
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

the requirements of Section 7 Statement of Cash Flows;
the requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
the requirement of paragraph 33.7.

Group Silverline Limited was regarded by the directors as being the company's ultimate parent company. The consolidated financial statements of Group Silverline Limited which include Toolstream Limited are available to the public and may be obtained from Companies House.

Preparation of consolidated financial statements
The financial statements contain information about Toolstream Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its subsidiary undertaking are included by full consolidation in the consolidated financial statements of its parent, Group Silverline, United Kingdom.

Toolstream Limited (Registered number: 04281144)

Notes to the Financial Statements - continued
for the Year Ended 31 July 2023

4. ACCOUNTING POLICIES - continued

Significant judgements and estimates
The company has applied judgement in applying accounting policies and key sources of estimation uncertainty in the following areas:

(i) Recoverability of assets

The company assumes all amounts owing from customers will be recovered in full. Where uncertainty exists as to the recovery a provision of £1,681,000 (2022: £2,642,000) has been made for the anticipated unrecoverable amount.

(ii) Usability of stocks

Where there is uncertainty over the usability of the consumable stocks a provision is made to cover the estimated unrecoverable amount. The provision is £1,178,000 (2022: £907,000).

(iii) Warranty Provision

The Company provides a warranty from the date of purchase for 3 years for power tools and a lifetime warranty on all hand tool products, excluding fair wear and tear and mis-use that are registered within 30 days from purchase. The company recognises a provision on the basis of a historical return rates. This requires management's best estimate of the costs that will be incurred based on historical trends. The warranty provision is recognised in trade debtors as part of the bad debt provision of £431,000 (2022: £389,000).

Revenue recognition
Revenue is measured at the fair value of consideration received or receivable for goods supplied (net of returns, trade discounts, allowances, value added tax and other sales related taxes) and royalties receivable.

The company recognises revenue when (a) the significant risks and returns of ownership have been transferred to the buyer, (b) the company retains no continual involvement or control over its goods, (c) the amount of revenue can be reliably measured and (d) it is probable that future economic benefits will flow to the entity.

Intangible assets
Goodwill is stated at cost less any accumulated amortisation and accumulated impairment losses. Goodwill is allocated to cash-generating units or group of cash-generating units that are expected to benefit from the synergies of the business combination from which it arose.

Goodwill is amortised on a straight line basis over its useful life estimated to be 10 years. Goodwill has no residual value.

Patent expenditure has been capitalised on the basis that the future economic benefits will derive from this asset.

Patents are amortised over 20 years which is deemed to be a reliable estimate of their useful economic lives.

Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated depreciation. Cost includes the original purchase price, costs directly attributable to bringing the asset to its working condition and making the asset capable of operating as intended.

Depreciation is provided on all tangible fixed assets, at rates calculated to write off the cost, less estimated residual value based on prices prevailing at the date of acquisition or revaluation, of each asset evenly over its expected useful life, as follows:

Plant and machinery- 20% on cost
Fixtures and fittings- 10-20% on cost
Motor vehicles- 20% on cost
Computer equipment- 33% on cost


The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

Toolstream Limited (Registered number: 04281144)

Notes to the Financial Statements - continued
for the Year Ended 31 July 2023

4. ACCOUNTING POLICIES - continued

Stocks
Stocks are stated at the lower of cost and net realisable value. Costs include all costs incurred in bringing each product to its present location and condition.

The company regularly assesses its stock for indications of impairment. Where an item of inventory is impaired, the identified inventory is reduced to the lower cost and net realisable value and an impairment charge is recognised in the Income statement.

Taxation
Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred taxation
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet 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.

Foreign currencies
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. All gains and losses are included in the profit and loss account in the period in which they arise.

Hire purchase agreements
Assets held under hire purchase agreements are capitalised and disclosed under tangible fixed assets at their fair value. The capital element of the future payments is treated as a liability and the interest is charged to the profit and loss account on a straight line basis.

Operating lease agreements

Rental applicable to operating leases where substantially all of the benefits and risks of ownership remain with the lessor are charged against profits on a straight line basis over the period of the lease.

Lease incentives received are recognised in the income statement over the term of the lease as an integral part of the lease expense.

Pension costs and other post-retirement benefits
The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

Toolstream Limited (Registered number: 04281144)

Notes to the Financial Statements - continued
for the Year Ended 31 July 2023

4. ACCOUNTING POLICIES - continued

Warranty provision
The company provides a warranty from the date of purchase for 3 years for certain powertools and for lifetime on all its hand tool products (excluding fair wear and tear and mis-use) that are registered within 30 days from the date of purchase. A warranty provision is included in the financial statements, which is calculated on the basis of historical return rates. The warranty provision is recognised in trade debtors as part of the bad debt provision.

Invoice discounting

Amounts due in respect of invoice discounting are separately disclosed as current liabilities. The Company can use these facilities to draw down on a percentage of the value of certain sales invoices. The management and collection of trade receivables remains within the Company.

Derivative Instruments

The company uses forward foreign currency contracts to reduce exposure to foreign exchange rates.

Derivative financial instruments are initially measured at fair value at the date on which a derivative is entered into and are subsequently re-measured at their fair value. Changes in the fair value derivatives are recognised in the profit and loss account.

The fair value of the forward foreign currency contract is calculated by reference to current forward exchange contracts with similar maturity profiles.

Toolstream Limited (Registered number: 04281144)

Notes to the Financial Statements - continued
for the Year Ended 31 July 2023

4. ACCOUNTING POLICIES - continued

Classification of financial instruments issued by the company
In accordance with FRS 102.22, financial instruments issued by the company are treated as equity only to the extent that they meet the following two conditions:

(a) they include no contractual obligations upon the group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the company; and

(b) where the instrument will or may be settled in the entity's own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the entity's own equity instruments or is a derivative that will be settled by the entity exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument classified takes the legal form of the entity's own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.

Basic financial instruments

(a) Trade and other debtors / creditors

Trade and other debtors are recognised initially at transaction price less attributable transaction costs. Trade and other creditors are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses in the case of trade debtors. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of instrument for a similar debt instrument.

(b) Interest-bearing borrowings classified as basic financial instruments

Interest-bearing borrowings are recognised initially at the present value of future payments discounted at a market rate of interest. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.

(c) Investments in preference and ordinary shares

Investments in equity instruments are measured initially at fair value, which is normally the transaction price. Transaction costs are excluded if the investments are subsequently measured at fair value through profit and loss. Subsequent to initial recognition investments that can be measured reliably are measured at fair value with changes recognition in profit or loss. Other investments are measured at cost less impairment in profit or loss.

(d) Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits.

Toolstream Limited (Registered number: 04281144)

Notes to the Financial Statements - continued
for the Year Ended 31 July 2023

4. ACCOUNTING POLICIES - continued

Other financial instruments
Financial instruments not considered to be basic financial instruments (Other financial instruments)

Other financial instruments not meeting the definition of Basic Financial Instruments are recognised initially at fair value. Subsequent to initial recognition other financial instruments are measured at fair value with changes recognised in profit or loss except as follows:


-
Investments in equity instruments that are not publicly traded and whose fair value cannot otherwise be
measured reliably shall be measured at cost less impairment; and

-
Derivative financial instruments and hedging hedging instruments in a designated hedging relationship
shall be recognised as set out below.

Derivative financial instruments are recognised at fair value. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss.

Business combinations
Business combinations are accounted for using the acquisition method. The cost of the acquisition is measured as the aggregate of the consideration transferred, which is measured at the acquisition date fair value.
Acquisition-related costs are expensed as incurred and included in administrative expenses.

Goodwill is initially measured at cost less any accumulated impairment losses. The goodwill recognised in the year has a useful economic life of 10 years.

5. TURNOVER

The turnover and loss before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

2023 2022
£'000 £'000
United Kingdom 51,732 57,367
Europe 5,464 11,449
Rest of the world 579 1,528
57,775 70,344

6. OTHER OPERATING INCOME
2023 2022
£'000 £'000
Sundry receipts 8 390
Management charges receivable 1,973 877
1,981 1,267

7. EMPLOYEES AND DIRECTORS
2023 2022
£'000 £'000
Wages and salaries 8,300 9,824
Social security costs 797 854
Other pension costs 225 243
9,322 10,921

Toolstream Limited (Registered number: 04281144)

Notes to the Financial Statements - continued
for the Year Ended 31 July 2023

7. EMPLOYEES AND DIRECTORS - continued

The average number of employees during the year was as follows:
2023 2022

Production staff 153 167
Distribution staff 44 50
Administrative staff 52 63
Management staff 2 5
251 285

There are no key management personnel other than the directors whose emoluments are disclosed below.

2023 2022
£    £   
Directors' remuneration 147,208 165,252
Directors' pension contributions to money purchase schemes 4,777 4,715

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes 1 1

8. OPERATING LOSS

The operating loss is stated after charging/(crediting):

2023 2022
£'000 £'000
Other operating leases 1,520 1,460
Depreciation - owned assets 585 649
Loss on disposal of fixed assets 54 90
Goodwill amortisation 50 13
Patents and licences amortisation 108 66
Computer software amortisation 636 664
Foreign exchange differences (779 ) (1,510 )

Included within foreign exchange differences is a charge of £450,000 (2022: credit £220,000) relating to the movement in the fair value of the year end forward foreign exchange hedging contracts.

9. AUDITOR'S REMUNERATION
2023 2022
£'000 £'000
Fees payable to the company's auditors for the audit of the company's
financial statements

88

65

10. INTEREST PAYABLE AND SIMILAR EXPENSES
2023 2022
£'000 £'000
Bank loan interest 1,345 592
Other interest payable 660 276
Hire purchase 100 36
2,105 904

Toolstream Limited (Registered number: 04281144)

Notes to the Financial Statements - continued
for the Year Ended 31 July 2023

11. TAXATION

Analysis of the tax credit
The tax credit on the loss for the year was as follows:
2023 2022
£'000 £'000
Current tax:
UK corporation tax (210 ) (99 )

Deferred tax (3,094 ) (93 )
Tax on loss (3,304 ) (192 )

UK corporation tax has been charged at 21% (2022 - 19%).

Reconciliation of total tax credit included in profit and loss
The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

2023 2022
£'000 £'000
Loss before tax (12,945 ) (3,068 )
Loss multiplied by the standard rate of corporation tax in the UK of 21%
(2022 - 19%)

(2,718

)

(583

)

Effects of:
Expenses not deductible for tax purposes 34 -
Depreciation in excess of capital allowances 81 22
Adjustments to tax charge in respect of previous periods (210 ) -
Deferred tax charge due to timing differences and accelerated capital allowances
(77

)

(93

)
Unutilised tax losses 2,533 347
(Profit)/Loss on sale of a tangible fixed asset 11 18
General provisions (12 ) 23
Group relief 71 74
Deferred tax asset on trading losses (3,017 ) -
Total tax credit (3,304 ) (192 )

The amalgamated standard rate of corporation tax charged for the year is 21% comprising 19% for the period 1 August 2022 to 31 March 2023 and 25% from 1 April 2023 to 31 July 2023.

Toolstream Limited (Registered number: 04281144)

Notes to the Financial Statements - continued
for the Year Ended 31 July 2023

12. INTANGIBLE FIXED ASSETS

Patents
andComputer
GoodwillLicencesSoftwareTotals
£'000£'000£'000£'000
COST
At 1 August 20221,5181,2452,2425,005
Additions-38567452
Disposals----
At 31 July 20231,5181,6302,3095,457
AMORTISATION
At 1 August 20221,0205611,2512,832
Amortisation for year50108636794
Eliminated on disposal----
At 31 July 20231,0706691,8873,626
NET BOOK VALUE
At 31 July 20234489614221,831
At 31 July 20224986849912,173

Goodwill amortisation is part of the administrative expenses total in the Income Statement.

13. TANGIBLE FIXED ASSETS
Fixtures
Freehold Plant and and
property machinery fittings
£'000 £'000 £'000
COST
At 1 August 2022 1 3,878 1,848
Additions - 18 3
Disposals - (94 ) (47 )
At 31 July 2023 1 3,802 1,804
DEPRECIATION
At 1 August 2022 1 2,873 1,677
Charge for year - 343 47
Eliminated on disposal - (39 ) -
At 31 July 2023 1 3,177 1,724
NET BOOK VALUE
At 31 July 2023 - 625 80
At 31 July 2022 - 1,005 171

Toolstream Limited (Registered number: 04281144)

Notes to the Financial Statements - continued
for the Year Ended 31 July 2023

13. TANGIBLE FIXED ASSETS - continued

Motor Computer
vehicles equipment Totals
£'000 £'000 £'000
COST
At 1 August 2022 145 3,259 9,131
Additions 6 36 63
Disposals (16 ) (103 ) (260 )
At 31 July 2023 135 3,192 8,934
DEPRECIATION
At 1 August 2022 80 2,979 7,610
Charge for year 19 176 585
Eliminated on disposal (16 ) (103 ) (158 )
At 31 July 2023 83 3,052 8,037
NET BOOK VALUE
At 31 July 2023 52 140 897
At 31 July 2022 65 280 1,521

Hire purchase agreements

The net carrying amount of assets held under finance leases is £174,000 (2022: £302,000).
The depreciation charged in the year relating to hire purchase contracts is £127,000.

14. STOCKS
2023 2022
£'000 £'000
Finished goods 17,809 43,214

The stock value includes £1,435,000 (2022: £907,000) relating to stock provisions.

15. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2023 2022
£'000 £'000
Trade debtors 6,045 9,280
Amounts owed by group undertakings 16,918 17,002
Other debtors 86 13
Other tax debtor 214 598
Deferred tax asset 3,115 21
Prepayments and accrued income 1,244 1,410
27,622 28,324

Deferred tax asset
2023 2022
£'000 £'000
Accelerated capital allowances (10 ) (101 )
Tax losses carried forward 3,017 -
Other timing differences 108 122
3,115 21

Amounts owed by group undertakings are repayable on demand.

Toolstream Limited (Registered number: 04281144)

Notes to the Financial Statements - continued
for the Year Ended 31 July 2023

16. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2023 2022
£'000 £'000
Bank loans and overdrafts (see note 18) 24,419 28,708
Other loans (see note 18) 5,499 5,632
Hire purchase contracts (see note 19) 105 155
Trade creditors 12,731 19,304
Amounts owed to group undertakings 1,326 1,285
Corporation tax 2 2
Social security and other taxes 193 944
VAT 626 2,599
Other creditors 597 3,048
Accruals and deferred income 1,713 2,178
47,211 63,855

The company is subject to a joint and several guarantee with the parent company, Group Silverline Limited, up to £1,300,000 in respect of the HM Revenue & Customs VAT deferral scheme.

17. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
2023 2022
£'000 £'000
Other loans (see note 18) 130 812
Hire purchase contracts (see note 19) 64 170
194 982

18. LOANS

An analysis of the maturity of loans is given below:

2023 2022
£'000 £'000
Amounts falling due within one year or on demand:
Bank overdrafts 8,907 8,846
Bank loans 15,512 19,862
Related party loans 4,817 4,929
Other loans 682 703
29,918 34,340

Amounts falling due between one and two years:
Other loans 1-2 years 130 682

Amounts falling due between two and five years:
Other loans 2-5 years - 130

Bank overdrafts consist of an overdraft facility, totalling £4,867,000 (2022: £4,453,000), and an invoice financing facility valued at £4,040,000 (2022: £4,393,000).
The interest rates on the borrowings are 2.75% above the Bank of England base rate *ABR* (2022: 2.75% ABR) and 2.5% ABR respectively (2022: 2.5% ABR).

Bank loans consist of short term loans to fund imports and had an average interest rate of 2.55% above base rate (2022: 2.55% above base rate).

For full details of the related party loans of £4,817,000 (2022: £4,929,000) see note 26.

Other loans relate to borrowings to fund information technology projects in the business. The average fixed interest rate over these loans are 7.48%.

Details of security are covered in note 20.

Toolstream Limited (Registered number: 04281144)

Notes to the Financial Statements - continued
for the Year Ended 31 July 2023

19. LEASING AGREEMENTS

Minimum lease payments fall due as follows:

Hire purchase contracts
2023 2022
£'000 £'000
Net obligations repayable:
Within one year 105 155
Between one and five years 64 170
169 325

Non-cancellable operating leases
2023 2022
£'000 £'000
Within one year 872 545
Between one and five years 130 498
1,002 1,043

20. SECURED DEBTS

The following secured debts are included within creditors:

2023 2022
£'000 £'000
Bank overdrafts 8,907 8,846
Bank loans 15,512 19,862
Other loans 812 1,515
Hire purchase contracts 169 325
25,400 30,548

The bank overdraft facility includes amounts due under an invoice discounting facility. This is secured by way of a fixed and floating charge over the company's assets.

The bank loan and overdraft facility is secured by:

(i) a Mortgage Debenture incorporating a fixed and floating charge over the company's assets;
(ii) a personal guarantee given by the shareholder of the Group, Mr James Goddard-Watts;
(iii) an unlimited intercompany guarantee granted by the parent undertaking, Group Silverline Limited.

The hire purchase liabilities are secured on the particular assets acquired. The other loans are secured against information technology assets.

Toolstream Limited (Registered number: 04281144)

Notes to the Financial Statements - continued
for the Year Ended 31 July 2023

21. FINANCIAL INSTRUMENTS

(a) Carrying amounts of the financial instruments

The carrying amounts of the financial assets and liabilities include:


2023 2022
£'000 £'000
Debtor/(Liability) measured at fair value through profit or loss (175) 275


(b) Financial instruments measured at fair value

Derivative financial instruments

The fair value of forward exchange contracts is based on broker quotes. The fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate (Based on government bonds).

22. DEFERRED TAX
£'000
Balance at 1 August 2022 (21 )
Credit to Income Statement during year (3,094 )
Balance at 31 July 2023 (3,115 )

The deferred tax asset provision of £98,000 at 31 July 2023 has been calculated at 25%. This comprises a provision of £10,000 in accelerated capital allowances and other timing differences deferred tax debtor of £108,000 and deferred tax debtor for tax losses recoverable of £3,017,000 (note 15).

23. CALLED UP SHARE CAPITAL

Allotted, issued and fully paid:
Number: Class: Nominal 2023 2022
value: £'000 £'000
1,000 Ordinary £1 1 1

24. PENSION COMMITMENTS

The company made defined pension contributions in respect of its employees amounting to £225,000 (2022: £379,000) during the year. Contributions unpaid at the year end were £53,000 (2022: £38,000).

25. ULTIMATE PARENT COMPANY

Group Silverline Limited is regarded by the directors as being the company's ultimate parent company.

The consolidated financial statements of Group Silverline Limited which include Toolstream Limited are available to the public and may be obtained from Companies House.

26. RELATED PARTY DISCLOSURES

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.

The Group has taken advantage of the exemption provided by FRS102 33.1A, where disclosure is not required to be given of transactions entered into between two or more members of the a group, as 100% of whose voting rights are controlled by the Group.

Toolstream Limited (Registered number: 04281144)

Notes to the Financial Statements - continued
for the Year Ended 31 July 2023

26. RELATED PARTY DISCLOSURES - continued

Key Management
There are no key management personnel other than the directors whose emoluments are disclosed in note 7.

During the year there was a management charge of £1,089,000 (2022: £1,089,000) from the parent company in respect of Group Silverline Director services provided to Toolstream.


James Goddard-Watts
Majority shareholder of Group Silverline Limited

During the year interest has been charged by Mr J Goddard-Watts to the company at a rate of 5.5% above the bank of england base rate and this amounted to £660,000 (2022: £241,000).

2023 2022
£'000 £'000
Amount due to/(from) related party at the balance sheet date 4,817 4,929

The ultimate controlling party is James Goddard Watts.

27. POST BALANCE SHEET EVENTS

Subsequent to the 31 July 2024, the shareholders and bank have provided a package of financial support to the business which provides the necessary resources to invest in stock needed to support sales. Additionally, the shareholders are confident in attracting new investment, a deal is expected to be completed during January 2025.

28. BUSINESS COMBINATION

Acquisition of King Dick Tools
On the 8th March 2022, the company acquired the King Dick Tools brand and assets.

Details of the assets recognised as a result of the acquisition is as follows:

£'000

Current assets
Stock 396
Other debtors 60
Net assets acquired 456

Goodwill arising on acquisition 498

Total Consideration 954

Paid on Completion 500
Deferred consideration (incl in other creditors) 454
Total Consideration 954

The goodwill arising on the acquisition will be written down on the useful economic life of 10 years.

On the 8 March 2022, £500,000 was paid on acquisition. The first deferred consideration payment of £254,000 was paid in March 2023 and the balance of £200,000 is due to be paid in March 2024.