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Registered number: 09185258










CUSTOM MATERIALS LTD










ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 
CUSTOM MATERIALS LTD
 
 
COMPANY INFORMATION


Directors
D S J E Cameron (resigned 1 March 2024)
M P Eefting 
K R Hubbard 
R Patel (resigned 6 January 2023)
D Spedding (resigned 9 January 2024)
G Henderson (appointed 9 January 2024)
W Hutchins (appointed 9 January 2024)
W Jin (appointed 9 January 2024, resigned 1 March 2024)




Registered number
09185258



Registered office
6th Floor One London Wall

London

EC2Y 5EB




Independent auditor
MHA

Victoria Court

17-21 Ashford Road

Maidstone

Kent

ME14 5DA





 
CUSTOM MATERIALS LTD
 

CONTENTS



Page
Group Strategic Report
 
 
1 - 3
Directors' Report
 
 
4 - 5
Independent Auditor's Report
 
 
6 - 9
Consolidated Statement of Comprehensive Income
 
 
10
Consolidated Balance Sheet
 
 
11
Company Balance Sheet
 
 
12 - 13
Consolidated Statement of Changes in Equity
 
 
14
Company Statement of Changes in Equity
 
 
15
Consolidated Statement of Cash Flows
 
 
16 - 17
Consolidated Analysis of Net Debt
 
 
18
Notes to the Financial Statements
 
 
19 - 41


 
CUSTOM MATERIALS LTD
 
 
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

Introduction
 
The directors present the strategic report for the year ended 31 December 2023. 

Business review
 
A new trading platform was launched successfully in the last quarter of the year which opens up B2B markets, substantially expanding the accessible markets for the business. The previous trading platform was closed in Oct-2023 and has been written off in full in these accounts resulting in a one time non-cash expense of £2.8m.
There remains inflationary pressures in the supply chain but the team have mitigated these as far as possible by negotiating new contracts with a number of new suppliers across the EU & US. 
The group showed a year-on-year revenue decrease of £2.3m (33%) from £7.0m to £4.7m primarily due to the ending of a large enterprise contract combined with a transition to launch a new trading platform. 
The group ended the contract with a global enterprise customer in order to refocus the business around the new trading opportunities aligned to the launch of the new B2B platform. The group has further expanded its offer of print on demand products and continues to invest in staff to develop its software platform in order to provide a robust and up to date seller experience. The business remains a remote first organisation.

Principal risks and uncertainties
 
The directors consider the following to be the principal risks and uncertainties of the company and group: 
Credit risk 
The group has limited credit risk due to the retail nature of the majority of the cash flows. 
Liquidity risk 
The company finances its operations through cash EBITDA generation and during the year had a successful  fundraising round. The group's policy is to maintain good relationships with its bankers and lender to ensure that appropriate facilities are in place in the future to fund the company's needs as it expands. 
Economic risk 
The group operates on a global scale and therefore is relatively well diversified in terms of economic risk. 
Competition 
The print on demand sector is competitive and as such the group continues to face competitor risk in the markets where it operates. The Directors monitor key competitors in terms of pricing and quality on a regular basis. 
Foreign exchange risk 
Foreign exchange risk arises from assets and liabilities being denominated in currencies other than the group's 
functional currency. The group does have significant USD and EUR assets which are materially offset by the 
group's operational liabilities. The net exposure is not deemed significant. 
Legislation 
The group takes a proactive approach to compliance with all relevant legislation in the countries and territories 
where it operates.
 
Page 1

 
CUSTOM MATERIALS LTD
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023


Going concern 
The consolidated financial statements have been prepared on the going concern basis, notwithstanding the losses incurred during the current and prior year. The directors have undertaken an exercise to review the likely cash requirements of the group to January 2026 which indicate a positive cash balance maintained over the period considered. The forecast takes account of the circumstances following the year end when the directors have taken action to control losses by streamlining IT services and reducing the costs of support using automation available through the platform & external tools. The group dissolved the subsidiary undertaking Merch Hero Limited which ceased trading in September 2023, and placed CM Fulfilment Limited into insolvency through a creditors’ voluntary liquidation process (this business being the trading company for the now decommissioned trading platform).
 
Management recognise that there is a high degree of uncertainty in the preparation of these forecasts due to the development of a new platform, wider continuing macroeconomic uncertainties and the timings of certain cash outflows. The group is in breach of a financial covenant with its lender which is also an investor, and is expected to do so again within 12 months from the date of approval of these financial statements, however the lender has indicated that it remains supportive of the group, it has agreed not to exercise its rights with respect to the existing breaches and has agreed to continue to provide incremental funding to ensure liquidity in the group. The forecast does not include certain risk factors; being the potential rejection of research and development tax credit claims and the guarantee by the company of obligations relating to CM Fulfilment Limited. Inclusion of payment of these amounts would result in a significant shortfall in working capital that would impact the group’s ability to settle its liabilities as they fall due. However the business has a supportive relationship with its lender and investors.
 
Nonetheless, at the date of signing the financial statements, while the directors fully expect the forecasts to be met, they recognize that there is material uncertainty and significant doubt in relation to the ability of the parent company and group to continue as a going concern, and therefore that it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements have been prepared on a going concern basis because management are confident of the business maintaining sufficient cash to allow the group to meet its liabilities as they fall due for at least 12 months from the approval of the financial statements.

Financial key performance indicators
 
Operational performance of the group during the year was in line with expectation (gross profit margin excluding enterprise contracts increased from 17% in 2022 to 18% in 2023) with a shift towards the core entrepreneur markets which will enable future growth through new platform capabilities. There has been a continuing strong focus on reducing costs (administrative costs excluding one-offs were reduced by £1m vs 2022). The group has maintained the investment in talent needed to support the business on the continuing development and new growth phase of the new platform. 
Further funding of £1.5m debt was secured during the period of which £1m was received in Q4-23. This will support the next phase in growth of the new platform and the integration of new channels to access wider market opportunities.

Page 2

 
CUSTOM MATERIALS LTD
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023


This report was approved by the board and signed on its behalf.



................................................
K R Hubbard
Director

Date: 31 January 2025

Page 3

 
CUSTOM MATERIALS LTD
 
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

The directors present their report and the financial statements for the year ended 31 December 2023.

Directors' responsibilities statement

The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
 
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with 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 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 the Group and of the profit or loss of the Group for that period.

 In preparing these financial statements, the directors are required to:


select suitable accounting policies for the Group's financial statements and then apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

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 the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006They are 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.

Results and dividends

The loss for the year, after taxation, amounted to £7,441k (2022 - loss £2,982k).

No dividends were declared during the year (2022 - Nil).

Directors

The directors who served during the year were:

D S J E Cameron (resigned 1 March 2024)
M P Eefting 
K R Hubbard 
R Patel (resigned 6 January 2023)
D Spedding (resigned 9 January 2024)

Future developments

The development of the new trading platform will continue throughout the next 12-18 months, increasing materially the accessible markets and delivering substantial benefits in service to both customers and printers. The directors anticipate that this will lead to significantly increased revenue and future profitability.

Page 4

 
CUSTOM MATERIALS LTD
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Matters covered in the Group Strategic Report

Certain items required under Schedule 7 to be disclosed in the Directors' Report are set out in the Strategic Report in accordance with S.414C(II) of the Companies Act 2006; these being the Group's principle risks and uncertainties.

Disclosure of information to auditor

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company and the Group's auditor is unaware, and

the director 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

The Group enacted restructuring of 2 subsidiaries to simplify the business as a whole and dissolved 2 dormant subsidiaries in 2024 (Merch Hero Ltd which ceased trading in September 2023 and Marcazo Ltd which had been dormant for the whole of 2023).
In August 2024, CM Fulfilment Ltd (the 100% owned subsidiary for the fully decommissioned trading platform) was placed into insolvency through a Creditors' Voluntary Liquidation process. The obligations of that company were guaranteed by Custom Materials Ltd, and there is a risk that a consequential claim may be made. 

Auditor

The auditor, MHAwill 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.
 





................................................
K R Hubbard
Director

Date: 31 January 2025

Page 5

 
CUSTOM MATERIALS LTD
 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CUSTOM MATERIALS LTD
 

Opinion


We have audited the financial statements of Custom Materials Ltd (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2023, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 December 2023 and of the Group's loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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 related to going concern


We draw attention to note 2.3 in the financial statements, which identifies that the Group has made successive losses and is in a net liability position at the year end. As stated in note 2.3, these events or conditions, along with other matters as set forth within the same note, indicate that a material uncertainty exists that may cast significant doubt on the Group's and the parent 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.


Page 6

 
CUSTOM MATERIALS LTD
 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CUSTOM MATERIALS LTD (CONTINUED)


Other information


The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's Report thereon. The directors are responsible for the other information contained within the Annual ReportOur opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.


We have nothing to report in this regard.


Opinion 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 Group Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.


Matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.


We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:


adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent Company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


In preparing the financial statements, the directors are responsible for assessing the Group's and the parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.


Page 7

 
CUSTOM MATERIALS LTD
 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CUSTOM MATERIALS LTD (CONTINUED)


Auditor's responsibilities for the audit of the financial statements
 

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


Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

enquiry of management around actual and potential litigation claims;
enquiry of entity staff to identify any instances of non-compliance with laws and regulations;
performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias;
reviewing minutes of meetings of those charged with governance; and
reviewing financial statement disclosures and testing to supporting documentation to assess compliance
with applicable laws and regulation.


Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.


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 Auditor's Report.


Page 8

 
CUSTOM MATERIALS LTD
 
 
 
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CUSTOM MATERIALS LTD (CONTINUED)


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 2006Our 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.





Duncan Cochrane-Dyet BSc BFP FCA (Senior Statutory Auditor)
for and on behalf of
MHA
Statutory Auditor
Maidstone
United Kingdom

31 January 2025
MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership registered in England and Wales (registered number OC312313)
Page 9

 
CUSTOM MATERIALS LTD
 
 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022
Note
£000
£000

  

Turnover
 4 
4,654
7,042

Cost of sales
  
(3,095)
(4,117)

Gross profit
  
1,559
2,925

Administrative expenses
  
(5,530)
(6,301)

Non-recurring expenses
 11 
(2,951)
(410)

Operating loss
 5 
(6,922)
(3,786)

Interest receivable and similar income
  
1
-

Interest payable and similar expenses
 9 
(637)
(508)

Loss before tax
  
(7,558)
(4,294)

Tax on loss
 10 
117
1,312

Loss for the financial year
  
(7,441)
(2,982)

Profit for the year attributable to:
  

Owners of the parent company
  
7,441
2,982

  
7,441
2,982

There were no recognised gains and losses for 2023 or 2022 other than those included in the consolidated statement of comprehensive income.

There was no other comprehensive income for 2023 (2022:£NIL).

The notes on pages 19 to 41 form part of these financial statements.

Page 10

 
CUSTOM MATERIALS LTD
REGISTERED NUMBER: 09185258

CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2023

As restated
2023
2022
Note
£000
£000

Fixed assets
  

Intangible assets
 12 
2,598
6,071

Tangible assets
 13 
11
17

  
2,609
6,088

Current assets
  

Debtors
 15 
235
2,811

Cash at bank and in hand
 16 
892
1,545

  
1,127
4,356

Creditors: amounts falling due within one year
 17 
(8,945)
(8,233)

Net current liabilities
  
 
 
(7,818)
 
 
(3,877)

Total assets less current liabilities
  
(5,209)
2,211

Net (liabilities)/assets
  
(5,209)
2,211


Capital and reserves
  

Called up share capital 
 18 
-
-

Share premium account
 19 
21,930
21,930

Other reserves
 19 
36
15

Profit and loss account
 19 
(27,175)
(19,734)

Equity attributable to owners of the parent Company
  
(5,209)
2,211

  
(5,209)
2,211


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 




................................................
K R Hubbard
Director

Date: 31 January 2025

The notes on pages 19 to 41 form part of these financial statements.

Page 11

 
CUSTOM MATERIALS LTD
REGISTERED NUMBER: 09185258

COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023

As restated
2023
2022
Note
£000
£000

Fixed assets
  

Intangible assets
 12 
2,590
6,064

Tangible assets
 13 
7
8

Investments
 14 
3
3

  
2,600
6,075

Current assets
  

Debtors
 15 
131
5,246

Cash at bank and in hand
 16 
42
705

  
173
5,951

Creditors: amounts falling due within one year
 17 
(6,269)
(6,228)

Total assets less current liabilities
  
 
 
(3,496)
 
 
5,798

  

  

Net (liabilities)/assets
  
(3,496)
5,798


Capital and reserves
  

Called up share capital 
 18 
-
-

Share premium account
 19 
21,930
21,930

Other reserves
 19 
36
15

Profit and loss account brought forward
  
(16,147)
(15,892)

Loss for the year
  
(9,315)
(255)

Profit and loss account carried forward
  
(25,462)
(16,147)

  
(3,496)
5,798


Page 12

 
CUSTOM MATERIALS LTD
REGISTERED NUMBER: 09185258
    
COMPANY BALANCE SHEET (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: 


................................................
K R Hubbard
Director

Date: 31 January 2025

The notes on pages 19 to 41 form part of these financial statements.

Page 13

 
CUSTOM MATERIALS LTD
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023


Called up share capital
Share premium account
Share based payment reserves
Profit and loss account
Total equity

£000
£000
£000
£000
£000


At 1 January 2022
-
17,745
379
(16,752)
1,372


Comprehensive income for the year

Loss for the year
-
-
-
(2,982)
(2,982)


Contributions by and distributions to owners

Shares issued during the year
-
4,185
-
-
4,185

Transfers
-
-
(364)
-
(364)



At 1 January 2023
-
21,930
15
(19,734)
2,211



Loss for the year
-
-
-
(7,441)
(7,441)

Transfer to/from profit and loss account
-
-
21
-
21


At 31 December 2023
-
21,930
36
(27,175)
(5,209)


The notes on pages 19 to 41 form part of these financial statements.

Page 14

 
CUSTOM MATERIALS LTD
 

COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023


Called up share capital
Share premium account
Share based payment reserves
Profit and loss account
Total equity

£000
£000
£000
£000
£000


At 1 January 2022
-
17,745
379
(15,892)
2,232


Comprehensive income for the year

Loss for the year
-
-
-
(255)
(255)


Contributions by and distributions to owners

Shares issued during the year
-
4,185
-
-
4,185

Share option movement
-
-
(364)
-
(364)



At 1 January 2023
-
21,930
15
(16,147)
5,798


Comprehensive income for the year

Loss for the year
-
-
-
(9,315)
(9,315)

Share option movement
-
-
21
-
21


At 31 December 2023
-
21,930
36
(25,462)
(3,496)


The notes on pages 19 to 41 form part of these financial statements.

Page 15

 
CUSTOM MATERIALS LTD
 

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023

As restated
2023
2022
£000
£000

Cash flows from operating activities

Loss for the financial year
(7,441)
(2,982)

Adjustments for:

Amortisation of intangible assets
2,081
1,682

Depreciation of tangible assets
5
33

Loss on disposal of tangible assets
2,805
-

Interest paid
637
508

Interest received
(1)
-

Taxation charge
(117)
(1,312)

Decrease in debtors
1,264
315

(Decrease)/increase in creditors
(642)
189

Research & Development tax credit received
1,429
-

Equity settled share based payment expense
21
(364)

Net cash generated from operating activities

41
(1,931)


Cash flows from investing activities

Generation of intangible fixed assets
(1,412)
(2,649)

Purchase of tangible fixed assets
-
(1)

Sale of tangible fixed assets
-
16

Interest received
1
-

Net cash from investing activities

(1,411)
(2,634)
Page 16

 
CUSTOM MATERIALS LTD
 

CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

As restated

2023
2022

£000
£000



Cash flows from financing activities

Issue of ordinary shares
-
4,185

Other new loans
1,000
-

Interest paid
(286)
(273)

Net cash used in financing activities
714
3,912

Net (decrease) in cash and cash equivalents
(656)
(653)

Cash and cash equivalents at beginning of year
1,545
2,198

Cash and cash equivalents at the end of year
889
1,545


Cash and cash equivalents at the end of year comprise:

Cash at bank and in hand
892
1,545

Bank overdrafts
(3)
-

889
1,545


The notes on pages 19 to 41 form part of these financial statements.

Page 17

 
CUSTOM MATERIALS LTD
 

CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2023




At 1 January 2023
Cash flows
At 31 December 2023
£000

£000

£000

Cash at bank and in hand

1,545

(653)

892

Bank overdrafts

-

(3)

(3)

Debt due within 1 year

(4,279)

(1,351)

(5,630)


(2,734)
(2,007)
(4,741)

The notes on pages 19 to 41 form part of these financial statements.

Page 18

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.


General information

Custom Materials Ltd (the "Company") is a private company limited by shares incorporated in England and Wales in the United Kingdom. The address of the registered office is 6th Floor One London Wall, London, United Kingdom, EC2Y 5EB. 
The financial statements are peresented in sterling which is the functional currency of the company and is rounded to the nearest £1,000.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

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 preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 3).

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 following principal accounting policies have been applied:

 
2.2

Basis of consolidation

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 Balance Sheet, 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.

Page 19

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.3

Going concern

The consolidated financial statements have been prepared on the going concern basis, notwithstanding the losses incurred during the current and prior year. The directors have undertaken an exercise to review the likely cash requirements of the group to January 2026 which indicate a positive cash balance maintained over the period considered. The forecast takes account of the circumstances following the year end when the directors have taken action to control losses by streamlining IT services and reducing the costs of support using automation available through the platform & external tools. The group dissolved the subsidiary undertaking Merch Hero Limited which ceased trading in September 2023, and placed CM Fulfilment Limited into insolvency through a creditors’ voluntary liquidation process (this business being the trading company for the now decommissioned trading platform).
 
Management recognise that there is a high degree of uncertainty in the preparation of these forecasts due to the development of a new platform, wider continuing macroeconomic uncertainties and the timings of certain cash outflows. The group is in breach of a financial covenant with its lender which is also an investor, and is expected to do so again within 12 months from the date of approval of these financial statements, however the lender has indicated that it remains supportive of the group, it has agreed not to exercise its rights with respect to the existing breaches and has agreed to continue to provide incremental funding to ensure liquidity in the group. The forecast does not include certain risk factors; being the potential rejection of research and development tax credit claims and the guarantee by the company of obligations relating to CM Fulfilment Limited. Inclusion of payment of these amounts would result in a significant shortfall in working capital that would impact the group’s ability to settle its liabilities as they fall due. However the business has a supportive relationship with its lender and investors.
 
Nonetheless, at the date of signing the financial statements, while the directors fully expect the forecasts to be met, they recognize that there is material uncertainty and significant doubt in relation to the ability of the parent company and group to continue as a going concern, and therefore that it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements have been prepared on a going concern basis because management are confident of the business maintaining sufficient cash to allow the group to meet its liabilities as they fall due for at least 12 months from the approval of the financial statements.

Page 20

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.4

Foreign currency translation

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'.

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.

Page 21

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.5

Revenue

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, which is at the point when an order is placed on the platform. The business acts as an agent as it does not have exposure to the significant risks and rewards associated with the sale of goods, for example it does not set retail prices of the goods for sale on its platform. 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:

Rendering of services

Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of revenue can be measured reliably;
it is probable that the Group will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.

 
2.6

Operating leases: the Group as lessee

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.

 
2.7

Research and development

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 of five 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.

 
2.8

Interest income

Interest income is recognised in profit or loss using the effective interest method.

Page 22

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.9

Finance costs

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.

 
2.10

Borrowing costs

All borrowing costs are recognised in profit or loss in the year in which they are incurred.

 
2.11

Pensions

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 Balance Sheet. The assets of the plan are held separately from the Group in independently administered funds.

 
2.12

Share-based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Group keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.
Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.

  
2.13

Breakage

In line with its Terms & Conditions, the Group reserves the right to provide against customer credit balances which remain on its balance sheet after 24 months and which it deems highly unlikely to be claimed and to release the balances to Statement of Comprehensive Income. The obligation to pay out a balance remains in place should a customer request it.

Page 23

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.14

Taxation

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 balance sheet date in the countries where the Company and the Group operate and generate income.


 
2.15

Exceptional items

Exceptional items are transactions that fall within the ordinary activities of the Group but are presented separately due to their size or incidence.

 
2.16

Intangible assets

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.

All intangible assets are considered to have a finite useful life of five years.

 
2.17

Tangible fixed assets

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.

At each reporting date the Group assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.

Page 24

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.17
Tangible fixed assets (continued)

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives.

Depreciation is provided on the following basis:

Office and computer equipment
-
3 years

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.

 
2.18

Impairment of fixed assets and goodwill

Assets that are subject to depreciation or amortisation are assessed at each balance sheet date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each balance sheet date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.

 
2.19

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

 
2.20

Debtors

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.

 
2.21

Cash and cash equivalents

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.

Page 25

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.22

Creditors

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.
 
 
2.23

Financial instruments

The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the Group's Balance Sheet when the Group becomes party to the contractual provisions of the instrument.

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.

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
Page 26

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.23
Financial instruments (continued)

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.

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.


3.


Judgements in applying accounting policies and key sources of estimation uncertainty

In the application of the Group's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. 
The estimates and associated assumptions are based on historical experience and other factors that are relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Share based payments 
Share options as set out in note 20 to the accounts have been granted to employees of the Company. As disclosed in the share-based payments accounting policy, the fair value of any vested share options is recognised in profit and loss.
Intangible fixed assets
In assessing expenditure on research and development that should be capitalised, management makes judgements as to the future economic benefits of the assets developed based on future business growth. Each year, management review the carrying value of intangibles for signs of impairment with reference to the future trading performance of the platform. This resulted in a £2.8m impairment charge in the year as detailed in note 12. 

Page 27

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

4.


Turnover

An analysis of turnover by class of business is as follows:


2023
2022
£000
£000

Sale of services
4,654
7,042

4,654
7,042


Analysis of turnover by country of destination:

2023
2022
£000
£000

United Kingdom
345
389

Rest of Europe
3,149
4,653

USA
829
1,617

Rest of the world
331
383

4,654
7,042



5.


Operating loss

The operating loss is stated after charging:

2023
2022
£000
£000

Exchange differences
76
68

Other operating lease rentals
35
86

Share-based payment
-
(98)


6.


Auditor's remuneration

During the year, the Group obtained the following services from the Company's auditor:


2023
2022
£000
£000

Fees payable to the Group's auditor for the audit of the Group's annual financial statements
22
20

The Group paid fees of £4k (2022: £3k) to it's auditor in respect on tax compliance services, and fees of £7k (2022: £6k) in respect of other non-audit services. 

Page 28

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

7.


Employees

Staff costs, including directors' remuneration, were as follows:


Group
Group
Company
Company
2023
2022
As restated
2023
2022
As restated
£000
£000
£000
£000


Wages and salaries
2,960
2,675
1,889
297

Social security costs
199
254
43
77

Cost of defined contribution scheme
43
123
8
22

3,202
3,052
1,940
396


The average monthly number of employees, including the directors, during the year was as follows:



Group
Group
Company
Company
        2023
        2022
        2023
        2022
            No.
            No.
            No.
            No.









Directors
4
6
4
6



Other
34
58
1
5

38
64
5
11


8.


Directors' remuneration

2023
2022
£000
£000

Directors' emoluments
425
261

Group contributions to defined contribution pension schemes
3
4

428
265


During the year retirement benefits were accruing to 3 directors (2022 - 3) in respect of defined contribution pension schemes.

The highest paid director received remuneration of £321k (2022 - £135k).

The value of the Group's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £3k (2022 - £3k).

No share options were exercised by the highest paid director (2022: none). 

Page 29

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

9.


Interest payable and similar expenses

2023
2022
£000
£000


Bank interest payable
1
-

Interest on loan notes
636
508

637
508


10.


Taxation


2023
2022
£000
£000

Corporation tax


Current tax on profits for the year
-
(1,312)

Adjustments in respect of previous periods
(117)
-


(117)
(1,312)


Total current tax
(117)
(1,312)

Deferred tax

Total deferred tax
-
-


Tax on loss
(117)
(1,312)
Page 30

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
 
10.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is lower than (2022 - lower than) the standard rate of corporation tax in the UK of 23.52% (2022 - 19%). The differences are explained below:

2023
2022
£000
£000


Loss on ordinary activities before tax
(7,558)
(4,294)


Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.52% (2022 - 19%)
(1,778)
(816)

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
30
19

Fixed asset differences
1
288

Capitalised revenue expenditure
-
(290)

Adjustments to tax charge in respect of prior periods
(117)
-

Movement in deferred tax not recognised
1,747
460

Research and development tax credit
-
(962)

Foreign tax paid
-
(11)

Total tax charge for the year
(117)
(1,312)


Factors that may affect future tax charges

The Group has not recognised a deferred tax asset of £3,963k (2022: £2,875k) in respect of trade losses carried forward of £15,852k (2022: £11,498k) on the basis that it is uncertain whether there will be any available future taxable profits. 

Page 31

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

11.


Non-recurring expenses

2023
2022
£000
£000


Resolutions
-
206

Restructuring costs
147
204

Impairment of intangible fixed assets
2,804
-

2,951
410

The directors deem the impairment of intangible fixed assets to be one-off in nature and have therefore classified the loss as a non-recurring item. 


12.


Intangible assets

Group





Software

£000



Cost


At 1 January 2023
9,505


Additions
1,412



At 31 December 2023

10,917



Amortisation


At 1 January 2023
3,434


Charge for the year on owned assets
2,081


Impairment charge
2,804



At 31 December 2023

8,319



Net book value



At 31 December 2023
2,598



At 31 December 2022
6,071

The intangible fixed asset relates to the trading platforms, developed in-house. In the year, the decision was taken to run down trading on the old platform, in favour of the newer and more functional platform. Accordingly the directors have impaired the net book value of the old platform to £nil.



Page 32

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
 
           12.Intangible assets (continued)

Company




Software

£000



Cost


At 1 January 2023
9,491


Additions
1,412



At 31 December 2023

10,903



Amortisation


At 1 January 2023
3,428


Charge for the year
2,081


Impairment charge
2,804



At 31 December 2023

8,313



Net book value



At 31 December 2023
2,590



At 31 December 2022
6,064

Page 33

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

13.


Tangible fixed assets

Group






Office and computer equipment

£000



Cost or valuation


At 1 January 2023
167


Disposals
(1)



At 31 December 2023

166



Depreciation


At 1 January 2023
150


Charge for the year on owned assets
5



At 31 December 2023

155



Net book value



At 31 December 2023
11



At 31 December 2022
17

Page 34

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

           13.Tangible fixed assets (continued)


Company






Office and computer equipment

£000

Cost or valuation


At 1 January 2023
136



At 31 December 2023

136



Depreciation


At 1 January 2023
128


Charge for the year on owned assets
1



At 31 December 2023

129



Net book value



At 31 December 2023
7



At 31 December 2022
8






Page 35

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

14.


Fixed asset investments

Company





Investments in subsidiary companies

£000



Cost or valuation


At 1 January 2023
3



At 31 December 2023
3





Subsidiary undertakings


The following were subsidiary undertakings of the Company:

Name

Registered office

Class of shares

Holding

CM Fulfilment Ltd
6th Floor, One London Wall, London, United Kingdom, EC2Y 5EB
Ordinary
100%
Marcazo Ltd
6th Floor, One London Wall, London, United Kingdom, EC2Y 5EB
Ordinary
100%
Merch Hero Ltd
6th Floor, One London Wall, London, United Kingdom, EC2Y 5EB
Ordinary
100%
Moteefe Portugal Unipessoal LTDA
Avenida Almirante Reis n 65 3 Pisa, 1150-011 Lisbon, Portugal
Ordinary
100%
CM ROW Fulfilment Ltd
6th Floor, One London Wall, London, United Kingdom, EC2Y 5EB
Ordinary
100%

CM ROW Fulfilment Ltd has taken the exemption in Section 479A of the Companies Act 2006 from the requirements in the Act for its individual accounts to be audited.
Information on events after the year end concerning the other subsidiary companies can be found in note 24.

Page 36

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

15.


Debtors

Group

Group
As restated
Company
Company
As restated
2023
2022
2023
2022
£000
£000
£000
£000

Due after more than one year

Other debtors
49
1,361
49
1,361

49
1,361
49
1,361

Due within one year

Trade debtors
13
1,033
3
974

Amounts owed by group undertakings
-
-
-
2,524

Other debtors
64
240
24
245

Prepayments and accrued income
109
177
55
142

235
2,811
131
5,246


Amounts due by group undertakings are unsecured, interest free and repayable on demand. 


16.


Cash and cash equivalents

Group
Group
Company
Company
2023
2022
2023
2022
£000
£000
£000
£000

Cash at bank and in hand
892
1,545
42
705

Less: bank overdrafts
(3)
-
-
-

889
1,545
42
705


Page 37

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

17.


Creditors: Amounts falling due within one year

Group

Group
As restated
Company

Company
As restated
2023
2022
2023
2022
£000
£000
£000
£000

Bank overdrafts
3
-
-
-

Other loans
5,630
4,279
5,630
4,279

Trade creditors
772
753
80
151

Amounts owed to group undertakings
-
-
159
270

Other taxation and social security
1,855
1,152
15
14

Other creditors
131
290
2
5

Accruals and deferred income
554
1,759
383
1,509

8,945
8,233
6,269
6,228


Amounts owed to group undertakings are unsecured, interest free and repayable on demand.
The loan notes are secured by means of a debenture, fixed and floating charges over the assets and undertakings of the Group. 


18.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



80 (2022 - 80) A Ordinary shares of £0.0001 each
0.01
0.01
8,024 (2022 - 7,861) A1 Ordinary shares of £0.0001 each
0.80
0.79
21,650 (2022 - 21,650) B Ordinary shares of £0.0001 each
2.17
2.17
25,971 (2022 - 25,971) B1 Ordinary shares of £0.0001 each
2.60
2.60
122,365 (2022 - 122,365) B2 Ordinary shares of £0.0001 each
12.24
12.24
55,626 (2022 - 55,626) B3 Ordinary shares of £0.0001 each
5.56
5.56
181,235 (2022 - 181,235) Ordinary shares of £0.0001 each
18.12
18.12
1,263,223 (2022 - 1,233,984) Preferred Ordinary shares of £0.0001 each
126.32
123.40

167.82

164.89

Each of the company shares carry no right to fixed income and each carry the right to one vote at general meetings of the company. 
During the year, the company issued 163 A1 Ordinary shares at their nominal value, and issued 29,239 Preferred Ordinary shares for consideration of £99,997.


All share classes have full voting and dividend rights, they entitle the holder to a variable return on a capital distribution (depending on the amount to be distributed) and are non-redeemable. 

Page 38

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

19.


Reserves

Share premium account

Consideration received for shares issued above their nominal value net of transaction costs.

Share based payment reserve

Cumulative share-based payment expense less transfers to the profit and loss reserve for awards have vested but will not be exercised.

Profit and loss account

Cumulative profit and loss net of distributions to owners including net exchange differences arising on consolidation on the retranslation of the accounts of overseas subsidiaries. 


20.


Share-based payments

The company operates an Enterprise Management Incentive (EMI) qualifying share option scheme. At the date of the Statement of Financial Position the movements were as follows:

Weighted average exercise price (pence)
2023
Number
2023
Weighted average exercise price
(pence)
2022
Number
2022

Outstanding at the beginning of the year

43.01

1,083

35.14
 
9,660
 
Granted during the year

111.33

43,750

-
 
-
 
Expired during the year

-

-

48.91
 
(8,577)
 
Outstanding at the end of the year
109.68

44,833

43.01
 
1,083
 

The Company also operates an unapproved share option scheme. In the year to 31 December 2023 the Company granted 11,450 non-qualifying share options (2022: Nil). During the year, no non-qualifying share options vested.
Share options vest monthly either immediately or up to 4 years from the grant date with a 12 month cliff. 



As restated
2023
2022
£000
£000

(Credit)/ expense recognised in the year (Group and Company)


Equity-settled schemes
21
(364)

21
(364)

Page 39

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

21.


Prior year adjustment

Both the company and consolidated balance sheets are marked as restated in the prior year in respect of amended disclosure of debtor and creditor balances - these restatements have had no impact on net assets of either balance sheet. 
The Consolidated Statement of Cash Flows in the prior year has been restated in respect of taxation received of £1,312k. This balance was accrued and not received in the year, and the statement has been amended to reflect that.
Other reserves in respect of equity based share options was overstated in the prior year by £364k. A prior year adjustment has been recognised to correct this, decreasing the reserve balance and staff costs by the stated amount. This adjustment had no tax impact, and has decreased the net assets of the company by the stated amount. 


22.


Contingent liabilities

Research & Development claims were made in respect of accounting periods ended 31 December 2021 and 31 December 2022 which gave rise to total tax credits paid to the Group of £1,429k. These claims have since been subjected to enquiry by HMRC, who have concluded that the claims made do not meet the required criteria. 
The Company has appealed HMRC's decision and have confidence their claim and supporting evidence satisfies legislative requirements. As the probability of the outcome cannot be reliably determined and therefore a reasonable estimate cannot be arrived at, no liability has been recognised in these financial statements. 


23.


Pension commitments

The Group operated a defined contribution pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £43k (2022 - £123k). Contributions totally £7k (2022 - £nil) were payable to the fund at the balance sheet date and are included within creditors.


24.


Related party transactions

Key management personnel are the directors of the company. Their remuneration is disclosed in note 8. 


25.


Post balance sheet events

The Group enacted restructuring of 2 subsidiaries to simplify the business as a whole and dissolved 2 dormant subsidiaries in 2024 (Merch Hero Ltd which ceased trading in September 2023 and Marcazo Ltd which had been dormant for the whole of 2023).
In August 2024, CM Fulfilment Ltd (the 100% owned subsidiary for the fully decommissioned trading platform) was placed into insolvency through a Creditors' Voluntary Liquidation process. The obligations of that company were guaranteed by Custom Materials Ltd, and there is a risk that a consequential claim may be made. 

Page 40

 
CUSTOM MATERIALS LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

26.


Controlling party

In the opinion of the directors there is no ultimate controlling party.

Page 41