The directors present the strategic report for the year ended 31 January 2024.
The profit for the year, after taxation, is £6,191,499 (2023: £12,552,835).
The Group's key financial and other performance indicators during the year were as follows:
| 2024 | 2023 | Change |
£’000 | £’000 | % | |
| |||
Financial: |
55,985 |
73,519 |
-23.8% |
Overseas Turnover | 50,912 | 55,210 | -7.9% |
Operating profit | 7,715 | 15,168 | -49.1% |
Profit for the financial year | 6,191 | 12,553 | -50.7% |
Shareholder’s equity | 61,073 | 58,187 | 4.9% |
KPI’s: Current assets as % of current liabilities |
372% |
259% |
113% |
Turnover from the UK market decreased by 23.8% & Overseas markets decreased by 7.9% during the year, this was due to the impact of the Writers and Actors strikes which severely impacted Film productions across the UK and international markets.
Turnover and thus profitability for FY25 has continued to feel the effects of the Writers and Actors strikes, but there are signs that FY26 will be a much more productive year for big budget film productions. It is also expected we will also see the launch of new product(s) from our manufacturing company which will replace a key legacy product and should give a boost to our global turnover.
Operating profit decreased by 49.1% during the year, this was due to the reduction in turnover caused by the Writers and Actors strikes.
Shareholders’ equity increased by 4.9% due to retained earnings.
The Group's "current ratio" (current assets as a percentage of current liabilities) has increased mainly due to the improvement of working capital.
The Group companies have regular management meetings where the board meet and evaluates the risks faced by each company. The principal risks and uncertainties facing each Company are broadly grouped as – competitive, technological, legislative and financial instrument risk.
Competitive risks
The Group operates within a competitive market place which is addressed by focussing on client service, competitive pricing and maintaining the Group’s strong reputation. To help streamline the operations of the Group so we can better service our customers a new ERP system will be implemented to ensure we can continue to support our customers with the highest levels of support.
Technological risks
The innovation in new products by existing suppliers and potential new suppliers means there is an increased risk of purchased stock becoming obsolete, we use various automated forecasting methods to assist us in trying to manage this risk.
Legislative risks
The Group operates mostly in highly regulated countries, so the level of reporting needed for the group continues to grow however with the new systems being implemented we expect to be able to comply with current and future requirements with minimal disruption.
Exposure to price, credit, liquidity, foreign exchange and cash flow risk
Price risk arises on financial instruments because of changes in, for example, commodity prices or equity prices. Included with the current asset investments are Listed investments with a book value of £18,213 (2023: £42,941) which are exposed to price risk but this exposure is within the Groups risk appetite.
Credit risk is the risk that one party to a financial instrument will cause a financial loss for that other party by failing to discharge an obligation. Group policies are aimed at minimising such losses, and require that deferred terms are only granted to customers who demonstrate an appropriate payment history and satisfy credit worthiness procedures. Details of the Groups receivables are shown in the notes to the financial statements.
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Group aims to mitigate liquidity risk by managing cash generation by its operations, applying cash collection targets throughout the Group. The Group also manages liquidity risk via revolving credit facilities and long term debt.
Foreign exchange risk is the risk that an entity will suffer financial loss due to the movement in the strength of its base currency. The Group manages this risk through self-hedging.
The Directors have a duty under Section 172 of the Companies Act 2006 to act in a way which they consider in good faith would promote the success of the Group for the benefits of its Members, whilst having regard to other stakeholders. For the year under review and up to the date of this report and thereafter, the Directors consider that they have acted and will act, both individually and collectively, in a manner most likely to promote the interests of the Group and its Members. Being a privately owned group, the Directors have regard to deriving long-term benefit which accrues equitably to all Members.
The Directors regularly assess the products and services the Group provides to ensure they are aligned to client needs. The Directors review and consider new business opportunities, both in the UK and abroad, as part of their long-term planning with a view to growing the business and sustaining profitability in the longer term. The Directors will give consideration to the level of investment in core infrastructure and automation where appropriate, with the objective to improve the client product and service offering and to manage its cost base. The Directors also actively engage with the client base to foster strong relationships which enable the Group to meet client needs on a long-term basis.
Business relationships
The Directors implement strategies to enhance the Group's business relationships with suppliers, clients, and others. The Group provides stage, studio and event lighting products for the live entertainment, worship, theatre and architectural markets. It is therefore vitally important that the risks that the Group faces are effectively identified and managed, in order to provide an appropriate level of resilience for its clients. The principal risks and uncertainties faced by the Group and the risk management procedures adopted by the Directors are set out within this report under the section headed 'Principal risks and uncertainties'.
In carrying out ther duties, the Directors are mindful of the impact their decisions may have on employees, the community and the environment. An employee review process is conducted with annual objectives aligned to the Group's values to support employees in managing their performance for the mutual benefit of themselves and the Group.
The Directors adopt a long-term approach to managing the environmental risks and opportunities facing the business, periodically reviewing and seeking initiatives that aim to minimise the impacts of the business on the environment. Management periodically review the Group's environmental performance and take corrective action where appropriate and issuing guidance where necessary.
The maintenance and enhancement of the Group's reputation is a key consideration of the Directors, ensuring that its officers and employees consistently act in compliance with regulatory rules and in accordance with the high standards of business conduct expected of firms operating within the lighting and adjacent industries. The Directors review the Group's ethics and whistleblowing policies and provides training to all employees on a regular basis covering ethics and standards of business conduct, making use of online and in-person training tools.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 January 2024.
The profit for the year, after taxation, is £6,191,499 (2023: £12,552,835).
Ordinary dividends were paid amounting to £2,087,800. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The Company made the following political donations in the current year:
Reform UK - £25,000
The Group is an equals opportunity employer and is committed to the promotion and equality of opportunity in all aspects of employment. The Group will take reasonable steps to employ, train and promote employees on the basis of their experience, abilities and qualifications without regard to age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race (including colour, nationality and ethnic or national origins), religion or belief, sex or sexual orientation. The Group values diversity and it is on everyone’s interests for the environment in which we work to be harmonious and respectful. We aim to provide a creative working environment where everyone has an equal opportunity for success. Proven acts of deliberate or very serious harassment, bullying or discrimination will result in the summary dismissal of the person concerned.
The Group will continue to invest in its staff, research and development and new partnerships to support our vision of being the leading international provider of cutting-edge entertainment technology products and solutions and will look to grow through organic client opportunities and strategic geographical expansion.
The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
As the group has consumed more than 40,000 kWh of energy in this reporting period, it is required to report on its UK emissions, energy consumption and energy efficiency activities.
UK energy use and associated greenhouse gas emissions
Current UK based annual energy usage and associated annual greenhouse gas (“GHG”) emissions are reported pursuant to the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report)Regulations 2018 (“the 2018 Regulations”) that came into force 1 April 2019.
Organisational boundary
In accordance with the 2018 Regulations, the energy use and associated greenhouse gas emissions are for those within the UK only that come under the operational control boundary and for which the subsidiary would itself be obliged to include if reporting on its own account. As a consequence, energy use and emissions are aligned with financial reporting for A.C. Worldwide Group Limited and exclude the non-UK based subsidiaries and those UK subsidiaries that would not qualify under the 2018 regulations in their own right.
Reporting period
The annual reporting period is 1st February to 31st January each year and the energy and carbon emissions are aligned to this period.
The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per UK employee.
There were no energy efficiency actions recorded for this year.
We have audited the financial statements of A.C. Worldwide Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 January 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
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 and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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 report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the entity through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and 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 indicators of potential bias.
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 of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £1,447,081 (2023: £4,651,208).
A.C. Worldwide Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Centauri House, Hillbottom Road, Sands Industrial Estate, High Wycombe, Buckinghamshire, United Kingdom, HP12 4HQ.
The group consists of A.C. Worldwide Group Limited and all of its subsidiaries.
The principal activity of the Group is a distributor of stage, studio and event lighting products for the live entertainment, worship, theatre and architectural markets.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The 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 2).
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 financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company A.C. Worldwide Group Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 January 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised upon delivery of the goods which is the point in time at which the significant risks and rewards of ownership of the goods are transferred to the customer. Revenue is valued at invoiced amounts, excluding VAT and other sales taxes and less trade discounts where relevant. Revenue from project sales are fixed price and relate to the sale of goods and implementation of the project. Revenue is recognised by reference to the stage of completion at the balance sheet date.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
It is the group's policy to not amortise intangible assets in the course of construction.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
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.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
In the consolidated accounts, interests in jointly controlled entities are accounted for using the equity method of accounting.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
Work in progress is valued on the basis of direct costs plus attributable overheads based on normal level of activity. Provision is made for any foreseeable losses where appropriate. No element of profit is included in the valuation of work in progress.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. 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.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
The Group only enters into financial instrument transactions which result in basic financial liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date in the countries where the company and Group operate and generate income.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill; relates to timing differences in respect of interest in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future; or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
The Group operates defined contribution plans 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.
Payments of contributions to defined contribution retirement benefit schemes are charged as an expense as 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.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
The Group has taken advantage of the optional exemption available on transition to FRS 102 which allows lease incentives on leases entered into before the date of transition to the standard, 1 February 2016, to continue to be charged over the period to the first market rent review rather than the term of the lease.
Amounts due from lessees under finance leases are recognised as receivables at the amount of the group's net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the group’s net investment outstanding in respect of leases.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
The results of overseas operations are translated at the average rates of exchange during the year and the balance sheet translated into pounds sterling at the rate of exchange ruling at the balance sheet date. Exchange differences which arise from translation of the operating net assets and results of foreign subsidiary undertakings are taken to other comprehensive income.
Provisions for liabilities
Provisions are recognised when the Group has a legal or constructive present obligation as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The Group estimates the net realisable value of stock at the end of the reporting period taking into account the age profile of stock and expected demand from customers. The Group also assesses the likelihood of recovering outstanding balances from customers and makes a provision against these balances as required.
The analysis of turnover is disclosed by territory of origin, being the country of domicile of the Group undertakings making the sale.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2023 - 1).
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Factors that may affect future tax charges
As part of Budget 2021 on 3 March 2021, it was announced that the UK corporation tax rate will increase to 25% from 1 April 2023. This change was substantively enacted on 24 May 2021. Prior to this change, the corporation tax rate was 19%. The effect on the company of this change has been reflected in the company's financial statements in the financial year as appropriate.
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
The impairment losses in respect of financial assets are recognised in other gains and losses in the profit and loss account of the comparative period.
The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The profit after tax of the parent company for the year was £1,447,081 (2023: £4,651,208).
More information on impairment movements in the year is given in note 11.
The remaining estimated useful economic life of the capitalised Brand is 0 years (2023: 0.25 years). The value attributable to Goodwill arises on consolidation.
More information on impairment movements in the year is given in note 11.
Freehold land and buildings held by A.C. Worldwide Group Limited relates to commercial property occupied by trading subsidiaries. It is included at historical cost, less depreciation in the company and Group balance sheet.
Tangible fixed assets with a carrying value of £1,984,090 (2023: £2,035,726) are pledged as security for the Group’s bank loans.
The Group’s share of profits from joint ventures was £78,414 (2022: £544,439) before dividends received of £Nil (2023: £552,122).
Details of the company's subsidiaries at 31 January 2024 are as follows:
On 31 January 2024 A.C. Americas (USA) Inc. was formed by the merger of A.C. Lighting Inc. and A.C. Promedia Inc., American sister companies to A.C. Holdings (Canada) Limited.
Details of joint ventures at 31 January 2024 are as follows:
Stocks are stated after provision for impairment of £4,792,604 (2023: £3,975,108). The increase in slow-moving and obsolete stock provision of £817,495 (2023: £691,822) was recognised in cost of sales during the year.
A decrease in the bad debt provision of £109,706 (2023: decrease of £447,677) was recognised in administrative expenditure during the year.
Finance lease receivables are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
The group enters into financial leasing arrangements for stock. The average term of finance leases entered into is 1 year.
The market value of listed and unlisted investments held by the Group at 31 January 2024 and 31 January 2023 was equal to the carrying amount.
Bank loans and overdrafts of the company are secured by charges dated 20 February 2003 and 14 November 2016 over certain freehold property and by a debenture dated 5 July 2007 granting fixed and floating charges over all of the company’s assets.
Included within bank loans payable by the Group are two mortgages payable relating to the subsidiary company A.C. Canada Limited of £3,961,481 ($2,320,500 and $4,420,000) (2023: £4,303,136 ($2,446,500 and $4,660,000)) from HSBC Bank Canada. These loans are repayable on the earlier of the bank's demand for repayment or the fifth anniversary of the drawdown. Until such demand, repayments of $10,500 and $20,000 plus interest are payable monthly and interest is charged at ‘Prime’ +0.5% and 5.63% respectively.
Also included within bank loans payable by the Group is a demand loan payable, due May 2025, relating to the subsidiary company, A.C. Canada Limited of £479,966 ($816,667) (2023: £524,785 ($866,667)) from HSBC Bank Canada of which $50,000 (2023: $50,000) is due within one year. Repayments of $4,167 plus interest are payable monthly until the balance is repaid. Interest is charged at 'Prime' +3.0%.
Bank loans of £433,472 (€501,663) (2023: £679,530 (€751,438)) are repayable by the subsidiary company ESL S.A.S., as detailed below.
A loan of €13,615 owing to Societe Marseillaise de Credit of which €13,615 is due within one year. Repayments are paid monthly until May 2024 along with interest which is charged at a fixed rate of 0.9%.
A loan of €238,102 owing to Societe Marseillaise de Credit of which €105,446 is due within one year. Repayments are paid monthly until May 2026 along with interest which is charged at a fixed rate of 0.57%.
A loan of €55,548 owing to Credit Agricole of which €40,937 is due within one year. Repayments are paid monthly until January 2025 along with interest which is charged at a fixed rate of 0.9%.
A loan of €170,003 owing to Credit Agricole of which €75,302 is due within one year. Repayments are paid monthly until June 2026 along with interest which is charged at a fixed rate of 0.54%
A loan of €24,395 owing to Banque Dupuy, De Parseval of which €10,042 is due within one year. Repayments are paid monthly until June 2026 along with interest which is charged at a fixed rate of 0.25%.
The company registered a mortgage deed which holds a fixed charge over its freehold property dated 20 February 2003.
The company registered a single debenture which holds a fixed and floating charge over its assets dated 5 July 2007.
The company and group is party to an omnibus guarantee and set-off agreement registered on 14 November 2016. This contains a fixed charge over its assets and a negative pledge.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
Tax losses are in respect of Spectrum Manufacturing Inc. and A.C. (Canada) Limited and are expected to be utilised in future years.
The Group has accumulated tax losses for which no deferred tax asset has been recognised due to the uncertainty of timing of relief of such losses amounting to £338,379. These losses are in respect of A.C. Holdings (Canada) Limited and A.C. Promedia (Canada) Inc.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the Group in an independently administered fund.
Contributions totalling £43,146 (2023: £46,012) were payable to the scheme at the end of the year and are included in creditors.
Each ordinary share carries one vote, an equal right to dividends and capital (including on a winding up) and is not redeemable.
At the reporting end date the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
After the year end certain subsidiaries in the US were amalgamated; these being A.C. Lighting (Canada) Inc, A.C. Promedia (Canada) Inc. and A.C. Americas (Canada) Ltd.
During the year total dividends of £2,002,000 (2023: £3,000,900) were paid to D A Leggett, a director of the company.