The directors present the strategic report for the year ended 30 April 2024.
The principal activity of the company remains the distribution of wireless consumer electronic devices, affiliated products and value-added services within the UK and Europe.
During the year the company successfully concentrated on more profitable business, driving an increase in its gross profit percentage which resulted in a higher gross profit on lower turnover. The strategic objective remains to increase market share, profit and revenue by expanding our product range and attracting new customers across our well-established UK and European channels.
At the start of the year, the company completed its significant investment project for operational relocation to a state-of-the-art logistics and distribution hub, increasing operational capacity by 1.5 million cubic feet. This move took place in May 2023 to enable increased operational efficiencies, scaling opportunities, and new service-led business initiatives. The company has now bedded in to the facility and moved to a business-as-usual operational position.
The business has benefitted from changes in operational governance and management during the year, which have been further consolidated with additional appointments to the board since the year end.
The business completed its objectives of enhanced governance, establishment of an ESG committee, securing certifications for IT & Cyber Security management and gained accreditation for approved vendor status to the CCS government framework. Since the year end the company has also achieved ISO 9001 Accreditation.
These advances, together with our position as an efficient, well managed distributor with independent, recurrent purchasing, supported by highly focussed sales and commercial functions, enhanced logistical capabilities sees the Company well placed to maximise on all opportunities that exist in the marketplace.
The financial performance of the company for the year ended 30 April 2024 is in line with the directors’ expectations, commensurate with investments made in all levels of personnel, premises, technical processes, and compliance procedures, to ensure best levels of business practice.
Key strategic priorities are:
To deliver incremental income streams utilising increased operational space. Accordingly, a group led decision was taken to incorporate and launch an independent service-focused group company. This company will operate independently within the group as a Technology specialist 3PL company, leveraging on the foundations and expertise of ege infrastructure, technical and logistical capabilities to deliver services to 3rd parties. This addition to the group will support the increased cost base, at group level, capitalising on opportunity allowing ege to evaluate the marketplace and formulate a strategic growth plan. Ultimately it is anticipated that ege will become a client of the 3PL business.
To undertake an evaluation of the company’s financing costs following the bolstering of financial acumen through the recruitment of a full-time Finance Director since the year end and to reduce the overall Cost of finance.
To strengthen the marketing team and finalise existing projects, primarily rebranding the ege business, ensuring that both internal and external parties are aligned, reflecting the development and growth of the company.
To review direct vendor relationships and look to strengthen core working relationships with key existing partners, while entering in to negotiations with new key brands.
To capitalise on vacated premises assets, leasing these out to generate additional income.
Sales led initiatives around existing sales channel activity, expand SKU / Product ranges, circular economy and end-to-end lifecycle services together with public sector engagement through attainment as an approved supplier to crown commercial services.
To benefit from a post year end financial department systems upgrade to an enterprise financial system.
Technical and service sales delivery projects.
The management of the business and the execution of the company’s strategy are subject to a number of risks. Risks are continually monitored and evaluated by the leadership team and appropriate controls put in place to monitor and mitigate them to the extent that this is possible.
Competition
The business environment in which the company operates remains competitive. Barriers to entry for market share growth from incumbent competitors are led by existing end customer contractual relationships or legacy system integrations with significant cost to change. Sales to the EU and EU trade remains challenging following the UK’s exit from the European Union with various trade friction including logistical delays and margin pressures associated with increased costs.
In order to mitigate risk, our team ensure recurrent procurement at the lowest open market value for goods in line with carefully managed stock control and run rates. Logistical partner reviews are undertaken bi-annually to reduce costs and delays associated with shipping products.
Supply Chain & theft
The company mitigates the risk of product availability through a diverse and European wide supplier base and procurement practices. Product theft is managed through a robust and secure operating environment, careful staffing background checks, on-site security, professional transit processes and appropriate insurance cover.
Market Risks
Key areas of market risk relate to increased competition resulting in margin erosion, general uncertain economic conditions in European Union and the cost-of-living crisis in the UK. On-going direct Manufacturer to consumer sales together with direct sales from Manufacturers to e-commerce giant Amazon also pose a threat and shrinking supply-chain for Distributors who face various channel controls from Brands working with Amazon in the D2C channel to stifle competitive grey market sales.
Key Employees
The resignation of key individuals and the inability to recruit people with suitable experience and skills in a volatile employee driven market could adversely impact the Company’s results. UK inflation is adding to business cost and further eroding margins. To mitigate these issues, the Company has a thorough induction programme and suite of benefits and training for all employees. To avoid over dependence of key staff, the directors continue to review and amend the structure where appropriate.
Credit Risk
The company has insured credit backed sales against all key customers to limit exposure to bad debts and undertakes robust due diligence, including appropriate credit checking against all customers prior to undertaking trade. The amount of credit exposure to any individual company is carefully monitored and assessed monthly. The Company has in place a debt factoring agreement with Barclays Bank PLC.
Product Safety
Poor product quality control requiring activation of our product recall procedures may give rise to legal liability, significant costs and damage to the company’s reputation. The company mitigates this risk through stringent procurement procedures and quality control checks in line with regulatory standards. The company has a Primary Authority agreement with Trading Standards.
The company also holds insurance policy cover for Public and Product Liability Indemnity on a worldwide basis.
Compliance with legal and ethical standards
A material failure to comply with applicable legal and ethical standards could result in penalties, costs, reputational harm and damage to relationships with suppliers or customers. The company has detailed guidelines and policies for employees on key compliance risks.
IT/Cybercrime
The business could potentially incur fraudulent losses that are not covered by insurance policies and sophisticated electronic fraud may evade the detection of staff or systems designed to prevent such events. The business needs to maintain adequate IT systems and infrastructure to support growth and development may be affected by; accidental exposure or deliberate theft of sensitive information, loss of service or system availability, significant system chances or upgrades and cybercrime. To mitigate risk, dedicated IT personnel with appropriate technical expertise within the Company, along with external contracted partners implement IT standards and oversee IT security. Regular Cybersecurity reviews are performed. This is further mitigated through internal controls the business placed at logistical and financial levels.
Foreign Exchange risk
FX movements continue to contribute to margin volatility, although the flexible approach to procurement and sales channels within the UK and ROW allow the business to be versatile in its approach. Where required and possible, the business mitigates significant transaction risk through taking forward contracts.
Interest Rate and Cash flow risk
The company is exposed to increased cost of finance from funding partners. The company mitigates these risks through capped interest loan agreements and in funding reviews, with refinancing procedures geared to lower the cost of finance to the business. The business utilises the lowest cost of finance from its suite of funding products to minimise cost of finance.
Price risk
The company is exposed to commodity price risk against its products. The company has in place price protection agreements with its direct vendor partners and where open market goods are sourced, these are procured on a just in time basis to fulfil regular run rate orders, with goods consistently purchased on a recurrent basis at the lowest open market value. Regular stock monitoring, stock rotation, FIFO practices and AVCO product management are implemented.
Liquidity Risk
If necessary, the company has investment partners with equity interest in the business who are supportive of the Company, its management team and who can be relied upon to temporarily shore up funds for unforeseen short-term requirements.
The directors are continually assessing risks and uncertainties and are confident that by continuing to work closely with its customer base, identifying new channels, products and service opportunities, while maintaining a deep understanding of market forces, together with changing consumer requirements, the business has a robust strategic path to continue to enjoy long term profitability.
The businesses’ key performance indicators communicate the continued, financial performance and strength of the Company:
Gross Profit has increased by 3.7% to £6.25m
Net Worth has continued to increased to £6.05m
Debtor days have improved from 22 to 20
Employee gender split as at 30 April 2024 Female: 31% Male 69%
Our people
As of 30 April 2024, our company proudly employs 68 professionals across the UK, recognising their crucial role in our ongoing success. We foster a culture where innovation and service excellence are paramount and recognised/celebrated at every level, to ensure our team meets the evolving needs of suppliers and customers alike. Led by a cadre of seasoned professionals, our senior management exemplifies expertise and experience.
Committed to sustainable practices, we engage with our employees in a manner that reflects this ethos. Our business is diligent in managing health and safety risks and we strive to create a workplace that is both safe and inviting for everyone. Regular employee surveys are conducted, reinforcing our commitment to listening and continual improvement.
Our comprehensive employee development programmes ranging from Apprenticeships to Executive Coaching, are designed to nurture the growth of our colleagues across all levels. These programmes span personal development, specific role and/or industry-specific training, formal instruction in health and safety, risk, and compliance. Leadership development, particularly at the senior level, is a key focus, aiming to cultivate long-term leadership capabilities.
Customers
Our extensive customer base is testament to our commitment to service excellence. We blend a wide array of services with the pursuit of cost-effective, flexible solutions tailored to our customers' unique needs. Constantly expanding our reseller and retail customer base ensures our services evolve in step with their requirements, offering a superior route-to-market for our suppliers.
Leveraging our bespoke ERP system, we are set to broaden our customer reach further, offering technology-driven solutions underpinned by simplicity - a core tenet of our strategic values.
Suppliers
Our supplier network is as diverse as it is extensive, encompassing many of the leading technology brands including Sony, TCL, OnePlus, and OPPO. Products from all leading “A-brands” are sourced and stocked where direct partnership agreements are not held. We proactively seek new supplier relationships, aiming to be the go-to partner for emerging brands seeking access to retail and reseller channels. Strategic relevance with our key partners is a priority.
Our supply chain services for technology manufacturers and brand owners include comprehensive 'kitting' services, encompassing a full suite of product management solutions. Our 'Code of Practice' formalises our operating principles with suppliers, fostering long-term, sustainable partnerships.
Our niche focus on technology-led products enables a supplier-centric approach, nurturing high-quality, long-term relationships within our dedicated customer base.
Communities and Environment
Our environmental commitment is unwavering. As a global technology distributor, our operations generate minimal industrial waste and low energy consumption. However, we are vigilant in monitoring and reducing our carbon footprint, waste and energy use, ensuring compliance with waste disposal regulations.
Community engagement is a cornerstone of our ethos. We actively support local and national initiatives, contributing both financially and through volunteer efforts, sponsorships, and fundraising activities. Our goal is to empower communities, making a tangible and positive impact.
This statement, which forms part of the Strategic Report, is intended to show how the company’s directors have approached and met their responsibilities under s172 Companies Act 2006 during the year. The statement has been prepared in response to the obligations as set out in the Companies (Miscellaneous Reporting) Regulations 2018.
As required by s172 of the UK Companies Act 2006, a director of the company must act in a way they consider in good faith, would most likely promote the success of the Company for the benefit of its Shareholders. In doing this, the director must have regard, amongst other matters, to the:
likely consequences of any decisions in the long term;
interests of the company’s employees;
need to foster the company’s business relationships with suppliers, customers and others
impact of the company’s operations on the community and environment;
Company’s reputation for high standards of business conduct; and
need to act fairly as between members of the company.
We understand that our business can only grow and succeed over the long term if we recognise the views and needs of our stakeholders. Understanding our stakeholders is key to ensuring the Board can have informed discussions and factor stakeholder interests into decision-making.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 April 2024.
The results for the year are set out on page 12.
Ordinary dividends were paid amounting to £367,000. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
DJH Audit Limited were re-appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
The company has taken advantage of the available exemption not to disclose energy and carbon reporting in accordance with the Environmental Reporting Guidelines. This information is included in the group directors' report of Eurostar Group Holdings Limited.
Basis for 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 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
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.
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 company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the company;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including legislation such as the Companies Act 2006, taxation legislation, data protection, employment, health and safety legislation, and waste electrical and electronic equipment regulations;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries posted during the period and at the period end to identify unusual transactions;
investigating the rationale behind significant or unusual transactions; and
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
enquiring of management as to actual and potential litigation and claims;
reviewing correspondence and agreements with HMRC; and
reviewing legal and professional fees incurred during the period to identify any potential indications of non-compliance with laws and regulations.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
Which laws and regulations the auditor identified as being of significance in the context of the entity.
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.
Use of our report
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
Eurostar Global Electronics Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 4, Evolution, Lymedale Business Park, Hooters Hall Road, Newcastle under Lyme, Staffordshire, ST5 9QF.
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 £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Eurostar Global Electronics Limited is a wholly owned subsidiary of Eurostar Group Holdings Limited. The financial statements of the company are consolidated in the financial statements of Eurostar Group Holdings Limited. These consolidated financial statements are available to the public and may be obtained from Unit 4, Evolution Lymedale Business Park, Hooters Hall Road, Newcastle Under Lyme, Staffordshire, ST5 9QF.
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 credited or charged to profit or loss.
Basic financial assets, which include debtors , cash and bank balances and amounts due from group companies, 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 are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company 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 company after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, 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.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company 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 company.
Related party exemption
The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with other group entities where the relationship is one of being wholly owned.
In the application of the company’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 directors consider there to be no critical judgements, key estimates or assumptions used in preparing the financial statements.
An analysis of the company's turnover is as follows:
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
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:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Investments in subsidiary companies are held at cost. The directors consider there to be no impairment at the year end.
Details of the company's subsidiaries at 30 April 2024 are as follows:
Included within other creditors are invoice discounting facilities of £3,169,689 (2023 - £4,920,256), which are secured by fixed charges over the assets to which they relate.
The bank loans are secured by a fixed and floating charge over the assets of the company.
Long term bank debt is in the form of three secured loans which are monthly repayment (Capital and interest) instruments with Barclays Bank PLC. The first loan matured in June 23 and was renegotiated and is set to mature in June 2025 at an interest rate of 9.72%. The second loan matured in December 2023 . The third loan is set to mature in January 2025 at an interest rate of 8.35% per annum.
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund. As at 30 April 2024, the group owed £17,745 (2023 - £26,886) to the pension fund.
Each class of ordinary shares are non-redeemable, carry full voting, dividend and capital distribution rights.
Share premium is made up of receipts in excess of the par value of new share capital issued.
The profit and loss reserve holds the retained earnings of the company, after the deduction of any dividends paid in the period.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Amounts contracted for but not provided in the financial statements:
During the year the company entered into the following transactions with related parties:
The advance is unsecured, repayable on demand and interest is charged at HMRC's official rate of interest per annum, where the balance exceeds £10,000.
The largest and smallest group in which the results of the company are consolidated is that headed by Eurostar Group Holdings Limited, incorporated in England and Wales. The consolidated accounts of this company are available to the public and may be obtained from Unit 4, Evolution Lymedale Business Park, Hooters Hall Road, Newcastle Under Lyme, Staffordshire, ST5 9QF. No other group accounts include the results of the company.