The directors present the strategic report for the year ended 30 April 2024.
Eurostar Group Holdings Limited serves as the parent company of a diverse group of businesses whose principal activity remains focused on technology distribution, logistics, and service-led operations. The Group includes three active trading companies operating within the UK and international markets, as well as an entity facilitating sales to the European market.
During the year the Group 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 Group 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 Group has now bedded in to the facility and moved to a business-as-usual operational position.
The Group has benefitted from changes in operational governance and management during the year, which have been further consolidated with additional appointments to the board of the principal subsidiary since the year end.
The Group 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 subsidiaries Eurostar Global Electronics Limited and Tech 3PL Limited have 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 Group well placed to maximise on all opportunities that exist in the marketplace.
The financial performance of the Group 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 for the Group are:
Delivering incremental income streams utilising increased operational space.
Supporting the integration and operationalisation of the specialist 3PL service provider entity launched by the Group, leveraging its existing expertise.
Diversifying revenue streams by developing service-led offerings in hardware, software, and lifecycle services.
Establishing strong intercompany collaborations to enhance operational synergies and competitive advantage.
Facilitating new business development, including market expansions, brand-building initiatives, and vendor partnerships.
Undertaking an evaluation of the Group’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.
The management of the business and the execution of the Group’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 Group 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 Group 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 Group’s results. UK inflation is adding to business cost and further eroding margins. To mitigate these issues, the Group 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 Group 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 Group 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 Group’s reputation. The Group mitigates this risk through stringent procurement procedures and quality control checks in line with regulatory standards. The Group has a Primary Authority agreement with Trading Standards. The Group 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 Group 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 Group, 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 Group is exposed to increased cost of finance from funding partners. The Group 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 Group is exposed to commodity price risk against its products. The Group 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 Group, 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 key performance indicators communicate the continued, financial performance and strength of the Group:
Gross Profit has increased by 3.5% to £6.48m
Group Net Worth has decreased by £100k due to an amortisation of goodwill charge of £137k, but remain substantial at £6.76m
Debtor days have improved from 25 to 22
Employee gender split as at 30 April 2024 Female: 31% Male 69%
Our people
As of 30 April 2024, our Group proudly employs 69 professionals, 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 groups 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 group 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 groups employees;
need to foster the groups business relationships with suppliers, customers and others
impact of the groups operations on the community and environment;
groups reputation for high standards of business conduct; and
need to act fairly as between members of the group.
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 £342,000. 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 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 2021/22 UK Government’s Conversion Factors for Company Reporting
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per £1m turnover, the recommended ratio for the sector.
The group is aware of its impact to the environment and is conscious to reduce its footprint. The renovation of the new site will include various technologies for energy saving. The group also started out from buying end-of-life products, to reduce global waste. Finally, the group is focused on battery-related technology and the evolutionary steps it will make to the sector.
We have audited the financial statements of Eurostar Group Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 April 2024 which comprise the group income statement, the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, 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.
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 to identify 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.
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.
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 £353,575 (2023 - £361,961 profit).
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
Eurostar Group Holdings Limited (“the company”) is a private limited company domiciled and 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 group consists of Eurostar Group Holdings Limited and all of its subsidiaries.
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 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 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 for parent company information presented within the consolidated financial statements:
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;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Eurostar Group Holdings 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 30 April 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.
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 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 when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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 income statement.
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 are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
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).
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 statement of financial position 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.
Basic financial liabilities, including creditors and bank loans, 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 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 income statement 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.
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 or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
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 income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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 statement of financial position 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.
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.
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 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 directors consider there to be no critical judgements, key estimates or assumptions used in preparing the financial statements.
The average monthly number of persons (including directors) employed by the group and 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.
Details of the company's subsidiaries at 30 April 2024 are as follows:
Subsidiary audit exemption
The following subsidiaries are claiming exemption from audit under Section 479A of the Companies Act 2006:
Connected247 Ltd - Company number 08389878
Tech 3PL Ltd - Company number 05168567
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 group.
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 group and 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 company 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.
The share premium account represents the proceeds received in excess of nominal value on the share capital.
The profit and loss reserve holds the retained earnings of the company and group, after the deduction of any dividends paid in the period.
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:
Amounts contracted for but not provided in the financial statements:
During the year the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
Dividends totalling £342,000 (2023 - £372,000) were paid in the year in respect of shares held by the company's directors.
Advances or credits have been granted by the group to its directors as follows: