The directors present the strategic report for the 53 weeks ended 30 June 2024.
After a successful FY2023 the directors were confident that we could continue to achieve profitable sustainable growth and deliver our key strategic objectives in FY2024.
UK Core Profit - Grow - focus on growing the level of UK Core business profit
Home Delivery Profit - Grow - following successful scale growth, focus on profit generation
International - Expand – develop outside of the UK into new geographies.
CORE – Product Sales
During the first half of the financial year (July to December) the business enjoyed some stable trading conditions. Interest rates had peaked, the GBP/USD exchange rate settled, and freight rates returned to their pre-COVID levels.
That stability, however, changed during Christmas & New Year 23/24. Houthi Rebels created a ‘no go zone’ in the Red Sea and forced container shipping to go instead, around the southern cape of Africa. This diversion initially caused disruption in stock availability, due to increased lead times. In addition, it also drove freight prices up significantly. Between December 23 and January 24 the China Containerized Freight Index doubled, it went on to double again by June 2024.
Thankfully we did not suffer the full price impacts due to our freight risk mitigation strategy to forward contract our freight with key partners and the fantastic efforts of our UK and China colleagues.
I’m pleased to say our freight costs did not reflect that of the market, and along with further softening of the GBP/USD we were able to trade through the challenge without having to pass on cost increases to our customers.
From a key category perspective, most moved forward, however, the MDA category suffered a sizeable double digit market decline for several months. Despite the market conditions, we outperformed the market by moving into new subcategories and opening up new routes to market.
FLEET – Home deliveries
FY2024 was a challenging year for the fleet, the largest cost element a home delivery service is labour and that had been driven up by UK wage inflation meaning costs had risen much faster than our sales prices, thus eroding margins. In addition to this, in the first half of the year we geared up (bought vans and hired people) for additional volume as promised by one of our strategic partners, but due to the decline in the aforementioned MDA market that volume didn’t materialise. It meant for several months we were carrying more overheads than we would have liked, and the fleet was reporting losses.
We reviewed the fleet in detail and embarked on a turnaround plan, improved its efficiency and, worked with our partners to help ease some of the cost pressures. The result was that by the end of the financial year the fleet was back to being profitable.
INTERNATIONAL
An encouraging year for our International business both in terms of performance and laying the foundations for growth going forward.
The EU and Australia are the main area of success, both presenting opportunities going into next year.
GROUP COMBINED
The directors are pleased to report that FY2024 was a significant growth year and we report our highest ever turnover of £89.2m. This represents and YOY increase of 12.6%. In addition to this, and despite a backdrop of high inflation we were also able to grow our PBT to £5.53m, which is a YOY increase of 19.9%.
See the table below for a summary of the performance and our Key Performance indicators which are Turnover, Profit Before Tax and Net Debt.
We have again demonstrated how resilient and strong we are as a Team and in our business performance. Positive foundations have been laid to ensure we convert the opportunities in the coming year.
The directors are very proud of the results in this financial year, and we’d like to record our thanks to all our Team for their valued contribution.
ACTUAL PERFORMANCE | ||||
| 2024 | 2023 | 2022 | 2021 |
Turnover | 89,263,697 | 79,442,067 | 73,313,807 | 78,149,241 |
YOY Change | 12.62% | 8.36% | -6.19% |
|
2 Year Change | 21.76% | 1.65% |
|
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3 Year Change | 14.22% |
|
|
|
|
|
|
|
|
Profit Before tax | 6,605,289 | 4,611,667 | 4,500,955 | 5,589,874 |
YOY Change | 19.93% | 2.46% | -19.48% |
|
2 Year Change | 22.88% | -17.50% |
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3 Year Change | -1.06% |
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|
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Bank cash/Net Debt | -9,161,190 | -3,497,696 | -7,562,847 | -923,180 |
YOY Change £ | -5,663,494 | 4,065,151 | -6,639,667 |
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2 year Change £ | -1,598,343 | -2,574,516 |
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3 Year Change £ | - 8,238,010 |
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At the balance sheet date, the Group had net assets of £1,660,100 (2023 - £3,313,605). The directors believe the Group’s balance sheet to be financially robust particularly given that net current assets were £4,548,714 (2023 - £6,419,593).
The directors believe that disclosing non-financial key performance indicators is not necessary for stakeholders to understand the group's development, performance, or position.
The principal risks and uncertainties facing the Group and the Group's steps to mitigate the risk are as follows:
Rising cost prices from our suppliers driven by increasing labour and raw materials costs
The directors manage this risk via strong sourcing capability, our China infrastructure and by maintaining strong long term relationships with factories and strategic partnerships with key suppliers.
Exposure to foreign currency fluctuations
The directors consistently monitor foreign currency markets and where possible will forward buy currency to ensure that as far as possible fluctuations have limited impact on the Groups’ trading results and cash flows.
Increased competition
The Group continues to refresh and develop its licensed core product ranges as well as investing in our own private label brands, entering new categories and channels and investing in sustainable retail relationships.
Over reliance on a single business factor
The directors are aware of the risk associated with over reliance on a single business factor, be that a single customer, supplier, geography, product category or brand. This risk is monitored regularly and considered in all new strategic decisions. Where possible steps are taken to diversify and mitigate any impact from this risk.
Hyper inflation
Whilst the ‘cost of living crisis’ is largely driven by events outside of the directors control the directors closely monitor its effects. Where possible, appropriate prices are locked to protect against inflation. Where cost increases, and therefore selling price increases cannot be avoided the directors continuously look to drive efficiencies and reduce consumption to mitigate.
Employees
During the period under review, the group employed an average of 213 employees (2022 : 190).
Our office-based colleagues continue to enjoy the flexibility of home working which has meant that the board and senior team put even more focus on regular communication updates on business performance and developments in order to keep teams well informed. The business has also invested in additional incentives and employee engagement activities throughout the year. Despite the challenges, we have continued to invest in training which has been remote where necessary. We have also provided resources to support colleagues with their mental health, including mental health first aiders and signposting of support material and services.
Environment and sustainability
The company continues to work on its sustainability strategy which includes our commitment to reduce our ‘in scope’ carbon emissions by focussing on Product re-engineering, Home delivery efficiency and on-site operations, including recycling and energy saving initiatives. We have clear KPIs in place which are reviewed on a regular basis and work with accredited partners to ensure we are well informed and operating within regulatory parameters. We are working closely with our overseas factories to ensure they are aligned with our objectives.
Customers
The group recognises that in today’s competitive market, success hinges on our customers being satisfied with both our product and service level. This applies to both our direct retailer customers and the end consumer. We strive to be flexible in our approach and to address each of our customers’ needs so that we can deliver the product and service they expect.
Suppliers
Management values its relationship with suppliers. We have a select panel and once onboarded the relationships usually last many years with a common goal for long term mutual success.
High standards and business conduct
The business is committed to a core set of cultural values which are intrinsic to how we treat our people, our suppliers and our customers. This culture is also reflected in our recruitment process, our induction program and ongoing colleague training and engagement. We ensure that colleagues are aware of and receive periodic updates on our HR policies including areas such as Diversity, Bribery & Corruption and Pricing & Competition law.
Each year the board considers and approves our modern slavery statement demonstrating our commitment to seeking to ensure there is no slavery or forced labour or human trafficking within any part of our business or supply chains.
From a health and safety perspective we continue to invest in a dedicated team and systems which adhere to the requirements of ISO 45001 alongside a culture of complete transparency at all levels. Incident reporting is monitored closely and appropriate action taken. Overall, our incident and injury frequency rates per 100,000 hours are reducing at a sustainable pace, and colleagues are showing an improved level of involvement and ownership in relation to maintaining a low incident rate, and a higher than historical reporting rate. The H&S committee is key to this, as is the works being undertaken by the re-invigorated group of Employee Safety representatives
The group maintain a risk register which is the basis of our business continuity plan and is regularly reviewed. There is an audit and risk committee which convenes quarterly and reviews the outcome of any British Standards Institution (BSI) or internal audits and discusses strategy in the context of a ‘risk pipeline’.
The group are regularly audited by BSI in line with the following International Organization of Standardization (ISO) accreditations which we hold:
ISO27001 Information Security Management
ISO 45001 Health & Safety Management system
On behalf of the board
The directors present their annual report and financial statements for the 53 weeks ended 30 June 2024.
The results for the 53 weeks are set out on page 14.
Ordinary dividends were paid amounting to £2,565,000. The directors do not recommend payment of a further dividend.
The directors who held office during the 53 weeks and up to the date of signature of the financial statements were as follows:
Since the balance sheet date, the Group has continued to perform well and despite the downturn in the UK economic outlook, rising costs driven by the recent government budget and strengthening USD we have been able to grow our revenues and expect FY2025 to be another strong year for Hamer Capital Ventures Group.
Organisational structure
Hamer Capital Ventures Limited is classified as a large unquoted company due to its size and shareholding structure.
Reporting period
The Hamer Capital Ventures Group is reporting for the financial year ended 30 June 2024.
Energy and carbon report
As the group has consumed more than 40,000 kWh of energy in this reporting period, it is required to report on its emissions, energy consumption or energy efficiency activities.
Measurement methodology
Scope 1 and 2 consumption and CO₂e emission data has been calculated using the 2024 UK Government Conversion Factors for Company Reporting as made available at https://www.gov.uk/government/collections/government-conversion-factors-for-company-reporting
For properties where the Hamer Capital Ventures is indirectly responsible for utilities (i.e. via a landlord or service charge), the Khw’s billed by the landlord has been used, or where a bill on account has been issued our own meter readings have been used to calculate the usage.
For our transport performance we have calculated the litres of diesel used by our delivery vans and inter depot transport in the period by dividing the total spend by the average price per litre of the year.
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 2024 UK Government’s Conversion Factors for Company Reporting.
The chosen intensity measurement ratios are total gross emissions in kilograms of CO2e per £ of turnover and CO2e per employee. Furthermore, because the majority of the Group’s emissions arise from its home delivery network we also measure the CO2e per delivery. The turnover for FY2024 was £89,263,697 (2023 £79,442,061), the average number of employees for FY2024 was 241 (2023: 213).
Our transport accounts for 89% (2023: 85%) of our calculated CO₂e. With this in mind we continue to try and maximise the efficiency of our delivery miles. Such measures include training all technicians on how to drive in the most fuel-efficient way and maximising the payload per route. During the year we trialled an electric van but unfortunately the range on electric vans is not quite where we need it to be to consider the move away from traditional diesel, however we monitor these technologies regularly and will, when right for the group, consider making the change.
We continue to introduced energy saving measures into our warehouses and offices, and during FY2023 we invested in motion sensor technology in our largest palletised warehouse, this has reduced our electricity consumption on that site by 30%.
We have previously encouraged colleagues to take an all-electric or hybrid company car where possible however, and we continue with our strategy to move to an ‘all-electric’ only company car list which to date has been successful.
We continue to review how we hold stock across our sites and are beginning to hold stock in multiple locations to reduce the need for inter-depot transport.
Whilst not in the reportable scope, will are also looking to promote a reduction in carbon emissions by colleagues from home working and in their personal lives. Directly, this has been achieved by continuing to encourage remote working thus reducing the daily commute. Indirectly this involves us educating and informing our colleagues on small changes they can make to help reduce their personal carbon footprint. We also send out frequent updates in this regard, to improve employee engagement in our group carbon reduction strategy.
From a product sourcing perspective, we continue to work with our factories to reduce plastic in our packaging, move towards sustainable sources of paper and board and focus on recyclability targets all in line with our customer requirements.
The Hamer Capital Ventures Group are not part of the Carbon Trust or any Carbon offset scheme, however the directors are in the process of reviewing this to see if it is appropriate for the Hamer Capital Ventures Group to join such a scheme. We also work closely with our retailers in understanding their sustainability strategy and making relevant adjustments to meet their required standards.
We have audited the financial statements of Hamer Capital Ventures Limited (the 'Parent Company') and its subsidiaries (the 'Group') for the 53 weeks ended 30 June 2024 which comprise 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 directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
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 the audit:
the information given in the strategic report and the directors' report for the financial 53 weeks 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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.
Identifying and assessing risks related to irregularities:
We assessed the susceptibility of the group and parent company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the group and parent company by discussions with directors and by updating our understanding of the sector in which the group and parent company operates.
Laws and regulations of direct significance in the context of the group and parent company include The Companies Act 2006 and UK Tax legislation.
Audit response to risks identified
We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of group and parent company financial statement disclosures. We reviewed the parent company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the parent company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.
During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.
As group auditors, our assessment of matters relating to non-compliance with laws or regulations and fraud differed at group and component level according to their particular circumstances. Our communications included a request to identify instances of non-compliance with laws and regulations and fraud that could give rise to a material misstatement of the group financial statements in addition to our risk assessment.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities 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 parent 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 parent company's members those matters we are required to state to them in an auditors 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 parent company and the parent 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 £2,490,407 (2023 - £315,926 profit).
Hamer Capital Ventures Limited (“the Company”) is a private company limited by shares incorporated in England and Wales. The registered office is 12 Braybrook Drive, Bolton, BL1 5XA.
The Group consists of Hamer Capital Ventures Limited and all of its subsidiaries. PCT Foshan has been excluded from consolidation as its inclusion is not material for the purposes of giving a true and fair view.
The Company's and the Group's principal activities and nature of its operations are disclosed in the Directors' report.
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.
These accounts have been prepared for the 53 week period ended 30 June 2024.
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, modified to include investment properties and certain financial instruments at fair value. 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 financial statements incorporate those of Hamer Capital Ventures Limited and all of its subsidiaries (i.e. entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits), except PCT Foshan, a company in China, which has been excluded on the grounds of immateriality. Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 30 June 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.
The cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.
Any non-controlling interest in the acquiree is recognised at the non-controlling interest's share of the acquiree's net identifiable assets, liabilities and provisions for contingent liabilities recognised at the acquisition date.
Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date.
Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.
Change in interest where control is not obtained or lost
Where an interest in a subsidiary is increased or reduced, but control is not obtained or lost, the difference between the fair value of any consideration paid or received and the change to the non-controlling interest is recognised directly in equity and attributed to owners of the parent.
These financial statements have been prepared on a going concern basis.
The directors have prepared cash flow projections for the Company and its Group and revised these in light of the current trading outlook. Within these projections they have considered a range of possible scenarios for the foreseeable future, including adverse foreign exchange and freight rate movements. The projections cover a period of at least 12 months from the date of signature of the financial statements. After considering the strength of the Company and Group balance sheet, along with the current year trading performance verses those projections, the directors consider the Company and its group to be well placed to sustain the impact of any potential downturn in trade.
Turnover represents the amounts receivable for goods and services net of VAT and trade discounts. Sales are recognised at the point at which the group has transferred the risk and rewards to the customer.
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.
Turnover relating to services is recognised at the point at which the group has fulfilled its contractual obligations and the risks and rewards attaching to the service and products have been transferred to the customer.
Some trademarks are determined to have an indefinite useful life and are not amortised, but instead reviewed for impairment annually, or more often if an indication of impairment arises.
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.
In the separate accounts of the company, interests in subsidiaries are initially measured at cost.
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.
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 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 trade and other debtors, cash and bank balances, are initially measured at transaction price.
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 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 trade and other creditors, bank loans and overdrafts, are initially recognised at transaction price.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate 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 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.
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 current tax expense and deferred tax expense. Current tax assets are recognised when tax paid exceeds the tax payable.
Current and deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited to other comprehensive income or equity, when the tax follows the transaction or event it relates to and is also charged or credited to other comprehensive income, or equity.
Current tax assets and current tax liabilities and deferred tax assets and deferred tax liabilities are offset, if and only if, there is a legally enforceable right to set off the amounts and the entity intends either to settle on the net basis or to realise the asset and settle the liability simultaneously.
Current tax is based on taxable profit for the year. Current tax assets and liabilities are measured using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based on tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax liabilities are recognised in respect of all timing differences that exist at the reporting date. Timing differences are differences between taxable profits and total comprehensive income that arise from the inclusion of income and expenses in tax assessments in different periods from their recognition in the financial statements. Deferred tax assets are recognised only to the extent that it is probable that they will be recovered by the reversal of deferred tax liabilities or other future taxable profits.
Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination and the amounts that can be deducted or assessed for tax. The deferred tax recognised is adjusted against goodwill.
For non-depreciable assets measured using the revaluation model and investment properties measured at fair value (except investment property with a limited useful life held by the group to consume substantially all of its economic benefit), deferred tax is measured using the tax rates and allowances that apply to the sale of the asset or property.
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.
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 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.
For defined contribution schemes the amount charged to profit or loss is the contributions payable in the year. Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments.
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.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
Foreign exchange
Transactions in foreign currencies are translated into the Company's functional currency (GBP) using a budgeted rate of exchange that prevailed at the date of the transaction. 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.
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.
Critical judgements
The directors do not consider there to be any critical judgements.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows:
The directors make a provision for the estimated cost of warranty and servicing on the sale of electronic goods. These provisions require management's best estimate of the costs that will be incurred based on the probability weighting of all possible outcomes. Including an assessment of historical rates of return and products sold in the year. The provision held at the year end was £2,202,665 (2023: £2,285,124).
The company considers whether stocks are impaired. The directors review stock on a line by line basis and stocks identified as having no or nominal consideration are measured at the lower of cost and net realisable value, adjusted where applicable for any loss of services potential. The provision for impairment of stock recognised is £570,155 (2023: £437,760) which is due to slow moving and obsolete stock.
The directors estimate the rebates due to be paid to retailers selling products on behalf of the group. As the retailers year end does not always align with that of the group, the rebate due to the retailer is accrued for on the assumption they will hit their sales target at the end of their year. If they achieve their target then the accrual has accounted for the rebate amount, if they do not achieve it then the amount is reversed which in turn increases profit. The amount accrued for in relation to rebates due to retailers is £623,779 (2023: £926,736).
During the year, the directors reviewed and amended the Motor Vehicle depreciation. The review resulted in reduction of both the residual value and useful life of the vehicles which was a fair reflection following a significant increase in the number of miles the vehicles do. The change resulted in an additional depreciation charge for FY2024 of £187,000 when compared to the previous accounting estimate.
The average monthly number of persons (including directors) employed by the Group and Company during the 53 weeks was:
Their aggregate remuneration comprised:
The actual charge for the 53 weeks can be reconciled to the expected charge for the 53 weeks based on the profit or loss and the standard rate of tax as follows:
The above dividends relate to the equity shareholders of the company.
Dividends distributed to non controlling interests amounted to £297,942 (2023: £19,442).
Investment properties rented to another Group entity have been accounted for using the cost model. The carrying value of these investment properties included within freehold land and buildings is £Nil (2023 - £3,135,726).
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Investment property comprises buildings. The fair value of the investment property brought forward was arrived at on the basis of a valuation carried out at 30 June 2023 by the directors of the Company. During the year the decision was taken to dispose of all investment property held.
Details of the company's subsidiaries at 30 June 2024 are as follows:
Registered office addresses (all UK unless otherwise indicated):
PCT Foshan has not been consolidated as its inclusion is not material for the purpose of giving a true and fair view.
The Company has control over Product Care Group Limited due to its share of the voting rights in Product Care Group Limited.
The Group mitigates it's foreign exchange risk by entering into forward currency contracts. At 30 June 2024, the outstanding contracts all mature within 18 months of the year end. At the year end the Group had committed to buy $29.125m (2023 - $11.5m) and €Nil (2023 - €1.98) over the next 18 months, with a variable liability at the maturity rate. The forward currency contacts are measured at fair value using the exchange rates for GBP:USD/EUR. The fair value of the contracts is a liability of £51,739 (2023: a liability of £662,696).
The provision for impairment of stock recognised is is £570,155 (2023: £437,760) which is due to slow moving and obsolete stock.
Included in trade debtors is a provision for bad debts of £19,880 (2023: £36,686).
Included in other borrowings is £3,381,962 (2023: £690,890) in relation to an invoice discounting facility, secured by a fixed charge over debtors and floating charge over all other assets in the Group.
The long-term loans are secured by fixed charges over all the assets and undertakings of the Group.
The maximum import loan term is 120 days, and the interest rates on these loans are variable tracking the currency's base rate. At the year end the rates were 3.675% for USD and 3.3% for GBP.
The term loan is repayable at £129k per month, at an interest rate of 4.03%.
There is a fixed and floating charge held over all of the company assets dated 25 January 2019, given by HSBC UK Bank Plc.
The following are the major deferred tax liabilities and assets recognised by the Group and Company, and movements thereon:
The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
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.
Included in creditors at the year end is £98,278 (2023:£68,145) payable to the scheme.
All shares rank pari passu.
The share premium reserve is consideration received for shares issued above their nominal value net of transaction costs.
Cumulative profit and loss net of distribution to owners.
The following exist in relation to the subsidiary companies:
There was a guarantee date 1 February 2019 in favour of HM Revenue and Customs for £Nil (2023: £Nil).
There is a fixed and floating charge held over all of the company assets date 25 January 2019, given by HSBC UK Bank PLC.
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:
On the 21 August 2024, 833 Ordinary A shares with the designation A1 were re-designated to A7. Their share class was unaffected.
The remuneration of key management personnel is as follows.
Other information
Included in creditors at the year end is £Nil (2023: £20,000) owed to a company related by common control.
Dividends totalling £40,000 (2023 - £40,000) were paid in the 53 weeks in respect of shares held by the company's directors.
Purchases totalling £6,000 (2023: £6,000) were made to a company with common directorship, Moorecap Limited, in respect of bookkeeping and accounts preparation. There are no balances outstanding at the year end.
Included within other creditors due after one year is an amount of £3,590,000 (2023: £8,250,000) in respect of a loan payable to a close family relation of the directors.
On a review of the loan balance, it was identified that a loan balance of £8.25m was incorrectly classified as due within one year, when according to the loan documentation it was due to be repaid after 5 years. This has affected the current liabilities and non current liabilities lines of the balance sheet. There is no impact on the profit for the year or the equity in the prior year.