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Company No: 07364238 (England and Wales)

ROOT 7 LTD

Annual Report and Unaudited Financial Statements
For the financial year ended 31 March 2024
Pages for filing with the registrar

ROOT 7 LTD

Annual Report and Unaudited Financial Statements

For the financial year ended 31 March 2024

Contents

ROOT 7 LTD

COMPANY INFORMATION

For the financial year ended 31 March 2024
ROOT 7 LTD

COMPANY INFORMATION (continued)

For the financial year ended 31 March 2024
DIRECTORS Mr L O Bartram
Mr R Ingram
Mr R J Innes
Mr A H Mackey
REGISTERED OFFICE Unit 14
Bessemer Park
250 Milkwood Road
London
SE24 0HG
United Kingdom
COMPANY NUMBER 07364238 (England and Wales)
CHARTERED ACCOUNTANTS GRAVITA III LLP
Aldgate Tower
2 Leman Street
London
E1 8FA
United Kingdom
ROOT 7 LTD

DIRECTORS' REPORT

For the financial year ended 31 March 2024
ROOT 7 LTD

DIRECTORS' REPORT (continued)

For the financial year ended 31 March 2024

The directors present their annual report and the unaudited financial statements of the Company for the financial year ended 31 March 2024.

Note from the CEO

In the year ending 31 March 2024, Root 7 Ltd executed its strategic decision to focus on the bumboo brand and move away from the high-value but low-frequency and low-growth area of wholesale product sales. By leveraging the investment injected into the company following a successful equity raise at the end of 2023, bumboo achieved top-line sales growth of 35% during this accounting period, with an EBITDA of £70k. This growth has been largely driven by low customer churn and a high conversion rate from sales on the www.bumboo.eco website. These strong indicators are due to our direct-to-consumer strategy that prioritizes user experience and customer service. As a result, we have garnered over 5,000 independently collected reviews on Feefo, with an average rating of 4.8*.

Reported losses are due to the high cost of borrowing, but we are pleased to note these have been reduced from the previous accounting period. We are forecasting positive cash flow and net profit for the current period.

The run rate for the current period shows a 60% top-line growth for the bumboo brand versus the period ending 31 March 2024, along with further improvement in EBITDA. We have been extremely pleased with our ability to maintain positive EBITDA during challenging market conditions and to continue outperforming all our key operational metrics.

The growth of the company will continue into 2025 with exciting expansion plans into new products and markets. I am pleased to announce that the company has obtained Advanced Assurance that the company’s forthcoming equity raise will qualify within the UK’s tax efficient Enterprise Investment Scheme.

DIRECTORS

The directors, who served during the financial year and to the date of this report except as noted, were as follows:

Mr L O Bartram
Mr R Ingram
Mr R J Innes
Mr A H Mackey

This Directors' Report has been prepared in accordance with the provisions applicable to companies entitled to the small companies' exemption provided by section 415A of the Companies Act 2006.



Approved by the Board of Directors and signed on its behalf by:

Mr R Ingram
Director

19 February 2025

ROOT 7 LTD

BALANCE SHEET

As at 31 March 2024
ROOT 7 LTD

BALANCE SHEET (continued)

As at 31 March 2024
Note 31.03.2024 31.03.2023
£ £
Fixed assets
Intangible assets 3 575,125 673,406
Tangible assets 4 3,726 5,925
578,851 679,331
Current assets
Stocks 273,791 323,329
Debtors 5 94,473 102,361
Cash at bank and in hand 18,696 84,660
386,960 510,350
Creditors: amounts falling due within one year 6 ( 983,343) ( 827,726)
Net current liabilities (596,383) (317,376)
Total assets less current liabilities (17,532) 361,955
Creditors: amounts falling due after more than one year 7 ( 27,730) ( 116,645)
Net (liabilities)/assets ( 45,262) 245,310
Capital and reserves
Called-up share capital 219,279 219,279
Share premium account 765,547 765,547
Profit and loss account ( 1,030,088 ) ( 739,516 )
Total shareholders' (deficit)/funds ( 45,262) 245,310

For the financial year ending 31 March 2024 the Company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.

Directors' responsibilities:

The financial statements of Root 7 Ltd (registered number: 07364238) were approved and authorised for issue by the Board of Directors on 19 February 2025. They were signed on its behalf by:

Mr R Ingram
Director
ROOT 7 LTD

STATEMENT OF CHANGES IN EQUITY

For the financial year ended 31 March 2024
ROOT 7 LTD

STATEMENT OF CHANGES IN EQUITY (continued)

For the financial year ended 31 March 2024
Called-up share capital Share premium account Profit and loss account Total
£ £ £ £
At 01 January 2022 219,176 99,980 ( 280,629) 38,527
Loss for the financial period 0 0 ( 458,887) ( 458,887)
Total comprehensive loss 0 0 ( 458,887) ( 458,887)
Issue of share capital 103 665,567 0 665,670
At 31 March 2023 219,279 765,547 ( 739,516) 245,310
At 01 April 2023 219,279 765,547 ( 739,516) 245,310
Loss for the financial year 0 0 ( 290,572) ( 290,572)
Total comprehensive loss 0 0 ( 290,572) ( 290,572)
At 31 March 2024 219,279 765,547 ( 1,030,088) ( 45,262)

In March 2023, the new Ordinary ‘A’, Ordinary ‘B’, Ordinary ‘C’, and Ordinary ‘D’ shares each of nominal value of £0.0001 were converted into a new class of Ordinary ‘B’ shares each of nominal value of £0.0001. The company then issued a new class of shares named Ordinary ‘A’ shares each of nominal value of £0.0001 in return for new equity capital of £666k for cash consideration, including the conversion of 15,000,000 preference shares on nominal value of £0.01 each.

ROOT 7 LTD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2024
ROOT 7 LTD

NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 March 2024
1. Accounting policies

The principal accounting policies are summarised below. They have all been applied consistently throughout the financial year and to the preceding financial period, unless otherwise stated.

General information and basis of accounting

Root 7 Ltd (the Company) is a private company, limited by shares, incorporated in the United Kingdom under the Companies Act 2006 and is registered in England and Wales. The address of the Company's registered office is Unit 14, Bessemer Park, 250 Milkwood Road, London, SE24 0HG, United Kingdom.

The financial statements have been prepared under the historical cost convention, modified to include certain items at fair value, and in accordance with Section 1A of Financial Reporting Standard 102 (FRS 102) ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ issued by the Financial Reporting Council and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime.

The financial statements are presented in pounds sterling which is the functional currency of the Company and rounded to the nearest £.

Going concern

The company has net current liabilities of £596,383 (2023: £317,376) at the balance sheet date which suggests that the going concern basis may not be appropriate. However, the directors have given assurance that they will continue to provide support to the company to allow it to continue in operation for the foreseeable future. The directors therefore consider it appropriate to prepare financial statements on a going concern basis. The financial statements do not include any adjustments that would result from a withdrawal of this support.

Reporting period length

The financial statements represent a period of accounts between 01 April 2023 to 31 March 2024. Therefore the figures are not directly comparable with the prior period.

Foreign currency

Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the Balance Sheet date are reported at the rates of exchange prevailing at that date.

Exchange differences are recognised in the Profit and Loss Account in the period in which they arise except for exchange differences arising on gains or losses on non-monetary items which are recognised in the Statement of Comprehensive Income.

Turnover

Turnover is 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.

Employee benefits

Short term benefits
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised as an expense when the Company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Defined contribution schemes
The Company operates a defined contribution scheme. The amount charged to the Profit and Loss Account in respect of pension costs and other post-retirement benefits is the contributions payable in the financial year. Differences between contributions payable in the financial year and contributions actually paid are included as either accruals or prepayments in the Balance Sheet.

Taxation

Current tax
Current tax is provided at amounts expected to be paid (or recoverable) using the tax rates and laws that have been enacted or substantively enacted at the Balance Sheet date.

Deferred tax
Deferred tax arises as a result of including items of income and expenditure in taxation computations in periods different from those in which they are included in the Company's financial statements. Deferred tax is provided in full on timing differences which result in an obligation to pay more or less tax at a future date, at the average tax rates that are expected to apply when the timing differences reverse, based on current tax rates and laws. Deferred tax assets and liabilities are not discounted.

The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.

Intangible assets

Intangible assets are stated at cost or valuation, net of amortisation and any provision for impairment. Amortisation is provided on all intangible assets at rates to write off the cost or valuation of each asset over its expected useful life as follows:

Development costs 10 years straight line
Trademarks, patents and licences 10 years straight line
Other intangible assets 10 years straight line
Research and development

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

Other intangible assets

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity

Tangible fixed assets

Tangible fixed assets are stated at cost or valuation, net of depreciation and any provision for impairment. Depreciation is provided on all tangible fixed assets, other than investment property and freehold land, at rates calculated to write off the cost or valuation, less estimated residual value, of each asset on a straight-line or reducing balance basis over its expected useful life, as follows:

Computer equipment 20 years straight line

Residual value represents the estimated amount which would currently be obtained from disposal of an asset, after deducting estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

Impairment of assets

Assets, other than those measured at fair value, are assessed for indicators of impairment at each Balance Sheet date. If there is objective evidence of impairment, an impairment loss is recognised in the Profit and Loss Account as described below.

Non-financial assets
At each balance sheet date, the company reviews 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 recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

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. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Financial assets
An asset is impaired where there is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated recoverable value of the asset has been reduced. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use.

Where indicators exist for a decrease in impairment loss, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.

For financial assets carried at amortised cost, the amount of impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets carried at cost less impairment, the impairment loss is the difference between the asset’s carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date.

Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to sell, which is equivalent to the net realisable value. Cost includes materials, direct labour and an attributable proportion of manufacturing overheads based on normal levels of activity. Cost is calculated using the FIFO (first-in, first-out) method. Provision is made for obsolete, slow-moving or defective items where appropriate.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks.

Financial instruments

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.

Financial assets and liabilities are only offset in the Balance Sheet when, and only when there exists a legally enforceable right to set off the recognised amounts and the Company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Basic financial assets
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.

Financial assets are derecognised when and only when the contractual rights to the cash flows from the financial asset expire or are settled, or the Company transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or the Company, despite having retained some, but not all, significant risks and rewards of ownership, has transferred control of the asset to another party.

Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

Equity instruments
Equity instruments issued by the Company are recorded at the fair value of cash or other resources received or receivable, net of direct issue costs. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the Company.

2. Employees

Year ended
31.03.2024
Period from
01.01.2022 to
31.03.2023
Number Number
Monthly average number of persons employed by the Company during the year, including directors 6 6

3. Intangible assets

Development costs Trademarks, patents
and licences
Other intangible assets Total
£ £ £ £
Cost/Valuation
At 01 April 2023 904,751 4,283 62,662 971,696
At 31 March 2024 904,751 4,283 62,662 971,696
Accumulated amortisation
At 01 April 2023 268,267 178 29,845 298,290
Charge for the financial year 91,585 429 6,267 98,281
At 31 March 2024 359,852 607 36,112 396,571
Net book value
At 31 March 2024 544,899 3,676 26,550 575,125
At 31 March 2023 636,484 4,105 32,817 673,406

4. Tangible assets

Computer equipment Total
£ £
Cost
At 01 April 2023 10,478 10,478
At 31 March 2024 10,478 10,478
Accumulated depreciation
At 01 April 2023 4,553 4,553
Charge for the financial year 2,199 2,199
At 31 March 2024 6,752 6,752
Net book value
At 31 March 2024 3,726 3,726
At 31 March 2023 5,925 5,925

5. Debtors

31.03.2024 31.03.2023
£ £
Trade debtors 16,649 85,458
Prepayments 5,035 11,342
Other debtors 72,789 5,561
94,473 102,361

6. Creditors: amounts falling due within one year

31.03.2024 31.03.2023
£ £
Bank loans 89,541 82,332
Trade creditors 155,860 147,896
Other loans 520,126 473,928
Accruals 8,712 7,712
Other taxation and social security 102,242 34,684
Other creditors 106,862 81,174
983,343 827,726

On 29 September 2023, Sellersfunding International Portfolio LTD created a fixed and floating charge covering all the property or undertakings of the company.

This was in the form invoice discounting and the directors of the company do not consider this to be a loan and therefore, has been recognized within other creditors.

7. Creditors: amounts falling due after more than one year

31.03.2024 31.03.2023
£ £
Bank loans 27,730 116,645

There are no amounts included above in respect of which any security has been given by the small entity.

8. Related party transactions

Transactions with the entity's directors

At the balance sheet date, the company owed £175,540 (2023: £74,166) to the directors and shareholders of the company. The loans are interest bearing and are repayable on demand.