The directors present the strategic report for the Period ended 31 March 2024.
The current reporting period runs from 1 February 2024 to 31 March 2024 whilst the prior period was 15 months to 31 January 2024. The reporting period was moved to March in order to align this with the trading and commercial year of the company. Therefore, amounts presented in these financial statements (including related notes) are not entirely comparable.
Revenue for the two-month period ended 31 March 2024 was £7,113k (hereinafter referred to as the 'two-month period'), despite a backdrop in poor consumer confidence caused by high and persistent inflation and a cost of living crisis.
Gross profit margin for the two-month period was 50.9%.
Profit before tax margin was 9.9% for the two-month period. The Group also continued to invest in people with headcount increasing to 94 compared to 65 for the period ended 31 January 2023.
The Directors are confident profit before tax will increase back to beyond prior year levels during 2025 following continued growth in the brand in the UK and internationally.
On 23 January 2023 Club L London merged with Club L Retail and subsequently it's subsidiaries (Club L Europe BV and Club L Los Angeles LLC) making Club L London the Topco for the full group.
Economic, market and business risk
Specific macroeconomic factors and changes due to geopolitical uncertainty can have an impact on how customers behave and can also have an impact on our operations and supply chain, which in turn could impact on our overall financial performance. Mitigations put in place to help the Group prepare for any potential volatility include: the Group has a diverse product range that is competitively priced. The Group has strong relationships with multiple carriers and logistics providers so we can spread our carriage if required. The Group has a strong supply chain consisting of multiply suppliers across multiple locations to help overreliance on any individual supplier.
Technology risk
Technology with e-commerce advances rapidly alongside increasing customer expectations of website user experience and functionality. The Group continues to invest heavily in technology across their website, inventory management, warehouse management, customer experience and overall IT infrastructure.
Liquidity risk
The business is self-funding and there are no external bank borrowings. The risk around liquidity is managed through a strong banking relationship and the availability of financing such as trade or asset financing if required. The directors have prepared forecasts including cashflows for the year ending and beyond, and the Group monitors cash as part of its day-to-day control procedures. The Group has considered cash headroom, and consequently, the directors believe the Group is well placed to manage business risk.
Currency risk
The Group trades in several currencies, but mostly GBP, USD, EUR and AUD. It has income and expenditure in all currencies creating a natural hedge that is sufficient to reduce exposure. Any surplus currency is exchanged into GBP at appropriate times.
Credit risk
The Group operates a DTC model where the customers pay instantly when purchasing goods. This mitigates the risk of bad debts.
Key personnel
The loss of key individuals would represent significant operational difficulties for the Group. The Directors continue to ensure that key personnel are appropriately renumerated to ensure that good performance is recognised.
Financial KPIs | 2 month period ended 31 March 2024 | 15 month period ended 31 January 2024 |
Turnover (£) | 7,113k | 47,788k |
Gross Profit (£) | 3,622k | 25,972k |
Profit before Tax (£) | 706k | 4,092k |
Net Assets (£) | 9,125k | 8,636k |
Going Concern
As of 31 March 2024, the Group made a profit of £544k for the two-month period ended 31 March 2024 and has a net asset position of £9,125k. The Group is operationally cash generative and at 31 March 2024 the Group has cash available of £8,772k.
The Directors have a reasonable expectation that the Group and Company has adequate resources to continue operations for the foreseeable future and there are no material uncertainties that cast significant doubt on the Group’s and Company's ability to meet its liabilities as they fall due.
Outlook
The Directors expect the Group to continue to grow over the coming year with a key strategic focus on increasing international presence.
In the decisions taken during the period ended 31 March 2024 the directors have always acted in good faith and in a way that they consider would be most likely to promote the success of the Group.
In making decisions concerning the business, the directors must consider a variety of matters including the interests of various stakeholders, the consequences of their decisions on the short and long term and the overarching reputation of the Group. It is important to the board that we develop strong and positive relationships with our stakeholders, in particular with our employees, customers and suppliers.
Our employees are the core of the company’s success. The Group continues to work on the wellbeing of its employees, and it has implemented a healthcare policy for physical and mental health support to enhance wellbeing and productivity. Through emails and newsletters, the Group informs employees on trading and key developments.
We value all our suppliers and have multi-year contracts in place with our key suppliers. The directors discus payment terms with management at high level to make sure they are in line with industry and market benchmarks.
The directors believe it is fundamental to nurture the relationship with our customers. We communicate and engage with them through different marketing channels.
On behalf of the board
The directors present their annual report and financial statements for the Period ended 31 March 2024.
The results for the Period are set out on page 9.
Ordinary dividends were paid amounting to £65,000. The directors do not recommend payment of a further dividend.
The directors who held office during the Period and up to the date of signature of the financial statements were as follows:
Information relating to post reporting date events is given in the notes to the financial statements.
The auditors, Sedulo Audit Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.
We have audited the financial statements of Club L London Limited (the 'parent company') and its subsidiaries (the 'group') for the Period ended 31 March 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
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
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 Period 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Extent to which the audit was capable of detecting irregularities, including fraud
The primary responsibility for the prevention and detection of fraud rests with directors and management, and we cannot be expected to detect non-compliance with all laws and regulations.
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our knowledge of the business and sector, enquiries of directors and management, and review of regulatory information and correspondence. We communicated identified laws and regulations throughout the audit team and remained alert to any indications of non-compliance throughout the audit.
We discussed with directors and management the policies and procedures in place to ensure compliance with laws and regulations and otherwise prevent, deter and detect fraud.
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations identified as potentially having a material effect on the financial statements. Our procedures included review of financial statement information and testing of that information, enquiry of management and examination of relevant documentation, analytical procedures to identify unusual or unexpected relationships that may indicate fraud, and procedures to address the risk of fraud through director or management override of controls.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
The notes on pages 15 to 34 form part of these financial statements.
The notes on pages 15 to 34 form part of these financial statements.
The notes on pages 15 to 34 form part of these financial statements.
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The notes on pages 15 to 34 form part of these financial statements.
The notes on pages 15 to 34 form part of these financial statements.
The notes on pages 15 to 34 form part of these financial statements.
Club L London Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Building 1, Think Park Mosley Road, Trafford, Manchester, M17 1FQ.
The group consists of Club L London Limited and all of its subsidiaries.
The principal activity of the group for the period under review was that of an online fashion retailer.
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.
As of 31 March 2024, the Group made a profit of £544k for the two-month period ended 31 March 2024 and has a net asset position of £9,125k. The Group is operationally cash generative and at 31 March 2024 the Group has cash available of £8,772k.
The Directors have a reasonable expectation that the Group and Company has adequate resources to continue operations for the foreseeable future and there are no material uncertainties that cast significant doubt on the Group’s and Company's ability to meet its liabilities as they fall due.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
the Company has transferred the significant risks and rewards of ownership to the buyer;
the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the Company receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Other revenue is recognised in the period to which it relates.
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.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
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, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
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.
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 period. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position. The assets of the plan are held separately from the Group in independently administered funds.
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.
Functional and presentation currency
The Group's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the date of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of Comprehensive Income with 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income.'
Provisions for liabilities
Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
Related party exemption
The Group 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 wholly owned subsidiaries within the group.
Transactions between group entities which have been eliminated on consolidated are not disclosed within the financial statements.
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.
Merger accounting
Following a corporate reconstruction, Club L London Limited acquired 100% of the issued share capital of Club L (Retail) Limited, in a share-for-share exchange at nominal value. The ultimate beneficial owner of Club L (Retail) and Club L London remained the same.
In terms of business combinations, judgement is required in determining whether the transaction was a merger or acquisition.
Prior to the reconstruction, Club L (Retail) was owned by Cuba Holdings Limited. Cuba Holdings Limited was owned by A Randev. As part of the reconstruction, a new company was formed, being Club L London, and acquired the shares that Cuba Holdings previously had in Club L (Retail). The shareholder of Club L London is A Randev, and essentially the ultimate beneficial ownership of Club L (Retail) remains the same before and after the acquisition.
As the ultimate beneficial ownership remains the same, merger accounting would be applied under FRS 102 19.27.
As described in note 29 to the financial statement, the merger transaction was not accounted for in the published financial statements for 31 January 2024, and accordingly the comparatives have been restated to take this into account.
The exceptional items included in administrative expenses relate to costs incurred related to relocating office premises and bonuses awarded.
The average monthly number of persons (including directors) employed by the group and company during the Period was:
Their aggregate remuneration comprised:
The actual charge for the Period can be reconciled to the expected charge for the Period based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 31 March 2024 are as follows:
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
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.
Outstanding at 31 March 2024 was £15,128 (31 January 2024: £14,364) which is included in other creditors.
The directors are not aware of any post balance sheet events.
Related party relationships:
Common ownership- Chu Leic Limited, Cuba Holdings Limited, Cuby Holdings Limited, Inspired, The Agency Limited
Common management- Cube Manufacturing Limited, China Manufacturing Limited, Solid Fulfilment Limited
Transactions between group companies, which are related parties, have been eliminated on consolidated and are not disclosed in this note.
The following purchases and (sales) occurred with related parties:
| 31 March 2024 | 31 January 2024 |
| £ | £ |
Chu Leic Limited | (185,512) | 390,595 |
Solid Fulfilment Limited | (185,565) | 466,663 |
Cuba Holdings Limited | (7,347) | 185,865 |
Cuby Holdings Limited | (2,280) | - |
The following amounts were owed by (owing to) related parties:
| 31 March 2024 | 31 January 2024 |
| £ | £ |
Chu Leic Limited | 238,589 | 53,077 |
Solid Fulfilment Limited | (281,097) | (466,663) |
Cuba Holdings Limited | 547,248 | 539,901 |
Cuby Holdings Limited | 2,280 | - |
Inspired, The Agency Limited | 7,737 | 7,737 |
Cube Manufacturing Limited | (82,519) | (82,519) |
China Manufacturing Limited | 24,595 | 24,595 |
Anita Randev is the ultimate controlling party.
As a result of the company changing its reporting period end from January to March, the comparative period is not comparable.
The comparative period is for the 15 months ended 31 January 2024 whereas the current period is for a 2 month period ended 31 March 2024.
On 14th October 2022 Club L London merged with Club L Retail and subsequently it's subsidiaries (Club L Europe BV and Club L Los Angeles LLC), following a group reconstruction, which would have required the group to account for the combination as a merger.
However, in the published comparative figures, the merger was not accounted for, and therefore the comparative figures have been restated to account for this.