Company registration number 07969584 (England and Wales)
MAGIC MADHOUSE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
MAGIC MADHOUSE LIMITED
COMPANY INFORMATION
Director
M Duke
Company number
07969584
Registered office
Unit 1 Great Cambridge Industrial Estate
Lincoln Road
Enfield
Middlesex
EN1 1SH
Auditor
Gravita Audit Limited
Aldgate Tower
2 Leman Street
London E1 8FA
MAGIC MADHOUSE LIMITED
CONTENTS
Page
Strategic report
1 - 2
Director's report
3
Independent auditor's report
4 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 25
MAGIC MADHOUSE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 1 -

The director presents the strategic report for the year ended 31 March 2023.

Review of the business

At the end of 2023, the business performed well, with sales increasing from £14.1m to £16.3m, across all major market segments. Despite a fall in a gross profit margin from 33% to 27%, the profit for the financial year continues to be strong at £800k (2022: £1.1m). The business cash balances also increased with a balance of £909k (2022: £727k). This year has been mainly about stabilisation after the market disruption due to the COVID- 19 pandemic. We have been able to set a definitive base for demand in each of our different markets, providing a good platform to build future growth on.

The business begins the 2024 financial year in good health. Our inventories are appropriately balanced to supply expected demand, and we have recognized areas for growth in our market sectors. In the future, we are focused on increasing operational efficiencies by targeted staff training and the removal of unnecessary expenditure.

We expect further growth in revenue in the upcoming year, led by an uplift in order volumes and average order value (AOV). Shipping and packaging expenses have now stabilized following the high rises of 2022. With strong growth in 2024, having done the work to solidify our market core base and build upon for greater growth in 2025.

Principal risks and uncertainties

The Company is active in a fast-changing market environment and is exposed to several principal risks:

Fixed cost inflation and changing consumer patterns are a source of concern. Nevertheless, we have a sound history of following market trends and will continue to keep a tight control on and manage our cost base.

It is important to have liquidity to enable the company to fulfil its financial commitments. We review cash flows on a regular basis, with adequate reserves being maintained to ensure operations for at least the next 12 months.

Our fundamental revenue sources are robust, and we believe in the future of the company. The business is positioned well to ride through market fluctuations and maintain long-term growth.

Key performance indicators

Year-on-year sales growth and Gross Profit Margin (“GPM”) continue to be our key KPIs with the addition of cash balances in 2023.

 

MAGIC MADHOUSE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 2 -
Future developments

Aiming towards 2025, we will streamline our product portfolio, focusing on growing our core products instead of venturing into new categories. By doing so, we will be able to consolidate our position in important markets and grow our market share.

We enter the year with solid stock levels, with high demand releases coming in with both Pokemon Prismatic Evolutions and Magic with Final Fantasy being released in 2025, we anticipate these releases will further springboard demand.

The financial situation of the company remains solid, with investments planned in personnel, infrastructure, and technological infrastructures to enhance efficiency and business resilience.

Trading card game demand keeps growing, and 2025 could be a revenue record year for the category. Yet cost pressures such as rising National Insurance contributions, higher minimum wage demands, and higher rental and refuse collection costs could affect margins.

In the face of these challenges, our course is clear: we will achieve growth through operating efficiency, smarter stock purchasing, and more intense focus on our most profitable product categories. We are optimistic about our ability to extend success into the future.

 

On behalf of the board

M Duke
Director
27 February 2025
MAGIC MADHOUSE LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 3 -

The director presents his annual report and financial statements for the year ended 31 March 2023.

Principal activities

The principal activity of the company continued to be that of retail sales of games and toys.

Results and dividends

The results for the year are set out on page 8.

Ordinary dividends were paid amounting to £42,580. The director does not recommend payment of a final dividend.

Director

The director who held office during the year and up to the date of signature of the financial statements was as follows:

M Duke
Statement of director's responsibilities

The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.

In preparing these financial statements, the director is required to:

The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

On behalf of the board
M Duke
Director
27 February 2025
MAGIC MADHOUSE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF MAGIC MADHOUSE LIMITED
- 4 -

Qualified Opinion

We have audited the financial statements of Magic Madhouse Limited (the ‘company’) for the year ended 31 March 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including a summary of 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).

In our opinion, except for the possible effects of the matter described in the basis for qualified opinion section of our report, the financial statements:

Basis for qualified opinion

We were not appointed as auditor of the company until after 31 March 2022 and thus did not observe the counting of physical inventories at the beginning of that year. We were unable to satisfy ourselves by alternative means concerning the inventory quantities held at 31 March 2022.

Consequently we were unable to determine whether any adjustment to this amount at 31 March 2022 was necessary or whether there was any consequential effect on the cost of sales for the year ended 31 March 2023. In addition, were any adjustment to the inventory balance to be required, the strategic report would also need to be amended.

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 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 qualified opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.

 

MAGIC MADHOUSE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF MAGIC MADHOUSE LIMITED (CONTINUED)
- 5 -

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The director is responsible for the other information contained within the annual report.

 

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

 

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the 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.

 

As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning the inventory held at 31 March 2022. We have concluded that where the other information refers to the inventory balance or related balances such as cost of sales, it may be materially misstated for the same reason.

Opinions on other matters prescribed by the Companies Act 2006

Except for the possible effects of the matter described in the basis for qualified opinion section of our report, in our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

Except for the matter described in the basis for qualified opinion section of our report, in the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.

Arising solely from the limitation on the scope of our work relating to inventory, referred to above:

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:

Responsibilities of director

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 group’s and 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.

MAGIC MADHOUSE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF MAGIC MADHOUSE LIMITED (CONTINUED)
- 6 -
Auditor's responsibilities for the audit of the financial statements

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.

The extent to which the audit was considered capable of detecting irregularities including fraud

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

 

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

 

To address the risk of fraud through management bias and override of controls, we:

 

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

 

 

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

 

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.

MAGIC MADHOUSE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF MAGIC MADHOUSE LIMITED (CONTINUED)
- 7 -

Use of our audit 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 an Auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Sudhir Rawal FCA (Senior Statutory Auditor)
For and on behalf of Gravita Audit Limited
Chartered Accountants
27 February 2025
Statutory Auditor
Aldgate Tower
2 Leman Street
London E1 8FA
MAGIC MADHOUSE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
- 8 -
2023
2022
as restated
Notes
£
£
Turnover
3
16,348,925
14,140,916
Cost of sales
(11,998,561)
(9,519,675)
Gross profit
4,350,364
4,621,241
Administrative expenses
(3,346,182)
(3,216,435)
Other operating income
9,515
42,932
Operating profit
4
1,013,697
1,447,738
Interest receivable and similar income
8
1,151
49
Interest payable and similar expenses
9
(21,060)
(16,760)
Profit before taxation
993,788
1,431,027
Tax on profit
10
(193,442)
(283,746)
Profit for the financial year
800,346
1,147,281

The profit and loss account has been prepared on the basis that all operations are continuing operations.

MAGIC MADHOUSE LIMITED
BALANCE SHEET
AS AT
31 MARCH 2023
31 March 2023
- 9 -
2023
2022
as restated
Notes
£
£
£
£
Fixed assets
Tangible assets
12
224,355
183,869
Current assets
Stocks
13
4,365,443
3,353,915
Debtors
14
839,764
467,450
Cash at bank and in hand
909,334
727,347
6,114,541
4,548,712
Creditors: amounts falling due within one year
15
(2,376,030)
(1,547,033)
Net current assets
3,738,511
3,001,679
Total assets less current liabilities
3,962,866
3,185,548
Provisions for liabilities
Provisions
17
46,766
44,539
Deferred tax liability
56,089
38,764
(102,855)
(83,303)
Net assets
3,860,011
3,102,245
Capital and reserves
Called up share capital
20
1
1
Profit and loss reserves
3,860,010
3,102,244
Total equity
3,860,011
3,102,245

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The financial statements were approved and signed by the director and authorised for issue on 27 February 2025
M Duke
Director
Company registration number 07969584 (England and Wales)
MAGIC MADHOUSE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
As restated for the period ended 31 March 2022:
Balance at 1 April 2021
1
1,996,043
1,996,044
Year ended 31 March 2022:
Profit and total comprehensive income
-
1,147,281
1,147,281
Dividends
11
-
(41,080)
(41,080)
Balance at 31 March 2022
1
3,102,244
3,102,245
Year ended 31 March 2023:
Profit and total comprehensive income
-
800,346
800,346
Dividends
11
-
(42,580)
(42,580)
Balance at 31 March 2023
1
3,860,010
3,860,011
MAGIC MADHOUSE LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
- 11 -
2023
2022
as restated
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
23
618,677
(12,841)
Interest paid
(21,060)
(16,760)
Income taxes paid
(210,505)
(121,828)
Net cash inflow/(outflow) from operating activities
387,112
(151,429)
Investing activities
Purchase of tangible fixed assets
(128,696)
(49,895)
Interest received
1,151
49
Net cash used in investing activities
(127,545)
(49,846)
Financing activities
Repayment of bank loans
(35,000)
(115,000)
Dividends paid
(42,580)
(41,080)
Net cash used in financing activities
(77,580)
(156,080)
Net increase/(decrease) in cash and cash equivalents
181,987
(357,355)
Cash and cash equivalents at beginning of year
727,347
1,084,702
Cash and cash equivalents at end of year
909,334
727,347
MAGIC MADHOUSE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
- 12 -
1
Accounting policies
Company information

Magic Madhouse Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 1 Great Cambridge Industrial Estate, Enfield, England, EN1 1SH.

1.1
Accounting convention

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.

1.2
Going concern

Atruet the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods provided in the normal course of business, and is shown net of VAT and other sales related taxes.

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.

1.4
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold improvements
Over the life of the lease
Fixtures and fittings
25% Reducing balance
Computers
33.3% Reducing balance
Motor vehicles
25% Straight line

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.

1.5
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible 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.

MAGIC MADHOUSE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 13 -

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.

1.6
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and costs incurred in bringing the stocks to their present location and condition.

1.7
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.8
Financial instruments

The company 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with 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

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

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.

MAGIC MADHOUSE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 14 -
Impairment of financial assets

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.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

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

Basic financial liabilities

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.

Other financial liabilities

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.

MAGIC MADHOUSE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 15 -
Derecognition of financial liabilities

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

1.9
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.10
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. 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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

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 when the company has 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.

1.11
Provisions

Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

 

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

MAGIC MADHOUSE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 16 -
1.12
Employee benefits

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.

1.13
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.14
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

1.15
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the director is 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.

MAGIC MADHOUSE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 17 -
Key sources of estimation uncertainty
Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

 

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the Balance Sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

Deferred income

In determining deferred income, due to limitations in pre-sales reporting, management makes an estimate of the deferred income based on stocks which have been paid for but were yet to be despatched and applied an average mark-up on these stocks.

3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Sale of goods
16,348,925
14,140,916
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
15,570,049
13,467,231
Outside United Kingdom
778,876
673,685
16,348,925
14,140,916
2023
2022
£
£
Other revenue
Interest income
1,151
49
Grants received
-
29,140
4
Operating profit
2023
2022
as restated
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
29,014
(9,141)
Government grants
-
(29,140)
Depreciation of owned tangible fixed assets
66,684
75,857
MAGIC MADHOUSE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 18 -
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
56,000
27,500
6
Employees

The average monthly number of persons (including directors) employed by the company during the year was

2023
2022
Number
Number
Director
1
1
Accounts
1
1
Customer Services
4
4
HR/Accounts
1
1
Marketing
3
3
Office
1
1
Sales
17
16
Shop
9
8
Warehouse
26
19
Total
63
54

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
1,270,181
1,105,844
Social security costs
102,416
74,817
Pension costs
31,765
28,483
1,404,362
1,209,144
7
Director's remuneration
2023
2022
£
£
Remuneration for qualifying services
9,880
9,715
Company pension contributions to defined contribution schemes
296
-
10,176
9,715
MAGIC MADHOUSE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 19 -
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
1,151
49
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
1,151
49
9
Interest payable and similar expenses
2023
2022
as restated
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
12,569
9,294
Other finance costs:
Interest on finance leases and hire purchase contracts
2,227
5,095
Other interest
6,264
2,371
21,060
16,760
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
176,118
284,850
Deferred tax
Origination and reversal of timing differences
17,324
(1,104)
Total tax charge
193,442
283,746
MAGIC MADHOUSE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
10
Taxation
(Continued)
- 20 -

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Profit before taxation
993,788
1,431,027
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
188,820
271,895
Tax effect of expenses that are not deductible in determining taxable profit
6,127
3,143
Permanent capital allowances in excess of depreciation
(18,829)
9,811
Deferred tax
17,324
(1,103)
Taxation charge for the year
193,442
283,746
11
Dividends
2023
2022
£
£
Interim paid
42,580
41,080
12
Tangible fixed assets
Leasehold improvements
Fixtures and fittings
Computers
Motor vehicles
Total
as restated
as restated
£
£
£
£
£
Cost
At 1 April 2022
39,444
145,474
177,490
67,006
429,414
Additions
-
0
784
127,912
-
0
128,696
Disposals
-
0
(60,977)
(87,502)
-
0
(148,479)
At 31 March 2023
39,444
85,281
217,900
67,006
409,631
Depreciation and impairment
At 1 April 2022
10,633
90,559
112,383
31,970
245,545
Depreciation charged in the year
4,116
10,959
34,857
16,752
66,684
Eliminated in respect of disposals
-
0
(48,657)
(78,296)
-
0
(126,953)
At 31 March 2023
14,749
52,861
68,944
48,722
185,276
Carrying amount
At 31 March 2023
24,695
32,420
148,956
18,284
224,355
At 31 March 2022
28,811
54,915
65,107
35,036
183,869
MAGIC MADHOUSE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 21 -
13
Stocks
2023
2022
£
£
Finished goods and goods for resale
4,365,443
3,353,915

The cost of opened playing card stock cannot be allocated to individual playing cards in a meaningful way as owing to the nature of the market, the selling price of these items can range from a negligible value to a value in excess of cost which is highly subjective and cannot be readily estimated.  The directors therefore have applied a policy of valuing such stock at a nil value at the balance sheet date.

14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
25,558
-
0
Other debtors
570,487
419,764
Prepayments and accrued income
243,719
47,686
839,764
467,450
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
16
-
0
35,000
Trade creditors
1,107,126
703,504
Corporation tax
467,141
501,529
Other taxation and social security
480,667
144,114
Deferred income
18
85,486
-
0
Other creditors
121,865
124,284
Accruals and deferred income
113,745
38,602
2,376,030
1,547,033
16
Loans and overdrafts
2023
2022
£
£
Bank loans
-
0
35,000
Payable within one year
-
0
35,000

The loan was drawn down in the prior year with interest payable at 10.1% per annum.

 

The loan was fully repaid on 1 April 2022.

MAGIC MADHOUSE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 22 -
17
Provisions for liabilities
2023
2022
as restated
£
£
Provision for dilapidations
46,766
44,539
Movements on provisions:
Provision for dilapidations
£
At 1 April 2022
44,539
Unwinding of discount
2,227
At 31 March 2023
46,766

The provision for dilapidations represents the estimated cost of restoring the leased properties to their original condition. During the year, the company recognised a depreciation expense of £4,116 (2022: £10,633) related to the capitalized asset. As at year end, the carrying amount of the asset is £24,696 (2022: £28,811).

18
Deferred income
2023
2022
£
£
Other deferred income
85,486
-
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
31,765
28,483

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary share of £1 each
1
1
1
1
MAGIC MADHOUSE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 23 -
21
Operating lease commitments

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2023
2022
£
£
Within one year
313,141
289,141
Between two and five years
1,237,837
1,037,708
In over five years
-
0
485,889
1,550,978
1,812,738
22
Directors' transactions

Dividends totalling £42,580 (2022: £41,080) were paid in the year in respect of shares held by the company's directors.

As at the year end, the company owed the director £68,631 (2022: £66,119).

23
Cash generated from/(absorbed by) operations
2023
2022
£
£
Profit after taxation
800,346
1,147,281
Adjustments for:
Taxation charged
193,442
283,746
Finance costs
21,060
16,760
Investment income
(1,151)
(49)
Loss on disposal of tangible fixed assets
21,526
-
Depreciation and impairment of tangible fixed assets
66,684
75,857
Increase in provisions
2,227
44,539
Movements in working capital:
Increase in stocks
(1,011,528)
(2,016,378)
Increase in debtors
(372,314)
(40,253)
Increase in creditors
812,899
475,656
Increase in deferred income
85,486
-
Cash generated from/(absorbed by) operations
618,677
(12,841)
MAGIC MADHOUSE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 24 -
24
Analysis of changes in net funds
1 April 2022
Cash flows
31 March 2023
£
£
£
Cash at bank and in hand
727,347
181,987
909,334
Borrowings excluding overdrafts
(35,000)
35,000
-
692,347
216,987
909,334
25
Prior period adjustment
Changes to the balance sheet
As previously reported
Adjustment
As restated at 31 Mar 2022
£
£
£
Fixed assets
Tangible assets
155,058
28,811
183,869
Provisions for liabilities
Other provisions
-
(44,539)
(44,539)
Net assets
3,117,973
(15,728)
3,102,245
Capital and reserves
Profit and loss reserves
3,117,972
(15,728)
3,102,244
Changes to the profit and loss account
As previously reported
Adjustment
As restated
Period ended 31 March 2022
£
£
£
Administrative expenses
(3,205,802)
(10,633)
(3,216,435)
Interest payable and similar expenses
(11,665)
(5,095)
(16,760)
Profit for the financial period
1,163,009
(15,728)
1,147,281
Reconciliation of changes in equity
1 April
31 March
2021
2022
Notes
£
£
Adjustments to prior year
Dilapidation Provision
1
-
(15,728)
Equity as previously reported
1,996,044
3,117,973
Equity as adjusted
1,996,044
3,102,245
Analysis of the effect upon equity
Profit and loss reserves
-
(15,728)
MAGIC MADHOUSE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
25
Prior period adjustment
(Continued)
- 25 -
Reconciliation of changes in profit for the previous financial period
2022
Notes
£
Adjustments to prior year
Dilapidation Provision
1
(15,728)
Profit as previously reported
1,163,009
Profit as adjusted
1,147,281
Notes to reconciliation
Dilapidation Provision

The adjustment relates to the recognition of a dilapidation provision of £44,539 on the leased warehouse and corresponding recognition of leasehold improvement cost of £39,444. This also resulted in additional depreciation charge of £10,633 and interest charge of £5,095, with the total impact on the profit and loss being £15,728.

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