The directors present their Strategic Report for High Street TV Holdings Limited (the "Company") together with its subsidiaries (the "Group") for the year ended 30 June 2024.
FY24 saw a small uplift in consumer sentiment in the last few months of the year, but was otherwise another challenging year for retail:
The prolonged cost-of-living crisis, combined with a second year of high inflation continued to constrain household budgets.
Consumer confidence remained negative throughout the period.
GBP vs USD saw a marginal improvement on the historic lows experienced in FY23 but remained below average.
Weak GBP combined with increased global shipping costs, as a direct result of rebel action in the Suez Canal, drove up import costs.
However, as in FY23, HSTV were able to partially mitigate this impact with strong product cost negotiations which allowed HSTV to offer excellent consumer value maintaining or reducing prices despite inflationary pressures.
Against this backdrop HSTV has continued in its mission to invest in portfolio and brand development and to find new ways to connect with consumers, particularly via:
expansion of its Drop Ship Vendor portfolio, which accelerates the process of launching new products on retail partner websites.
restructuring HSTV’s media offer to meet the changing needs of modern consumers.
Continued robust controls over HSTV’s cost base, combined with a pro-active approach to seeking out efficiencies has enabled the business to deliver further cost savings, which will provide a strong base for business performance in FY25.
In the fourth quarter of FY24, HSTV developed and implemented new strategies to increase both sales and margins:
A highly competitive and profitable promotional calendar, supported by key suppliers, allows HSTV to demonstrate value in a B2B environment dominated by heavy discounting.
Exclusive products in both B2C and B2B will reduce cross-channel/retailer price competition and facilitate higher margins.
Seasonal purchases tailored to ensure higher sell through and lower markdown risk
A clear product lifecycle framework identifying optimal timing on B2B expansion and media support.
A detailed product portfolio review resulting in the release of several licences due to low profitability
Following the implementation of these strategies, HSTV has enjoyed significant year-on-year growth in both sales and profitability in the first half of FY25 and is on target to deliver a strong FY25 EBITDA, above the annual budget of £2m.
Key business risks are monitored by the Board of Directors on an ongoing basis and strategies are developed as appropriate to mitigate such risks and minimise their impact. The principal risks and the strategies adopted are set out below:
Regulatory environment
The business sector the Group operates in is regulated by the Advertising Standards Agency (ASA). The Group has an in-house team who ensure all the Group’s advertisements fully conform with the ASA codes of conduct. The Group also works closely with industry experts and with Clearcast to pre-approve all content before airing on TV.
Financial risk management
The principal financial risks are credit risk and fluctuations in foreign exchange rates.
The group's principal credit risk arises from trade debtors. Credit limits are closely monitored, and insurance policies are in place, so the perceived risks to the company are low.
The group purchases stock and freight in foreign currencies and uses forward currency transactions to hedge against this exposure.
Liquidity risk
The group seeks to manage liquidity risk by ensuring it has sufficient liquidity available to meet its foreseeable needs and to invest cash assets safely and profitably. The Directors review the group's detailed cash projections on a regular basis to ensure the business has adequate liquidity and working capital.
The group has loan notes outstanding at the year end to Endless Funds IVA and IVB and to shareholders (together totalling £18.7m). These are not due for repayment until at least 1 April 2026.
Promoting the success of the group
The sectors in which the group operates continue to offer expansion prospects into new product areas and new ways of connecting with our consumers. We are continuously assessing the strategies for our key routes to market, so that we can move swiftly to maximise new opportunities. Our primary routes to market are:
Direct to Consumer – This offers exciting organic growth prospects as the group introduces new products to existing brands, such as New Image, Drew&Cole and SmartAir and leverages relationships with specialist manufacturers to develop new brands and products to meet ever changing consumer trends.
In FY24 HSTV launched two new brands which will support growth in FY25:
Garden Force: expands HSTVs garden tool capability, pioneering new products in the range that already contains Amazon’s number one jet sprayer.
Spring & Spruce: expands HSTVs range of successful laundry and cleaning products
Wholesale and International – The group continues to develop its track record of successfully launching new brands and products into retail by working closely with the group's key retail partners. As the group widens its range of brands and products it has a greater number of opportunities to both strengthen its relationship with its key retail partners and to build relationships with new partners.
Group outlook
The group has developed a stable and efficient cost base which facilitates delivery of the following key objectives:
A sustainably profitable, cash generative business.
Continuous review of financial and operational reporting to support and accelerate decision making.
Leveraging the company's considerable experience in video-based advertising to drive sales.
Driving quality through embedded relationships with best-in-class product manufacturers.
The directors of High Street TV Holdings Limited manage the company’s risks and those of its subsidiaries, at a group level. The financial key performance indicators the group uses are turnover, earnings before interest, taxation, depreciation and amortisation (‘EBITDA’), profit, and cash generation. All of these are measured monthly and assessed by the Board of Directors.
Non-financial performance is measured across the group by growth of the customer database, customer satisfaction, staff excellence and the group profile.
KPI | HY1 Mgmt Info | 30-Jun-24 | 30-Jun-23 | Comment |
£’000 | £’000 | |||
Turnover | 21,180 | 35,631 | 37,005 | Sales in HY1 FY25 are up 6% on the equivalent period in FY25, driven by HSTVs new strategy |
Adjusted EBITDA | 1,543 | (614) | 62 | Adjusted EBITDA in HY1 FY25 has increased by £1.5m year on year |
Profit/(Loss) before tax | 1,024 | (3,057) | (1,943) | PBT in HY1 FY25 increases by £1.3m year on year |
Increase/(decrease) in cash at bank | 191 | (1,121) | (844) |
|
* Adjusted EBITDA moves infomercial production into PBT recognising that the useful life of infomercials spans several financial reporting periods.
The Board always endeavours to act in a way that promotes the success of the Group for the benefit of its members as a whole, and ensures consideration of:
the likely consequences of any decision in the long term
the interests of the Group’s employees
the need to foster the Group’s business relationships with suppliers, customers and others
the impact of the Group’s operations on the community and the environment
the desirability of the Group maintaining a reputation for high standards of business conduct, and
the need to act fairly between members of the Company.
Stakeholder Engagement
The Board considers that the key stakeholders of the group are: our employees, customers, suppliers, the local communities in which the group operates and also our shareholders. We understand that the long-term sustainable success of our business is dependent on building and maintaining positive relationships with stakeholders and considering the external impact of the group's activities.
Employees
Regular, clear and comprehensive employee engagement is embedded within our culture. Monthly town halls delivered by the directors provide clarity to all colleagues on financial results, current and future successes and any challenges the business is facing. In addition, the annual Personal Development Plan process provides an opportunity for both coaching and feedback. Key feedback themes are coordinated and addressed centrally.
The Board are clear that the health and wellbeing of our employees is a priority matter and have implemented robust actions to ensure this is delivered:
Programme for physical wellbeing includes monthly challenges to participate in weekly exercise and group physical exercise classes open to all staff.
Investors in People assessment, The Board were proud to improve from a silver to a gold rating in FY24 and continue to use the IIP process to solicit, listen and where possible, implement employee feedback.
Charity work is important to HSTV. The board have selected a new charity, Martin House and all colleagues have been encouraged and supported to fundraise
The Board have continued to facilitate hybrid working and have also introduced new flexible working patterns to allow colleagues to match their working hours to their personal commitments.
Customers
The business continuously invests in customer engagement strategies to ensure that the business delivers on the key requirements of value for money and customer satisfaction. To this end, the business engages with customers through Trustpilot scores, social media platforms, call-centre contacts and the corporate website.
Our Retail and International customers have dedicated HSTV account teams ensuring regular communication on deliverables and to assist with future planning requirements.
All communications are passed to the appropriate departments to facilitate a process of continuous improvement in line with customer feedback.
Suppliers
The business continues to build long-lasting and mutually beneficial partnerships with our suppliers, both UK based and overseas. The Board's objective in developing these partnerships is to ensure the long-term stability of the relationships by treating our suppliers ethically and fairly. Key accounts have direct contact with the relevant departmental heads and the business systems and controls are developed to ensure that invoices are processed on a timely basis. Additional IT integrations have been developed where possible to enable reporting insights into the deliverables of key suppliers.
Communities
The Board recognises that as a responsible business, our impact on local communities and the environment influences our ability to grow sustainably.
The Board has appointed a leading carbon and energy management company, to independently assess its Greenhouse Gas (GHG) emissions in accordance with the UK Government’s ‘Environmental Reporting Guidelines: Including Streamlined Energy and Carbon Reporting Guidance’. The reporting provides insights into the energy consumed by the business and makes recommendations as to how this might be reduced. See the Energy and Carbon Report section in the directors’ report for further information.
Our business continues to partner with a nominated charity each year to raise awareness and organises a number of fundraising events that are wholeheartedly supported by employees.
Shareholders
We have an open and constructive dialogue with our external shareholders (through the non-executive directors who sit on the Board) and internal shareholders through monthly board meetings and monthly management meetings. Shareholders play a key role in our decision-making process, financial performance, business modelling and strategic outlook. This ensures that our business strategy is aligned with the interests of our shareholders whilst taking into consideration the potential impact of the Board’s decisions on other key stakeholders.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 June 2024.
The results for the year are set out on page 11.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, BHP LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The GHG emissions have been assessed following the ISO 14064-1:2018 standard and have used the 2023 conversion factors published by the Department for Environment, Food and Rural Affairs (Defra) and the Department for Business, Energy and Industrial Strategy (BEIS). The assessment follows the market-based approach for assessing Scope 2 emissions from electricity usage. The operational control approach has been used.
The emissions above include both those generated directly and indirectly eg outsourced logistics.
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per £M turnover, the recommended ratio for the sector.
The group has continued to control emissions by using video conferencing facilities rather than physical meetings wherever possible, thus maintaining low rates on both company car emissions and rail travel.
We have audited the financial statements of High Street TV Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 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 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 FRS 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 year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the risk, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
We focused on laws and regulations, relevant to the company, which could give rise to a material misstatement in the financial statements. Our tests included agreeing the financial statement disclosures to underlying supporting documentation, enquiries with management, review of company minutes and legal expenses. There are inherent limitations in the audit procedures described and, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
As part of our audit, we addressed the risk of management override of internal controls, including testing of journals and review of nominal ledger. We evaluated whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
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 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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £328,713 (2023 - £315,146 loss).
High Street TV Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Central House, Beckwith Knowle, Otley Road, Harrogate, HG3 1UF.
The group consists of High Street TV Holdings Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated financial statements incorporate those of High Street TV Holdings Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits).
All financial statements are made up to 30 June 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
After assessing the principal risks and uncertainties surrounding the trading environment, the directors have adopted the going concern basis in preparing these accounts. This assessment has involved preparing detailed forecasts and performing sensitivity analysis on sales and profitability along with considering the liquidity and future expected cashflows of the group.
Throughout the forecasted period, the group continues to have significant liquidity headroom based upon a combination of the groups current cash balances, bank facilities plus cash generated during the forecast period.
The directors believe that the group is well placed to manage its financing and other business risk satisfactorily, and have a reasonable expectation that the group will have adequate resources to continue in operation for at least 12 months from the signing date of these financial statements. They therefore, consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements.
Turnover represents amounts received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The amounts receivable take into account trade discounts, settlement discounts and volume rebates.
Where the group acts as an agent selling goods or services, only the commission income is included in turnover. Commission income is recognised as it is earned.
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.
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.
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 group uses forward foreign exchange contracts to hedge the foreign exchange risk from highly probable forecast stock purchases in US dollars. They are designated as cash flow hedges with fair value movements recognised directly in other comprehensive income. The amount recognised in other comprehensive income is transferred to the income statement in the same period that the hedged item affects profit or loss.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the 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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Transactions in currencies other than pounds sterling are recorded using an average rate of exchange. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Stock provisions
The Directors have determined a stock provision taking account of the age of stock and its likely realisable value.
Rebates and returns provisions
Provisions for customer rebates and returns have been determined based on agreements in place and the group's experience to date.
Impairment of investments
The Directors deem the investment held in High Street TV Bidco Limited free from material impairment based on having performed an analysis of future cashflows of its subsidiaries.
Valuation of licences
During the prior year the Directors engaged an independent expert to revalue the licences held by HSTV Media Limited. Further details on this can be found in note 10.
In the opinion of the directors, all sales are derived from the same class of business.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
During the prior year, the licences held by the Company were revalued by Expert Media Partners (EMP). This is an independent valuer with significant experience within the market for EPG prominence and has been involved in a large number of swaps and/or sales of EPG slots.
If revalued assets were stated on an historical cost basis rather than a fair value basis, the total amounts included would have been as follows:
Details of the company's subsidiaries at 30 June 2024 are as follows:
Stocks are stated after provisions for impairment of £400,000 (2023: £503,164).
Trade debtors are stated after provisions for impairment of £nil (2023: £69,000).
Amounts owed by group undertakings are unsecured, interest free and are repayable on demand.
Within other creditors falling due within one year are amounts due to invoice discounters of £1,855,577 (2023: £2,165,292). They are secured by a debenture, fixed charge on debts and a floating charge over the group's assets.
Amounts owed to group undertakings are unsecured, interest free and repayable on demand.
Group
Other loans are loan notes payable which are provided by Endless Fund IV A and B. The loan notes bear an interest rate of 8% and have a redemption date of 1 April 2026. The loan notes are held at amortised cost.
Company
Other loans are loan notes provided by management. The loan notes bear an interest rate of 8% and have a redemption date of 1 April 2026. The loan notes are held at amortised cost.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The charge to the profit or loss arises in relation to movements in accelerated capital allowances and short term timing differences. Deferred tax recognised in other comprehensive income relates to cashflow hedging movements and the revaluation of licences.
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. Contributions amounting to £10,300 (2023: £10,866) were payable to the fund at the year end and are included in creditors, amounts falling due within one year.
The A, B and D ordinary shares shall be entitled to receive notice, attend and vote at general meetings. In certain circumstances the holders of A ordinary shares are entitled to enhanced voting rights. The C and E ordinary shares are not entitled to receive notice.
The A, B , C and D ordinary shares rank pari passu with regards to dividend and capital distribution.
The E and G ordinary shares shall not have any rights with regards to dividend and capital distribution.
The A, B, C, D, E and G ordinary shares are not redeemable.
The group uses forward foreign currency contracts to hedge the foreign exchange risk from highly probable forecast stock purchases in US dollars. They are designated as cashflow hedges with fair value movements recognised directly in other comprehensive income. The amount recognised in other comprehensive income is transferred to the income statement in the same period that the hedged item affects profit or loss. At 30 June 2024, the outstanding contracts mature within twelve months (2023: twelve months). The company is committed to buy US$6.5 million (2023: US$14.5 million) and pay a fixed sterling amount.
The valuation of all financial derivative assets and liabilities carried at fair value by the group is based on hierarchy Level 2. Fair value hierarchy levels are defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The fair value of forward exchange contracts has been determined based on discounted market forward currency exchange rates at the balance sheet date. The fair value of the forward foreign currency contracts gives rise to assets of £Nil (2023: £Nil) and liabilities £8,681 (2023: £453,017).
The subsidiaries of High Street TV Holdings Ltd guarantee the loan notes issued by High Street TV Bidco Ltd. The amount guaranteed totals £21.2m.
The subsidiary, High Street TV (Group) Limited, entered into a guarantee dated 27 September 2012 in favour of HMRC for £200,000 in relation to import taxes.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The remuneration of key management personnel is as follows.
During the year a subsidiary (High Street TV (Group) Limited) paid commission of £nil (2023: £3,769) to a company where a Director's Spouse is also a Director.
High Street TV Holdings Limited is the smallest and largest group for which consolidated financial statements are prepared. The group has taken advantage of the exemption, under paragraph 33.1A of FRS 102 "Related party disclosures" from disclosing related party transactions with entities that are part of the High Street TV Holdings Limited group.
Endless Fund IV (A and B)
The group has loan notes with Endless Fund IV (A and B). At the year end, the amounts owed were £15,215,743 (2023: £15,215,743) redeemable by 1 April 2026. The group paid interest at a rate of 8% on these loan notes which amounted to £1,220,594 (2023: £1,217,259) for the financial year. The group also paid administrative and monitoring charges of £104,086 (2023: £97,944) during the year.
The company and group have loan notes from management. At the year end, the amounts owed were £3,484,135 (2023: £3,484,135) redeemable 1 April 2026. It paid interest at a rate of 8% on these loan notes which amounted to a total of £267,638 for the financial year (2023: £268,638).
A prior year restatement of £532,440 has been made to reallocate recharged wages costs between Cost of Sales and Administrative Expenses. The effect is an increase in gross profit equal to the value of the reallocation. The adjustment has no impact to net profit and does not alter the prior year Balance Sheet or Statement of Changes in Equity.