Company registration number 05075959 (England and Wales)
CONTRACT CANDLES & DIFFUSERS LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
CONTRACT CANDLES & DIFFUSERS LTD
COMPANY INFORMATION
Directors
F L Hamilton-Fox
A Thompson
A L Thompson
L E Dormer
L Hamilton
L E Gray
(Appointed 16 January 2024)
R Grieveson
(Appointed 16 January 2024)
B C Moody
(Appointed 16 January 2024)
Secretary
L E Gray
Company number
05075959
Registered office
1 McMillan Close
Saltwell Business Park
Low Fell
Gateshead
Tyne & Wear
United Kingdom
NE9 5BF
Auditor
Azets Audit Services
Bulman House
Regent Centre
Gosforth
Newcastle upon Tyne
NE3 3LS
Solicitors
Ward Hadaway
c/o Ward Hadaway Law Firm
Sandgate House
102 Quayside
Newcastle Upon Tyne
Tyne And Wear
United Kingdom
NE1 3DX
CONTRACT CANDLES & DIFFUSERS LTD
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 5
Directors' responsibilities statement
6
Independent auditor's report
7 - 9
Income statement
10
Statement of comprehensive income
11
Statement of financial position
12
Statement of changes in equity
13
Notes to the financial statements
14 - 28
CONTRACT CANDLES & DIFFUSERS LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Principal activities
The principal activity of the company is manufacturing specialist candles and diffusers.
Review of the business
Turnover was £31,788k compared to £48,355k in 2022, a decrease of 34% due to a combination of a moderate retraction in the home fragrance market following two years of substantial growth and some prior over-stocking in some of our biggest customers. This led to an operating loss of £1,227k compared to a profit of £434k in 2022 as we were unable to reduce our costs as quickly as the revenue decline.
The focus in 2023 was on stabilising the business through recovery of Gross Profit and reducing costs. Gross Profit improved by 3.6ppts through operational efficiencies and creating more stability in our supply chain. Some difficult decisions were made in 2023 on property and people, meaning our Administrative Expenses including Finance charges and Depreciation reduced by £1,986k, further stabilising the business and setting us up to return to growth.
We reduced our average staffing numbers from 416 in 2022 to 291 in 2023, a decrease of 30% which is a reflection of the above activity and also realising the benefits of the significant investment in manufacturing automation.
Principal risks and uncertainties
The principal business risk is associated with declining sales and the need to manage fixed costs in line with revenue. The business shifted focus to winning new business in 2023, and the benefits of this will be felt in 2024 onwards due to the long conversion timeline in the industry. We invest heavily in our people, our R&D development and in our operational infrastructure to ensure we continue to provide the best service to our customers. The Directors constantly consider any potential issues which may impact upon the business and take appropriate action to deal with them.
Development and performance
The statement of financial position is £3,783k as at 31 December 2023, compared to £4,864k at 31 December 2022 which is a reflection of the trading losses in the year. Significant action was taken to reduce our stock from £7,388k to £3,991k through new inventory-management procedures.
Key performance indicators
The company's key financial and other performance indicators during the year were as follows:
The above KPIs reflect the action taken in the year improve the Gross Profit but not being able to reduce Administrative Expenses quickly enough in the year to recover a profit on the lower revenue.
CONTRACT CANDLES & DIFFUSERS LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Future developments
2023 has been a difficult year with such a significant reduction in revenue. The board responded with a stabilisation plan to improve Gross Profit and to reduce our fixed costs, with some of the benefit of this exercise being realised in the last quarter of 2023.
We see 2024 continuing to stabilise, with a further slight decline in revenue but more than offset by the full year annualization of cost savings and further improvements on Gross Profit through ongoing efficiency projects. Despite the challenging year, we have maintained strong customer and supplier relationships and believe these provide a solid foundation for us to return to growth in the coming years. The board anticipates a significantly improved financial performance and a return to profitable growth in 2025 as the lower cost base and improved Gross Profit % are carried through into a recovery on revenue following the award of significant new business.
The board believes that the company is in a strong position to take full advantage of the significant opportunities available to it and looks forward to the forthcoming year and beyond with cautious optimism.
Promoting the success of the company
Section 172(1) statement
Under section 172 of the Companies Act 2006, the Directors have a duty to act in good faith in a way that is most likely to promote the success of the company for the benefit of its members as a whole, having regard to the likely consequences of decisions for the long term, the interests of the company's employees, the need to foster relationships with other stakeholders, the impact on the community and the environment and maintaining a reputation for high standards of business conduct. Key decisions made by the board during the year were considered with the aforesaid duty to act in good faith.
All business decisions are taken with due regard to the primary stakeholders who impact the performance of the business including: Our Employees; Our Customers; Our Suppliers; and Our Shareholders.
We constantly monitor current market conditions and explore opportunities to increase shareholder value. Our dependence on one large customer is a recognised risk for the company. The company manages this risk by formalising the ties between us and our main customers while also seeking out new customers and markets to diversify the risk. We continue to invest in our R&D function to provide products that new and existing customers want at competitive prices and by maintaining strong relationships with customers.
We continue to invest internally in our people and methods to ensure we can maximise our opportunities and satisfy our customer expectations. We have invested in progressive programmes of training, communication and consultation as well as in our employee’s wellbeing. We aim to provide equal opportunities to all current and prospective employees in a diverse and inclusive environment.
Supplier relationships are important across all areas of the business. The company has developed key and positive long-term relationships that have ensured a stable and sustainable supply chain.
We aim to continue to develop our people, systems and product portfolio to promote the success of the company for the benefit of its members as a whole, having regard to the likely consequences of decisions for the long term, the interests of the company's employees, the need to foster relationships with other stakeholders, the impact on the community and the environment (as detailed in the "Carbon Reporting" section) and holding ourselves to high standards of business conduct.
R Grieveson
Director
3 April 2025
CONTRACT CANDLES & DIFFUSERS LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Results and dividends
The results for the year are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
F L Hamilton-Fox
A Thompson
A L Thompson
S Thompson
(Resigned 16 April 2024)
L E Dormer
L Hamilton
K Kyle
(Resigned 1 September 2023)
L E Gray
(Appointed 16 January 2024)
R Grieveson
(Appointed 16 January 2024)
B C Moody
(Appointed 16 January 2024)
M D Proudfoot
(Appointed 16 January 2024 and resigned 31 May 2024)
Financial instruments
Liquidity risk
Liquidity risk is the risk that the company does not have sufficient liquid assets to meet its obligations as they fall due. Liquidity is maintained at a prudent level and the company ensures there is an adequate liquidity buffer to cover contingencies. The company maintains sufficient cash and open committed credit lines from its bankers to meet its funding requirements.
Interest rate risk
The company has interest bearing liabilities. Interest rate risk re unfavourable movements in interest rates are not perceived as being material to the accounts due to the arrangements in place.
Credit risk
Credit risk is the risk of loss in the value of financial assets due to counterparties failing to meet all or part of their obligations. The credit management policy of the company ensures that the appropriate credit checks are made on customers prior to any sales being made. Credit accounts for individual customers are assigned on a case by case basis after reviewing the financial stability of the customer.
CONTRACT CANDLES & DIFFUSERS LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Going concern
The financial statements have been prepared on a going concern basis.
The company meets its day to day working capital requirements through cash generated from operations and external/group borrowings.
The company’s forecasts and projections for the next twelve months show that the company should be able to continue in operational existence for that period, taking into account reasonable possible changes in trading performance.
The ultimate parent company, THF Holdings Ltd, has confirmed its intention to support the company for a period of at least twelve months from the date of approval of these financial statements. The directors are confident in the ability of THF Holdings Ltd to support the company on the basis that the parent company has itself obtained the support of its majority shareholder to provide short term working capital should this be necessary for a minimum period of 12 months from the date of approval of the financial statements.
The company relies on the support of is parent company, THF Holdings Ltd. The group was in breach of the financial covenants agreed with its bankers as at 31 December 2023 and thereafter. The bank has acknowledged the breaches but have not waived the breaches and have reserved any right or remedy that they have now, or in the future, in connection with, or arising from, a covenant breach.
The group is in regular communication with the group’s bankers and following a review of forecasts the bank has agreed additional finance to the group through to June 2025. Following on from the discussions with the bank, the directors have at present no reason to believe the bank would take any action to demand immediate repayment of any of the loans within 12 months of the approval of these financial statements nor withdraw their support of future funding.
In the assessment of going concern the directors have made the assumption that the bank will continue to be supportive, not recall the debt in advance of the original repayment terms and provide finance to the group should there be a need.
With this continued support, the company expects to retain sufficient financial resources to continue meeting its liabilities as they fall due.
Based on the factors set out above the directors believe that it remains appropriate to prepare the financial statements on a going concern basis. However, as the group have not had a formal waiver of the loan covenant breaches and are forecasting to rely on bank and shareholder support, this represents a material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern and therefore to continue realising its assets and discharging its liabilities in the normal course of business. These financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.
Disabled persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employee involvement
The company's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the company's performance.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.
CONTRACT CANDLES & DIFFUSERS LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
Auditor
In accordance with section 485 of the Companies Act 2006, a resolution for the re-appointment of Azets Audit Services as auditors of the company is to be proposed at the forthcoming Annual General Meeting.
Energy and carbon report
The company is required to include in its annual reporting information regarding greenhouse gas emissions and energy consumption. As a subsidiary of THF Holdings Ltd, we have taken advantage of the exemptions to exclude these in our directors report as the disclosures are included in the consolidated accounts of our ultimate parent company, THF Holdings Ltd.
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
R Grieveson
Director
3 April 2025
CONTRACT CANDLES & DIFFUSERS LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have 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 directors must not approve the financial statements unless they are 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 directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are 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. They are 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.
CONTRACT CANDLES & DIFFUSERS LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CONTRACT CANDLES & DIFFUSERS LTD
- 7 -
Opinion
We have audited the financial statements of Contract Candles & Diffusers Ltd (the 'company') for the year ended 31 December 2023 which comprise the income statement, the statement of comprehensive income, the statement of financial position, the statement of changes in equity 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).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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 opinion.
Material uncertainty relating to going concern
We draw attention to note 1 in the financial statements which indicates that the directors have prepared forecasts based on their assessment of current and predicted operating conditions. The assumptions used in forecasting are extremely judgmental and difficult to predict and could be subject to significant variations. These factors indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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 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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are 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 course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
CONTRACT CANDLES & DIFFUSERS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CONTRACT CANDLES & DIFFUSERS LTD
- 8 -
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.
Matters on which we are required to report by exception
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.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
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 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 company or to cease operations, or have no realistic alternative but to do so.
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.
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.
CONTRACT CANDLES & DIFFUSERS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CONTRACT CANDLES & DIFFUSERS LTD
- 9 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Becasuse of the field in which the client operates, we identified the following areas as thoses most likely to have a material impact on the financial statements: employment law and compliance with the UK Companies Act tax legislation.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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.
Claire Hinshaw ACCA
Senior Statutory Auditor
For and on behalf of Azets Audit Services
3 April 2025
Chartered Accountants
Statutory Auditor
Bulman House
Regent Centre
Gosforth
Newcastle upon Tyne
NE3 3LS
CONTRACT CANDLES & DIFFUSERS LTD
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
Notes
£
£
Turnover
3
31,788,142
48,355,368
Cost of sales
(21,219,771)
(33,999,515)
Gross profit
10,568,371
14,355,853
Distribution costs
(164,761)
(305,301)
Administrative expenses
(11,630,513)
(13,616,506)
Operating (loss)/profit
4
(1,226,903)
434,046
Interest payable and similar expenses
8
(170,596)
(41,437)
(Loss)/profit before taxation
(1,397,499)
392,609
Tax on (loss)/profit
9
317,093
(164,210)
(Loss)/profit for the financial year
(1,080,406)
228,399
The income statement has been prepared on the basis that all operations are continuing operations.
CONTRACT CANDLES & DIFFUSERS LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
£
£
(Loss)/profit for the year
(1,080,406)
228,399
Other comprehensive income
-
-
Total comprehensive income for the year
(1,080,406)
228,399
CONTRACT CANDLES & DIFFUSERS LTD
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 12 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
10
90,452
124,383
Tangible assets
11
3,207,835
2,887,472
3,298,287
3,011,855
Current assets
Stocks
12
3,991,167
7,387,886
Debtors
13
8,236,822
10,976,242
Cash at bank and in hand
54,241
55,273
12,282,230
18,419,401
Creditors: amounts falling due within one year
14
(10,863,056)
(15,309,955)
Net current assets
1,419,174
3,109,446
Total assets less current liabilities
4,717,461
6,121,301
Creditors: amounts falling due after more than one year
15
(730,222)
(731,248)
Provisions for liabilities
Deferred tax liability
18
203,708
526,116
(203,708)
(526,116)
Net assets
3,783,531
4,863,937
Capital and reserves
Called up share capital
20
150
150
Capital redemption reserve
50
50
Profit and loss reserves
3,783,331
4,863,737
Total equity
3,783,531
4,863,937
The financial statements were approved by the board of directors and authorised for issue on 3 April 2025 and are signed on its behalf by:
R Grieveson
Director
Company Registration No. 05075959
CONTRACT CANDLES & DIFFUSERS LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2022
150
50
4,635,338
4,635,538
Period ended 31 December 2022:
Profit and total comprehensive income for the period
-
-
228,399
228,399
Balance at 31 December 2022
150
50
4,863,737
4,863,937
Year ended 31 December 2023:
Loss and total comprehensive income for the year
-
-
(1,080,406)
(1,080,406)
Balance at 31 December 2023
150
50
3,783,331
3,783,531
CONTRACT CANDLES & DIFFUSERS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
1
Accounting policies
Company information
Contract Candles & Diffusers Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 1 McMillan Close, Saltwell Business Park, Low Fell, Gateshead, Tyne & Wear, United Kingdom, NE9 5BF.
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.
This 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:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 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 financial statements of the company are consolidated in the financial statements of THF Holdings Ltd. These consolidated financial statements are available from its registered office at 1McMillan Close, Saltwell Business Park, Low Fell, Gateshead, Tyne & Wear, NE9 5BF.
CONTRACT CANDLES & DIFFUSERS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.2
Going concern
The financial statements have been prepared on a going concern basis.
The company meets its day to day working capital requirements through cash generated from operations and external/group borrowings.
The company’s forecasts and projections for the next twelve months show that the company should be able to continue in operational existence for that period, taking into account reasonable possible changes in trading performance.
The ultimate parent company, THF Holdings Ltd, has confirmed its intention to support the company for a period of at least twelve months from the date of approval of these financial statements. The directors are confident in the ability of THF Holdings Ltd to support the company on the basis that the parent company has itself obtained the support of its majority shareholder to provide short term working capital should this be necessary for a minimum period of 12 months from the date of approval of the financial statements.
The company relies on the support of is parent company, THF Holdings Ltd. The group was in breach of the financial covenants agreed with its bankers as at 31 December 2023 and thereafter. The bank has acknowledged the breaches but have not waived the breaches and have reserved any right or remedy that they have now, or in the future, in connection with, or arising from, a covenant breach.
The group is in regular communication with the group’s bankers and following a review of forecasts the bank has agreed additional finance to the group through to June 2025. Following on from the discussions with the bank, the directors have at present no reason to believe the bank would take any action to demand immediate repayment of any of the loans within 12 months of the approval of these financial statements nor withdraw their support of future funding.
In the assessment of going concern the directors have made the assumption that the bank will continue to be supportive, not recall the debt in advance of the original repayment terms and provide finance to the group should there be a need.
With this continued support, the company expects to retain sufficient financial resources to continue meeting its liabilities as they fall due.
Based on the factors set out above the directors believe that it remains appropriate to prepare the financial statements on a going concern basis. However, as the group have not had a formal waiver of the loan covenant breaches and are forecasting to rely on bank and shareholder support, this represents a material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern and therefore to continue realising its assets and discharging its liabilities in the normal course of business. These financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.
1.3
Turnover
Turnover is recognised at the fair value of the consideration 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 fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on delivery 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.
CONTRACT CANDLES & DIFFUSERS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which shall not exceed ten years.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation 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:
Goodwill
20% straight line
Computer Software
20% straight line
1.6
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
5 - 6.67% straight line
Plant and machinery
15 - 25% reducing balance
Fixtures and Fittings
25% reducing balance
Equipment
25% reducing balance
Motor vehicles
25% reducing balance
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.
1.7
Impairment of fixed assets
At each reporting period end date, the company 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.
CONTRACT CANDLES & DIFFUSERS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
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.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.9
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.
1.10
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 statement of financial position 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.
CONTRACT CANDLES & DIFFUSERS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
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.
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.
CONTRACT CANDLES & DIFFUSERS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 19 -
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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
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.
1.12
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 income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The 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 income statement, 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.
CONTRACT CANDLES & DIFFUSERS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 20 -
1.13
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.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.16
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 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.
No key assumptions and other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year have been identified.
CONTRACT CANDLES & DIFFUSERS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
3
Turnover
2023
2022
£
£
Turnover analysed by class of business
Sale of goods
31,788,142
48,355,368
2023
2022
£
£
Turnover analysed by geographical market
UK
30,988,723
46,704,451
Europe
769,331
1,158,148
Rest of world
30,088
492,769
31,788,142
48,355,368
4
Operating (loss)/profit
2023
2022
Operating (loss)/profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(28,809)
221,501
Research and development costs
73,109
110,284
Depreciation of owned tangible fixed assets
503,955
427,699
Loss on disposal of tangible fixed assets
2,826
-
Amortisation of intangible assets
33,931
33,836
Operating lease charges
1,520,191
1,565,297
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
19,250
17,500
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Production
203
311
Administration and support
76
91
Other departments
12
14
Total
291
416
CONTRACT CANDLES & DIFFUSERS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
6
Employees
(Continued)
- 22 -
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
7,592,592
11,433,583
Social security costs
721,903
1,137,848
Pension costs
126,605
146,371
8,441,100
12,717,802
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
288,421
406,742
Company pension contributions to defined contribution schemes
3,520
4,733
291,941
411,475
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2022 - 4).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
128,379
141,996
Company pension contributions to defined contribution schemes
1,321
1,321
8
Interest payable and similar expenses
2023
2022
£
£
Interest on finance leases and hire purchase contracts
62,780
41,437
Other interest
107,816
170,596
41,437
9
Taxation
2023
2022
£
£
Current tax
Adjustments in respect of prior periods
5,550
(20,630)
CONTRACT CANDLES & DIFFUSERS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
9
Taxation
2023
2022
£
£
(Continued)
- 23 -
Deferred tax
Origination and reversal of timing differences
(322,643)
140,478
Changes in tax rates
44,362
Total deferred tax
(322,643)
184,840
Total tax (credit)/charge
(317,093)
164,210
The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
(Loss)/profit before taxation
(1,397,499)
392,609
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
(328,692)
74,596
Tax effect of expenses that are not deductible in determining taxable profit
15,625
64,661
Effect of change in corporation tax rate
(13,786)
Group relief
51,680
Permanent capital allowances in excess of depreciation
(50,459)
Deferred tax adjustments in respect of prior years
235
7,763
44,362
1,762
(20,630)
Taxation (credit)/charge for the year
(317,093)
164,210
CONTRACT CANDLES & DIFFUSERS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
10
Intangible fixed assets
Goodwill
Computer software
Total
£
£
£
Cost
At 1 January 2023 and 31 December 2023
25,125
197,436
222,561
Amortisation and impairment
At 1 January 2023
25,125
73,053
98,178
Amortisation charged for the year
33,931
33,931
At 31 December 2023
25,125
106,984
132,109
Carrying amount
At 31 December 2023
90,452
90,452
At 31 December 2022
124,383
124,383
11
Tangible fixed assets
Leasehold improvements
Plant and machinery
Fixtures and Fittings
Equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 January 2023
772,430
2,571,363
867,444
316,933
282,541
4,810,711
Additions
17,568
651,072
167,014
835,654
Disposals
(2,252)
(15,001)
(506)
(17,759)
At 31 December 2023
787,746
3,207,434
1,033,952
316,933
282,541
5,628,606
Depreciation and impairment
At 1 January 2023
121,388
1,081,198
449,664
159,629
111,360
1,923,239
Depreciation charged in the year
27,002
276,416
118,732
38,989
42,816
503,955
Eliminated in respect of disposals
(319)
(6,104)
(6,423)
At 31 December 2023
148,071
1,351,510
568,396
198,618
154,176
2,420,771
Carrying amount
At 31 December 2023
639,675
1,855,924
465,556
118,315
128,365
3,207,835
At 31 December 2022
651,042
1,490,165
417,780
157,304
171,181
2,887,472
The carrying value of land and buildings comprises:
2023
2022
£
£
Long leasehold
639,675
651,042
CONTRACT CANDLES & DIFFUSERS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
11
Tangible fixed assets
(Continued)
- 25 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Plant and machinery
867,177
834,631
Fixtures and Fittings
68,595
179,942
Motor vehicles
104,422
139,246
1,040,194
1,153,819
12
Stocks
2023
2022
£
£
Raw materials and consumables
3,991,167
7,387,886
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
5,051,998
9,779,005
Corporation tax recoverable
106
Amounts owed by group undertakings
2,924,609
649,023
Other debtors
11,345
5,285
Prepayments and accrued income
214,508
501,590
8,202,566
10,934,903
2023
2022
Amounts falling due after more than one year:
£
£
Other debtors
34,256
41,339
Total debtors
8,236,822
10,976,242
CONTRACT CANDLES & DIFFUSERS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
14
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
16
2,365,635
1,281,010
Obligations under finance leases
17
396,616
201,571
Other borrowings
16
4,354,495
8,923,963
Trade creditors
1,343,646
2,441,596
Amounts owed to group undertakings
27,652
140,634
Taxation and social security
1,255,298
1,806,898
Other creditors
78,791
130,409
Accruals and deferred income
1,040,923
383,874
10,863,056
15,309,955
15
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
17
730,222
731,248
16
Loans and overdrafts
2023
2022
£
£
Bank loans
2,365,635
Bank overdrafts
1,281,010
Other loans
4,354,495
8,923,963
6,720,130
10,204,973
Payable within one year
6,720,130
10,204,973
During the year the bank overdraft facility was replaced by an import loan facility. The interest rate applicable on the loan is 10.45%.
The bank loan and invoice finance creditors are secured by a debenture including a fixed charge over all property, a first fixed charge and a first floating charge over all assets dated 13/07/2005.
CONTRACT CANDLES & DIFFUSERS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 27 -
17
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
396,616
201,571
In two to five years
730,222
731,248
1,126,838
932,819
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
630,469
535,030
Tax losses
(424,025)
(3,614)
Retirement benefit obligations
-
(5,300)
short term timing differences
(2,736)
-
203,708
526,116
2023
Movements in the year:
£
Liability at 1 January 2023
526,116
Credit to profit or loss
(322,408)
Liability at 31 December 2023
203,708
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
126,605
146,371
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.
CONTRACT CANDLES & DIFFUSERS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 28 -
20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of 1p each
15,000
15,000
150
150
21
Operating lease commitments
Lessee
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
635,067
627,447
Between two and five years
167,586
668,558
802,653
1,296,005
22
Ultimate controlling party
The company's immediate parent is THF Holdings Ltd, incorporated in England and Wales.
The most senior parent entity producing publicly available financial statements is THF Holdings Ltd. These financial statements are available upon request from 1 Mcmillan Close, Saltwell Business Park, Low Fell, Gateshead, NE9 5BF.
The ultimate controlling party is Mr A Thompson and Mrs A L Thompson.
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