The directors present the strategic report for the period ended 30 September 2024.
On 29 September 2023, Pre Group Ltd acquired the entire share capital of United Carpets Group Limited and Paul Eyre (Holdings) Limited via a share for share exchange agreement. No change in overall ownership occurred throughout the group, and as such merger accounting principles have been applied.
The majority of the groups trade continues to be centered around the "United Carpets" group of companies which specialises in carpet and bed retailing and the franchising of retail outlets.
The financial year-end to 30 September 2024 for us, and like many retailers in the flooring industry, remained competitive. As a predominately Franchised business and in an ever-tightening market we saw a decrease in LFL sales of 3.6% against an increase of 1.1% in LFL sales in the prior year.
The Franchise network, like all businesses in 2024, was hit with the continued cost-of-living crisis that has been affecting our customers and competitors alike. The volatility of oil prices linked to Ukraine, and as of writing, the tensions in the Middle East have maintained a sense of pessimism in the market. Inflation remains sticky and interest rates remain high; retail traders have been feeling the effects none other than Carpetright who fell into administration in July 24.
We are pleased to maintain the excellent relationships we have with our key suppliers, there is no doubt that this allows us to keep our price increases to a minimum and therefore we keep our prices competitive for customers. So, against this backdrop, our LFL sales for the period up to publication have increased by 6.9% showing the strength of our Franchise model.
As of 1 October 2023, the group operated from 58 stores of which 46 were franchised and 12 were corporate stores. During the year under review, one store was closed and two were transferred to corporate ownership resulting in a total of 57 stores of which 43 were franchised and 14 were corporate by the year end.
The group also controls and operates three other trading subsidiary companies, two of which operate in the rental and development of property sector. These companies own various properties, some of which are held for sale and others which are held for rental and capital appreciation. These companies have maintained steady growth during the period to 30 September 2024, through the profits generated from the rental of investment property and the sales of park homes.
The third smaller trading subsidiary operates a motor vehicle rental business, which also includes the running and management of a bar restaurant. The company continues to operate within a competitive sector, with the costs to run the business continually rising as a result of external economic factors.
Financial review
Revenue, which includes marketing and rental costs incurred by the group and recharged to franchisees, decreased by 2.8% to £26.7m (2023: £27.4m) during the year. The impact of having more corporate stores does increase the turnover however, given the current challenging global economic environment, turnover has seen a small decrease in the period.
Cost of sales as a percentage of turnover decreased to 34.5% (2023: 36.6%). As a business, we have tried to keep costs down given the current economic climate and continued inflationary pressures. The management team remains positive and pleased with this performance and whilst no increase is palatable this does demonstrate the effective monitoring and cost control measures implemented.
Profit before tax was £1.6m (2023: £1.3m), a increase of £0.3m. This small increase reflects increased costs across the network net of gains made on the investment property held by the group.
At the year end the net assets of the group amounted to £11.3m. The management board is satisfied that the group has significant reserves, providing financial strength and permitting opportunities in respect of further expansion to be facilitated in line with the longer-term growth strategy.
The group makes little use of financial instruments other than an operational bank account and trade receivables and payables.
Price Risk
The group is exposed to price risk in relation to the cost of stock for resale. The group monitors trends in the market closely and liaises with related companies and third-party suppliers in relation to fluctuations in the prices and impact on future profitability. The group does not hedge its future stock purchase requirement but it does seek to recover major movements in the commodity price through price adjustments with its customers when appropriate.
Liquidity Risk
The group seeks to manage financial risk by ensuring liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.
Interest Rate Risk
The group finances its operations predominately through retained profits and via related company funding arrangements. The group exposure to interest rate fluctuations on its borrowings is managed by the use of both fixed and floating facilities.
Foreign Currency Risk
The group's activities expose it to the financial risks of changes in foreign currency exchange rates. Some of the company's inventory purchases are in US dollars and Euros. The group does not hedge its foreign currency exchange transactions on the basis any fluctuations in exchange rates are not expected to have a significant impact on our results and we continue to minimise this risk in our commercial arrangements with customers and suppliers.
Credit Risk
The principal credit risk arises from trade debtors. Most customers have paid for their goods before the company fits / delivers. Any customers that seek credit are directed to our third-party credit providers. A provision for doubtful debts is monitored against any non-payment of debts and a provision is made if necessary.
The group reviews and monitors its performance against a number of key performance indicators both financial and non-financial. The principal measures include revenue growth, maintaining service levels, improvement of gross margins, number of operational stores and debtor days. These are reviewed by the management team and reported to the Board on a monthly basis.
The Directors have and will continue to monitor all of the KPI’s and daily operating controls and maintain a strong focus on increasing performance in all aspects of the business.
The main KPIs and corresponding results are as follows:
| 2024 | 2023 |
Turnover | £26.7m | £27.4m |
Revenue growth | (2.8%) | 0.8% |
Gross profit margin | 65.5% | 63.4% |
|
|
|
Year-end store numbers |
|
|
| 14 | 12 |
| 43 | 46 |
| 57 | 58 |
|
|
|
Net current assets | £5.1m | £5.3m |
Net assets | £11.3m | £10.6m |
The decrease in revenue in the year is reflective of the challenging economic climate, which resulted in the reduction in overall store numbers during the period.
The net assets of the group remain substantial for its size at £11.3m which illustrates the financial strength of the group.
The success of the group is dependent on the continued service of its key management personnel and franchisees and on its ability to attract, motivate, and retain suitably qualified individuals. The group has competitive reward packages for all staff and significant earnings potential for successful franchisees. The group seeks to train and develop all staff and franchisees to continually improve product knowledge and customer service.
We would like to take this opportunity to thank the staff once again and especially the franchisees for their professionalism and support.
On behalf of the board
The directors present their annual report and financial statements for the period ended 30 September 2024.
The results for the period are set out on page 9.
Ordinary dividends were paid amounting to £640,071. The directors do not recommend payment of a further dividend.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
The future developments of the group are closely linked to the continued success of the trading subsidiaries. The directors continue to monitor and manage the trading subsidiaries. We continue to roll out our new branding across the "United Carpets" network, resulting in the customer's in-store experience matching the visuals outside of the store. Going forward however remains challenging and we are focused on the basics of our operation which are product, price, and our customers. We continue to review and update where necessary customer offerings which we believe continue to make us competitive and relevant and one step ahead of the competition.
The group has sufficient financial resources in place to execute its strategy to develop for the future.
Sumer Auditco Limited were appointed as auditor to the group and are deemed to be reappointed under section 487(2) of the Companies Act 2006.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of Pre Group Ltd (the 'parent company') and its subsidiaries (the 'group') for the period ended 30 September 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
The information given in the strategic report and the directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
The strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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 identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussions with the directors (as required by auditing standards) and discussed with the directors the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation and taxation legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly, the company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: laws related to employment, health & safety and data protection.
Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and inspection of regulatory and legal correspondence, if any. Through these procedures we did not become aware of any actual or suspected non-compliance.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
We design procedures in line with our responsibilities, outlined below to detect material misstatement due to fraud:
Matters are discussed amongst the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud
Identifying and assessing the design and effectiveness of controls that management have in place to prevent and detect fraud
Detecting and responding to the risks of fraud following discussions with management and enquiring as to whether management have knowledge of any actual, suspected or alleged 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.
Other matters which we are required to address
The financial statements of the parent company for the period ended 28 September 2023 were not audited, as an exemption from audit was claimed under s477 of the Companies Act 2006.
The comparative results included in these financial statements reflect the adoption of merger accounting, as permitted by FRS 102, following a group restructure.
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 profit for the year was £810,986 (2023 - £0 profit).
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
Pre Group Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Moorhead House, Moorhead Way, Bramley, Rotherham, South Yorkshire, S66 1YY.
The group consists of Pre Group Ltd and all of its subsidiaries.
The director decided to extend the accounting reference date to 30 September 2024, to align with other group companies and companies under the control of the ultimate shareholder.
The change is for 2 days and therefore comparative amounts presented in the financial statements (including the related notes) are considered comparable.
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 the revaluation of freehold properties and to include investment properties and 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 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 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Pre Group Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 30 September 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.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
On 29 September 2023, Pre Group Ltd acquired the entire share capital of United Carpets Group Limited and Paul Eyre (Holdings) Limited, via a share for share exchange agreement. The group has adopted the principles of merger accounting from FRS 102. Accordingly, the consolidated group financial statements have been presented as if United Carpets Group Limited and Paul Eyre (Holdings) Limited have been owned by Pre Group Ltd throughout the current and preceding periods. The comparative figures include the results of the merged entities, the assets and liabilities at the previous balance sheet dates and the shares issued by Pre Group Ltd as consideration as if they had always been in issue.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
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.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
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.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the 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, 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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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 balance sheet 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 leased asset are consumed.
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.
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.
Trade receivables are recognised to the extent that they are judged recoverable. Management reviews are performed to estimate the level of provision required for irrecoverable debt. Provisions are made specifically against invoices where recoverability is uncertain.
At the balance sheet date, the provision for bad and doubtful debts was £1,635,491 (2023; £1,611,369).
Refer to note 18, showing the trade debtor balance impacted by this key accounting estimate.
The company considers it necessary to evaluate the recoverability of the cost of stock. The stock levels are constantly reviewed and should there be an indication of obsolescence, the stock is written down to its assessed net realisable value.
At the balance sheet date, the stock provision was £367,838 (2023: £269,499).
Refer to note 17, showing the stock balance impacted by this key accounting estimate.
The company considers it necessary to evaluate the costs of exiting a lease ahead of the agreed lease terms and returning the leased properties to their original condition as required on termination of the lease term per the lease agreements.
At the balance sheet date, management have recognised a provision of £819,501 (2023; £945,450), as detailed in note 23.
Tangible fixed are depreciated over their useful economic lives taking into account residual values, where appropriate. The actual lives of the tangible fixed assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, all relevant known factors are taken to account but there is inherent uncertainty present in making this assessment.
During the period a depreciation charge of £664,022 (2023: £694,876) was calculated based on accounting policies applied.
Refer to note 13, showing the tangible fixed assets carrying values impacted by this key accounting estimate.
Properties are valued annually using the yield methodology. This uses market rental value capitalised at a market yield rate. There is an inevitable degree of judgement involved in that each property is unique and value can ultimately only be reliably tested in the market itself. The directors use professional valuations to assist in their assessment which are undertaken on an existing use basis.
At the balance sheet date, the net book value of freehold properties was £1,950,652 (2023: £2,018,364) and the fair value of the investment properties was £5,796,533 (2023: £4,856,193).
The average monthly number of persons (including directors) employed by the group and company during the period was:
Their aggregate remuneration comprised:
The actual charge for the period can be reconciled to the expected charge for the period based on the profit or loss and the standard rate of tax as follows:
Deferred tax has been recognised at a rate of 25%. In October 2022, the government announced an increase in the corporation tax main rate from 19% to 25% for companies with profit over £250,000. There is a small company rate of 19% for taxable profits under £50,000 and marginal relief available for profits falling between £50,000 - £250,000 with effect from 1 April 2023.
Investment property comprises of 8 properties. The fair value of the investment properties has been arrived at on the basis of valuations carried out on 10 February 2025 by Knight Frank LLP, who are not connected with the company, as well as valuation calculations by the directors. The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties and rental yields. The directors believe the valuation dated 10 February 2025 is indicative of the fair value of the properties held as at 30 September 2024.
This class of asset has a current value of £5,796,533 (2023: £4,856,193) and the directors consider this to be a fair estimate of current market value.
Details of the company's subsidiaries at 30 September 2024 are as follows:
Registered office addresses (all UK unless otherwise indicated):
The bank loans are secured against the properties to which it relates.
The bank loans also include a loan which is secured under the Bounce Back Loan Government Scheme.
Obligations under finance leases and hire purchase contracts are secured on the assets to which they relate.
The bank loans are secured against the properties to which it relates.
The bank loans also include a loan which is secured under the Bounce Back Loan Government Scheme.
Obligations under finance leases and hire purchase contracts are secured on the assets to which they relate.
Bank loan of £1,787,500 (2023: £1,911,567) is secured against the properties to which it relates. The loan is repayable by 2 February 2027 at a fixed rate of 4.25% per annum.
Bank loan of £372,265 (2023: £402,365) is secured against the properties to which it relates. The loans is repayable by 2 February 2027 at a fixed rate of 1.6% per annum.
Bank loan of £17,342 (2023: £27,413) is secured under the Bounce Back Loan Government Scheme.
Bank loan of £1,000,000 (2023: £750,000) relates to a revolving credit facility with a facility limit of £1,500,000 and no fixed terms of repayment. Interest is charged at 3.5% above the Bank of England base rate per annum and is secured via a deed of priority between Santander and a number of the subsidiaries of the group.
Finance lease payments represent rentals payable by the company or group 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. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The above provision reflects an estimate of the potential cost associated with vacating a small number of underperforming stores. In 2024, 1 store (2023: 1) was vacated during the period and it is expected that the remaining provision will be utilised between 2025 and 2026.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax asset set out above is expected to reverse within 12 months and relates to the utilisation of tax losses against future expected profits of the same period. The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
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.
As at the balance sheet date, contributions due to the schemes in respect of the current reporting year were £16,993 (2023: £18,220).
The company was incorporated on 28 July 2023. On incorporation, 1 Ordinary share of £2.00 each was issued at par.
On 29 September 2023, a further 190,231 Ordinary shares of £2.00 each were issued at par.
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 operating leases represent leases property to third parties. The leases are negotiated over varying terms and rentals are fixed for a number of years.
At the reporting end date the group had contracted with tenants for the following minimum lease payments:
During the year, repayments of £402,293 (2023: advances of £50,000) were made to Elite Lifestyle Parks Limited, a company in which P R Eyre is a director and shareholder. During the year, interest of £44,225 (2023: £35,357) has been charged on these loans. At the year-end, an amount of £207,831 (2023: £610,124) was owed to Elite Lifestyle Parks Limited and is included within other creditors. The loans are unsecured and repayable upon demand.
During the year, loans totalling £Nil (2023: £44,338) were advanced to and repayments totalling £43,125 (2023: £Nil) were received from iJump Trampoline Parks Limited, a company in which P R Eyre is a shareholder. At the year-end, an amount of £350,836 (2023: £393,961) was owed to the company by iJump Trampoline Parks Limited and is included within other debtors. The loans are non-interest bearing, unsecured and repayable upon demand.
At the balance sheet date, an amount of £133,742 (2023: £44,016) was owed from K Eyre, the son of P R Eyre. During the period, loan advances has been made of £87,500 (2023: £41,368). Interest of £2,226 (2023: £2,648) has been charged on this loan during the period.
Dividends totalling £640,071 (2023 - £677,160) were paid in the period in respect of shares held by the company's directors.
The above loan was fully repaid post period end.