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| 2. |
Summary of Significant Accounting Policies |
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The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the company's financial statements. |
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Statement of compliance |
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The financial statements of the company for the financial year ended 31 December 2024 have been prepared in accordance with the provisions of FRS 102 Section 1A (Small Entities) and the Companies Act 2006. |
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Basis of preparation |
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The financial statements have been prepared on the going concern basis and in accordance with the historical cost convention as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets. |
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Turnover |
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Turnover comprises the invoice value of goods supplied by the company, and services provided by the company on behalf of its parent company. All turnover amounts are exclusive of trade discounts and value added tax.
Sale of Goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied;
* the Company has transferred significant risks and rewards of ownership to the buyer;
* the Company retains neither managerial involvement to the degree usually associated with ownership
nor effective control over the goods sold;
* the amount of revenue can be measured reliably;
* it is probable that the Company will receive the consideration due under the transaction; and
* the costs incurred or to be incurred in respect of the transaction can be measured reliably. |
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Tangible assets and depreciation |
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Tangible assets are stated at cost or at valuation, less accumulated depreciation. The charge to depreciation is calculated to write off the original cost or valuation of tangible assets, less their estimated residual value, over their expected useful lives as follows: |
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Long leasehold property |
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Straight line over the term of the lease |
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Fixtures, fittings and equipment |
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20% Straight line |
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The carrying values of tangible fixed assets are reviewed annually for impairment in periods if events or changes in circumstances indicate the carrying value may not be recoverable. |
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Leasing |
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Lease payments are recognised as an expense over the lease term on a straight-line basis. The aggregate benefit of lease incentives is recognised as a reduction to expense over the lease term on a straight-line basis. |
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Stocks |
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Stocks are valued at the lower of cost and net realisable value. Stocks are determined on a first-in first-out basis. Cost comprises expenditure incurred in the normal course of business in bringing stocks to their present location and condition. Full provision is made for obsolete and slow moving items. Net realisable value comprises actual or estimated selling price (net of trade discounts) less all further costs to completion or to be incurred in marketing and selling. |
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Trade and other debtors |
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Trade and other debtors are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method less impairment losses for bad and doubtful debts except where the effect of discounting would be immaterial. In such cases the receivables are stated at cost less impairment losses for bad and doubtful debts. |
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Cash and cash equivalents |
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Cash and cash equivalents comprise cash at bank and in hand, demand deposits with banks and other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. In the Statement of Financial Position bank overdrafts are shown within Creditors. |
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Provisions |
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Provisions are recognised when the company has a present legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the same value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. |
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Trade and other creditors |
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Trade and other creditors are initially recognised at fair value and thereafter stated at amortised cost using the effective interest rate method, unless the effect of discounting would be immaterial, in which case they are stated at cost. |
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Employee benefits |
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The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund.
Short term benefits, including holiday pay and other similar non-monetary benefits, are recognised as an expense in the period in which the service is received. |
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Taxation and deferred taxation |
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Current tax represents the amount expected to be paid or recovered in respect of taxable profits for the financial year and is calculated using the tax rates and laws that have been enacted or substantially enacted at the Statement of Financial Position date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more tax in the future, or a right to pay less tax in the future. Timing differences are temporary differences between the company's taxable profits and its results as stated in the financial statements.
Deferred tax is measured on an undiscounted basis at the tax rates that are anticipated to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the Statement of Financial Position date. |
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Foreign currencies |
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Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the Statement of Financial Position date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated at the rates of exchange ruling at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The resulting exchange differences are dealt with in the Profit and Loss Account. |
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Ordinary share capital |
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The ordinary share capital of the company is presented as equity. |
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Exceptional item |
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Exceptional items are those that the directors' view are required to be separately disclosed by virtue of their size or incidence to enable a full understanding of the company's financial performance. |
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| 6. |
Critical Accounting Judgements and Estimates |
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The director considers the accounting estimates and assumptions below to be its critical accounting judgements and estimates: |
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Recognition of deferred tax asset |
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The recognition of deferred income tax assets is based upon whether it is probable that sufficient and suitable taxable profits will be available in the future against which the reversal of temporary differences and tax losses carried forward can be utilised. Where the temporary differences are related to losses, the availability of the losses to offset against projected taxable profits is also considered.
The company has recognised a deferred income tax asset of £837,178 at 31 December 2024 (2023: £935,473). Recognition involves judgement regarding future financial performance of the company and as a result there is no absolute assurance the assets recognised will be realised.
The director has reviewed financial projections and is satisfied that there is a reasonable possibility that the company will generate sufficient future profits to utilise tax losses carried forward. The director has therefore continued to recognise deferred income tax assets in the financial statements. |
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Establishing useful economic lives for impairment and depreciation of fixed asset |
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Tangible fixed assets consists of long leasehold property and fixtures, fittings and equipment. The company capitalised leasehold improvement costs under long leasehold property and the cost is depreciated on a straight line basis over the lease term of the property. Judgement is required in determining the estimated useful life.
Assets should be reviewed for impairment annually. The requirement to account for an impairment charge depends primarily on the estimated useful economic life of the asset, estimates of residual values and the company's ability to generate cashflows from the assets use. The director regularly reviews the asset's useful economic life and changes it as necessary to reflect current thinking on remaining life in light of prospective economic utilisation and physical condition of the assets concerned. Changes in the asset's useful life can have a significant impact on amortisation charges and depreciation for the period. Details of the useful economic lives is included in the accounting policies. |