FOR THE PERIOD ENDED 30 SEPTEMBER 2024
PADDLE HOLDINGS LIMITED
COMPANY INFORMATION
PADDLE HOLDINGS LIMITED
CONTENTS
PADDLE HOLDINGS LIMITED
GROUP STRATEGIC REPORT
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Paddle Holdings Limited has pleasure in presenting its accounts for the period ended 30 September 2024.
The period to 30 September 2024 continued to bring challenges and changes to the company and Group. On 16th August 2024 the company acquired Backstay Holdings (Two) Limited, the holding company of Gill Marine Holdings Limited, which is the holding company of Douglas Gill International Limited, in a share for share exchange. Following the acquisition, Paddle Holdings aligned its year end with the acquired Group, changing the year end date from 31 August 2024 to 30 September 2024.
Sales for the period to September 2024 of the group’s main trading subsidiary, Red Paddle Co Limited, decreased from £7.5m in the 12-month period to August 2023, to £6.4m in the 13-month period to September 2024, and gross profit from £3.0m to £2.4m. The main factor impacting the decreased sales volumes continues to be the volume of overstock in the market within the sector, leading to high levels of discounted product available to consumers. As our global distribution model involves selling into distributors in other countries, the overstock situation was present in that channel as well. The overstock at distributor and retailer level in the year ended 2023 has continued to impact sales in the period to September 2024, however we are focussing our attention in the D2C markets and our apparel lines where we generate strong margins. Since the period end the stock position has improved significantly, leading to a clearer position.
We continued to invest in our people, our product development and our marketing at similar levels, so the full impact of the gross profit reduction went to the bottom line and resulted in a loss for the year of £1.6m.
Given the results for the period the directors have assessed the valuation of the investment in its subsidaries and considered the need for an impairment. The directors have calculated that the investment is impaired by £23.2m and this has been processed through the financial statements. See note 13 for details.
Goodwill arising on consolidation has been written down to £8.6m to reflect the directors updated valuation.
Excellent customer service continues to be a priority. The emphasis on service, quality and innovation remains key. Our Head of Production continued to maintain strong links with our suppliers to ensure our required high quality is maintained.
Sales for the period to September 2024 of the group’s main trading subsidiary, Red Paddle Co Limited, decreased from £7.5m in the 12-month period to August 2023, to £6.4m in the 13-month period to September 2024, and gross profit from £3.0m to £2.4m. The main factor impacting the decreased sales volumes continues to be the volume of overstock in the market within the sector, leading to high levels of discounted product available to consumers. As our global distribution model involves selling into distributors in other countries, the overstock situation was present in that channel as well. The overstock at distributor and retailer level in the year ended 2023 has continued to impact sales in the period to September 2024, however we are focussing our attention in the D2C markets and our apparel lines where we generate strong margins. Since the period end the stock position has improved significantly, leading to a clearer position.
We continued to invest in our people, our product development and our marketing at similar levels, so the full impact of the gross profit reduction went to the bottom line and resulted in a loss for the year of £1.6m.
Given the results for the period the directors have assessed the valuation of the investment in its subsidaries and considered the need for an impairment. The directors have calculated that the investment is impaired by £23.2m and this has been processed through the financial statements. See note 13 for details.
Goodwill arising on consolidation has been written down to £8.6m to reflect the directors updated valuation.
Excellent customer service continues to be a priority. The emphasis on service, quality and innovation remains key. Our Head of Production continued to maintain strong links with our suppliers to ensure our required high quality is maintained.
The greatest risk during the period and into the following year was the amount of overstock in the consumer goods markets, and the general economic climate. The stock position has cleared in the following year, albeit with an impact on gross margin.
Exchange rate fluctuations will always have an impact and introduce a degree of uncertainty to the business. Our products are purchased in US dollars and sold in US dollars and Sterling within the wider group. The cash impact of any exchange risk is hedged to a large degree by our trade in multi currencies, but there is still a potential impact when our earnings are translated back into Sterling. Internationally, we buy and sell in US dollar, so there is no obvious exchange risk, however the timing of the purchases and sales can be mismatched, leading to potential transactional exchange differences which can impact our Sterling gross profit margin.
The worldwide SUP market continues to be negatively impacted by the number of cheap, lower quality boards available as the barriers to entry at the bottom end of the market are low. However, our constant push for innovation and product improvement; and sharing that message with consumers who increasingly ask for our brand means we are able to look to the future with considerable confidence. Our strategy continues to be to produce high quality products that offer excellent performance and value for money backed up by great service.
Our diversification into a wider range of products also reduces the risk of relying on one product sector, and indeed our other products are now making up more than half of our sales value.
Exchange rate fluctuations will always have an impact and introduce a degree of uncertainty to the business. Our products are purchased in US dollars and sold in US dollars and Sterling within the wider group. The cash impact of any exchange risk is hedged to a large degree by our trade in multi currencies, but there is still a potential impact when our earnings are translated back into Sterling. Internationally, we buy and sell in US dollar, so there is no obvious exchange risk, however the timing of the purchases and sales can be mismatched, leading to potential transactional exchange differences which can impact our Sterling gross profit margin.
The worldwide SUP market continues to be negatively impacted by the number of cheap, lower quality boards available as the barriers to entry at the bottom end of the market are low. However, our constant push for innovation and product improvement; and sharing that message with consumers who increasingly ask for our brand means we are able to look to the future with considerable confidence. Our strategy continues to be to produce high quality products that offer excellent performance and value for money backed up by great service.
Our diversification into a wider range of products also reduces the risk of relying on one product sector, and indeed our other products are now making up more than half of our sales value.
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PADDLE HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Sales decreased due to the continuing market overstock, and margins in the main trading subsidiary took a hit, falling from an average of 39.7% to 37.4%. This is mainly due to boards being sold at lower price to clear stock overhang.
The group had a net loss for the period of £27m which comprises of a trading loss of £5.5m and an impairment to intangible assets of £21.5m. While the trading conditions continue to be challenging, the Directors continue to invest for growth and believe the issues are mainly due to market overstock and changes in the route to market. The company continues to implement changes to address these issues, and also to right-size the cost base of the trading companies.
At the year end the Group had net assets of £18.9m and net current assets of £10.6m, including stocks of £10.3m.
The Group has received commitment from the Shareholders to provide further financial support should it be required, and did receive support post year end to 30 September 2025 totalling £3.8m. This was utilised to repay deferred consideration due in November 2024 of £1.1m, the purchase of our Red Paddle Co North American distribution of £700k, and for stock purchasing by Douglas Gill International Limited.
As noted in note 2.3, having reviewed the Group’s financial position and anticipated future financial performance and cash flows, the directors are of the opinion that the business will have adequate cash resources to continue operations for the foreseeable future, upon which the Group is expected to return to being operationally cash flow positive. Stock levels are forecast to continue to reduce, alleviating pressure on cashflow.
As a result the directors conclude that it is appropriate that the going concern basis is adopted in preparing the financial statements for the period ended 30 September 2024.
At the year end the Group had net assets of £18.9m and net current assets of £10.6m, including stocks of £10.3m.
The Group has received commitment from the Shareholders to provide further financial support should it be required, and did receive support post year end to 30 September 2025 totalling £3.8m. This was utilised to repay deferred consideration due in November 2024 of £1.1m, the purchase of our Red Paddle Co North American distribution of £700k, and for stock purchasing by Douglas Gill International Limited.
As noted in note 2.3, having reviewed the Group’s financial position and anticipated future financial performance and cash flows, the directors are of the opinion that the business will have adequate cash resources to continue operations for the foreseeable future, upon which the Group is expected to return to being operationally cash flow positive. Stock levels are forecast to continue to reduce, alleviating pressure on cashflow.
As a result the directors conclude that it is appropriate that the going concern basis is adopted in preparing the financial statements for the period ended 30 September 2024.
This report was approved by the board and signed on its behalf.
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PADDLE HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
The directors present their report and the financial statements for the period ended 30 September 2024.
The loss for the period, after taxation, amounted to £26,983,655 (2023: loss £3,552,872).
The directors who served during the period were:
The directors expect the company to continue in the management of its investments with a continued focus on cost base and returning to a profitable position, without any additional funding.
The existing loan facility issued by Backstay Holdings Limited to the Paddle Holdings Group was increased to £5m in November 2024, and to £5.5m in February 2025, to facilitate the repayment of deferred consideration and cashflow requirements of the trading entities.
The auditors, Bishop Fleming Audit Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
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PADDLE HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
This report was approved by the board and signed on its behalf.
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PADDLE HOLDINGS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments 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 Group 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 the Group and to 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 the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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PADDLE HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PADDLE HOLDINGS LIMITED
We have audited the financial statements of Paddle Holdings Limited (the 'parent Company') and its subsidiaries (the 'Group') for the period ended 30 September 2024, which comprise the Consolidated statement of comprehensive income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity, the Consolidated analysis of Net Debt, and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
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 or the 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.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' 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.
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PADDLE HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PADDLE HOLDINGS LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group 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 Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
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PADDLE HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PADDLE HOLDINGS LIMITED (CONTINUED)
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 Auditors' 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 Group financial statements.
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:
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:
• the nature of the industry and sector, control environment and business performance;
• the results of our enquiries of management and the directors about their own identification and assessment of the risk of irregularities;
• any matters we identified having obtained and reviewed the Company’s documentation of its policies and procedures relating to:
o identifying, evaluating, and complying with laws and regulations and whether management were aware of any instances of non-compliance;
o detecting and responding to the risk of fraud and whether management had knowledge of actual, suspected, or alleged fraud; and
o the internal controls established to mitigate the risks of fraud or non-compliance with laws and regulations.
• the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud, which included incorrect recognition of revenue, management override of controls using manual journal entries, and these were identified as the greatest potential area for fraud. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act, Financial Reporting Standard 102, UK tax legislation and overseas tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the Company ability to operate or to avoid a material penalty. These included data protection regulations, health and safety regulations, environmental legislations and employment legislation.
Our procedures to respond to risks identified included the following:
• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
• reviewing the financial statement disclosures and testing to supporting documentation to assess the recognition of revenue;
• enquiring of management and the directors concerning actual and potential litigation claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement or fraud;
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PADDLE HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PADDLE HOLDINGS LIMITED (CONTINUED)
• reviewing correspondence with external parties;
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business;
• communicating relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from an error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business;
• communicating relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from an error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' 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 Auditors' 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.
for and on behalf of
Chartered Accountants
Statutory Auditors
Brook House
Winslade Park
Manor Drive
Exeter
EX5 1GD
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PADDLE HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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PADDLE HOLDINGS LIMITED
REGISTERED NUMBER:13764165
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 18 to 42 form part of these financial statements.
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PADDLE HOLDINGS LIMITED
REGISTERED NUMBER:13764165
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 18 to 42 form part of these financial statements.
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PADDLE HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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PADDLE HOLDINGS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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PADDLE HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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PADDLE HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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PADDLE HOLDINGS LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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PADDLE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
The company is a private company, limited by shares, incorporated in England within the United Kingdom. The address of the registered office is Unit 12 Halwell Business Park, Halwell, Totnes, TQ9 7LQ.
In September 2024, the company changed its year end date from 31 August 2024 to 30 September 2024.
In September 2024, the company changed its year end date from 31 August 2024 to 30 September 2024.
2.ACCOUNTING POLICIES
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
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PADDLE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
2.ACCOUNTING POLICIES (continued)
The organisation operates as a holding company, and consequently, the assessment of the going concern is contingent upon the future trading capabilities of its subsidiaries.
The directors acknowledge that the Group has generated a loss and less turnover in the period. Paddle Holdings Limited Group comprises Vian Marketing Limited, Red Paddle Co Limited, Tushingham Sales Limited, Backstay Holdings (Two) Limited, Gill Marine Holdings Limited, Douglas Gill International Limited and Gill North America Inc.
Results remained under pressure into the year to September 2025 as the directors chose not to cut back on investment into marketing. There have been significant changes in the wider outdoor recreation market, and also in sales channels, and internally, in the product mix. Looking forward the cost base has been reviewed to better focus on the opportunities in different products and customer type, and the directors are confident of returning to a profitable position, and being able to cover any working capital without any additional funding.
Given the results for the period the directors have assessed the valuation of the investment in its subsidaries and considered the need for an impairment. The directors have calculated that the investment is impaired by £23.2m and this has been processed through the financial statements. See note 13 for detail.
Goodwill arising on consolidation has been written down to £8.6m to reflect the directors updated valuation.
When making an assessment of the Company's ability to continue as a going concern, management considers various factors, including current trading and market conditions, funding requirements, the expectation of future trading and the ability of the group to operate within available funding facilities, and any other relevant circumstances. This assessment covers at least twelve months following the date of approval of the financial statements.
The company is reliant on support from the majority shareholder who has confirmed its intention to provide further financial resources necessary to assist the company meeting its liabilities as and when they fall due to the extent that money is not otherwise available to meet such liabilities.
Consequently, the Directors conclude that, whilst there remains a reliance on continued shareholder support to finance business operations in the short term, the Company will be able to meet its debts as they fall due and have prepared the financial statements on a going concern basis.
The directors acknowledge that the Group has generated a loss and less turnover in the period. Paddle Holdings Limited Group comprises Vian Marketing Limited, Red Paddle Co Limited, Tushingham Sales Limited, Backstay Holdings (Two) Limited, Gill Marine Holdings Limited, Douglas Gill International Limited and Gill North America Inc.
Results remained under pressure into the year to September 2025 as the directors chose not to cut back on investment into marketing. There have been significant changes in the wider outdoor recreation market, and also in sales channels, and internally, in the product mix. Looking forward the cost base has been reviewed to better focus on the opportunities in different products and customer type, and the directors are confident of returning to a profitable position, and being able to cover any working capital without any additional funding.
Given the results for the period the directors have assessed the valuation of the investment in its subsidaries and considered the need for an impairment. The directors have calculated that the investment is impaired by £23.2m and this has been processed through the financial statements. See note 13 for detail.
Goodwill arising on consolidation has been written down to £8.6m to reflect the directors updated valuation.
When making an assessment of the Company's ability to continue as a going concern, management considers various factors, including current trading and market conditions, funding requirements, the expectation of future trading and the ability of the group to operate within available funding facilities, and any other relevant circumstances. This assessment covers at least twelve months following the date of approval of the financial statements.
The company is reliant on support from the majority shareholder who has confirmed its intention to provide further financial resources necessary to assist the company meeting its liabilities as and when they fall due to the extent that money is not otherwise available to meet such liabilities.
Consequently, the Directors conclude that, whilst there remains a reliance on continued shareholder support to finance business operations in the short term, the Company will be able to meet its debts as they fall due and have prepared the financial statements on a going concern basis.
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PADDLE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
2.ACCOUNTING POLICIES (continued)
Functional and presentation currency
Transactions and balances
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PADDLE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
2.ACCOUNTING POLICIES (continued)
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PADDLE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
2.ACCOUNTING POLICIES (continued)
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PADDLE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
2.ACCOUNTING POLICIES (continued)
GOODWILL
OTHER INTANGIBLE ASSETS
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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PADDLE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
2.ACCOUNTING POLICIES (continued)
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PADDLE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
2.ACCOUNTING POLICIES (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditor, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated statement of comprehensive income.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated statement of comprehensive income.
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PADDLE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Useful economic life of intangibles
The directors use the best available information to estimate the useful economic lives of the intangible assets.
Impairment of intangible assets
Where impairment indicators are present the company makes an estimate of the recoverable value of intangible and tangible assets. The recoverable amount of the asset (or asset’s cash generating unit) is the higher of the fair value less costs to sell and value in use. Value in use is defined as the present value of the future cash flows before interest and tax obtainable as a results of the asset’s (or asset’s cash generating unit) continued use. Due to the specialised nature of the assets, judgement is used to assess the degree of certainty attached to the flow of future economic benefits and the technical feasibility and success of the various projects. If there is a material change in economic conditions, climate or other circumstances influencing the estimate of future cash flows or fair value the Group could be required to recognise impairment charges in the future.
Warranty Provision
The warranty provision has been calculated using an average of historic costs of warranty claims over a three year period to reflect the costs likely to be incurred.
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PADDLE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
Analysis of turnover by country of destination:
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PADDLE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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PADDLE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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PADDLE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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PADDLE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
10.TAXATION (CONTINUED)
There were no factors that may affect future tax charges.
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PADDLE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 SEPTEMBER 2024
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