The director presents the strategic report for the year ended 28 February 2026.
Smallworld Accessories Limited supplies adults’ and children’s accessories through concessions operated with major UK retailers. The company provides fully merchandised, end-to-end solutions across jewellery, hair, gifting, sunglasses, belts, bags, cold weather, beauty and event categories.
The strategy of the business is:
To grow by supplying sustainably-sourced accessory ranges to customers that enhance their brand positioning and clothing offer.
To develop profitable product extension opportunities within the accessories category to expand the width of the company's offer and grow the customer base both in the UK and internationally.
The business delivered turnover of £20.2m and a loss before tax of £0.6m for the year. Turnover increased by 1.1% year on year despite continued cost-of-living pressures and their effect on consumers’ disposable income.
The year’s loss was impacted by the continued investment and upfront costs to support future growth. Improving and scaling our logistics capabilities and additional trading expertise strengthened the foundations for future performance. These changes are designed to increase flexibility, accelerate growth from new product categories, and sustain strong operational performance for existing and new customers.
As part of these operational changes, the business decided to withdraw from the Direct-to-Consumer service model at the end of the year and focus on its core concession business. This resulted in one-off stock write-off costs during the year. Despite this impact, the business protected its gross profit margin, which increased from 32.4% in the previous year to 33.3%.
The benefit of these changes is already being seen by the business, with growth across new accessory categories, such as Sunglasses and Belts.
The business has continued to place a core focus on sustaining a strong balance sheet position which has enabled it to invest to deliver on these business growth opportunities.
Hair and Jewellery across the Adults and Kids ranges remain core strengths and key sales drivers throughout the year. The company also offers strong Gifting and Events ranges that support its retail partners during key seasonal selling periods. Growth in new categories, Sunglasses and Belts, is expected to generate returns from the upfront investment made during the year and provide greater stability as the company’s revenue streams become less seasonally weighted.
The company’s operating structure and processes support the continued use of sustainably sourced raw materials and sustainable supply-chain practices in the manufacture of its products. This enables the company to provide its retail partners with ranges that respond to increasing consumer expectations regarding sustainability.
Since the end of the financial year, the company has launched two new product categories with existing concession partners. This expansion supports the company’s strategic objective of developing profitable product extensions within the accessories category and broadens its market presence. The company now operates in 1,738 stores.
Management KPIs
The following are the financial key performance indicators (‘KPIs’) used by management to assess and regulate the company’s performance:
Contribution per customer contract - these measures are not disclosed externally, but are used internally to ensure each contract delivers a sustainable level of contribution to support the ongoing profitability of the business.
Gross profit as a percentage of turnover – 33.3% for the period, an increase of 0.9 percentage points from the previous year.
Trade debtor days: 22 days, up from 20 days last year.
Administrative expenses as a % of turnover – 35.7% for the period, up +5.8% from the previous year.
The main Market risk is the potential impact of continuing cost inflationary pressures. From a business perspective the risk would be that this could drive up the cost base of the business and negatively impact on customer’s disposable income.
To mitigate this risk, the business has and will continue to focus on the following areas:
Continue to ensure that the product mix and value for money offering is aligned with customer demand.
Development of both existing sales channels and potential new channels - leveraging our strengths in in-store servicing and product design across Adults and Children’s accessories.
Tightly manage the stock critical path to avoid investing in stock too early while protecting availability during peak sales periods. Strong allocation, store placement and visual-merchandising processes enable the business to manage stock effectively, retain flexibility and invest in growth areas and new opportunities as they arise.
Focus on mitigating overheads price increases to ensure that the cost base of the business is tightly controlled, and that cost efficiencies are made where possible.
The company imports most of its products from the Far East and pays for the majority in Chinese renminbi, with a smaller requirement for US dollars. It regularly reviews exchange rates and economic indicators that could weaken sterling and uses forward currency contracts to manage the potential effect of currency fluctuations on product costs.
The company designs, manufactures and tests its products to ensure that they meet all legal requirements for the markets it operates in. The company is a full member of the Ethical Trading Initiative.
On behalf of the board
The director presents his annual report and financial statements of the group and company for the year ended 28 February 2026.
The results for the year are set out on page 9.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
The director who held office during the year and up to the date of signature of the financial statements was as follows:
The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring it has sufficient liquid resources to meet the operating needs of the group.The ultimate controlling entity has provided finance to assist cash flow and liquidity management.
All customers who wish to trade on credit terms are subject to credit verification procedures. The concession stands are operated from the premises of large supermarket chains and some high street stores and sales are reported by the stores themselves based upon the goods passing through the tills. Due to the customer mix the group has not experienced debtor recovery issues but trade debtors are monitored on an ongoing basis and provision will be made for doubtful debts where necessary.
The group's policy is to consult and discuss with employees, through staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
The auditor, Sumer Audit, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
United Kingdom company law requires the director to prepare financial statements for each financial year. Under that law, the director has elected to prepare the group and parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the group and parent company, and of the profit or loss of the group for that period.
In preparing these financial statements, the director is required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and parent company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and parent company, and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the group and parent company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
We have audited the financial statements of Smallworld Accessories Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 28 February 2026 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 director's 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 director 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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
The strategic report and the director's report have been prepared in accordance with applicable legal requirements.
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, our procedures included the following:
Obtaining an understanding of the legal and regulatory framework that the group operates in, focusing on those laws and regulations that had a direct effect on the financial statements and operations;
Obtaining an understanding of the group’s policies and procedures on fraud risks, including knowledge of any actual, suspected or alleged fraud; and
Discussing among the engagement team how and where fraud might occur in the financial statements and any potential indicators of fraud through our knowledge and understanding of the group and our sector-specific experience.
As a result of these procedures, we considered the opportunities and incentives that may exist within the group for fraud. We are also required to perform specific procedures to respond to the risk of management override. As a result of performing the above, we identified the following areas as those most likely to have an impact on the financial statements: health & safety, employment law and compliance with the UK Companies Act.
In addition to the above, our procedures to respond to risks identified included the following:
Making enquiries of management about any known or suspected instances of non-compliance with laws and regulations and fraud;
Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to stock provisions and write offs, goodwill and fair value of forward contracts; and
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness.
Due to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the parent 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 parent 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 parent company and the parent 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 period was £0 (2025 - £0 profit).
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
Smallworld Accessories Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 3 Bell Lane, Lewes, BN7 1JU.
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 company has early adopted the 2024 FRS 102 periodic review amendments with the amendment being applied retrospectively subject to exceptions set out in the standard. In accordance with the transitional provisions of the standard, comparatives have not been restated. The accounting policies for leases have been impacted as a result of the adoption of amendments to FRS 102 (2024).
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 £1.
The financial statements have been prepared under the historical cost convention adjusted for certain financial instruments measured 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’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income.
In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued, and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date.
The group consists of Smallworld Accessories Holdings Limited and its subsidiary, Smallworld Accessories Limited. Upon the incorporation of the subsidiary, the company subscribed for its share capital, which is recorded within the fixed asset investments of the company's balance sheet.
Smallworld Accessories Limited has been included in the group financial statements using the purchase method of accounting. Accordingly, the group statement of comprehensive income and statement of cash flows include the results and cash flows of Smallworld Accessories Limited for the year.
At the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the financial statements have been prepared on a going concern basis. In reaching this conclusion, the director considered relevant information, including the annual budget, forecast future cash flows and the impact of subsequent events.
The losses for the year ended 28 February 2026 were driven in large part by the decision to maintain and increase investment to support the future growth of the business and strengthen the critical fundamentals that the company considers to be its foundation. The business is already seeing benefits from this investment through growth in new accessory categories, including sunglasses, belts and beauty. This growth is expected to support a return to profitability, notwithstanding the continuing effects of a challenging inflationary environment in the UK and the resulting pressure on consumers' disposable income. The company therefore considers that it has a foundation from which to pursue future sales and growth opportunities.
The two principal potential risks to the business are market risk and foreign exchange risk. Market risk could arise if inflationary pressures on UK consumers increased significantly from current levels, further reducing customers' disposable income and adversely affecting sales. Foreign exchange risk could arise if sterling weakened significantly against the currencies used for overseas stock purchases, increasing intake costs and reducing profit margins.
The director performed a robust analysis of forecast future cash flows, including scenarios reflecting the potential effects of the current economic environment on the business. The analysis also assessed the effectiveness of the measures available to mitigate those effects.
Based on these assessments and the resources available to the company, the director has concluded that there is no material uncertainty that may cast significant doubt on the company's ability to continue as a going concern. The director therefore considers the adoption of the going concern basis in preparing the annual report and accounts to be appropriate.
Revenue comprises sales of goods provided to customers net of value added tax and other sales taxes. Revenue is recognised when performance obligations are satisfied and the control of goods is transferred to the buyer. The sale of goods is the only source of revenue.
The nature, timing of satisfaction of performance obligations and significant payment terms of the company's major sources of revenue are as follows:
Sale of goods
Revenue is derived from the sale of accessories. The sale of these products is considered one performance obligation and accounted for as a product sale. There are no contracts whose performance obligations are satisfied over time. Revenue is recognised when the products are delivered to the customer or when they are purchased by the customer in stores where the company has concessionary stands. The company considers itself the principal in these sales. There are no financing components nor any element of variable considerations.
For leasehold land and buildings and motor vehicles, which are held as right-of-use assets, the right-of-use asset is initially measured at an amount equal to the corresponding lease liability, plus lease payments made on or before the commencement day, less any lease incentives received and plus any initial direct costs. The right-of-use asset is subsequently measured at cost less accumulated depreciation and impairment losses. Depreciation on the right-of-use asset is recognised using the straight-line basis and starts at the commencement date of the lease.
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.
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 are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost.
Other financial assets 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.
Basic financial liabilities 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.
Derivatives, including forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
For derivatives that are designated and qualify as cash flow hedges, the effective portion of changes in the fair value of the hedge is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss. Any gain or loss previously recognised in other comprehensive income is reclassified to profit or loss when the hedge relationship ends. This occurs when the hedging instrument expires or no longer meets the hedging criteria, the forecast transaction is no longer highly probable, the hedged debt instrument is derecognised, or the hedging instrument is terminated.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a
negative fair value is recognised as a financial liability.
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.
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 costs of short-term employee benefits are recognised as a liability and an expense.
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.
At the inception of the contract, the company assesses whether a contract is, or contains, a lease. It recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for those which are short-term or low-value leases as explained below. The right-of-use assets and the lease liabilities are presented as separate line items in the balance sheet.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the rate implicit in the lease. If this rate cannot be readily determined, the company uses its incremental or obtainable borrowing rate. The lease liability is subsequently measured by increasing the carrying amount to reflect interest in the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The company takes advantage of the practical expedients available in respect of leases of low-value items and short-term leases. This means that short-term leases less than 12 months and low-value asset leases are not recognised as lease liabilities and right-of-use asset but are recognised as an expense on a straight-line basis over the lease term. Low-value assets are any assets below £10,000 but excluding all cars, vans, lorries, land and buildings and production line equipment. The expenses are recognised within administrative expenses.
In the comparative period, the group classified leases as finance leases whenever the terms of the lease transferred substantially all the risks and rewards of ownership to the lessees. All other leases were classified as operating leases. Assets held under finance leases were 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 was included in the balance sheet as a finance lease obligation. Lease payments were treated as consisting of capital and interest elements and the interest was 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, less any lease incentives received, were charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis was more representative of the time pattern in which economic benefits from the leased asset were consumed.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
In the application of the group’s accounting policies, the director is 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 following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The group entered into leases previously that are now recorded on the balance sheet. The lease liability is initially measured at present value of the lease payments which are discounted using an incremental borrowing rate. The incremental borrowing rate has been assessed by the director to be 6%.
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.
The group monitors stock levels and impairment on an ongoing basis. Units held on concession stands are vulnerable to damage, pilfering and misplacement within the stores and provisions are maintained to reflect this. At the end of a season the group writes off the bulk of the remaining goods as new product lines are introduced. The estimation includes judgement on a number of factors including historical sales patterns, expected sales profiles and potential obsolescence. The cost of these write-offs is included within cost of sales.
At the reporting date, the carrying amount of inventory was £4,424,080 (2025 - £2,985,652).
The director has estimated the useful life of goodwill to be 10 years. The useful life of goodwill may vary depending on a number of factors including timing of future returns and market demands. The director has reviewed the estimated useful life of goodwill and determined that goodwill should continue to be amortised over 10 years from the inception date, with no impairment of goodwill required to be recognised.
All turnover is derived from the sale of goods.
Costs in relation to the audit of the group financial statements are encapsulated within the fees payable by the subsidiary.
The average monthly number of persons employed by the group and company during the year was:
Their aggregate remuneration comprised:
The director is also considered to represent the key management personnel of the group.
The actual charge for the year can be reconciled to the expected charge/(credit) for the period based on the profit or loss and the standard rate of tax as follows:
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
Details of the company's subsidiaries at 28 February 2026 are as follows:
At the reporting date, the replacement cost of stock was £4,743,000 (2025 - £3,194,000).
Other debtors falling due after more than one year includes a deposit of £823.438 (2025: £881,211) with a key supplier to provide security on orders placed by the group. This is funded by a loan from the ultimate controlling entity of the same amount, which is recorded in creditors: amounts falling due after more than one year within other borrowings.
Other borrowings relates to a loan from the ultimate controlling entity, which has been subordinated to the loan received under the UK Government-backed Coronavirus Business Interruption Loan Scheme ("CBILS") received in 2021.
As disclosed within note 17, the ultimate controlling entity has provided a loan to the group to fund a deposit that is held with a key supplier.
In the 2021, the group obtained a bank loan under the UK Government-backed Coronavirus Business Interruption Loan Scheme ("CBILS"). The loan is subject to interest charges at a rate of 3.8% above the Bank of England base rate per annum, with the Government providing a Business Interruption payment to cover the first 12 months of interest payments. The loan is repayable over 6 years, with a repayment holiday in place for the first 12 months of the loan.
The loan is secured by fixed and floating charges over the company's assets and has external guarantees.
Finance lease obligations relate to the right-of-use assets recognised as part of the early adoption of the amendments to FRS 102 issued in March 2024.
The following are the major deferred tax liabilities and assets recognised by the group and company:
The timing of the expected reversal of the deferred tax asset is expected to be in the next 12 months. The deferred tax liability is expected to reverse over the useful lives of the tangible fixed assets.
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.
Ordinary shares have attached to them full voting, dividend and capital distribution (including on winding up) rights.
The group entered into forward foreign exchange contracts to mitigate exchange rate risk for foreign currency payments, all contracts mature within 12 months of the reporting date.
Group and company
At the reporting date, the group had loans outstanding with the ultimate controlling entity amounting to £2,278,858 (2025: £2,336,631), included within non-current liabilities. The loan interest paid during the year was £57,843 (2025: £57,843) and was charged at a rate of 4% (2025: 4%) on the interest bearing loan. The loans are unsecured, and are subordinated to the group's other financing facilities.
At the reporting date, the group had a year-end trade creditor balance outstanding with an other trading related party of £410,151 (2025: £111,925), and a debtor balance due in more than one year of £823,438 (2025: £881,211). During the year, purchases with that related party amounted to £5,225,410 (2025: £4,418,275).
Changes to lease accounting
The early adoption of FRS 102 (2024) this year resulted in the recognition of right-of-use assets and lease liabilities. Until 28 February 2025, the group recognised lease payments as expenses in the period to which they related. The group adopted the modified retrospective approach, determining right-of-use assets and lease liabilities starting from the date of initial application of 1 March 2025. The cumulative effect of the initial application is recognised as an adjustment to the opening balance sheet. There is no restatement of comparative information.
The group had one lease relating to the office premises and one lease relating to a motor vehicle, which the group previously treated as an operating lease under FRS 102 (2022). The right-of-use asset is calculated at an amount equal to the lease liability that would have been recognised in the balance sheet at 1 March 2025 (initial application date). The group applied a 6% discount rate, the incremental borrowing rate, to calculate the present value of the remaining lease payments.
As a result of the change in accounting for leases, the group has recognised, at the start of the period, a right-of-use asset amounting to £827,168 and lease liabilities amounting to £827,168. The impact on the balance sheet at 1 March 2025 is to increase fixed assets and creditors by these amounts.
The overall impact on the profit and loss account of recognising the previous operating lease on the balance sheet as at 28 February 2026 is a depreciation charge of £90,381, interest payable of £48,441 which a total impact of £138,822. The impact on the profit and loss if leases were still recognised as operating leases would be lease rental expenses of £68,970. The overall impact is a lower profit before tax of £69,852 in the year ended 28 February 2026.
Changes in revenue recognition policy
The early adoption of FRS 102 (2024) this year, resulted in applying the five-step model approach, similar to IFRS 15 for revenue recognition. There has been no change to the recognition of income under this model and so no transition adjustment are applicable.
Other
No other periodic review amendments have had a material impact on the financial statements.