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Registered number: 07166396
Drink Warehouse UK Limited
Annual report and financial statements
For the 6 month period ended 31 December 2021
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Drink Warehouse UK Limited
Company Information
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E P H Farquhar (appointed 1 December 2021)
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Chartered Accountants & Statutory Auditor
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Drink Warehouse UK Limited
Contents
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Directors' responsibilities statement
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Independent auditor's report
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Consolidated statement of comprehensive income
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Consolidated balance sheet
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Consolidated statement of changes in equity
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Company statement of changes in equity
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Consolidated Statement of cash flows
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Notes to the financial statements
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Drink Warehouse UK Limited
Group strategic report
For the 6 month period ended 31 December 2021
The directors present their strategic report on the group for the 6 month period ended 31 December 2021.
The directors present the trading results of the last six months for the period ended 31 December 2021.
Over this short period the group has seen annualised turnover increase from £9.5m to £25.6m, when compared to the previous reporting period. This has been driven by the relaxation of restrictions imposed on the sector, relating to the COVID-19 pandemic.
The Company made use of Government assistance programmes, notably the Coronavirus Job Retention Scheme (CJRS), to offset fixed employment costs by furloughing all non-directors of the business, throughout the main period of Government restrictions. This was a strategic decision to ensure that the DWUK maintained full resource to take advantage of what the directors expected to be a rapid rebound in trade as restrictions eased. This has proven to be a successful strategy, as there is evidence to support an even stronger and sustained rebound than had previously been forecast.
Principal risks and uncertainties
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The execution of business strategy combined with the day-to-day management of the business are subject to several business and financial risks.
The business operates within a fast-paced market with the key risks being competition, liquidity of the customer base, product availability, employee retention, exchange rate fluctuations, uncertainties around Brexit and the risks now present around COVID-19.
The directors acknowledge the uncertainty around these and have put in place strategies to minimise any risk to the company.
Financial key performance indicators
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Our key performance indicators are included in weekly analysis and monthly management accounts.
These focus on the throughput of stocks within the business and therefore stock turnover days are our Key Performance Indicator as well as standard margin analysis on these sales.
This report was approved by the board and signed on its behalf.
Page 1
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Drink Warehouse UK Limited
Directors' report
For the 6 month period ended 31 December 2021
The directors present their report and the financial statements for the 6 month period ended 31 December 2021.
The principal activity of the group is the provision of alcohol and soft drinks to the on-trade within Kent, London and Sussex.
The profit for the 6 month period, after taxation, amounted to £406,483 (2021 - loss £2,186,318).
The directors do not recommend the payment of a dividend for the year.
The directors who served during the 6 month period were:
P A Oliver (resigned 1 February 2022)
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J L Gould (resigned 1 December 2021)
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E P H Farquhar (appointed 1 December 2021)
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DWUK continued to achieve strong sales and margin growth for the first quarter of 2022 with both exceeding forecast, which gives the Directors confidence that budgeted expectations will be met. The focus of the business remains heavily on managing the margins and cost base of the group, as well as putting in strategies to mitigate any potential threats from, exchange rate risk and credit risk.
DWUK is committed to the future growth of the business with continued investment in both the infrastructure of the group and investment in people.
The Management constantly review the cash flow of the business on a daily, weekly and monthly basis to ensure all financial commitments and obligations are met.
Financial risk management
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The group has exposure to three main areas of risk – foreign exchange exposure, liquidity risk and customer credit exposure. The group has established a risk and financial management framework whose primary objectives are to protect the company from events that hinder the achievement of its performance objectives. The objectives aim to limit undue counterparty exposure, ensure sufficient working capital exists and to monitor the management of risk.
Exposure to price, credit, liquidity and cash flow risk
The group’s principal financial instruments comprise bank balances, bank overdrafts, trade creditors, trade debtors, loans to the group and lease arrangements. The main purpose of these instruments is to finance the group’s operations.
Due to the nature of the financial instruments used by the group there is minimal exposure to price risk, for example in respect of fluctuations in commodity or equity prices. The group’s approach to managing other risks applicable to the financial instruments concerned is as follows.
Page 2
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Drink Warehouse UK Limited
Directors' report (continued)
For the 6 month period ended 31 December 2021
Liquidity risk is the risk that the group will encounter difficulty in meeting its financial obligations as they fall due. The group’s objective in managing liquidity risk is to ensure that this does not arise. Having assessed future cash flow requirements the group expects to be able to meet its financial obligations through the cash flows that are generated from its operating activities. In the event that these cash flows would not be sufficient to enable the group to meet all of its obligations the group has available credit facilities provided by its bankers and investors. The interest rate risk arising from these facilities is considered by the directors to be minimal, and the group has not entered into any derivative instruments designed to mitigate exposure to such risk. With these facilities in place the group is in a position to meets its commitments and obligations as they fall due.
The group regularly offers credit terms to its customers which allow for payment of the debt after delivery of goods. The group is at risk to the extent that a customer may be unable to pay the debt within those terms. This risk is mitigated by the strong on-going customer relationships and by only granting credit to customers who are able to demonstrate an appropriate payment history and satisfy credit worthiness procedures.
Disclosure of information to auditor
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Each of the persons who are directors at the time when this directors' report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the company and the group's auditor is unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the company and the group's auditor is aware of that information.
Post balance sheet events
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There have been no significant events affecting the group since the year end.
Under section 487(2) of the Companies Act 2006, Kreston Reeves LLP will be deemed to have been reappointed as auditor 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
This report was approved by the board and signed on its behalf.
Page 3
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Drink Warehouse UK Limited
Directors' responsibilities statement
For the 6 month period ended 31 December 2021
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 judgements and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the 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.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the group's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements and other information included in directors' reports may differ from legislation in other jurisdictions.
Page 4
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Drink Warehouse UK Limited
Independent auditor's report to the members of Drink Warehouse UK Limited
We have audited the financial statements of Drink Warehouse UK Limited (the 'parent company') and its subsidiaries (the 'group') for the 6 month period ended 31 December 2021, which comprise the group statement of comprehensive income, the group and company balance sheets, the group statement of cash flows, the group and company statement of changes in equity 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).
In our opinion the financial statements:
∙give a true and fair view of the state of the group's and of the parent company's affairs as at 31 December 2021 and of the group's profit for the 6 month period then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the 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.
Conclusions relating to going concern
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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 auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Page 5
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Drink Warehouse UK Limited
Independent auditor's report to the members of Drink Warehouse UK Limited (continued)
Opinion on other matters prescribed by the Companies Act 2006
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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 6 month 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.
Matters on which we are required to report by exception
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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.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
∙the parent company financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors' remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
Responsibilities of directors
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As explained more fully in the directors' responsibilities statement set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Page 6
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Drink Warehouse UK Limited
Independent auditor's report to the members of Drink Warehouse UK Limited (continued)
Auditor's responsibilities for the audit of the financial statements
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Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these 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:
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the group and industry, and through discussion with the directors and other management (as required by auditing standards), we identified that the principal risks of non-compliance with laws and regulations related to health and safety, anti-bribery and employment law. We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006 and taxation legislation.
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to the posting of inappropriate journal entries to manipulate profit or loss. Audit procedures performed by the engagement team included:
∙Discussions with management and assessment of known or suspected instances of non-compliance with laws and regulations (including health and safety) and fraud, and review of the reports made by management; and
∙Assessment of identified fraud risk factors; and
∙Challenging assumptions and judgements made by management in its significant accounting estimates; and
∙Performing analytical procedures to identify any unusual or unexpected relationships, including related party transactions, that may indicate risks of material misstatement due to fraud; and
∙Confirmation of related parties with management, and review of transactions throughout the period to identify any previously undisclosed transactions with related parties outside the normal course of business; and
∙Reading minutes of meetings of those charged with governance and reviewing correspondence with relevant tax authorities; and
∙Identifying and testing journal entries, in particular any manual entries made at the year end for financial statement preparation.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.
Page 7
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Drink Warehouse UK Limited
Independent auditor's report to the members of Drink Warehouse UK Limited (continued)
As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
∙Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
∙Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the company's internal control.
∙Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
∙Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the company to cease to continue as a going concern.
∙Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
∙Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Allan Pinner FCCA (senior statutory auditor)
for and on behalf of
Kreston Reeves LLP
Chartered Accountants
Statutory Auditor
Canterbury
30 June 2022
Page 8
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Drink Warehouse UK Limited
Consolidated statement of comprehensive income
For the 6 month period ended 31 December 2021
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6 months ended
31 December
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Interest receivable and similar income
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Interest payable and similar expenses
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Profit/(loss) before taxation
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Profit/(loss) for the financial 6 month period
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Profit/(loss) for the 6 month period attributable to:
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Non-controlling interests
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Owners of the parent company
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There was no other comprehensive income for 2021 (2021:£NIL).
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The notes on pages 15 to 37 form part of these financial statements.
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Page 9
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Drink Warehouse UK Limited
Registered number: 07166396
Consolidated balance sheet
As at 31 December 2021
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 15 to 37 form part of these financial statements.
Page 10
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Drink Warehouse UK Limited
Registered number: 07166396
Company balance sheet
As at 31 December 2021
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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Profit and loss account brought forward
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Profit/(loss) for the 6 month period
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Profit and loss account carried forward
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 15 to 37 form part of these financial statements.
Page 11
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Drink Warehouse UK Limited
Consolidated statement of changes in equity
For the 6 month period ended 31 December 2021
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Profit for the 6 month period
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The notes on pages 15 to 37 form part of these financial statements.
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Page 12
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Drink Warehouse UK Limited
Company statement of changes in equity
For the 6 month period ended 31 December 2021
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Profit for the 6 month period
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The notes on pages 15 to 37 form part of these financial statements.
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Page 13
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Drink Warehouse UK Limited
Consolidated statement of cash flows
For the 6 month period ended 31 December 2021
Cash flows from operating activities
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Profit/(loss) for the financial 6 month period
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Amortisation of intangible assets
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Depreciation of tangible assets
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Loss on disposal of tangible assets
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(Increase)/decrease in stocks
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(Increase)/decrease in debtors
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of intangible fixed assets
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Purchase of tangible fixed assets
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Purchase of fixed asset investments (including deferred consideration)
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Net cash from investing activities
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Cash flows from financing activities
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Net loan (payments)/receipts
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Net cash used in financing activities
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Net (decrease) in cash and cash equivalents
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Cash and cash equivalents at beginning of 6 month period
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Cash and cash equivalents at the end of 6 month period
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Cash and cash equivalents at the end of 6 month period comprise:
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Page 14
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
Drink Warehouse UK Limited is a private company limited by shares and is incorporated in England with registration number 07166396. The registered office address of the company is Unit 2a & 2b Sapphire House, Minster, Kent, CT12 5FE.
The principal activity of the group is the provision of alcohol and soft drinks to trade establishments within Kent, Sussex and London.
2.Accounting policies
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Basis of preparation of financial statements
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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 judgement 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 financial statements are rounded to the nearest pound.
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 balance sheet, 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.
Page 15
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
2.Accounting policies (continued)
These financial statements have been prepared on the going concern basis. The directors are required to state whether it is appropriate to adopt the going concern basis of accounting in preparing the financial statements, and to identify any material uncertainties as to the group and the company’s ability to continue as a going concern over a period of at least 12 months from the date of approval of the financial statements.
The group holds certain finance facilities which are repayable on demand. The group has received a letter of support from its investors, confirming that they will be willing to provide additional capital support to the group, should the need arise.
While the impact of the COVID-19 pandemic has been assessed by the directors so far as reasonably possible, due to its unprecedented impact on the wider economy, it is difficult to evaluate with any certainty the potential outcomes on the group's trade, its customers and suppliers. However, taking into consideration the UK Government's response, its range of measures to support business and the group's own resources and planning, the directors have reasonable expectation that the group will continue in operational existence for the foreseeable future.
Notwithstanding the factors above, the directors continue to adopt the going concern basis in preparing the financial statements.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
∙the group has transferred the significant risks and rewards of ownership to the buyer;
∙the group retains neither continuing 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 group 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.
Page 16
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
2.Accounting policies (continued)
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Foreign currency translation
|
Functional and presentation currency
The company's functional and presentational currency is pound sterling.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the consolidated statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
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Operating leases: the group as lessee
|
Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
Page 17
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
2.Accounting policies (continued)
Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the consolidated statement of comprehensive income in the same period as the related expenditure.
Interest income is recognised in profit or loss using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Defined contribution pension plan
The group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. Once the contributions have been paid the group has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the balance sheet. The assets of the plan are held separately from the group in independently administered funds.
Page 18
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
2.Accounting policies (continued)
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Current and deferred taxation
|
The tax expense for the 6 month period comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the company and the group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Page 19
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
2.Accounting policies (continued)
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of the group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight-line basis to the consolidated statement of comprehensive income over its useful economic life.
Other intangible assets
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
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:
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years, once brought into use
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Page 20
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
2.Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
The group adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the group. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line and reducing balance methods.
Depreciation is provided on the following basis:
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Long-term leasehold property
|
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straight line over lease term
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15% - 25% reducing balance
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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.
Investments in subsidiaries are measured at cost less accumulated impairment.
Unlisted investments are measured at cost less accumulated impairment
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis.
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
Page 21
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
2.Accounting policies (continued)
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Cash and cash equivalents
|
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the consolidated statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the group's cash management.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
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 creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
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.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the group would receive for the asset if it were to be sold at the balance sheet date.
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is an 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.
Page 22
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
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Judgements in applying accounting policies and key sources of estimation uncertainty
|
The preparation of the financial statements requires the directors to make judgements, estimates and assumptions that can affect the amounts reported for assets and liabilities, and the results for the year. The nature of estimation is such though that actual outcomes could differ significantly from those estimates.
The following judgements have had the most significant impact on amounts recognised in the financial statements:
Going concern
In the judgement of the directors it is appropriate to prepare the financial statements in accordance with the going concern basis of accounting. See note 2.3 for further details.
Goodwill and intangible assets
The company has recognised goodwill and other intangible assets arising from business combinations with a carrying value of £584,291 (June 2021 - £620,685) at the reporting date (see note 13). On acquisition the company determines a reliable estimate of the useful life of goodwill and intangible assets based upon factors such as the expected use of the acquired business, forecasts of expected future results and cash flows, and any legal, regulatory or contractual provisions that can limit useful life. At each subsequent reporting date the directors consider whether there are any factors such as technological advancements or changes in market conditions that indicate a need to reconsider the useful life of goodwill and intangible assets.
The whole of the turnover is attributable to the principal activity of the group, being the provision of alcohol and soft drinks to trade establishments within Kent, Sussex, and London.
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All turnover arose within the United Kingdom.
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6 months ended
31 December
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Government grants receivable
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Page 23
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
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The operating profit/(loss) is stated after charging:
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6 months ended
31 December
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Other operating lease rentals
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6 months ended
31 December
|
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Fees payable to the group's auditor for the audit of the group's annual financial statements
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Page 24
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
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Staff costs, including directors' remuneration, were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the 6 month period was as follows:
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6 months ended
31 December
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6 months ended
31 December
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Office, distribution and warehouse
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6 months ended
31 December
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Group contributions to defined contribution pension schemes
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During the 6 month period retirement benefits were accruing to 2 directors (2021 - 4) in respect of defined contribution pension schemes.
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The highest paid director received remuneration of £53,000 (2021 - £241,385).
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The value of the group's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £660 (2021 - £549).
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Page 25
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
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6 months ended
31 December
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Other interest receivable
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Interest payable and similar expenses
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6 months ended
31 December
|
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Other loan interest payable
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Finance leases and hire purchase contracts
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6 months ended
31 December
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Taxation on loss on ordinary activities
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Page 26
|
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
12.Taxation (continued)
|
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Factors affecting tax charge for the 6 month period/period
|
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The tax assessed for the 6 month period/18 month period is lower than (2021 - lower than) the standard rate of corporation tax in the UK of 19% (2021 - 19%). The differences are explained below:
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6 months ended
31 December
|
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Profit/(loss) on ordinary activities before tax
|
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Profit/(loss) on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)
|
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Capital allowances for 6 month period/18 month period in excess of depreciation
|
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Utilisation of tax losses
|
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Adjustments to tax charge in respect of prior periods
|
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Unrelieved tax losses carried forward
|
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Other differences leading to an increase (decrease) in the tax charge
|
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Total tax charge for the 6 month period/period
|
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Factors that may affect future tax charges
|
As part of Finance Bill 2020, which was substantively enacted on 17 March 2020, the corporation tax main rate is to remain at 19% until 31 March 2023.
The UK government has announced that the main rate will increase on 1 April 2023 to 25%, for companies with taxable profits above £250,000. Companies with taxable profits below £50,000 will continue to pay at 19%, and marginal relief will apply between these thresholds. This change forms part of the Finance Bill 2021, which was substantively enacted on 24 May 2021.
Deferred taxes have been measured using rates enacted at the reporting date and reflected in these financial statements.
Page 27
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
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Charge for the 6 month period on owned assets
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Page 28
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
13.Intangible assets (continued)
Page 29
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
|
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Long-term leasehold property
|
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Fixtures, fittings and office equipment
|
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Charge for the 6 month period
|
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The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:
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Page 30
|
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
14.Tangible fixed assets (continued)
|
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Long-term leasehold property
|
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|
Fixtures, fittings and office equipment
|
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Charge for the 6 month period on owned assets
|
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The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:
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Page 31
|
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
|
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Investments in subsidiary companies
|
Other fixed asset investments
|
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The following were subsidiary undertakings of the company:
|
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|
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Oliver's Beer and Wine Limited
|
Unit 2a & 2b Sapphire House, Sapphire Way, Minster, Kent, CT12 5FE
|
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Unit 2a & 2b Sapphire House, Sapphire Way, Minster, Kent, CT12 5FE
|
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|
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Finished goods and goods for resale
|
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The difference between purchase price or production cost of stocks and their replacement cost is not material.
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Page 32
|
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
|
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|
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Amounts owed by group undertakings
|
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|
Prepayments and accrued income
|
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Cash and cash equivalents
|
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Page 33
|
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
|
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Creditors: Amounts falling due within one year
|
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Amounts owed to group undertakings
|
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Other taxation and social security
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Obligations under finance lease and hire purchase contracts
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Accruals and deferred income
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A bank loan of £3,627 (June 2021 - £3,627) is due to Lloyds TSB Commercial Finance Limited. This loan has been secured by way of a debenture including fixed and floating charges, against all assets of the group.
Included within the group's other loans are amounts of £667,076 (June 2021 - £898,437) which are due to Kent County Council. These loans have been secured by way of a debenture including fixed and floating charges, against all assets of the group.
A bank loan of £975,000 (June 2021 - £1,284,401) is due to Santander UK plc. This loan has been secured by way of a debenture including fixed and floating charges, against all assets of the group.
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Creditors: Amounts falling due after more than one year
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Net obligations under finance leases and hire purchase contracts
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Page 34
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
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Hire purchase and finance leases
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Minimum lease payments under hire purchase fall due as follows:
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Charged to profit or loss
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Page 35
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
23.Deferred taxation (continued)
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Charged to profit or loss
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Accelerated capital allowances
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Allotted, called up and fully paid
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1,149,254 (2021 - 1,149,254) Ordinary shares of £0.0001 each
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343,284 (2021 - 343,284) A Ordinary shares of £0.0001 each
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85,820 (2021 - 85,820) Growth Shares shares of £0.0001 each
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Share premium account
This reserve represents the excess of the fair value of the consideration receivable on the issue of ordinary share capital, net of the direct costs incurred in their issue, over the nominal value of those shares (which is recognised as called up share capital). Share premium may only be utilised to write-off any expenses incurred or commissions paid on the issue of those shares, or to pay up new shares to be allotted to members as fully paid bonus shares.
Profit and loss account
This reserve comprises all current and prior period retained profits and losses after deducting any distributions made to the company’s shareholders.
Page 36
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Drink Warehouse UK Limited
Notes to the financial statements
For the 6 month period ended 31 December 2021
The group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the group in an independently administered fund. The pension cost charge represents contributions payable by the group to the fund and amounted to £24,167 (June 2021 - £63,617). Contributions totalling £Nil (June 2021 - £5,439) were payable to the fund at the balance sheet date and are included in creditors.
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Commitments under operating leases
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At 31 December 2021 the group and the company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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Related party transactions
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During the period no additional loans were made to a company of which the director has a significant interest. The amount owed to the company at the period end totalled £Nil (June 2021 - £6,248)
Key management personnel
All directors and senior management who have the authority and responsibility for planning, directing and controlling the activities of the company are considered to be key management personnel. Total remuneration in respect of these individuals is £176,167 (July 2021 - £827,080).
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The ultimate controlling parties continue to be MJ Curtis and L Farley by virtue of their shareholdings in the company.
Page 37
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