ACCOUNTS - Final Accounts preparation
ACCOUNTS - Final Accounts preparation
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Company registration number:
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COMPANY INFORMATION
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CONTENTS
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GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2022
The principal activity of Wine Box Company Ltd (WBC) is the wholesale distribution of packaging and display primarily to the speciality food, drink, and hospitality sectors. We break the business down into four areas, PURE, which relates to stocked products being sold through brochures and websites, Retail Display and Furniture, Fabric Bags, which supplies printed bags and BESPOKE, which designs and manufactures higher volume orders to a customer’s own specifications. Established in 1989, the company prides itself on the quality and the range of its products backed up by high levels of service. During 2021 the main distribution warehouse was relocated to Crawley into a modern and far more efficient unit. The head office and showroom remain in South London, but more and more functions now work between the two locations.
The ongoing Covid-19 pandemic continued to impact on the business both positively and negatively in the early parts of 2021. Lockdowns and restrictions benefitted the packaging side of the business whilst negatively impacting the Fabric Bags, Retail Display & Furniture and Bespoke. As lockdowns were relaxed, we started to see a return to a more predictable mix of business with a resurgence of Fabric Bags and increasing enquiries for Retail Display and Bespoke. Whilst demand for PURE has softened slightly, it is still well above pre-Covid levels, and we see this continuing. Protective Packaging is particularly strong and as this is a core part of the business it is very encouraging to see. A significant percentage of our customer base did not have transactional websites prior to Covid but this changed overnight as they adapted to a rapidly changing environment, and this will not be reversed.
To cope, we accelerated our planned warehouse move and upgraded our website and these are now fully integrated and running smoothly. As demand becomes more predictable, we are pivoting to a more sales led approach and have a detailed sales and marketing plan for the coming 12 to 18 months that is built around customer retention, turning one-time buyers into multi-buyers and also attracting brand new customers into the business.
With stretched supply chains and unpredictable demand over the last 18 months, we were holding excess of stock at the year end but, this will all sell and our stock levels should drop back to pre-covid levels over the coming months. Some of our customers were also carrying excess stock which has impacted on sales in the early part of FY 2022/2023 but these are now clearing and we expect to see a stronger second half of the year than we saw in 2021/2022.
In addition to the investment in our new warehouse, we also organised a purchase of own shares on the departure of a director and shareholder which was financed from reserves. Whilst this impacted our cash position, we felt that it was manageable and as a strong cash generating business, we expect to rebuild our reserves relatively quickly. Settling an IP dispute also resulted in a significant drain on cash but, again it was manageable, and it has allowed us to carry on building on sales of a strong product line for us which will pay dividends over the coming years.
We are very positive for the coming 12 months and expect to carry on growing the profitability of the business in line with the targets we have set.
Employees
We have always considered ourselves to be a “family” business and employee retention has been strong with a good percentage having been with the business for five plus years. The management team have all been with us for ten plus years and as part of our succession planning, they have become shareholders in the business and five of them are on the board of directors alongside the two founders. We have always had a diverse group of employees, and this continues to be the case.
Environment and Social Responsibility
We pride ourselves on our strong environmental and social policies and this has been the case since 1989. We started the business with the help of the Prince’s Trust and have always tried to give something back. Over the years we have made donations to the Trust but along the way have set up our own projects. We prefer the hands-on approach with anything we do and this is especially true for our own tree planting project in South West France where we bought around 60 acres of land and have planted over 30,000 trees. After acquiring Canby Bags in 2012 and expanding our Fabric Bags business we have been actively involved in the “Cocobagh” project with our suppliers in India where we run a training school aimed at giving women the skills to get into work. Fuller details on these projects and our more general policies can be found on our website.
In addition to the above projects, we have added solar power to our new warehouse and where possible use electric vehicles and will be moving to a renewable energy supplier when current contracts expire.
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GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
We have faced a number of challenges over the years, none more so that the Covid pandemic and the long-term impact this will have. Traditionally WBC has traded very resiliently in recessions and downturns. The business is quite diverse, has a large number of smaller customers and is at the higher end of the market. We are also very agile and have the ability to adapt very quickly to changing circumstances. We feel the risks facing the business can be summarised as follows:
∙Recession – as mentioned above though we feel we could trade through a recession at similar levels of trade to an average of the last 3 years
∙Raw material price inflation – whilst this has been significant over the last 12 months, we feel the worst is over and expect to see stable prices over the next 12 – 24 months with the possibility of reductions.
∙Container prices – this has impacted the business hugely in the last 12 months, but we have managed to pass the bulk of the increases on to our customers. We feel the rates peaked in November 2021 and have been declining since that point. We would expect this to continue for the next 24 months with prices settling at close to pre-covid levels.
∙Recruitment – we are finding it more difficult to hire well qualified employees but are still able to fill positions, but it takes longer. We do not expect this to have a significant impact on the business apart from in the sales team where we are hoping to strengthen it in the short term. The main impact of this would be on the Bespoke side of the business where we are looking for significant growth in 2022/2023 Financial year. We feel that some of this growth may now be delayed into 2023/2024.
∙Conflict in Europe – the situation in Ukraine is worrying but only to the extent that it might escalate and spread. We feel the impact on raw materials is already priced in.
∙Brexit – To date this has had minimal impact on our business apart from exports to Ireland, but the increased cost and paperwork does not seem to have deterred our Irish customer base. Trade wars over the Northern Ireland Protocol may impact us but not significantly.
∙Exchange rates – whilst we cover our Forex exposure, we are still impacted by a weak Pound (GBP) particularly against the Dollar (USD). We feel that the downside risk on the USD is now limited and expect the rates to improve gradually over the next 24 months.
∙Covid – we feel the risk of Covid impacting the UK is minimal now but the zero Covid policy in China does impact our office in Shanghai and our supply base so this may have an impact on lead times and supply from there going forwards. At present we are operating well though.
∙Inflation and Interest rates – We feel that inflation will peak soon and then gradually fall. We have been able to pass on price increases to date and see a period of relative stability ahead in pricing. Interest rates do not impact our business or our customers hugely as they are still at historically very low levels.
∙Turnover - £17,747,842 (2021 - £15,069,193)
∙Gross Profit - £6,188,689 (2021 - £5,265,214)
∙Profit Before Tax - £1,265,926 (2021 - £1,715,459)
There are no non-financial key performance indicators that are deemed necessary for understanding the performance of the group.
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2022
The directors present their report and the financial statements for the year ended 31 March 2022.
The directors who served during the year were:
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 profit for the year, after taxation, amounted to £1,118,261 (2021 - £1,293,057).
The total distribution of dividends for the year ended 31 March 2022 was £487,145 (2021 - £1,251,616).
The Company has chosen in accordance with section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 to set out within the Company's Strategic Report the Company's Strategic Report Information Required by Schedule 7 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulation 2008. This includes information that would have been included in the business review and details of principal risks and uncertainties.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
There have been no significant events affecting the Group since the year end.
Under section 487(2) of the Companies Act 2006, Menzies LLP were appointed on the 16 September 2021 and will be deemed to have been reappointed as auditors 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.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WINE BOX COMPANY LTD
We have audited the financial statements of Wine Box Company Ltd (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 March 2022, which comprise the Group Statement of income and retained earnings, the Group and Company Statements of financial position, 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).
We were not appointed as the Group's auditors at the year-ended 31 March 2021, and thus we did not observe the counting of physical inventories at the end of the previous year. We were unable to satisfy ourselves by alternative means concerning the inventory quantities held at 31 March 2021, which are included in the balance sheet at £1,977,759, by using other audit procedures.
Consequently we were unable to determine whether any adjustment to this amount was necessary. We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion on the financial statements.
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.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WINE BOX COMPANY LTD (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning the inventory quantities of £1,977,759 held at 31 March 2021. We have concluded that where the other information refers to the inventory balance or related balances such as cost of sales, it may be materially misstated for the same reason.
Except for the possible effects of the matter described in the basis for qualified opinion section of our report, 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 year 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.
Except for the matter described in the basis for qualified opinion section of our report, 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.
Arising solely from the limitation on the scope of our work relating to inventory, referred to above:
∙we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and
∙we were unable to determine whether adequate accounting records have been kept
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:
∙returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors’ remuneration specified by law are not made
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WINE BOX COMPANY LTD (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
The Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation. We determined that the following laws and regulations were most significant including:
∙The Companies Act 2006;
∙Financial Reporting Standard 102;
∙UK employment legislation;
∙UK health and safety legislation; and
∙General Data Protection Regulations
We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
∙We understood how the Company are complying with those legal and regulatory frameworks by making inquiries to management and those responsible for legal and compliance procedures.
∙The engagement partner assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The assessment did not identify any issues in this area.
∙We assessed the susceptibility of the Company's financial statements to material misstatement, including how fraud might occur. Audit procedures performed by the engagement team included:
°Identifying and assessing the design effectiveness of controls that management has in place to prevent and detect fraud;
°Understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process;
°Challenging assumptions and judgments made by management in its significant accounting estimates; and
°Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations.
As a result of the above procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas:
∙Management override of controls to manipulate results;
∙Posting of journals to the accounting software which are of a non-routine nature in terms of timing and amount; and
∙Timing of revenue recognition.
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. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WINE BOX COMPANY LTD (CONTINUED)
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditor
1st Floor
Midas House
62 Goldsworth Road
Surrey
GU21 6LQ
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CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 MARCH 2022
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 34 form part of these financial statements.
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COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 16 to 34 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022
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COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022
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CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2022
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CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 MARCH 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
Wine Box Company Ltd is a private company limited by shares, registered in England and Wales. The address of its registered office and principal place of business is disclosed on the company information page.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of income and retained earnings in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of income and retained earnings from the date on which control is obtained. They are deconsolidated from the date control ceases.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
Grants of a revenue nature are recognised in the Consolidated statement of income and retained earnings in the same period as the related expenditure.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
2.Accounting policies (continued)
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.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
2.Accounting policies (continued)
The directors do not consider there to be any judgements or estimation uncertainty which materially impact these financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
Analysis of turnover by country of destination:
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
There were no factors that may affect future tax charges.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
Page 25
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15.Tangible fixed assets (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
Page 28
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
Page 29
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
Page 30
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
Page 31
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
Capital redemption reserve
Foreign exchange reserve
Profit and loss account
Page 32
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
A number of prior year adjustments have arisen that impact the retained earnings brought forward.
The first is an adjustment arising within the Statement of Changes in Equity and the Statement of Financial Position, it relates to the retrospective recognition of a wholly owned subsidiary that upon incorporation in 2011 had been expensesd to the profit & loss account. The impact is an increase of £100,000 to both investments and profit and loss reserves brought forward. The second prior year adjustment is to recognise the goods in transit held as at the previous year end, the recognition increased the closing stock and reduced other debtors as at 31 March 2021 by £365,432. The third prior year adjustment was made to recognise the financial instruments held as at the prior year end, the amount of £715,812 was held in the form of forward contracts and is included within both financial assets and liabilities. The fourth prior year adjustment arose in relation to the classification of undeposited funds, the reclassification was a reduction to cash at bank and an increase to other debtors of £76,998. The fifth prior year adjustment was the removal of duplicated counted stock within the financial system. The impact of this was a reduction to the stock held as at 31 March 2021 of £461,887, with profit and loss reserves reducing by the same amount. The overall impact to the profit and loss reserves brought forward is a reduction of £361,887.
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. Contributions totalling £12,856 (2021 - £8,221) were payable to the fund at the reporting date and are included in creditors.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
There is no ultimate beneficiary or controlling party of the group. The group is controlled by the Directors jointly.
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