ACCOUNTS - Final Accounts preparation
ACCOUNTS - Final Accounts preparation
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FOR THE PERIOD ENDED 31 DECEMBER 2021
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RUROC GLOBAL HOLDINGS LIMITED
COMPANY INFORMATION
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RUROC GLOBAL HOLDINGS LIMITED
CONTENTS
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RUROC GLOBAL HOLDINGS LIMITED
GROUP STRATEGIC REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2021
The Directors present their Strategic Report for the period ended 31 December 2021.
The principal activity of the Group during the period was the design, manufacture and subsequent e-commerce sale of ski & motorcycle helmets and accessories.
The Directors aim to ensure the Group continues to produce sustained growth within its principal activities. It also expects to utilise its strong supply chain, over the forthcoming period, to diversify its product solution. This will further strengthen its service level, enhancing customer loyalty as well as bringing new opportunities for future profitability.
The Directors constantly monitor the risks and uncertainties facing the Group with particular reference to the exposure on exchange rates, liquidity, stocks, interest rates and credit risks. They are confident that there are suitable policies in place and there are no material risks and uncertainties which have not been considered.
The Group uses various financial instruments which include loans, cash and various items, such as trade debtors and trade creditors that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the Group’s operations. The existence of these financial instruments exposes the Group to a number of financial risks, which are described in more detail below. The main risks arising from the Group’s financial instruments are currency risk, interest rate risk, credit risk and liquidity risk. The Directors review and agree policies for managing each of these risks and they are summarised below. Currency Risk The Group has minimal exposure to translation and transaction foreign exchange risk. The global trading profile of the Group means that the majority of its exposure is naturally hedged. Liquidity Risk The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Short term flexibility is achieved by utilising related company funds. Interest Rate Risk The Group finances its operations through a mixture of retained profits, related company funds and loans. The Group’s exposure to interest rate fluctuations on its borrowings is managed by actively looking to reduce its working capital requirement. Credit Risk The Group’s principal financial assets are stock and trade debtors. There is minimal risk associated to trade debtors due to the Group’s direct to consumer business model. All payments are made at the point of order.
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RUROC GLOBAL HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2021
The Directors use a number of measures to monitor and benchmark the performance of the Group and these are continually monitored throughout the period.
The Group’s main performance indicators have been identified as turnover, gross profit margin and operating profit margin. The COVID-19 pandemic continued to affect the Group's performance for the period. The inability to travel had a direct impact on production volumes which led to customer delays. This in turn forced the Group to transport its good via air freight at a significant cost variance which went some way to mitigate supply chain issues, although the level of returns still increased on previous periods. Despite the operational challenges for the period, turnover increased by £1,934,933 (9.4%) for the 8 month period ended 31 December 2021, compared to the year ended 30 April 2021, evidencing significant growth and a strong and loyal customer base. Nonetheless, gross profit decreased by £473,321 at a margin of 12.3% (year ended 30 April 2021: 15.7%) and the operating loss of the Group increased by £3,179,928 to £6,582,460 (year-ended 30 April 2021: £3,402,532). The performance for the year has been heavily impacted by exceptional costs of £2,625,200 (year ended 30 April 2021: £Nil) relating solely to an unsuccessful investment in China. Cash outflows to the China operation in the form of working capital and capital investment funding did not yield the expected tangible benefits and, as the relationship with the third-party connections in China broke down, it became apparent that no future inflows would follow. Hence, the Directors believe the balance owed to the Group from this investment to be unrecoverable. Although the pandemic has not restricted the Group’s ability to generate orders, the significant strain on the supply chain did significantly impact on the ability for the Group to trade profitably. Looking ahead to the year ending 31 December 2022, the Group will record an operating profit, whilst growing turnover and gross profit. During FY22 the trade of Enginehawk ceased, to allow the business to better focus on strengthening our position within the head protection industry. This strategic decision has already proven to be successful, with the Group recording six-monthly profit in the period thereafter. Much of this success is due to creating a strong and reliable supply chain, realigned focus on streamlining overheads and ensuring marketing is focused on the core markets in which the Group operates and has a loyal and growing customer base. Looking ahead to FY23, forecasts show the Group will build on a strong second half of FY22, where much of the rebuilding work has already been achieved, and report strong profit growth and cash generation. As a result, cash can be utilised in clearing down significant portions of the debts which have built from previous loss-making periods. There is a renewal optimism throughout the entire Group and the Directors are confident of being able to deliver a highly successful future for the Group.
Going concern is discussed in more detail within the accounting policies. Material uncertainties exist regarding the ongoing support from HSBC, tax related creditors, trade, and other creditors. Specifically, the Directors acknowledge the need to formalise payment plans with key suppliers with a view to bringing the accounts up to date.
After considering the forecasts, sensitivities and mitigating actions available and having given due regard to the risks, uncertainties and continued challenges in the macroenvironment environment, the Directors note that until those discussions conclude on the acceptance of supportive measures as requested from suppliers, there exists a material uncertainty. This may cast doubt over the Group’s ability to continue as a going concern until said funding is secured and therefore, the Group may not be able to realise its assets and discharge its liabilities in the normal course of business. The directors however believe that ongoing support will be provided by HSBC and that Time To Pay or payment plan arrangements can be agreed with key suppliers. The financial statements have, therefore, been prepared on a going concern basis, whilst noting the material uncertainty above.
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RUROC GLOBAL HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2021
This report was approved by the board on 23 December 2022 and signed on its behalf.
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RUROC GLOBAL HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2021
The Directors present their report and the financial statements for the 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;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙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 loss for the period, after taxation, amounted to £6,815,785 (2021: loss £3,515,700).
No dividends were declared or paid during the period (year ended 30 April 2021: £Nil).
The Directors who served during the period were:
FY23 trading has been extremely strong despite continued tough trading conditions as a result of macroeconomic events. The group financial results for the year ended 30 December 2022 will again show a significant increase in revenue and a return to profitability.
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RUROC GLOBAL HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2021
Subsequent to the year end there has been further loan notes entered into with BGF Nominees Limited for which will be accounted for in the next financial year. Additional charges have been raised as security of the secured liabilities by way of fixed charge.
Subsequent to the year end, the repayments of the bank loan offered by HSBC were deferred for 4 months. As at 26 May 2022, a new wholly owned subsidary was established called Ruroc Sportsware (Dongguan) Limited in order to aid the growth of the group and help achieve strategic objectives. As at 24 June 2022, one of the Group's subsidiaries Enginehawk Limited ceased to trade, a subsequent impairment review has been performed to ascertain the carrying value of the investment is not misstated.
The auditors, Bishop Fleming LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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RUROC GLOBAL HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF RUROC GLOBAL HOLDINGS LIMITED
We have audited the financial statements of Ruroc Global Holdings Limited (the "parent Company") and its subsidiaries (the "Group") for the period ended 31 December 2021, which comprise the Group Statement of Comprehensive Income, the Group and Company Statements of Financial Position, the Group Statement of Cash Flows, the Group and Company Statement of Changes in Equity, the Group analysis of net debt and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
The Group’s loss for the period includes an exceptional cost of £2,625,200, incurred by the main trading subsidiary Ruroc Limited, which is disclosed in note 13. This relates to the costs and associated write down of the Group's aborted Chinese operations in 2021. We have been unable to obtain sufficient audit evidence to support this cost and write down of £2,625,200 and whether it is properly disclosed in the financial statements. Consequently we were unable to determine whether any adjustment to this amount, with any consequential adjustments to the profit and loss account, 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.
We draw attention to note 2.3 in the financial statements, which indicates that the group to which the company belongs, Ruroc Global Holdings Limited ("Group" or "The Group") has a consolidated Balance Sheet position of Net Liabilities totalling £6,755,226 as at 31 December 2021. The Group has made a loss after tax of £6,819,940 in the period to 31 December 2021. The materiality uncertainty in relation to going concern centres around the Group's ability to recover to profitability and generate operating cashflows in order to meet its significant creditor obligations. As stated in note 2.3, these events or conditions, along with the other matters as set forth in note 2.3, indicate that a material uncertainty exists that may cast significant doubt on the Group's and parent Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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. Our evaluation of the Directors' assessment of the Group and parent Company's ability to continue to adopt the going concern basis of accounting included reviewing forecast performance, including profit and loss, cashflow and balance sheet projections, identifying the key drivers for future performance and key inputs into the projections, and performing a reasonableness check on these assumptions. We performed a review of board minutes, and ensured post balance sheet events are up to date. We have had conversations with key stakeholders including the bank and investors to ensure our understanding of the factors affecting the Group were sufficient.
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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RUROC GLOBAL HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF RUROC GLOBAL HOLDINGS LIMITED (CONTINUED)
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. Responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' Report thereon. The Directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
As described in the basis for qualified opinion section of our report, we have been unable to obtain sufficient audit evidence to support the exceptional cost relating to the Group's aborted Chinese operations in 2021 of £2,625,200 and whether it is properly disclosed in the financial statements, along with any potential consequential adjustment to the profit and loss account. Where the other information refers to the loss for the period or this matter 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 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.
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RUROC GLOBAL HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF RUROC GLOBAL HOLDINGS LIMITED (CONTINUED)
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 the exceptional cost relating to the Group’s aborted Chinese operations in 2021, together with any consequential impact on the profit and loss account, 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 for the group.
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 only, 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.
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RUROC GLOBAL HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF RUROC GLOBAL HOLDINGS LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙We have considered the nature of the industry and sector, control environment and business
performance;
∙We have considered the results of our enquiries of management and the board about their own identification and assessment of the risks of irregularities within the entity
∙We have considered any matters we identified having obtained and reviewed the company’s documentation of their policies and procedures relating to:
∙identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
∙detecting and responding to the risks of fraud and whether they have knowledge of any actual,
suspected or alleged fraud;
∙the internal controls established to mitigate risks of fraud or non-compliance with laws and
regulations; and
∙We have considered the matters discussed among the audit engagement team regarding how and where
fraud might occur in the financial statements and any potential indicators of fraud
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud, which included incorrect recognition of revenue and management override of controls using manual journal entries, and these were identified as the greatest potential area for fraud. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act, FRS 102 and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company’s ability to operate or to avoid a material penalty. These included occupational health and safety regulations, and employment legislation.
Our procedures to respond to risks identified included the following:
∙reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
∙reviewing the financial statement disclosures and testing to supporting documentation to assess the recognition of revenue;
∙enquiring of management and those charged with governance concerning actual and potential litigation and claims;
∙reviewing the exceptional cost relating to the Group's aborted Chinese operations in 2021 and available information to the extent available: we note this has led to the limitation of scope in our qualified audit opinion;
∙reviewing going concern assertions in detail and consideration of the existence of material uncertainties that
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RUROC GLOBAL HOLDINGS LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF RUROC GLOBAL HOLDINGS LIMITED (CONTINUED)
are referred to in the financial statements and audit report;
∙understanding the impact of changes in the management team and finance team during and after the year end;
∙performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
∙in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; and
∙assessing whether the judgements made in making accounting estimates are indicative of a potential bias.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
These procedures were considered at both the parent company and subsidiary level as appropriate.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from an error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditors
1-3 College Yard
WR1 2LB
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RUROC GLOBAL HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 DECEMBER 2021
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RUROC GLOBAL HOLDINGS LIMITED
REGISTERED NUMBER:08997654
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 19 to 43 form part of these financial statements.
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RUROC GLOBAL HOLDINGS LIMITED
REGISTERED NUMBER:08997654
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 19 to 43 form part of these financial statements.
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RUROC GLOBAL HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2021
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RUROC GLOBAL HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 APRIL 2021
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RUROC GLOBAL HOLDINGS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2021
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RUROC GLOBAL HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 DECEMBER 2021
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RUROC GLOBAL HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2021
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE PERIOD ENDED 31 DECEMBER 2021
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
Ruroc Global Holdings Limited is a private Company limited by shares, registered in England and Wales. The Company's registered number is 08997654 and registered office address is Unit 2 Barnett Way, Barnwood, Gloucester, Gloucestershire, GL4 3RT.
The principal activity of the Company during the year continued to be that of a holding company.
2.ACCOUNTING POLICIES
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise 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 following principal accounting policies have been applied:
The consolidated financial statements present the results of the company and its own subsidiaries ("the group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
2.ACCOUNTING POLICIES (continued)
FY21 has been a challenging year for Ruroc on many fronts, each of which has impacted on the Group’s ability to manage cash flow and, as a result, the creditor balances which exist at 31 December 2021 are larger than anticipated. Specifically, the key challenges which have faced the business during the period are as follows:
∙Supply chain challenges within China and the continued impact of the COVID-19 pandemic on global trading, which has resulted in material increases to import costs, negatively impacting on our margin.
∙Delays in stock being received and therefore necessitating the close management of customer relations but ultimately resulting in higher levels of returns.
∙Significant investment in overheads and marketing in anticipation of rapid growth once more. The period to 31 December 2021 has seen an increase in revenue of £1.9m compared to the year to 30 April 2021, despite being four months shorter. This investment has given the Group a strong foothold for future trading performance, as highlighted below on future forecasted before for FY23.
The business has undergone drastic change in personnel during FY22 to bring in the necessary expertise and re-size the departments throughout the business, resulting in significant cost savings. Furthermore, a wholly owned subsidiary has been incorporated in China which has fixed the supply chain difficulties of the past, ensuring stock is received into the business in a timelier fashion, to a higher standard and with improved margin.
During the period ended 31 December 2021 the group incurred a net loss of £6,819,940 (year to 30 April 2021 loss of £3,515,700). At the period end the Group had net liabilities of £6,755,226 (30 April 2021 net assets of £64,714) and net current liabilities of £10,908,972 (30 April 2021: £3,962,101). Since the year end the Group has raised additional funding from its principal investor, BGF Investments LP of £6,250,000. Post year end trading performance has improved and the unaudited management accounts to 30 November 2022 show Earnings Before Depreciation, Interest and Tax of £353,086.
The Directors have prepared budgets and cash flow forecasts for a period of at least 12 months following the date of approval of the financial statements. These forecasts assume that the current improved trading performance of the Group continues. The Directors are of the opinion that the Group will continue in operational existence for the foreseeable future and continue to adopt the going concern basis in preparing financial statements. This opinion is based on the Group’s current trading levels, support to date from BGF Investments LP and other creditors, including HSBC. However, in making this assessment the directors have made a number of significant assumptions. These include:
∙Ongoing support from HSBC:
°The facilities with HSBC include a term loan facility of £1,777,777 and a trade finance facility of £3,961,585. Since the balance sheet date the company has agreed deferral of repayments of the term loan facility of £444,444. The bank has been supportive of the business to date. The Directors assume this support will continue for at least 12 months from signing these financial statements, and so the Directors do not expect these banking facilities to be withdrawn within the 12 months from approving these financial statements. The balance on the term loan facility at 30 November 2022 was £1,050,683 and the balance on the trade finance facility at 30 November 2022 was £3,170,486 per the unaudited management accounts, showing a decrease in HSBC liabilites post year end.
°the trade finance facility is due for renewal in May 2023. Whilst the Bank remains supportive, no formal extension has been agreed at the date of signing these financial statements.
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
2.ACCOUNTING POLICIES (continued)
∙Ongoing support from tax- and trade-related creditors
°The Group has arrears of PAYE of approximately £1.3m at the date of signing these financial statements. The Group is in the process of agreeing a Time To Pay arrangement with HMRC but no agreement has been reached at the date of signing these financial statements.
°The Group has sales tax arrears of approximately £1.9m with overseas tax authorities. At the date of signing these financial statements the Group is in the process of agreeing payment plans for these amounts but no agreement has been reached at the date of signing these financial statements.
°The Group continues to manage trade creditor and other creditor balances carefully with a view to bringing accounts up to date, but is dependent on supplier goodwill in certain cases.
The Directors’ assumptions and outlook assumes that the Group’s cost savings, creditor management and bank funding assumptions are achieved. The financial statements do not reflect the adjustments that would be necessary should the ability of the Group to trade be jeopardised due to a material issue with any one of these assumptions not being achieved. As such there is a material uncertainty related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.
The Directors are actively monitoring the above matters and are in regular dialogue with relevant counterparties and funders as the Group’s financial position improves. However the Directors recognise that the above assumptions represent material uncertainties in respect of the preparation of the financial statements on a going concern basis.
Functional and presentation currency
Transactions and balances
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
2.ACCOUNTING POLICIES (continued)
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. Research and development tax credits are treated as grant income and are recognised within other operating income in the Consolidated Statement of Comprehensive Income. Grants of a revenue nature are recognised in the Consolidated Statement of Comprehensive Income in the same period as the related expenditure.
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
2.ACCOUNTING POLICIES (continued)
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Group keeping the scheme open or the employee maintaining any contributions required by the scheme). Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period. Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
2.ACCOUNTING POLICIES (continued)
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
2.ACCOUNTING POLICIES (continued)
GOODWILL
OTHER INTANGIBLE ASSETS
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
2.ACCOUNTING POLICIES (continued)
At each reporting 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. Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
The company 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 and loans to related parties.
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period of the revision and future periods if the revision affects both current and future periods. The following are the critical judgments and key sources of estimation uncertainty that the directors have made in the process of applying the group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements: Tangible fixed assets Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values. Obsolete stock provision Stock provisions are recognised in cases where the expected net realisable value of inventory is lower than its carrying amount, including provisions for obsolete, slow moving stock and waste. All inventory provisioning requires a level of judgment and is based on a number of factors including current and expected sales performance and stock cover. Dilapidations Provisions have been made for dilapidations. These provisions are estimates and the actual costs and timing of future cash flows are dependent on future events and market conditions. Management have estimated the future costs based on historic experience of similar costs incurred on property leases in the past. Any difference between expectations and the actual future liability will be accounted for in the period when such determination is made. Capitalisation and amortisation of intangible fixed assets Key judgment is applied when considering whether to capitalise development expenditure in order to recognise internally generated intangible assets such as product development. The intangibles are subsequently measured under the cost model and all considered to have a finite useful life and are subsequently amortised over their useful economic life. Impairment of intangible assets Impairment of intangible assets is considered to be a critical accounting judgement and any impairment is based on whether current or future events suggest that their carrying value is impaired. Where there is any indication of impairment of any specific intangible assets such as development costs and computer software, the company/group undertake impairment reviews to ensure the recoverable amount is the higher of realisable value less costs to sell and value in use. Impairment of intercompany debt The impairment of intercompany debt is considered to be a key judgement by the group and company. Management actively assess the recoverability of such debts to ensure amounts are recoverable within individual subsidiaries. Where there are indicators of impairment an impairment review is undertaken by preparing discounted cashflows and assessing future events which may result in the recovery of intercompany debt. Where debt is deemed to be irrecoverable a subsequent impairment provision would be charged to the accounts.
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
3.JUDGEMENTS IN APPLYING ACCOUNTING POLICIES (CONTINUED)
The assessment of the going concern status of the company is considered to be a key judgement due to the element of uncertainty in regards to future trading conditions, trading performance, cashflows, funding and creditor management. Management regularly prepare, monitor and revise weekly and monthly forecasts and engage in regular dialogue with funders and investors to ensure any risks are identified and addressed. The key judgments and considerations made by management in regards to going concern are detailed further in the specific going concern accounting policy.
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
Page 29
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
Page 30
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
Page 31
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
12.TAXATION (CONTINUED)
The group has tax carry forward tax losses of £5,812,420 (30th April 2021: £8,162,338) available to utilise against future taxable profits.
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
Page 33
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
Page 34
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
Page 35
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
Page 36
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
Loan 1 - £27,777 per month up to February 2025.
Loan 2 - £83,333 per month up to February 2023. Both loans have an interest charge of the LIBOR rate plus 3.75%.
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
Page 38
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
Page 39
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
Page 40
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
Share premium account
Other reserves
Profit and loss account
Page 41
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
A prior year adjustment of £15k has been made in the consolidated accounts in relation to an additonal amortisation charge in the subsidary Ruroc IP Holdings Limited.
The total amount of guarantees not included in the Balance Sheet is £
2021: £2,797,936). The Company has provided a multilateral guarantee in favour of HSBC Bank plc covering the liabilities of Enginehawk Limited, Ruroc IP Holdings Limited and Ruroc Limited.
The group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £72,323 (30 April 2021: £70,490). Contributions totalling £
Page 42
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RUROC GLOBAL HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2021
Subsequent to the year end, the repayments of the bank loan offered by HSBC were deferred for 4 months. As at 26 May 2022, a new wholly owned subsidary was established called Ruroc Sportsware (Dongguan) Limited in order to aid the growth of the group and help achieve strategic objectives. As at 24 June 2022, one of the Group's subsidiaries Enginehawk Limited ceased to trade, a subsequent impairment review has been performed to ascertain the carrying value of the investment is not misstated.
By virtue of the shareholding, there is no ultimate controlling party.
Page 43
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