CHRISTOPHER_WARD_(LONDON) - Accounts

The directors present the strategic report for the year ended 31 March 2021.

Business review

In what was a difficult COVID year the business achieved an excellent sale performance with total sales being 25% up year on year with the Christopher Ward brand being up by 29%. This against a backdrop where the global watch market was down 30%.

Sales were up 39% in the UK and 22% up internationally.

Our third-party business in Switzerland was 6% down on the year as the business is much more dependent on distribution through physical stores.

The overall gross profit for the year was down £265k despite the sales growth above. This is principally due to an increased investment in marketing of £1,147k, the costs of £502k incurred due to the weakness of Sterling against our major trading currencies, principally the Swiss Franc.

Outside of these areas our margin increased by 0.4% points.

Our administrative costs increased by £518k. £203k of which represents an accrual for a charity donation to the Blue Marine Foundation, which was paid after the year end. The other increase of £315k were attributable to our continued investment in our business capability along with extra costs incurred through moving our website on to another platform.

As a result of the above our Adjusted EBITDA loss increased by £783k to £1,106k. After exceptional items our EBITDA loss increased by £187k to £1,223k.

Exceptional items of £116k related principally to dual running costs as we transitioned between website platforms and regulatory requirements.

Capital expenditure of £617k relates to our continued investment in our systems and business infrastructure to support future growth. With the major focus being on the launch of our new website, on a completely different platform, in late June 2020.

It is pleasing to note our continued focus on reducing the working capital deployed within the group is starting to yield benefits with a reduction of £659k principally due to reduction in the stock held of £742k.

Funding

As at the balance sheet date the Net Cash position of the group (defined as cash less bank loans and overdrafts) amounted to £246k.

Subsequent to the year end on 30th September 2021 the founders introduced £750k of further cash into the business by way of 2021 Founders Loan Notes.

If this had been introduced into the business on 31st March 2021 the Net cash position of the group would have amounted to £996k. In addition, as is explained in note 20, the total banking facilities available in the UK and Switzerland amounted to £1,561k.

As a result of the above, the total liquidity available to the group amounts to £2,557k.

In addition, also on 30th September 2021, the company and its shareholders together with BGF and Founders’ Loan Note holders agreed to a variation to the terms applying to BGF and Founders Loan notes as follows:

• All interest accrued to 30th September 2021 is now to be repaid on a half yearly basis commencing June 2025. This interest will be interest free until final repayment.

• The interest rate applicable to these Loan notes will, from 1st October 2021, be 6% per annum instead of 9% per annum. Payable quarterly with the first payment due on 31st December 2021.

The directors believe the combination of these actions, together with the continued focus on working capital management, give the group the enhanced liquidity to fund the future growth of the Christopher Ward brand.

COVID-19 pandemic

Like most businesses we are impacted by the current COVID-19 pandemic. Whilst the pandemic places further uncertainty in the evaluation of forward business forecasts, this risk is mitigated to a degree with our business being principally internet based as opposed to relying on distribution through physical stores.

To further mitigate the risk we regularly update our business forecasts and scenario planning in order to adjust as necessary our stock buying, our other business costs as well as inform of our cash needs.

We consistently apply COVID-19 safe policies in line with the local laws of the UK and Switzerland to ensure our business operations are protected as far as possible.

Economic risk

In addition to the COVID-19 risks outlined above the group is exposed to developments in the overall retail market, the watch market in general together with the provision of the components required to produce the watches. These risks are constantly reviewed by the directors.

With the exception of watches which are sold directly to customers under the Christopher Ward brand, the group also provides and develops watches for a number of third-party customers. The group has a close working relationship with its customers and is actively involved in their business development. The amounts owing from these customers are actively managed to ensure amounts are collected within normal payment terms.

Liquidity risk

The company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and invest cash assets safely and profitably. The directors mitigate this risk by focusing on cash management and detailed cash flow forecasting.

Currency risk

The nature of the business is that it is exposed to some degree to currency risk as it principally incurs costs in Sterling, Swiss Francs and US dollars. In addition, it principally sells its products in Sterling, Swiss Francs and US dollars. This potential currency risk is managed by applying sensible currency assumptions to all purchasing decisions, utilising the natural exchange rate hedge that is afforded by operating in different currencies and supplementing this with currency hedging, principally forward exchange contracts.

Going Concern

In view of the Group’s funding position which is covered earlier, the directors have assessed the group’s position in view of the continuing COVID-19 pandemic and its likely impact on the group and are satisfied sufficient liquidity is available to meet its working capital and other capital requirements for the next twelve months.

*This is after excluding cash/bank loans and overdrafts as well as accumulated interest on BGF and Founders Loan Notes. For 2019 the amounts exclude other loans, the then shareholders loans and finance leases.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 March 2021.

The principal activity of the company continued to be that of a holding company for a group of companies engaged in the design, manufacture, supply and retail of watches and associated accessories.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The auditor, Spencer Gardner Dickins Audit LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

The truegroup has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of financial risk management objectives, review of performance and future developments.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

The directors are responsible for preparing the Annual Report and the 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 group and company, 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 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 ;

•     prepare the on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We have audited the financial statements of Christopher Ward (London) Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 March 2021 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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 the parent company's affairs as at 31 March 2021 and of the group's loss for the year 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.

Basis for opinion

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 company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’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

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 and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

•     the information given in the strategic report and the directors' eport for the financial year for which the financial statements are prepared is consistent with the financial statements; and

•     the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.

We have nothing to report in respect of the following matters where 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.

As explained more fully in the directors' responsibilities statement, 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 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 company or to cease operations, or have no realistic alternative but to do so.

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 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:

- Enquiring of management and those charged with governance around actual and potential litigation and claims;

- Enquiring of entity staff to identify any instances of non-compliance with laws and regulations;

- Reviewing minutes of meetings of those charged with governance;

- Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.

- Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias.

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 is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Other matters which we are required to address

In the previous accounting period, the directors of the group took advantage of audit exemption under s477 of the Companies Act. Therefore the prior period financial statements were not subject to audit.

Use of our 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 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.

The profit and loss account has been prepared on the basis that all operations are continuing operations.

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £426,779 (2020 - £649,405 loss).

Christopher Ward (London) Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 1 Park Street, Maidenhead, Berkshire, SL6 1SL.

The group consists of Christopher Ward (London) Holdings Limited and all of its subsidiaries.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:

• Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

The consolidated financial statements incorporate those of Christopher Ward (London) Holdings Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.

All financial statements are made up to 31 March 2021 except for Christopher Ward London Limited which is made up to the last Friday of the financial year being 26 March 2021 (2020: 27 March 2020). Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

At the time of approving the financial statements, the directors have assessed the group's situation regarding the COVID-19 pandemic and the likely impact on the group. The financial statements have been prepared on the going concern basis as the directors have undertaken a review of the future financing requirements for on-going operations of the group, and are satisfied that sufficient cash facilities are secured to meet its working capital requirements for at least 12 months from the date of signing of these financial statements.

Turnover is recognised at the fair value of the consideration received or receivable for goods provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods, allowing for the subsequent dispatch of goods in the week following the year end for orders placed prior to that date), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Positive goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date if the fair value can be measured reliably.

Assets are included in intangible fixed assets as the cost is incurred. Applicable amortisation is provided from the date of use.

Amortisation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

Tangible fixed assets are initially measured at cost, net of depreciation and any impairment losses.

Assets are included in tangible fixed assets as the cost is incurred. Applicable depreciation is provided from the date of use.

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, other direct costs that have been incurred in bringing the stocks to their present location and condition.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the profit and loss account in other administrative expenses.

Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Rentals payable under operating leases, including any lease incentives received, are charged to income on a straight line basis over the term of the relevant lease.

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.

Assets and liabilities of foreign subsidiaries denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies reported in the profit and loss account are translated at the average exchange rates for the period. All differences are taken to the statement of changes in equity.

In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

The group has entered into commercial leases as a lessee in order to obtain use of property, plant and equipment and motor vehicles. The classification of such leases as operating or finance lease requires the company to determine, based on an evaluation of the terms and conditions of the arrangements, whether it retains or acquires the significant risks and rewards of ownership of these assets and accordingly whether the lease requires an asset and liability to be recognised in the balance sheet.

Judgements are required on estimating the useful economic lives of tangible fixed assets. Where an indication of impairment is identified the estimation of recoverable value requires estimation.

In recognising stock provisions in the financial statements management estimate the costs recoverable on the slow moving, old or damaged stock items. These estimates are based on expected net realisable value and estimated using business knowledge and professional judgement.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

The company includes a 60:60 guarantee with all sales which includes the ability for customers to return an item within 60 days of purchase. As a result, it is necessary to consider the likely amount of returns expected and the associated provisioning required. When calculating the provision, management considers the level of sales made in the past 60 days and the historic trend of returns.

In recognising accrued costs in the financial statements management estimate the costs directly attributable to the financial year. These estimates are based on the expected costs, business knowledge and professional judgement.

In recognising prepaid costs in the financial statements management estimate the costs directly attributable to the next financial year. These estimates are based on the actual costs to date, business knowledge and professional judgement.

An analysis of the group's turnover is as follows:

Management has assessed the administrative expenses and categorised the above costs as exceptional in the year. These include irregular professional support, regulatory requirements, dual running costs, contractual termination costs and one off investment costs.

The average monthly number of persons (including directors) employed by the group and company during the year was:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2020 - 1).

Investment income includes the following:

The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:

In the opinion of the directors, the aggregate value of the company's investment in subsidiary undertakings is not less than the amount included in the balance sheet.

Registered office addresses (all UK unless otherwise indicated):

Registered office addresses (all UK unless otherwise indicated):

Unsecured loan notes comprise of investor loan notes of £2,800,000 (2020: £2,800,000) which carry an interest rate of 9% per annum. The interest is payable in quarterly instalments from September 2021. The loan notes are repayable in quarterly instalments from June 2025. Christopher Ward London Limited has provided a full guarantee for the liability of the loan notes and related interest. Christopher Ward SA has provided a guarantee which is limited to the amount of unrestricted equity capital surplus available for distribution.

Within unsecured loan notes are founder loan notes of £995,000 (2020: £995.000) which carry an interest rate of 9% per annum. The interest is payable in quarterly instalments from September 2021. The loan notes are repayable in quarterly instalments from June 2025.

Within bank loans is £385,713 (2020: £nil) which relates to a COVID19 loan secured by the Swiss government. This loan is interest free and is repayable in bi-annual instalments £32,144 (CHF41,668) from 31 March 2022 with the final payment being due September 2027.

Included within bank loans in 2020 was a total of £23,906 in respect of a term loan which carried interest at 3% above the Bank of England base rate per annum. In 2021 this loan was renewed under a new facility which carries interest at 3% above the Bank of England base per annum. The loan balance of £18,680 is repayable in full by 27 June 2021.

Included within bank overdrafts is a total of £77,144 (2020: £367,094) relating to fixed advances from the bank which carry interest at a rate of 3.5% per annum and are secured over certain assets of the group.

Included within bank overdrafts is a total of £378,142 (2020: £185,643) which carried interest at 2.95% above the Bank's base rate per annum and was secured over certain of the assets of the group.

In 2020, shareholders loans of £45,887 carried interest at 3%.

Banking facilities

As at 31 March 2021, the group had access to the following banking facilities:

Bank overdraft of £875,000 which incurs interest at a rate of 2.5% plus base rate per annum and is repayable on demand. As at the year end, £378,142 (2020: £185,643) of this overdraft facility was drawn.

Commercial credit card facility of £300,000 (2020: £300,000). As at the year end, £66,148 (2020: £150,870) of this facility was being used.

Swiss banking facilities of £385,713 (CHF500,000) which incurs interest at a rate of 3.5% per annum and is repayable on demand. As at the year end, £77,144 (CHF100,000) (2020: £158,518 (CHF190,000)) of these facilities were drawn.

Deferred tax assets and liabilities are offset where the group or company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Defined contribution pension schemes are operated in the UK and in Switzerland for all qualifying employees. The assets of the schemes are held separately from the group in independently administered funds.

All classes of shares rank pari passu and entitle the holder to attend and vote at any meeting of the company, to participate in the profits of the company that are available for distribution and to a return of capital on winding up to the extent that all other debts are settled.

On the 30 July 2020 75,000 deferred shares of £1 each were issued for cash at par.

On 25 July 2019, the company repurchased 25 E ordinary shares for cash at par and subsequently cancelled these shares.

On 25 July 2019, 550 A ordinary shares of £1 each were issued for cash at a premium of £6,271.73 per share.

On 25 July 2019, the following shares were reclassified as Ordinary £1 shares:

50 A ordinary shares of £1 each

450 B ordinary shares of £1 each

450 C ordinary shares of £1 each

500 D ordinary shares of £1 each

On 23 December 2019 1,450 Ordinary £1 shares were subdivided into 145,000 1p ordinary shares.

On 23 December 2019 550 A ordinary £1 shares were subdivided into 55,000 1p A ordinary shares.

The share premium account represents the amount received in excess of nominal value for shares purchased in the group.

Profit and loss reserves represent the retained earnings of the group since its inception.

The legal reserve is held by Christopher Ward SA and relates to the mandatory retainment of part of the firm's earnings. This reserve is not available for distribution.

Company only

Christopher Ward (London) Holdings Limited is part of a group guarantor scheme regarding the commercial loans with Barclays. At the reporting date, Christopher Ward (London) Holdings Limited has fixed and floating charges over its assets to the value of £84,828 (2020: £169,488).

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Amounts contracted for but not provided in the financial statements:

Change to Business Financing

On 30 September 2021, the company, and its shareholders together with the BGF and Founders’ Loan Note holders agreed to a variation to the terms applying to the BGF and Founders Loan notes as follows:

• All interest accrued to 30 September 2021 is now to be repaid on a half yearly basis commencing June 2025. This interest will be interest free until final repayment.

• The interest rate applicable to these Loan notes will, from 01 October 2021, be 6% per annum. Payable quarterly with the first payment due on 31 December 2021.

The Founders introduced further cash of £750k into the business by way of 2021 Founders Loan Notes. These loan notes carry an interest rate of 6% per annum. Payable quarterly with the first payment due on 31 December 2021.

Had these changes been in place at the year-end date the balance sheets of the company and the group would have been as follows:

Other events after the reporting date

On 4 May, 2021 21,000 deferred shares of £1 each were issued for cash at par.

During the year the group entered into the following transactions with related parties:

Finance costs paid to key management personnel are for the provision of personal guarantees.

The following amounts were outstanding at the reporting end date:

Amounts due to shareholders represents unsecured investor loan notes of £2,800,000 (2020: £2,800,000) which carries an interest rate of 9% per annum. Rolled up interest of £452,378 (2020: £172,142) is payable in monthly instalments from September 2021. The loan notes are repayable in monthly instalments from June 2025.

Christopher Ward London Limited has provided a full guarantee for the liability of the loan notes and related interest. Christopher Ward SA has provided a guarantee which is limited to the amount of unrestricted equity capital surplus available for distribution.

Amounts due to shareholders also includes unsecured founder loan notes of £995,000 (2020: £995,000) which carries an interest rate of 9% per annum. Rolled up interest of £160,756 (2020: £61,173) is payable in monthly instalments from September 2021. The loan notes are repayable in monthly instalments from June 2025.

In 2020, the remaining balance in Group of £45,887 represented a loan carrying an interest rate of 3% per annum that was repayable on demand.

The directors have provided personal guarantees over bank facilities limited to £1,200,000 (2020: £1,358,518).

EBITDA noted above of £1,222,560 (2020: £1,035,609) includes exceptional items of £116,360 (2020: £712,498).