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Budget Greeting Cards Limited
Registered number: 01798438
Annual report and
financial statements
For the year ended 31 December 2021
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BUDGET GREETING CARDS LIMITED
COMPANY INFORMATION
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MJ Bradbury (appointed 18 May 2022)
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K Makofka (appointed 19 January 2023)
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Chartered Accountants & Statutory Auditor
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BUDGET GREETING CARDS LIMITED
CONTENTS
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Independent Auditor's Report
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Statement of Comprehensive Income
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Statement of Financial Position
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Statement of Changes in Equity
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Notes to the Financial Statements
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BUDGET GREETING CARDS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
The directors present their strategic report for Budget Greeting Cards Limited ("the Company") for the year ended 31 December 2021.
The principal activity of the Company during the year under review continued to be the wholesaling of greeting cards and allied products. The Group operates from eight locations across England and Northern Ireland, and online.
2021 was an excellent year for the Company despite the challenges that Brexit and the Covid-19 pandemic continued to offer the world. The ecommerce channel continued to grow in line with expectations. There was a focus on improving operational procedures alongside planning strategic developments which will help the Company to continue to perform strongly.
Principal risks and uncertainties
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A significant amount of the Company’s products are sourced from the Far East and are purchased in US dollars. The risk of volatility in currency fluctuation will continue to impact on the Company’s performance. In addition, significant increases in the costs of shipping also put pressure on margin, and pricing has had to be reviewed as a consequence.
The Company’s customers are primarily retail businesses, both on the high street and online. Any challenges to this sector, including economic pressures caused by the cost-of-living crisis and the conflict in Ukraine, will have a knock-on effect for the Company.
Financial key performance indicators
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Management monitor sales, margin and cash on an a regular basis.
This report was approved by the board on 11 April 2023 and signed on its behalf.
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BUDGET GREETING CARDS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
The directors present their report and the financial statements for the year ended 31 December 2021.
Directors' responsibilities statement
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The directors are responsible for preparing the Strategic Report, the Directors' 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 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 of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company 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 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 hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £2,030,655 (2020 - £1,126,335).
The directors do not propose a dividend for the year ended 31 December 2021.
The directors who served during the year and to the date of this report were:
PD Lavery (resigned 5 January 2023)
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GJ Chadwick (appointed 16 September 2020, resigned 31 August 2021)
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A Dunn (appointed 18 May 2022, resigned 2 December 2022)
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AG Silcock (appointed 1 April 2021, resigned 17 February 2022)
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MJ Bradbury (appointed 18 May 2022)
K Makofka (appointed 19 January 2023)
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BUDGET GREETING CARDS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
The financial statements have been prepared on a going concern basis. The directors have forecast the likely cash requirements of the Company for the period to 30 April 2024 and are satisfied that they will have access to enough liquidity based on current internal forecasts and projections. The directors have also received confirmation of ongoing support by way of an unconditional letter of financial support from the parent undertaking for a period to 30 April 2024.
The directors expect that, based on trading expectations through 30 April 2024, alongside current economic factors and other potential downsides, the Company will have sufficient funds, through its operations based on the forecast through 30 April 2024 with funding available from its parent company, BGC Bidco Limited, to meet its liabilities as they fall due for that period if required.
Those expectations are dependent on BGC Bidco Limited providing additional financial support during that period. BGC Bidco Limited has indicated its intention to continue to make available such funds as are needed by the company for the period covered by the budgets and forecasts.
The directors are confident that the company will have sufficient funds to continue to meet its liabilities as they fall due for a period to 30 April 2024 and therefore have prepared the financial statements on a going concern basis.
Guarantees and other financial commitments
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The Company provides financial guarantees to the Group`s lender in respect of the loan facilities held by BGC Bidco Limited (the “Group”). The Company guarantees the Lender's punctual performance of the Group`s obligations under the agreement and undertakes with the Lender that whenever the Group does not pay any amount when due in connection with the existing loan agreements as if a principal obligor.
The maximum exposure to credit risk amounts to £5,025,000 (2020: £5,925,000) representing the outstanding banking facilities of the Group as at the end of the reporting period.
The total credit risk on guarantees as at 31 December 2021 and 31 December 2020:
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Guarantee provided by the Company to secure the loan facilities for the Group
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In assessing the credit risk, the Directors have reviewed the forecasts of liquidity and covenant compliance for a period to 30 April 2024 under several sensitivities to the respective forecast. The Directors are satisfied that the Group will not be in breach of the loan facility agreement and that the Group maintains sufficient cash reserves to pay its debts as they fall due and complies with its financial covenant. Therefore, as at the end of the reporting period, the probability of loan default by the Group is low and no allowance is recognized in this regard.
On 24 February 2022 Russian Forces entered Ukraine, resulting in Western Nation reactions including announcements of sanctions against Russia and Russian interests worldwide and an economic ripple effect on the global economy. The Directors have carried out an assessment of the potential impact of Russian Forces entering Ukraine on the business, including the impact of mitigation measures and uncertainties, and have concluded that this is a non-adjusting post balance sheet event with the greatest impact on the business expected to be from the economic ripple effect on the global economy. The Directors have taken account of these potential impacts in their going concern assessment.
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BUDGET GREETING CARDS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
The business is continuing to invest both in its people, and in technology, in order to allow it to make swifter and more data-driven business decisions so that it is well placed to manage any potential upcoming challenges the wider economic environment might generate.
Disclosure of information to auditor
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Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the directors is aware, there is no relevant audit information of which the Company's auditor is unaware, and
∙the directors has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
The financial risks to which the Company is exposed are credit risk, liquidity risk and market risk. The Company's exposure to risk and its objectives, policies and processes for managing risk and the methods used for measuring risk have not changed since the prior year.
Credit risk is the risk that financial loss arises from the failure of a customer or counterparty to meet its obligations under a contract. Such credit risk is measured and controlled through regular review of the credit ratings assigned to the counterparties by credit rating agencies, and by having insurance cover in place over a number of customer balances.
Liquidity risk is the risk that the Company will not have sufficient funds to meet the obligations or commitments arising from its business operations and its financial liabilities. The board approves a liquidity framework within which the business operates. Performance against this framework is actively monitored and reported monthly.
Market risk is the risk that movements in market rates, including foreign exchange rates, interest rates and inflation will affect the Company's results. The management of market risk is undertaken within risk limits approved by the board.
The auditor, Ernst & Young LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on 11 April 2023 and signed on its behalf.
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BUDGET GREETING CARDS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BUDGET GREETING CARDS LIMITED
We have audited the financial statements of Budget Greeting Cards Limited (the 'Company') for the year ended 31 December 2021, which comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
∙give a true and fair view of the state of the Company's affairs as at 31 December 2021 and of its profit 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.
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 United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
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In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for at least a period up to and including 30 April 2024.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the company’s ability to continue as a going concern.
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BUDGET GREETING CARDS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BUDGET GREETING CARDS LIMITED (CONTINUED)
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.
Opinion on other matters prescribed by the Companies Act 2006
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In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors' remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
Responsibilities of directors
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As explained more fully in the Directors' Responsibilities Statement set out on page 2, 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 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.
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BUDGET GREETING CARDS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BUDGET GREETING CARDS LIMITED (CONTINUED)
Auditor's responsibilities for the audit of the financial statements
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Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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 Auditor's Report.
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 risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.
∙We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant are those that relate to the reporting framework (FRS 102 and the Companies Act 2006) and the relevant direct tax regulations in the United Kingdom. In addition, the Company has to comply with laws and regulations relating to its operations, including the health and safety at work, anti-bribery and corruption regulations and General Data Protection Regulations.
∙We understood how Company is complying with those frameworks by making enquiries of management and those responsible for compliance procedures, to understand how the Company maintains and communicates its policies in these areas. We corroborated our enquiries through reading the minutes of the board meetings. We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur, through internal team discussions and enquiry of management and those charged with governance. We considered the risk of management override and assumed revenue recognition to be a fraud risk, specifically, as a result of year end cut off and manual journals posted throughout the year.
∙We performed audit procedures to address each identified fraud risk and incorporated data analytics into our testing of manual journals. We have tested a sample of revenue recognized around the year end by checking to proof of delivery notes or other evidence of delivery to validate that revenue had been recorded in the correct period.
∙Based on this understanding we designed our audit procedures to identify noncompliance with such laws and regulations. We considered the extent of compliance with those laws and regulations as part of our procedures on the related financial statement items. Our procedures involved journal entry testing, with a focus on journals meeting our predefined risk criteria based on an understanding of the business, and by making enquiries with those management and those charged with governance.
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BUDGET GREETING CARDS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF BUDGET GREETING CARDS LIMITED (CONTINUED)
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an 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.
Jamie Dixon (Senior Statutory Auditor)
for and on behalf of
Ernst & Young LLP
Chartered Accountants
Statutory Auditor
2 St Peters Square
M2 3DF
11 April 2023
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BUDGET GREETING CARDS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
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Exceptional administrative expenses
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Interest receivable and similar income
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Profit for the financial year
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There was no other comprehensive income for 2021 (2020:£NIL).
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The notes on pages 12 to 27 form part of these financial statements.
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BUDGET GREETING CARDS LIMITED
REGISTERED NUMBER: 01798438
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Provisions for liabilities
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 11 April 2023.
The notes on pages 12 to 27 form part of these financial statements.
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BUDGET GREETING CARDS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
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Comprehensive income for the year
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Comprehensive income for the year
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The notes on pages 12 to 27 form part of these financial statements.
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BUDGET GREETING CARDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Budget Greeting Cards Limited (‘the Company’) is a limited company incorporated in the United Kingdom.
The address of its registered office and the principal place of business is:
Prelude House
Chapter Street
Manchester
M40 2AY
United Kingdom
The business also operates from a further seven locations across England and Northern Ireland.
The financial statements have been presented in pounds sterling which is the functional currency of the company and rounded to the nearest £.
The principal activity of the Company in the year under review was that of the sale of greeting cards and allied activities.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
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Financial Reporting Standard 102 - reduced disclosure exemptions
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The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of BGC Bidco Limited as at 31 December 2021 and these financial statements may be obtained from BGC Bidco Limited, Prelude House, Chapter Street, Manchester, M40 2AY, United Kingdom.
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BUDGET GREETING CARDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.Accounting policies (continued)
The financial statements have been prepared on a going concern basis. The directors have forecast the likely cash requirements of the Company for the period to 30 April 2024 and are satisfied that they will have access to enough liquidity based on current internal forecasts and projections. The directors have also received confirmation of ongoing support by way of an unconditional letter of financial support from the parent undertaking for a period to 30 April 2024.
The directors expect that, based on trading expectations through 30 April 2024, alongside current economic factors and other potential downsides, the Company will have sufficient funds, through its operations based on the forecast through 30 April 2024 with funding available from its parent company, BGC Bidco Limited, to meet its liabilities as they fall due for that period if required.
Those expectations are dependent on BGC Bidco Limited providing additional financial support during that period. BGC Bidco Limited has indicated its intention to continue to make available such funds as are needed by the company for the period covered by the budgets and forecasts.
The directors are confident that the company will have sufficient funds to continue to meet its liabilities as they fall due for a period to 30 April 2024 and therefore have prepared the financial statements on a going concern basis.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
∙the Company has transferred the significant risks and rewards of ownership to the buyer;
∙the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of revenue can be measured reliably;
∙it is probable that the Company will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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BUDGET GREETING CARDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.Accounting policies (continued)
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
All intangible assets are considered to have a finite useful life.
Amortisation is provided on the following basis:
Computer software - 33% straight line
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
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.
Investments in subsidiaries are measured at cost less accumulated impairment.
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BUDGET GREETING CARDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.Accounting policies (continued)
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis.
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in the Statement of Comprehensive Income.
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
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, loans to related parties and investments in ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of Comprehensive Income.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the reporting date.
Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
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BUDGET GREETING CARDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.Accounting policies (continued)
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to the Statement of Comprehensive Income on a straight line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.
Interest income is recognised in profit or loss using the effective interest method.
- 16 -
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BUDGET GREETING CARDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
2.Accounting policies (continued)
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company 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.
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
Exceptional items are transactions that fall within the ordinary activities of the Company but are presented separately due to their size or incidence.
- 17 -
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BUDGET GREETING CARDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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Judgments in applying accounting policies and key sources of estimation uncertainty
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In applying the Company's accounting policies, the directors are required to make judgements, estimates and assumptions in determining the carrying amounts of assets and liabilities. The directors' judgements, estimates and assumptions are based on the best and most reliable evidence available at the time when the decisions are made, and are based on historical experience and other factors that are considered to be applicable. Due to the inherent subjectivity involved in making such judgements, estimates and assumptions, the actual results and outcomes may differ.
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, if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.
Critical accounting judgements
The critical accounting judgements that the directors have made in the process of applying the Company’s accounting policies that have the most significant effect on the amounts recognised in the statutory financial statements are discussed below.
(i) Assessing indicators of impairment
In assessing whether there have been any indicators of impairment of assets, the directors have considered both external and internal sources of information such as market conditions, counterparty credit ratings and experience of recoverability. There have been no indicators of impairments identified during the current financial year.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
(i) Stock provision (see note 16)
The directors have considered the valuation of stock items and included an estimate for impairment
provision at the year end for items which are deemed to be slow moving or obsolete.
Analysis of turnover by country of destination:
- 18 -
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BUDGET GREETING CARDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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As part of the property leasing agreement at the Company's sites, the Company is contractually obliged to repair any damage incurred during the life of the lease, a provision was made for the expected cost of this.
The prior year credit represents the reversal of the overprovision made in relation to the cost of vacating the Dunstable site.
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Other operating income comprises management charges from Group companies and rental income.
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The operating profit is stated after charging:
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Depreciation of tangible fixed assets
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Amortisation of intangible assets, including goodwill
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Other operating lease rentals
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Cost of defined contribution scheme
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Fees payable to the Company's auditor for the audit of the Company's annual accounts
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- 19 -
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BUDGET GREETING CARDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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Staff costs, including directors' remuneration, were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the year was as follows:
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Warehouse and office staff
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The highest paid director received remuneration of £187,109 (2020 - £175,000).
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The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £NIL (2020 - £NIL).
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Other interest receivable
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- 20 -
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BUDGET GREETING CARDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Origination and reversal of timing differences
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Adjustments in respect of prior periods
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Effect of tax rate change on opening
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Taxation on profit/(loss) on ordinary activities
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Factors affecting tax charge for the year
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The tax assessed for the period is lower than (2020 - lower than) the standard rate of corporation tax in the UK of 19% (2020 - 19%). The differences are explained below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2020 - 19%)
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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
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Remeasurement of deferred tax for changes in tax rates
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Income not taxable for tax purposes
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Adjustment to tax charge in respect of prior periods
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Adjustment to tax charge in respect of previous periods - deferred tax
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Total tax charge for the year
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- 21 -
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BUDGET GREETING CARDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
12.Taxation (continued)
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Factors that may affect future tax charges
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The UK Government announced in the 2021 budget that from 1 April 2023, the rate of corporation tax in the United Kingdom will increase from 19% to 25%. Companies with profits of £50,000 or less will continue to be taxed at 19%, which is a new small profits rate. Where taxable profits are between £50,000 and £250,000, the higher 25% rate will apply but with a marginal relief applying as profits increase.
- 22 -
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BUDGET GREETING CARDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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Investments in subsidiary companies
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The following was a subsidiary undertaking of the Company:
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- 23 -
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BUDGET GREETING CARDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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Finished goods and goods for resale
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Impairment losses totalling £487k (2020 - £77k) in the Statement of Comprehensive Income.
The stock in the prior year has been adjusted for £476,187 to better represent the goods received not invoiced at the year end.
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Amounts owed by group undertakings
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Prepayments and accrued income
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Amounts owed by group undertakings and related parties are unsecured, interest-free and repayable on demand.
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Cash and cash equivalents
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- 24 -
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BUDGET GREETING CARDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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Amounts owed to group undertakings and related parties are unsecured, interest-free and repayable on demand.
The other creditors in the prior year has been adjusted for £476,187 to better represent the goods received not invoiced at the year end.
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Charged to profit or loss
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The provision for deferred taxation is made up as follows:
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Accelerated capital allowances
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Short term timing differences
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- 25 -
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BUDGET GREETING CARDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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As part of the property leasing agreement at the Company's sites, the Company is contractually obliged to repair any damage incurred during the life of the lease. The provision of £577,862 is expected to be fully utilised by 2027 when the final lease expires unless the Company extends at any of the premises.
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Authorised, allotted, called up and fully paid
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1,000,000 (2020 - 1,000,000) Ordinary shares of £1.00 each
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Profit & loss account
This reserve represents cumulative profits and losses less any dividends paid.
The Company operates a defined contribution 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 £68,523 (2020 - £65,323). Contributions totalling £14,206 (2020 - £13,397) were payable to the fund at the balance sheet date.
- 26 -
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BUDGET GREETING CARDS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
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Commitments under operating leases
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At 31 December 2021 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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Related party transactions
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The Company is a wholly-owned subsidiary of Budget Trading Limited and has taken advantage of the exemption in Section 33 Related Party Disclosures - not to provide details of transactions entered into with other wholly owned group companies.
During the year the Company paid rent to BGC Pension Scheme amounting to £1,841,168 (2020: £2,200,313).
Mr P D Lavery, a director, is a trustee and beneficiary of the pension scheme.
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The Company's immediate parent undertaking is Budget Trading Limited. The smallest group whose consolidated financial statements include the results of the Company is that headed up by BGC Bidco Limited which are publicly available from Prelude House, Chapter Street, Manchester, M40 2AY, United Kingdom. The largest group whose consolidated financial statements include the results of the Company and that are publicly available is that headed up by Ardenton Capital Limited which are publicly available from 6th Floor, One London Wall, London, United Kingdom, EC2Y 5EB.
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Ultimate controlling party
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The ultimate controlling party is Ardenton Capital Corporation which is incorporated in Canada, registered office 60 W 6th Avenue Suite 200, Vancouver, British Colombia, Canada V5Y 1K1.
- 27 -
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