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Company registration number: 04490044
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FOR THE YEAR ENDED
31 MARCH 2023
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COMPANY INFORMATION
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Chartered Accountants & Statutory Auditor
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CONTENTS
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Statement of Financial Position
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Notes to the Financial Statements
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UK OFFICE DIRECT LIMITED
REGISTERED NUMBER:04490044
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STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2023
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Allotted, called up and fully paid share capital
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The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The Company has opted not to file the statement of income and retained earnings in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 2 to 6 form part of these financial statements.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
UK Office Direct Limited is a private company limited by shares and incorporated in England and Wales. The address of the registered office is disclosed on the Company Information page, which is also its principal place of business.
The financial statements are presented in sterling which is the functional currency of the company and rounded to the nearest £.
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 Section 1A of Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The following principal accounting policies have been applied:
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Judgements and key sources of estimation uncertainty
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The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management has not made any judgements, estimates and assumptions in the amounts reported during the year.
The financial statements continue to adopt the going concern basis.
The Company had net current assets and total net assets at the balance sheet date of £5,658,057 (2022: £5,198,640).
Notwithstanding these results, the Company has provided a cross guarantee to its fellow group entities and as a result, the going concern assumption for the Company is also dependent on the financial position of the EO Group.
Following the removal of all COVID-19 restrictions on the UK economy in March 2022, the occupation of office environments experienced a slow improvement as white-collar workers steadily returned to work. Google Workplace movement trend data supported this migration, improving to -18% below pre-pandemic levels by the end of 2022 (having run -27% down during the previous financial year). However, based on other external data sources we estimate that office occupancy is still running 30-50% below pre-pandemic levels reflecting a permanent shift to new hybrid working patterns.
Against the background of a slow recovery in demand, the industry has also been impacted by the sharp increase in UK inflation following the pandemic and the invasion of Ukraine in February 2022, with the Consumer Price Index peaking at 11.1% in October 2022 (a level not seen since 1981). However, as fast as the rate increased over the past two years, economists are also forecasting the rate to return to their target level of 2% by the end of 2024.
As a result, there's still some uncertainty in forecasting the future trading performance of the Group, although the environment is slowly becoming more predictable and therefore forecasting certainty has improved considerably over the past 12 months.
The Directors have, for the Group and the Company, considered the following matters in determining the appropriateness of the going concern basis of preparation in the financial statements:
∙A financial forecast to March 2025 indicates that the Group will have sufficient cash reserves to be able to
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
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Going concern (continued)
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meet its debts as and when they fall due;
∙The assumptions used to prepare the financial forecasts are considered to be reasonable;
∙Various downside forecast scenarios for the period to March 2025, modelling slower growth (including a reduction in demand) also indicate that the Group will have sufficient cash reserves to able to meet its debts as and when they fall due;
∙The development and growth of the Group’s B2B eCommerce platform (now owned / managed by CTRL Commerce Ltd) is diversifying the Group away from a reliance on the sale of office products;
∙The Group has successfully launched into new categories during the last financial year and has plans to continue this expansion, further reducing the reliance on the sale of traditional office products;
∙The loan from Barclays Plc under the UK Government's Coronavirus Business Interruption Loan Scheme;
∙The on-going availability of a short-term, revolving, secured working capital facility from its bankers;
∙The Group's credit facilities have no associated covenants;
∙The Group is only carrying £0.8m of third-party debt at 31 March 2023 (repayable over the next three years);
∙The Group is using cashflow generated from trading activities to reinvest into the development of the CTRL Commerce B2B eCommerce platform – this investment is discretionary and can be reduced (almost entirely) at any time;
∙UK economists are forecasting a sharp reduction in inflation over the next 18 months, returning to their target 2% level by the end of 2024; and
∙The Group's key suppliers have expressed support in continuing to provide agreed payment terms on trade credit. Further, we have assessed the ability of our key suppliers to continue to meet our forecast demands for goods & services to ensure we are able to meet our customer demand.
In using the financial forecasts for the going concern assessment, the Directors have taken into consideration the judgements, estimates and assumptions which have been applied. Many of these judgements are, by their nature, subjective and the modelled outcomes are dependent on uncertain, external factors. However, the Directors now anticipate a return to a more stable operating environment in the coming years than has been the case in the recent past – making the forecasting process more predictable and the forecast outcomes more reliable.
Consequently, the Directors are confident given the actions taken over the past 24 months to diversify the business and reduce running costs, the balance sheet funding and the on-going support of key suppliers that the Group will have adequate resources to continue in operational existence for the foreseeable future.
Accordingly, the financial statements continue to adopt the going concern basis.
Turnover is recognised when invoices for associated costs are received from suppliers and goods have been delivered by the suppliers to customers such that risks and rewards of ownership have transferred to them. The turnover shown in the Statement of Income and Retained Earnings represents amounts receivable during the year in the normal course of business, net of trade discounts, VAT and other sales and related taxes.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
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 Statement of Financial Position 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.
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.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
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 the Statement of Income and Retained Earnings 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.
The average number of persons employed by the Company during the year including Directors amounted to 5 (2022: 6).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Due after more than one year
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Amounts owed by group undertakings
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Amounts owed by group undertakings
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Prepayments and accrued income
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Included within debtors due after more than one year are loans amounting to £5,580,000 (2022: £5,580,000) due on 29 March 2026. Interest at a rate of 2% above LIBOR Base Rate is charged on these loans. The default interest of 1% above the interest rate has been applied to interest overdue.
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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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Related party transactions
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In accordance with the exemption allowed by Financial Reporting Standard 102, transactions with group companies have not been disclosed in these financial statements.
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Parent and ultimate parent company
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The Company's parent company is Euroffice Limited.
The ultimate parent company is considered to be EO Group Ltd. EO Group Ltd prepares consolidated accounts which are available from Companies House, Crown Way, Cardiff, CF14 3UZ.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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Ultimate controlling party
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The Group and the Company’s ultimate controlling entity is Darwin Private Equity I LP, a fund managed by Darwin Private Equity LLP, a limited liability partnership registered in England and Wales.
The Company has given Barclays Bank Plc a cross guarantee in favour of the parent company EO Group Ltd, Euroffice Holdco 1 Limited, Euroffice Holdco 2 Limited, Euroffice Limited, IDOS Online Limited, Ctrl Commerce Limited and Office Power Limited.
The auditors' report on the financial statements for the year ended 31 March 2023 was unqualified.
The audit report was signed on 7 July 2023 by Caroline Milton FCA (Senior Statutory Auditor) on behalf of Menzies LLP.
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