Rectella Limited - Limited company accounts 23.2

REGISTERED NUMBER: 00430344 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 30 April 2023

for

Rectella Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Income Statement

10

Other Comprehensive Income

11

Balance Sheet

12

Statement of Changes in Equity

13

Notes to the Financial Statements

14

DIRECTORS:

S Edwards

K Moulsdale

REGISTERED OFFICE:

380 Chester Road Empress Business Centre

Manchester

Manchester

M16 9EA

REGISTERED NUMBER:

00430344 (England and Wales)

SENIOR STATUTORY AUDITOR:

Lee Warburton BA FCA

AUDITORS:

Voisey & Co LLP

8 Winmarleigh Street

Warrington

Cheshire

WA1 1JW

The directors present their strategic report for the year ended 30 April 2023.

REVIEW OF BUSINESS

Rectella Limited, trading as Julian Charles, completed its second full year of trading under new ownership following the acquisition by SKG Capital GP Limited in June 2020.

The business is a retailer of a wide range of luxury Bedding and Homewares. It continues to trade through a UK-wide store estate and a fully transactional website. The retail footprint remained consistent despite the loss of 6 concessions through the M&Co. partnership. The number of trading outlets (stores and concessions) stands at 73.

Despite significant challenges within the UK retail market, the business enjoyed sales growth on last year of 2% across stores and the online channel combined. The base store estate delivered significant growth on last year, with like for like sales for all stores increasing by 6%. A new store opening in Manchester and the relocation of an existing store to a larger unit in Fleetwood, Lancashire, have both proved very successful and give confidence in the retail strategy going forward.

A wide range of macro-economic and geo-political factors have contributed to rising costs for the business over the last two years. Energy costs increased to an exceptionally high level, principally driven by the supply-side impact of the Ukraine conflict, driving up the cost of manufacturing our products and operating UK stores. Container shipping costs rose to 10 times their normal rate before returning to more normal levels, which, in conjunction with increased UK transport costs, eroded gross margins. Staff costs continue to increase in line with changes to the National Living Wage. Business Rates are increasing as relief is tapered down. A weakening of Sterling vs. The Dollar increased the effective cost of imported products. On top of these specific areas, high UK inflation impacted the whole cost base.

Whilst trading was resilient in FY23, the business took steps to safeguard the business given the uncertainty of the UK economy. Product sourcing was switched to be more UK-based, allowing more flexibility in the timing of intake and reducing the level of cash tied up in stock on the water. Whilst this adversely impacted buying margins, strong negotiating and a reduction in discounting largely mitigated this impact.

In common with most businesses operating in the retail sector, the company faces continued risks relating to a downturn in consumer footfall alongside the shift in spending habits from physical retail to online. However, the like for like growth in stores demonstrates that there is still a market for traditional 'bricks and mortar' retailing, with opportunities to increase the retail footprint in towns and cities not yet addressed. The business continues to invest in its online offering to ensure that consumers can engage and transact with the business in their preferred channel.

The business remained agile and reviewed prices throughout the year to remain competitive both in-store and online to drive a value message to increasingly cost-conscious consumers. Strong supplier relationships were maintained, ensuring that underlying cost price pressures could largely be contained. Costs continued to be well managed through the year, with overheads being reviewed and re-tendered where appropriate to mitigate underlying cost increases from rising raw material prices, fuel and energy price inflation and legislative wage increases.

The business continued a partnership with Alder Hey Children's hospital. The Company is proud to sponsor Alder Hey which cares for over 330,000 children, young people, and their families every year.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors regularly review the principal risks and uncertainties facing the company and endeavour to identify appropriate mitigations for these. As is required by The Companies Act 2006, this business review contains a description of these risks and uncertainties:

Weak consumer confidence

The 'cost of living crisis' severely impacted UK retail. Whilst we acknowledge that we are unable to directly control consumer confidence, we monitor it closely and adapt our proposition to best serve the needs of our loyal customer base. The business has proved to be resilient to a general decline on high street footfall and online traffic as it focused trading campaigns on the great value proposition. The opening of new stores in key markets provided further insulation against lower consumer spending. Strong product margins achieved across all categories means that the business has scope to adopt a more discount-led trading stance if required.

Rising costs

The cost transformation plan completed in FY22 ensured that the business was well placed to weather the challenges presented by an exceptionally difficult cost environment in FY22 and FY23. Looking forward, we are satisfied that our low-cost operating model can be maintained across the existing store estate and can be applied to each new store we open. We anticipate further cost increases over the short to medium term, albeit at a more manageable level, and expect the business to be profitable in FY24.

Over-reliance on a small number of product categories

The business has enjoyed consistently strong trading in its core categories of Bedding, Curtains and Soft Furnishings over many years. However, the directors have sought to broaden the product mix to incorporate more 'Home' categories. The website provides the ideal testing ground for changes to the product proposition and a number of new categories have been presented to customers through FY23. The business also developed the technical and operational capability to launch drop ship fulfilment (direct from supplier to customer) in the financial year. Following successful trials several new categories will be incorporated into the offer in FY24.

We are very satisfied with the performance of the business in the context of such challenging market conditions. We are confident that our strategic focus on opening new stores in key markets, further developing our online proposition and the introduction new categories will further strengthen our business.

FUTURE DEVELOPMENTS

The business plans to evolve the retail estate through opening new stores in key markets and closing those making a lower contribution. There is a strong pipeline of new sites set to open over the next twelve months.

ON BEHALF OF THE BOARD:

S Edwards - Director

22 January 2024

The directors present their report with the financial statements of the company for the year ended 30 April 2023.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of merchanting of textiles and soft furnishings.

DIVIDENDS

No dividends will be distributed for the year ended 30 April 2023.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 May 2022 to the date of this report.

S Edwards

K Moulsdale

DISCLOSURE IN THE STRATEGIC REPORT

As permitted by the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulation 2008, certain matters which are required to be disclosed in the Directors' report have been omitted as they are included in the Strategic Report. These matters relate to the financial management risk and future developments.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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 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 and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the 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 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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Voisey & Co LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

S Edwards - Director

22 January 2024

Opinion

We have audited the financial statements of Rectella Limited (the 'company') for the year ended 30 April 2023 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity and Notes to the Financial Statements, 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 30 April 2023 and of its 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 Auditors' 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 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 directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

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.

In connection with our audit of the financial statements, 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 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 the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

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 Report of the Directors.

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, 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

As explained more fully in the Statement of Directors' Responsibilities set out on page four, 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 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.

Auditors' responsibilities for the audit of the financial statements

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 a Report of the Auditors 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:

1 - We enquired of management and those charged with governance about actual and potential litigation and claims, including review of relevant nominal ledger accounts.

2 - We obtained an understanding of laws, regulations and guidance that affect the Company, focusing on those that had a direct effect on the financial statements or that had a fundamental effect on its operations. Key laws, regulations and guidance that we identified included the Companies Act 2006, health and safety legislation and employment legislation.

3 - We enquired of management and those charged with governance to identify any instances of non-compliance with laws and regulations. We also reviewed meeting minutes for evidence of non-compliance with relevant laws and regulations.

4 - We reviewed the Company's financial statement disclosures and agreed to supporting documentation to assess compliance with the applicable laws and regulations discussed above.

5 - We gained an understanding of the controls that management have in place to prevent and detect fraud. We enquired of management about any incidences of fraud that had taken place during the accounting period.

6 - The risk of fraud and non-compliance with laws and regulations was discussed within the audit team and tests were planned and performed to address these risks.

7 - In addressing the risk of fraud due to management override of controls, we performed 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.

8 - We also challenge management assumptions with regard to accounting estimates.

Despite appropriate planning and performing our work in accordance with International Auditing Standards, there are always inherent limitations that non-compliance is not detected. Non-compliance with laws and regulations is often further removed from the events and transactions reflected in the financial statements and material misstatements due to fraud can be deliberately concealed from auditors, for example through misrepresentation, forgery or collusion.

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 Report of the Auditors.

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 a Report of the Auditors 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.

Lee Warburton BA FCA (Senior Statutory Auditor)

for and on behalf of Voisey & Co LLP

8 Winmarleigh Street

Warrington

Cheshire

WA1 1JW

22 January 2024

TURNOVER

3

17,661,007

17,362,191

Cost of sales

(13,110,723

)

(11,667,843

)

GROSS PROFIT

4,550,284

5,694,348

Distribution costs

(1,903,180

)

(1,969,831

)

Administrative expenses

(3,584,979

)

(3,551,552

)

(937,875

)

172,965

Other operating income

-

130,403

OPERATING (LOSS)/PROFIT

5

(937,875

)

303,368

Interest receivable and similar income

471

-

(937,404

)

303,368

Interest payable and similar expenses

6

(41,176

)

(15,143

)

(LOSS)/PROFIT BEFORE TAXATION

(978,580

)

288,225

Tax on (loss)/profit

7

-

-

(LOSS)/PROFIT FOR THE FINANCIAL YEAR

(978,580

)

288,225

(LOSS)/PROFIT FOR THE YEAR

(978,580

)

288,225

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(978,580

)

288,225

FIXED ASSETS

Tangible assets

8

271,039

303,760

Investments

9

1

1

271,040

303,761

CURRENT ASSETS

Stocks

10

2,609,971

2,999,984

Debtors

11

811,303

983,162

Cash at bank

403,996

232,287

3,825,270

4,215,433

CREDITORS

Amounts falling due within one year

12

4,323,472

3,882,907

NET CURRENT (LIABILITIES)/ASSETS

(498,202

)

332,526

TOTAL ASSETS LESS CURRENT LIABILITIES

(227,162

)

636,287

CREDITORS

Amounts falling due after more than one year

13

278,091

162,960

NET (LIABILITIES)/ASSETS

(505,253

)

473,327

CAPITAL AND RESERVES

Called up share capital

17

2

2

Share premium

18

1,575,884

1,575,884

Capital redemption reserve

18

118,121

118,121

Retained earnings

18

(2,199,260

)

(1,220,680

)

SHAREHOLDERS' FUNDS

(505,253

)

473,327

The financial statements were approved by the Board of Directors and authorised for issue on 22 January 2024 and were signed on its behalf by:

S Edwards - Director

Called up

Capital

share

Retained

Share

redemption

Total

capital

earnings

premium

reserve

equity

£

£

£

£

£

Balance at 1 May 2021

2

(1,508,905

)

1,575,884

118,121

185,102

Changes in equity

Total comprehensive income

-

288,225

-

-

288,225

Balance at 30 April 2022

2

(1,220,680

)

1,575,884

118,121

473,327

Changes in equity

Total comprehensive income

-

(978,580

)

-

-

(978,580

)

Balance at 30 April 2023

2

(2,199,260

)

1,575,884

118,121

(505,253

)

1.	STATUTORY INFORMATION

Rectella Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of paragraph 3.17(d);

•

the requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);

•

the requirements of paragraphs 12.26, 12.27, 12.29(a), 12.29(b) and 12.29A;

•

the requirement of paragraph 33.7.

Preparation of consolidated financial statements

The financial statements contain information about Rectella Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its subsidiary undertaking are included by full consolidation in the consolidated financial statements of its parent, SKG Capital GP Ltd, 23 Berkeley Square, London, England, W1J 6HE.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.

Significant judgements and key sources of estimation uncertainty

In the application of the company'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 key assumptions concerning the future and other key sources of estimation include uncertainties at the reporting date, which may have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial periods, are discussed below.

Management do not consider the company to have any significant accounting judgements or key sources of

estimation uncertainty.

Going concern

At the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Revenue is recognised at the fair value of the consideration received or receivable for goods and services 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, settlements discounts and volume rebates.

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

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 goods), 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.

Tangible fixed assets

Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised as to write off the cost or valuation of assets less their residual value over their useful economic lives on the following bases:

Leasehold improvements Straight line over lease term

Plant and machinery 20 - 40% Straight line

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 assets, and is credited or charged to profit or loss.

Leases

The company operates from a number of retail stores. As lessee, the lease payments under the lease are recognised as an expense over the lease term on a straight line basis.

Lease incentives are recognised as a reduction to the lease expense over the lease of the term on a straight line basis.

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost.

Stocks

Inventories are stated at the lower of cost and estimated selling price less cost to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their preset location and condition.

Inventories held for distribution at no or normal consideration are measured at the lower of cost and replacement costs, adjusted where applicable for any loss of service potential.

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

Financial instruments

The company 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 it's financial instruments.

Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with 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.

Basic financial assets

Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measured at transaction price, including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair values are recognised in profit or loss, except that investments in equity instruments that are not publically traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indications of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset's original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed, The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expires or are settled, or when the company transfers the financial assets and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substances of the contractual arrangements entered into. An entity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic Financial Liabilities

Basic financial liabilities, include trade and other payables, bank loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Debt instruments that do not meet the conditions in FRS paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company's contractual obligations expire or are discharged or cancelled.

Equity Instruments

Equity instruments issued by the company 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 company.

Derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument. In which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.

Employee benefits

The cost 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 or non-current assets.

The cost of any unusual 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.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Government grants

Grant income relates to furlough income under Coronavirus Job Retention Scheme. Cash payments were made to compensate for part of the wages, associated national insurance and employer contributions of employees who have been placed on furlough. There is also business rates relief obtained in relation to stores leased by Rectella Limited.

This grant income has been recognised under the performance model whereby entitlement to the grant only passes to the company when relevant employees are placed on furlough. Grant income is recognised on a straight line basis over the furlough period for each employee.

Grants received before the recognition criteria are satisfied is recognised as a liability.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date, except where forward contracts exist. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

3.

TURNOVER

The turnover and loss (2022 - profit) before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business is given below:

30.4.23

30.4.22

£

£

Retail Sales

14,215,940

13,926,098

Internet Sales

3,445,067

3,436,093

17,661,007

17,362,191

An analysis of turnover by geographical market is given below:

30.4.23

30.4.22

£

£

United Kingdom

17,087,034

16,799,306

Europe

573,973

562,885

17,661,007

17,362,191

4.	EMPLOYEES AND DIRECTORS

30.4.23

30.4.22

£

£

Wages and salaries

3,314,939

3,119,338

Social security costs

216,936

189,264

Other pension costs

88,799

92,531

3,620,674

3,401,133

The average number of employees during the year was as follows:

30.4.23

30.4.22

Selling and distribution

215

223

Administration

22

23

237

246

Key Personnel:

The key personnel are considered to be the director only. Please see the note below for remuneration paid to the directors in the year.

30.4.23

30.4.22

£

£

Directors' remuneration

155,280

162,625

Directors' long term incentive schemes

16,220

8,554

5.	OPERATING (LOSS)/PROFIT

The operating loss (2022 - operating profit) is stated after charging:

30.4.23

30.4.22

£

£

Hire of plant and machinery

16,051

33,743

Depreciation - owned assets

82,632

245,688

Loss on disposal of fixed assets

111,163

-

Auditors' remuneration

22,000

20,000

Other non- audit services

15,008

-

Foreign exchange differences

19,574

20,913

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

30.4.23

30.4.22

£

£

Bank loan interest

29,137

3,437

Other interest paid

12,039

11,706

41,176

15,143

7.

TAXATION

Analysis of the tax charge

No liability to UK corporation tax arose for the year ended 30 April 2023 nor for the year ended 30 April 2022.

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

30.4.23

30.4.22

£

£

(Loss)/profit before tax

(978,580

)

288,225

(Loss)/profit multiplied by the standard rate of corporation tax in the UK of 25% (2022 - 19%)

(244,645

)

54,763

Effects of:

Expenses not deductible for tax purposes

-

1,536

Capital allowances in excess of depreciation

(30,615

)

-

Depreciation in excess of capital allowances

-

5,187

Utilisation of tax losses

-

(61,486

)

Loss on disposal of assets

4,302

-

Losses carried forward

270,958

-

Total tax charge

-

-

Tax losses carried forward at 30th April 2023 amount to £7,440,234.

The main rate of corporation tax for the year ended 30 April 2023 was 25%. This came into effect on 1 April 2023 following the government announcement that the previous rate of 19% would be increased from that date.

The rate of corporation tax is 25% for companies with annual profits over £250,000. For companies with annual profits below £50,000 the rate remains at 19%. Marginal relief provisions have also been introduced so that, where a company's profits fall between the lower (£50,000) and upper (£250,000) limits, it is able to claim an amount of marginal relief that bridges the gap between the lower and upper limits providing a gradual increase in the corporation tax rate.

8.	TANGIBLE FIXED ASSETS

Short

Plant and

leasehold

machinery

Totals

£

£

£

COST

At 1 May 2022

2,474,949

2,247,064

4,722,013

Additions

10,689

138,984

149,673

Amounts written off

(2,383,035

)

(1,979,650

)

(4,362,685

)

At 30 April 2023

102,603

406,398

509,001

DEPRECIATION

At 1 May 2022

2,362,977

2,055,276

4,418,253

Charge for year

23,629

59,003

82,632

Charge written back

(2,326,729

)

(1,936,194

)

(4,262,923

)

At 30 April 2023

59,877

178,085

237,962

NET BOOK VALUE

At 30 April 2023

42,726

228,313

271,039

At 30 April 2022

111,972

191,788

303,760

During the year, a detailed review of the fixed assets register was undertaken and the Directors took a view to write off old items of computer equipment and store fixture and fittings.

9.	FIXED ASSET INVESTMENTS

Shares in

group

undertakings

£

COST

At 1 May 2022

and 30 April 2023

1

NET BOOK VALUE

At 30 April 2023

1

At 30 April 2022

1