BARLE_HOLDINGS_LIMITED - Accounts
BARLE_HOLDINGS_LIMITED - Accounts
The directors present the strategic report for the period ended 2 April 2023.
The principal activity of the company is that of a holding company.
The principal activity of the group is that of the retail of premium, design-led furniture and home furnishings through The Conran Shop brand in stores, concessions, online, via franchise partners in Japan and Korea, and through The Conran Shop Professional, a division which sells principally to corporate customers.
The brand retains its iconic appeal and the management team aim to build on the legacy created by Sir Terence Conran in order to drive growth for the business.
The group made a loss for the year and has continued to make losses after the year end. The group is not expected to return to profitability within the next 12 months. Whilst the performance of the group has been disappointing in recent years, with the backing of the shareholders, the restructuring of the company and the group is now in progress. The group's store in Chelsea has closed and the group's subsidiary, The Conran Shop SAS, in France, has been placed into voluntary liquidation after the period end.
The directors have taken the decision to wind up the the company's subsidiary, The Conran Shop SAS, and no longer consider the results and financial position of this subsidiary as part of the group's operations. Therefore, the directors have decided not to consolidate this subsidiary into the group's financial statements as they do not believe it shows a true and fair view of the group's continuing operations. Therefore on 1 April 2022 the group disposed of its 100% holding in The Conran Shop SAS from these financial statements to reflect this decision. The subsidiary was disposed of immediately after the prior period end and therefore there are no results arising from the company's interest in the The Conran Shop SAS included in these financial statements.
After the reporting date the group has disposed of its Marylebone store. With the group's flagship store in Sloane Street and the plan to re-focus the product offering along with continuing to streamline the business operations, the directors are very optimistic about the future.
The business is subject to a number of risks which could adversely affect the group's future development. The principal risks and uncertainties are as follows:
Marketplace
The luxury homewares and furnishings business continues to be competitive. In addition to this, the current economic outlook remains uncertain and therefore trading conditions remain challenging.
The group seeks to stand out in this environment by offering a highly distinctive range of products at attractive luxury price points, aiming to build iconic own brand products that are readily recognisable as being from The Conran Shop, in complement to ensuring the range also includes premium, design-led branded products, as well as offering a digital, direct to customer model, with our customers and employees at the heart of the business.
Credit risk
The principal credit risk for the group arises from its trade debtors, predominantly in relation to its Professional channel and Franchise partners. In order to manage this risk, the group performs credit checks on all customers offered credit, and subsequently sets appropriate limits.
Third party production risk
The group produces and purchases its product through a network of third-party suppliers whose performance in terms of quality, compliance with local laws and regulations, and adherence to delivery deadlines is important to ensure the timely availability of stock in stores, online and for delivery to wholesale and franchise partners, as well as customer-specific orders. The group is in regular contact with suppliers to monitor adherence to the terms of supply.
Liquidity risk
The directors seek to manage liquidity risk by ensuring sufficient liquidity is available to meet foreseeable seasonal operational needs. The group monitors budgets and cash flows on a weekly basis and works closely with its shareholders to ensure the company and the group has the appropriate resources available to fund all working capital cycles.
Foreign exchange risk
The group continues to routinely carry out business denominated in foreign currencies. It remains the group's policy to mitigate exchange risks by operating a multi-currency system which allows more timely control over gains and losses.
Environmental issues
The group is committed to the promotion of environmental initiatives and minimising the environmental impact of its business. Our industry is energy intensive and to satisfy the requirements of our customers requires a high level of transport usage. The focusing on creating an efficient and sustainable business the group is taking steps to reduce its on-going carbon footprint. The group's objective is to recycle as much of its waste as possible.
Employee involvement
The flow of information to employees has been maintained by our group meetings. Members of the management team regularly visit stores and discuss matters of current interest and concern to the business with members of employees.
The directors consider the financial key performance indicators to be as follows:
2023 2022
Sales 25,550,716 38,802,134
EBITDA* (4,816,914) (7,319,232)
Operating loss (9,818,170) (8,335,111)
* Earnings before interest, tax, depreciation, amortisation and exceptional items.
On behalf of the board
The directors present their annual report and financial statements for the period ended 2 April 2023.
The results for the period are set out on page 11.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
After the period end, the group placed its French Subsidiary, The Conran Shop SAS, into voluntary administration.
After the period end, a further £9.7m has been loaned to the parent company by the shareholder.
Rickard Luckin were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
select suitable accounting policies and then apply them consistently; make judgements and accounting estimates that are reasonable and prudent; state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the ; prepare the on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.
The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of results for the year, principal risks and uncertainties, corporate and social responsibility and going concern.
Adverse opinion
We have audited the financial statements of Barle Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 2 April 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
do not give a true and fair view of the state of the group's affairs as at 2 April 2023 and of the group's loss for the period then ended; have not been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have not been prepared in accordance with the requirements of the Companies Act 2006.
give a true and fair view of the state of the company's affairs as at 2 April 2023; 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 adverse opinion
As explained in note 1.4, the group has not consolidated the French subsidiary, The Conran Shop SAS. The directors are of the opinion that this subsidiary should be excluded from the group financial statements in the current period as the subsidiary has been put into a voluntary liquidation after the period end. This subsidiary has therefore been treated as disposed of on the first day of the current period. Under FRS 102, the parent company should have consolidated this subsidiary into the group financial statements for the period. Had the French subsidiary been consolidated, many elements in the accompanying consolidated financial statements would have been materially affected. The effects on the consolidated financial statements of the failure to consolidate in the current period have not been determined. The French subsidiary’s unaudited financial statements show the company made a loss for the period of £2,469,988 and had net liabilities of £3,695,054 as at 31 March 2023. The French subsidiary has been treated as disposed of on the first day of this period and has given rise to a gain on disposal of this subsidiary of £869,199 which is shown as an exceptional item in the group statement of comprehensive income. Our opinion on the parent company’s financial statements is also qualified for this matter as the failure to consolidate all subsidiaries is a departure from the requirements of FRS 102 and the Companies Act 2006.
Additionally, we were unable to obtain sufficient appropriate audit evidence of the customer deposits and stock accruals including within creditors amounts falling due within one year totalling £3,006,473. Consequently we were unable to determine whether any adjustment to this amount was necessary.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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 adverse opinion on the group financial statements and qualified opinion on the parent company financial statements.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
As described in the Basis for adverse opinion section of our report, the group financial statements have not consolidated the French subsidiary, The Conran Shop SAS, in the current period and this subsidiary has been treated as disposed of on the first day of the current period. We have concluded that the other information is materially misstated for the same reason with respect to the amounts or other items in the financial statements affected by the failure to consolidate this subsidiary.
Additionally, we were unable to obtain sufficient appropriate audit evidence of the customer deposits and stock accruals including within creditors amounts falling due within one year totalling £3,006,473. Consequently we were unable to determine whether any adjustment to this amount was necessary.
Opinions on other matters prescribed by the Companies Act 2006
As explained in note 21, the group has not consolidated the French subsidiary, The Conran Shop SAS. The directors are of the opinion that this subsidiary should be excluded from the group financial statements as the subsidiary has been put into a voluntary liquidation after the period end. This subsidiary has been treated as disposed of on the first day of the this period. Under FRS 102, the parent company should have consolidated this subsidiary into the group financial statements for the period. Had the French subsidiary been consolidated, many elements in the accompanying consolidated financial statements would have been materially affected. The effects on the consolidated financial statements of the failure to consolidate have not been determined. The French subsidiary’s unaudited financial statements show the company made a loss for the period of £2,469,988 and had net liabilities of £3,695,054 as at 31 March 2023. Our opinion on the parent company’s financial statements is also qualified for this matter as the failure to consolidate all subsidiaries is a departure from the requirements of FRS 102 and the Companies Act 2006. In addition, the directors’ report and strategic report do not consider the effects of the failure to consolidate this subsidiary in the current period.
Additionally, we were unable to obtain sufficient appropriate audit evidence of the customer deposits and stock accruals including within creditors amounts falling due within one year totalling £3,006,473. Consequently we were unable to determine whether any adjustment to this amount was necessary.
Because of the significance of the matters described in the Basis for adverse opinion section of our report, in our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year; and
the strategic report and the directors' report have not been prepared in accordance with applicable legal requirements.
Except for the effects of the matters described in the Basis for adverse opinion section of our report, 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.
As a result of the matters described in the Basis for adverse opinion section of our report, in the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have identified material misstatements in the strategic report and the directors' report.
Arising solely from the matters described in the Basis for adverse opinion section of our report:
we have not obtained all the information and explanations that we consider necessary for the purpose of our audit; and
we were unable to determine whether adequate accounting records have been kept.
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:
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our: general commercial and sector experience; through verbal and written communications with those charged with governance and other management and via inspection of the parent company's regulatory and legal correspondence.
We discussed with those charged with governance and other management the policies and procedures regarding compliance with laws and regulations.
We communicated identified laws and regulations to our team and remained alert to any indicators of non-compliance throughout the audit, we also specifically considered where and how fraud may occur within the group and the parent company.
The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the parent company is subject to laws and regulations that directly affect the financial statements, including: the company’s constitution; relevant financial reporting standards; company law; tax legislation and distributable profits legislation and we assess the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly the parent company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on the amounts or disclosures in the financial statements, for instance through the imposition of fines and penalties, or through losses arising from litigations. We identified the following areas as those most likely to have such an affect: employment legislation; health and safety legislation; trade and export legislation; consumer rights legislation; data protection legislation; and anti-bribery and anti-corruption legislation.
ISAs (UK) limit the required procedures to identify non-compliance with these laws and regulations and no procedures over and above those already noted are required. Except for the matter described in the Basis for adverse opinion section of our report, these limited procedures did not identify any actual or suspected non-compliance which laws and regulations that could have a material impact on the financial statements.
In relation to fraud, we performed the following specific procedures in addition to those already noted:
Challenging assumptions made by management in its significant accounting estimates in particular: stock provisions, amortisation and depreciation;
Identifying and testing journal entries, in particular any entries posted with unusual nominal ledger account combinations and consolidation journals;
Performing analytical procedures to identify unexpected movements in account balances which may be indicative of fraud;
Ensuring that testing undertaken on both the performance statement, and the Balance Sheet includes a number of items selected on a random basis; and
Discussions with management.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with ISAs (UK). For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the procedures that we are required to undertake would identify it. In addition, as with any audit, there remains a high risk of non-detection of irregularities, as these might involve collusion, forgery, intentional omissions, misrepresentation, or the override of internal controls. We are not responsible for preventing non-compliance with laws and regulations or fraud, and cannot be expected to detect non-compliance with all laws and regulations or every incidence of fraud.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £9,600,000 (2022 - £11,500,000 loss).
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
Barle Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 16-22 Baltic Street West, London, EC1Y 0UL.
The group consists of Barle Holdings Limited and all of its subsidiaries.
The company has taken advantage of the Companies Act provisions that permit the company to prepare financial statements within 7 days of its accounting reference date of 31 March.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being the parent company of a group that prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Barle Holdings Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates except for one of its subsidiaries, The Conran Shop SAS.
The directors have taken the decision to wind up the the company's subsidiary, The Conran Shop SAS, and no longer consider the results and financial position of this subsidiary as part of the group's operations. Therefore, the directors have decided not to consolidate this subsidiary into the group's financial statements as they do not believe it shows a true and fair view of the group's continuing operations. Therefore on 1 April 2022 the group disposed of its 100% holding in The Conran Shop SAS from these financial statements to reflect this decision. The subsidiary was disposed of immediately after the prior period end and therefore there are no results arising from the company's interest in the The Conran Shop SAS included in these financial statements.
All financial statements are made up to 2 April 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
The financial statements have been prepared on a going concern basis.
The group made a loss for the period of £8,931,033. The group meets its day to day working capital requirements through financial support provided by the ultimate shareholder. A further £9.7m of funding has been received via loans from the shareholder to the parent company, Barle Holdings Limited after the period end. Should that support be withdrawn then a material uncertainty would exist as to whether the company and the group could continue as a going concern.
The directors have a reasonable expectation that the company and the group has sufficient resources to continue to trade for at least the next 12 months from the date these financial statements are signed.
It is on this basis that the directors consider it appropriate to prepare the financial statements on the going concern basis.
Turnover 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, settlement 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 the 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 the 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.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors 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, 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 value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators 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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset 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.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, loans from fellow group companies and loans from the shareholder 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 creditors 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 creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Debt instruments that do not meet the conditions in FRS 102 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
Exceptional items
Income and expenses classified as exceptional are shown separately on the face of the profit and loss account. Income and expenses are treated as exceptional in nature if they are significant one off income or expenses and are not expected to reoccur.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
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, and experience of recoverability to conclude as to whether any assets are impaired or not.
There has been an impairment of £3,403,989 relating to the amounts owed by The Conran Shop SAS to the group, as the balance is unlikely to be recovered.
The carrying value of the fixed asset investments in subsidiaries were reviewed by the directors at the period end and as a result the investment of £9,600,000 (2022: £11,500,000) made during the period by the parent company has been impaired.
As described in note 21, the directors no longer consider the results and financial position of this subsidiary as part of the group's operations. They have therefore taken the decision to dispose of this subsidiary from the group's financial statements as of the first day of this accounting period.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The deprecation expense is the recognition of the decline in the value of the asset and allocation of the cost of the asset over the periods in which the asset will be used. Judgements are made on the estimated useful life of the assets which are regularly reviewed to reflect the changing environment.
Judgement is made on the level of the stock provision required to ensure that stock is held at the lower of cost and net realisable value. When assessing the provision the directors have considered factors such as the ageing of the stock and movements in customer preferences.
The directors have made a provision for dilapidations that represent their best estimate of the liability at the time of the balance sheet date. The actual liability will be dependent on a number of factors including any future agreement that may be reached with the landlord in settling any potential liability at that time.
The £758,842 relates to redundancy costs committed to in the period and provided for at the period end.
During the current period, the impairment of £3,403,989 (2022: £nil) was incurred in relation to the amounts owed by The Conran Shop SAS.
In the prior period, the dilapidation provision of £720,000 was in relation to various leasehold properties. The £157,163 relates to the release of the unutilised provision for dilapidations made in the prior period.
Additionally in the prior period, the acquisition costs amounting to £48,533 incurred in relation to the trade and assets acquired from Retail Holdings (2020) Limited and Retail Shops (2020) Limited and costs in relation to restructuring.
The average monthly number of persons (including directors) employed by the group and company during the period was:
Their aggregate remuneration comprised:
The company has no employees other than the directors.
The group has incurred and provided for redundancy costs during the period totalling £758,842 and this is included within exceptional expenses.
The actual charge for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:
The group had trading losses carried forward of £17,600,000 (2022: £26,587,919). The group had an unrecognised deferred tax asset of £3,880,000 at the period end.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Details of the company's subsidiaries at 2 April 2023 are as follows:
At the period end, the directors made a provision for old and damaged stock including discontinued stock lines. During the period, there was a net reduction in the provision of £246,826 which was credited to the profit and loss account.
Finance lease payments represent rentals payable by the group for certain items of I.T. and equipment. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 2 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The retirement indemnity provision related to amounts due in respect of The Conran Shop SAS and this has been released as part of the gain on disposal of this subsidiary.
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
Contributions totalling £42,433 (2022: £43,036) were payable to the fund at the balance sheet date and are included in creditors.
Ordinary shares carry voting rights, but no right to fixed income.
The directors have taken the decision to wind up the the company's subsidiary, The Conran Shop SAS, and no longer consider the results and financial position of this subsidiary as part of the group's operations. Therefore, the directors have decided not to consolidate this subsidiary into the group's financial statements as they do not believe it shows a true and fair view of the group's continuing operations. Therefore on 1 April 2022 the group disposed of its 100% holding in The Conran Shop SAS from these financial statements to reflect this decision. The subsidiary was disposed of immediately after the prior period end and therefore there are no results arising from the company's interest in the The Conran Shop SAS included in these financial statements.
The Conran Shop SAS was placed into voluntary liquidation after the period end.
Currency translation
This reserve represents translation differences arising from the translation of financial statements of foreign operations into Pounds sterling as the presentational currency. Upon disposal of the foreign subsidiary the translation reserve has been transferred to the profit and loss reserves.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
After the period end, a subsidiary of the group, The Conran Shop SAS, was placed into voluntary liquidation.
After the period end, a further £9.7m has been raised via loans from the shareholder.
After the period end, the group has invested in a new joint venture incorporated in Kuwait.
Included in other creditors is an amount of £21,100,000 (2022: £10,033,284) due to the shareholder of the company. The amount is interest free and repayable on demand.
During the period the group received invoices of £100,000 (2022: £75,000) due to a company relating to the remuneration of a director of the parent company.
During the period there has been sales totalling £nil (2022: £9,493) to a company related by common influence of a director of the parent company.
During the period there have been management recharges of £1,079,169 and expenses totalling £340,835 with the subsidiary that has not been consolidated. This subsidiary owed the group £3,403,989 as at the balance sheet date and a provision has been made against this balance in full.