BODYPOWER_SPORTS_HOLDINGS - Accounts

The director presents the strategic report and financial statements for the year ended 30 September 2023.

Fitness Superstore is a leading group in the import and retail of fitness and gym equipment. The group's business model is based on a multi-channel approach, which allows it to reach customers through various routes to market. The group has a strong presence in the UK with 11 destination stores, a successful ecommerce platform, and some wholesale trading on its private label brands. The group mainly serves the consumer sector but also operates in the commercial sector, positioning itself as a "speciality" retailer. The group prides itself on offering an extensive range of fitness equipment and providing expert advice to its customers. This is made possible through the group's nationwide store network, telesales operation and strong digital presence. In addition to its retail channels, Fitness Superstore has exclusive distribution rights for several renowned international fitness brands. The group is proud to represent many “market leading” premium fitness equipment brands, which have established subsidiaries in the UK.

Overall, Fitness Superstore is dedicated to delivering exceptional service and providing customers with access to high-quality fitness and gym equipment. The director continues to explore new opportunities and strive for excellence in meeting the needs of the group's customers in the ever-growing fitness industry.

Review of the business

Despite the challenges posed by the COVID-19 pandemic, the director is pleased with the group's performance. It is important to note that there has been a decline in consumer demand for home fitness equipment, following the initial surge in trading caused by the pandemic. This decline has been further magnified by the resale of gym equipment on second-hand marketplaces such as EBAY, which has had a significant negative impact on new home equipment sales.

Additionally, the prolonged period of social distancing has led to a growing desire for social interaction and in-person workouts. This has resulted in a sustained increase in the number of affordable public gym openings across the UK and Europe. It is crucial to recognise that customer buying habits have evolved in the post-lockdown era, with consumers now more comfortable making "big ticket" purchases online rather than visiting physical retail stores on the high street. While this shift is positive for online sales, it unfortunately has had a detrimental effect on sales in traditional bricks & mortar stores, where the average consumer spend is typically higher than online.

Furthermore, the ongoing "cost of living crisis" in the UK continues to impact consumer spending across all retail sectors, particularly on non-essential "big ticket" items. It is anticipated that this trend will persist into 2024 and potentially beyond.

Despite these challenges, the group remains committed to adapting to the changing market dynamics and finding new opportunities for growth. The director acknowledges the need to remain agile and responsive to customer preferences. By leveraging the group's online presence, exploring partnerships, and focusing on customer satisfaction, the directors is confident that the group can navigate these obstacles and continue to thrive in the retail industry.

The group does not anticipate any further store openings in the next 12 months until economic conditions in the UK have improved and hopefully a more traditional demand for home fitness equipment returns. All things considered the group is well positioned to “ride out” a prolonged period of depressed trading within the home fitness equipment sector due to its continued “zero borrowings” status, “low cost” infrastructure and an extremely strong balance sheet.

Product development has fortunately kicked on massively over the past 12 months enhancing the group's existing range of offerings, exclusivity and introducing new innovative products and categories that cater to the evolving needs of its customers. The group has continued to make significant investments in digital technologies to improve its competitiveness, operational efficiency and most importantly to enhance the overall customer experience.

A strong retail store network will continue to be an essential ingredient of Fitness Superstore’s strategy. Maintaining the group's dominant “bricks & mortar” presence across the UK requires material investment in its stores to ensure the customer experience is fulfilling, exciting and unique. Material investment in the group's digital platform has continued and is paramount to its success across all sales channels. The director continues to focus on strong supplier relationships which is essential with the gradual reduction in consumer brands that has unfortunately taken place since the COVID pandemic. Fitness Superstore prides itself on having the best and most extensive product offerings in the home fitness equipment marketplace. Looking ahead, the director remains committed to the group's strategic priorities and will continue to focus on innovation, customer-centricity, and operational excellence.

All risks are monitored on an ongoing basis by the director and senior management. Strategies are then developed (as appropriate) to minimise and mitigate against these threats, essentially reducing their commercial and environmental impact. The principal risks and uncertainties are set out as follows:

Increased competition

The COVID-19 lockdowns and technology advances has led to a boom in “at home” fitness. Although consumer demand has since “dropped off” competition still remains in the form of, 1) More specialty retailers entering the market, 2) Many “big box” retailers now focusing on the home fitness equipment category, and 3) Home fitness brands and Asia factories now going “direct to market” to improve their margins.

Online marketing costs continue to increase, especially “Pay per click” advertising, mainly due to additional retailers entering the fitness equipment sector. Although Fitness Superstore operates in a highly competitive market it differentiates itself through product range, customer experience, distribution infrastructure and most importantly the knowledge and expertise of its sales staff.

Reduced demand for home fitness equipment

Consumer research shows almost 50% of households purchased home fitness equipment during the extended COVID-19 lockdown period. We are therefore likely to see “consumer demand” for home fitness products continue to fall for at least another 12 months.

Supply chain instability

Relationships with the group's suppliers, which has always been intrinsic to its success, is key to maintaining a successful and profitable business. Therefore, the group is in constant contact with its suppliers to secure “continuity of supply” over the whole range of its products. Even though the coronavirus pandemic has passed, the reduced consumer demand for home fitness equipment is a major issue and continues to impact on the group's key suppliers. The directors expects this to continue throughout 2024 and possibly beyond.

Retention of employees

The group values its workforce and management highly, which is of course essential in maintaining its success in an ultra-competitive marketplace. For these reasons the group must continue to motivate and reward its employees well, keep morale high by reducing customer service issues where possible - thereby reducing unnecessary staff turnover. Regardless, the labour market continues to be highly competitive and extremely challenging for UK employers.

Economic and market conditions

It is likely consumer confidence will be heavily impacted by job losses, rising consumer and national debt and the continued economic ramifications of BREXIT. Furthermore, the general downturn in customer “foot flow” to retail stores across the UK (mainly due to COVID-19 changes in consumer buying habits) impacts heavily on “bricks & mortar” retailers, where average spend is materially higher than online. However, Fitness Superstore has always performed well in times of recession, due to its strong balance sheet, competitive edge and wide range of price points.

IT systems, continuity and cyber attack

The group is dependent on efficient and secure information technology to trade efficiently. The group's business systems sit behind secure “fire walls” with robust and automated backup procedures. Enhanced “Disaster recovery” systems and protocols have been implemented. Moreover, the group also continues to invest heavily in its online platform security to reduce the ongoing risk of cyber-attacks.

Climate change and emissions

Climate change is an emerging risk for the business. With the phasing out of petrol and diesel vehicles the group's current operating model could be exposed. As clean air zones grow in size, minimum emissions standards may become more stringent meaning diesel vans may not be allowed into these areas.

Regulatory risks

In the UK, fitness equipment must be manufactured to EU/UK standards. These standards are subject to continuous revision which can drive up import costs dramatically having a negative impact on sales volumes.

Credit exposure

The group has very little exposure to bad debts. However, should more sales be generated from wholesale business (less than 2% currently) the group's exposure risk will of course increase. The group looks to minimise its “bad debt” risk by using “credit rating” agencies and identifying payment issues with wholesale customers in a timely manner.

Exchange rate exposure

Due to sustained growth in imported brands and products a high proportion of the group's purchases are purchased in US dollars. The group mitigates its risks by regularly reviewing foreign exchange fluctuations and selling prices.

Profit & loss performance

With reduced demand for home fitness equipment annual turnover has fallen from £33m in 2022 to approximately £30m in 2023.

Gross profit margin has increased from 39.9% in 2022 to 40.3% in 2023. However, the GP margin improvement in the year is more a consequence of reductions in overseas shipping costs rather than improved product margins.

Group overheads have actually decreased in the year by 4.5% from £10.3m in 2022 to £9.8m in 2023 (on a much-reduced turnover) which is more than satisfactory considering the level of UK inflation and escalating employment costs in the year. Based on all the above factors, operating profit has unfortunately fallen from £3.1m in 2022 to £2.55m in 2023. In conclusion and all things considered this is a satisfactory result for the group.

Balance sheet

As at the 30th September 2023 cash reserves were at a healthy £27.3m (up from £24.8m in 2022). Therefore, the net increase in cash and cash equivalents was approx. £2.5m in the year.

I’m also pleased to report that our inventory levels have again reduced from the previous year, from £8.6m in September 2022, to £7.2m in 2023, which is essentially in line with the reduction in sales revenue.

Retained reserves in the group has increased from £42m to £43m in the year.

On behalf of the board

The director presents his annual report and financial statements for the year ended 30 September 2023.

The results for the year are set out on page 9.

Ordinary dividends were paid amounting to £1,500,000. The director does not recommend payment of a further dividend.

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

The auditor, Mercer & Hole LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

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

Principal activity, financial risk management objectives and policies and the exposure to credit, liquidity, interest rate and other price risks are set out in the strategic report (as defined by section 414c (11) of the Companies Act 2006).

The director is responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the director is required to:

• select suitable accounting policies and then apply them consistently;

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

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the ;

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

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

We have audited the financial statements of Bodypower Sports Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 September 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).

In our opinion the financial statements:

• give a true and fair view of the state of the group's and the parent company's affairs as at 30 September 2023 and of the group's profit for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the 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 opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

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

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

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

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

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

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the parent company or to cease operations, or has 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.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

We gained an understanding of the legal and regulatory framework applicable to the group and the industry in which it operates and considered the risk of acts by the group that were contrary to applicable laws and regulations, including fraud. These included, but were not limited to, the Companies Act 2006 and tax legislation.

We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements and the financial report (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate entries including journals to overstate revenue or understate expenditure and management bias in accounting estimates.

Audit procedures performed by the engagement team included:

• discussions with management, including considerations of known or suspected instances of non- compliance with laws and regulations and fraud;

• gaining an understanding of management's controls designed to prevent and detect irregularities; and

• identifying and testing journal entries.

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 auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.

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.

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

These financial statements have been prepared in accordance with the provisions relating to medium-sized groups.

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £1,693,360 (2022 - £17,274 profit).

Bodypower Sports Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 13 Gatelodge Close, Round Spinney, Northampton, Northamptonshire, NN3 8RJ.

The group consists of Bodypower Sports Holdings Limited and all of its subsidiaries.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

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, modified to include the revaluation of freehold properties and to include investment properties at fair value. The principal accounting policies adopted are set out below.

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £1,693,360 (2022 - £17,274 profit).

The business combination has been accounted for using merger accounting which treats the merged group as if it had been combined throughout the current and comparative periods. Merger accounting principles for this combination gave rise to a merger reserve in the consolidated balance sheet, being the difference between the nominal value of new shares issued by the parent company for the acquisition of the shares of the subsidiary.

The consolidated financial statements incorporate those of Bodypower Sports Holdings Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits).

All financial statements are made up to 30 September 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.

At the time of approving the financial statements, the director has a reasonable expectation that the group 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 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.

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.

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

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

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

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

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

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

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

At each reporting period end date, the group reviews the carrying amounts of its tangible 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.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

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

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

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

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

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

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

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.

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 and loans from fellow group companies, 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.

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

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

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

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

The costs of short-term employee benefits are recognised as a liability and an expense.

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.

The company operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

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.

In the application of the group’s accounting policies, the director is 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.

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

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

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 1).

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

In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:

The carrying value of land and buildings comprises:

The group's properties were independently valued on 30 September 2023 by Drake & Partners LLP, Chartered Surveyors. The valuation was in accordance with the requirements of UK GAAP, International Valuation Standards and the RICS Valuation Standards.

The group's properties were independently valued on 30 September 2023 by Drake & Partners LLP, Chartered Surveyors. The valuation was in accordance with the requirements of UK GAAP, International Valuation Standards and the RICS Valuation Standards.

The carrying value of land and buildings comprises:

Details of the company's subsidiaries at 30 September 2023 are as follows:

In the company only accounts the investments in subsidiaries are stated at cost. In the group accounts the results of the subsidiaries are consolidated into the group results.

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

The deferred tax liability set out above is expected to reverse within 10 years and relates to accelerated capital allowances that are expected to mature within the same period.

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

This reserve represents the cumulative surplus arising on the revaluation of the group's investment properties. These surpluses are not taxable but give rise to a deferred tax liability.

This reserve represents the excess of the nominal value of the shares acquired in the company's subsidiaries over the nominal value of the shares issued as part of the group reorganisation.

This reserve includes all current and prior period retained profits and losses.

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:

The operating leases represent leases to third parties. The leases are negotiated over terms of 10 years. All leases include a provision for five-yearly upward rent reviews according to prevailing market conditions. There are no options in place for either party to extend the lease terms.

At the reporting end date the group had contracted with tenants for the following minimum lease payments:

The remuneration of key management personnel is as follows.

Dividends totalling £1,500,000 (2022 - £1,500,000) were paid in the year in respect of shares held by the company's directors.

Included in creditors is an amount of £384,512 (2022: £241,183 debtor) owed by the company to Mr Paul Walker, director.