Rutland Water Cycling Ltd - Limited company accounts 17.3

REGISTERED NUMBER: 02926548 (England and Wales)

Rutland Water Cycling Ltd

Strategic Report, Report of the Directors and

Financial Statements

For The Period 1st February 2016 to 29th January 2017

Page

Company Information

1

Strategic Report

2

to

3

Report of the Directors

4

Report of the Independent Auditors

5

Income Statement

6

Other Comprehensive Income

7

Balance Sheet

8

Statement of Changes in Equity

9

Notes to the Financial Statements

10

to

16

DIRECTORS:

Mrs K Archer

P M Archer

D Middlemiss

Mrs S M C Middlemiss

SECRETARY:

Mrs K Archer

REGISTERED OFFICE:

310 Wellingborough Road

Northampton

Northamptonshire

NN1 4EP

BUSINESS ADDRESS:

The Old Station Yard

Wing Road

Manton

Oakham

Rutland

LE15 8SZ

REGISTERED NUMBER:

02926548 (England and Wales)

AUDITORS:

Cheney & Co

Statutory Auditor

310 Wellingborough Road

Northampton

NN1 4EP

The directors present their strategic report for the period 1st February 2016 to 29th January 2017.

During this financial year Rutland Cycling delivered further significant growth, increasing the number of stores from nine

to ten, and growing online revenue. In 2017 Rutland Cycling continued its geographical expansion by acquiring a

high-profile store in Nottingham and a destination store with cycle hire at Pitsford Water in Northampton. A new

landmark destination store at Everards Meadows, Leicester is due to open during 2018.

KEY PERFORMANCE INDICATORS

2017

2016

2015

2014

2013

Turnover in £ thousands

16,001

11,120

9,104

9,202

10,872

Gross Profit in £ thousands

4,282

2,788

1,930

1,897

2,372

Gross Profit %

26.8%

25.1%

23.9%

20.6%

21.8%

Trading ratio

40.6%

34.1%

24.2%

17.4%

18.6%

Liquidity

91.9%

83.6%

92.5%

105.5%

131.1%

Turnover growth %

43.9%

22.1%

(1.1%)

(15.4%)

8.4%

REVIEW OF BUSINESS

In March 2014 BGF, a long term equity investor backed by five of the UK's main banking groups, recognising the

potential of Rutland Cycling, invested £2.7m of growth capital. In November 2015 a second tranche of growth capital

was injected by the BGF to help facilitate the acquisition of Cambridge Station Cycles. Following the successful opening

of the Peterborough superstore in 2015 further investment was secured for new store openings. In addition the business

has invested in its online platform, completing a strategically astute exit of low margin marketplace revenue while

growing the branded web business by over 20% in each of 2014 and 2015. The new website continued to perform

extremely well in 2016 at 26% growth, again hitting record levels of turnover while also supporting click and collect

business in the expanded store network. Growth in stores and online cumulated in an increase in Turnover of 43.9%

year on year whilst increasing Gross Profit by nearly 2 points to 26.8%

During 2016-17, achievements include:

- The launch of a new store at Cambridge Station in April 2016. Won through a competitive tender process with the rail

operating franchise, this is a prized retail location adjacent to 'CyclePoint' the UK's largest bike park. The latter opened

on 27th June 2016, providing 2850 secure spaces in a state of the art facility designed to encourage increased cycle

usage in a city where cycling already enjoys the highest modal share of transport options in the UK. The retail store of

approx. 4,000 sq. ft. benefits from the latest Rutland branding, housing a multi-brand bike, parts, accessory and clothing

range with support from the best brands in Cycling. The location also makes for a thriving workshop business, In

addition there is an excellent bike hire business, with electric bikes in particular helping to differentiate the Rutland offer

from poorer quality competition.

- The launch and subsequent expansion of industry-leading e-bike departments at our Whitwell, Peterborough,

Grafham, Barnwell and Normanton stores has positioned Rutland to take leadership in the fastest growing sector of the

cycling industry. Rutland moved fast to create compelling store-in-store destinations. With e-bike contribution in

previous years being negligible, the trading results have been hugely positive; e-bike revenue is now already a seven

figure sum p.a. Rutland has a clear USP in this sector with access to traffic-free cycle paths ideal for 'demo-ing' bikes,

large stores with space to display credible ranges and an experienced and fully trained team. The Company continues

to open up new e-bike departments in its existing and new stores.

- Online sales growth of 26% year on year. Continued growth as a result of implementing our strategic vision for digital,

with ongoing investment in our development roadmap, user experience, digital marketing, people and processes in

Rutland's online division.

- Margin improvement with marketplace channel exit complete, while overall turnover increased by 43.9%

PRINCIPAL RISKS AND UNCERTAINTIES

Weakened sterling brings price inflation challenges, yet Rutland's increased buying power puts the Company in a strong

position to work with key suppliers to improve terms and deliver an enhanced product range ahead of competitors. In the

wider industry contraction in some sectors of the mechanical bike sector has been compensated for by exciting growth

in electric bike sales and continued high demand for workshop and hire services stemming from higher cycling

participation levels. Rutland remains particularly well placed to take advantage of these trends.

BUSINESS GROWTH & DEVELOPMENT

During 2016 Rutland's strategic focus on excellent customer experience, better supporting the most important brands in

the industry and leadership in the e-bike market delivered excellent growth. Online, the focus on core brands and

products through an improved website resulted in significantly increased revenues. With Marketplace channels

successfully exited, a major project, costs remained under control. The Business is confident that these strategies will

continue to deliver further growth

Through better supporting the most important brands in the industry, Rutland has built an enviable bike portfolio

including key accounts with Bianchi, Brompton, Cannondale, Cube, Frog, Giant, Raleigh, Scott, Specialized, Trek and

Whyte. Collectively these brands account for over 80% of all bikes sold in the specialist sector in the UK. The business

values its close relationships with the bike industry's leading suppliers.

New store openings at Cambridge Station and recent acquisitions at Pitsford and Nottingham once again demonstrate

that Rutland possesses an excellent platform for expansion, successfully tried and tested. This organisation has

experienced teams and clear ownership of business functions down to highly skilled and dedicated teams in stores,

logistics, digital and finance.

Rutland's customer offer also provides a unique mix of high margin services. Bike hire once again enjoyed YOY growth

in 2016, with electric bike hire an increasingly important product. The interplay between hire, demo and sales in the

electric sector is extremely advantageous to Rutland. Women's departments also continue to enjoy growth as a result of

the investment made in this area. In MTB and Road, weakness in the lower-value market has been compensated by

robust trends in the higher value 'performance' market. Rutland have been well placed for this trend as a result of

investment into modern and 'premium' retail environments in recent years and throughout 2016.

The company vision is centred on being "Britain's Best Cycling Destination", taking our unique model, rooted in a

passion for cycling and excellent customer service giving us access to the best brands to inspire more people to own

and ride a new generation of bikes.

2016 has been a year of much change and growth and the board would like to thank our store and central office teams

for all their hard work, commitment and passion in implementing this change whilst delivering a superior customer

service.

ON BEHALF OF THE BOARD:

D Middlemiss - Director

26th October 2017

The directors present their report with the financial statements of the company for the period 1st February 2016 to 29th January 2017.

PRINCIPAL ACTIVITY

The principal activity of the company in the period under review was that of the sale and hire of cycles and associated

accessories.

DIVIDENDS

No dividends will be distributed for the period ended 29th January 2017.

DIRECTORS

The directors shown below have held office during the whole of the period from 1st February 2016 to the date of this

report.

Mrs K Archer

P M Archer

D Middlemiss

Mrs S M C Middlemiss

DISCLOSURE IN THE STRATEGIC REPORT

The requirement of disclosure of items in the directors report under Schedule 7 are set out in the strategic report in

accordance with s.414C (11) of the Companies Act 2006.

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 or she ought to

have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that

the company's auditors are aware of that information.

AUDITORS

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

ON BEHALF OF THE BOARD:

D Middlemiss - Director

26th October 2017

We have audited the financial statements of Rutland Water Cycling Ltd for the period ended 29th January 2017 on

pages six to sixteen. The financial reporting framework that has been applied in their preparation is applicable law and

United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial

Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.

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.

Respective responsibilities of directors and auditors

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. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give

reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or

error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances

and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates

made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and

non-financial information in the Strategic Report and the Report of the Directors to identify material inconsistencies with

the audited financial statements and to identify any information that is apparently materially incorrect based on, or

materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of

any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 29th January 2017 and of its profit for the period 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.

Opinion on other matter 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 Report of the Directors for the financial year for which the financial statements are prepared is consistent with

the financial statements, and has been prepared in accordance with applicable legal requirements. In the light of the

knowledge and understanding of the company and its environment, we have not identified any material misstatements in

the Strategic Report or the Report of the Directors.

Matters on which we are required to report by exception

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.

Paul Sparks ACA FCCA (Senior Statutory Auditor)

for and on behalf of Cheney & Co

Statutory Auditor

310 Wellingborough Road

Northampton

NN1 4EP

26th October 2017

TURNOVER

3

16,001,153

11,120,648

Cost of sales

(11,718,435

)

(8,332,468

)

GROSS PROFIT

4,282,718

2,788,180

Administrative expenses

(4,025,086

)

(3,051,500

)

OPERATING PROFIT/(LOSS)

5

257,632

(263,320

)

Interest receivable and similar income

2,082

2,516

259,714

(260,804

)

Interest payable and similar expenses

6

(1,916

)

(7,869

)

PROFIT/(LOSS) BEFORE TAXATION

257,798

(268,673

)

Tax on profit/(loss)

7

(67,997

)

37,200

PROFIT/(LOSS) FOR THE FINANCIAL PERIOD

189,801

(231,473

)

PROFIT/(LOSS) FOR THE PERIOD

189,801

(231,473

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

189,801

(231,473

)

FIXED ASSETS

Intangible assets

8

73,098

98,087

Tangible assets

9

965,297

924,450

1,038,395

1,022,537

CURRENT ASSETS

Stocks

10

4,752,705

2,838,858

Debtors

11

143,449

106,853

Cash at bank and in hand

1,507,775

1,102,435

6,403,929

4,048,146

CREDITORS

Amounts falling due within one year

12

6,968,436

4,807,438

NET CURRENT LIABILITIES

(564,507

)

(759,292

)

TOTAL ASSETS LESS CURRENT LIABILITIES

473,888

263,245

CREDITORS

Amounts falling due after more than one year

13

-

(16,155

)

PROVISIONS FOR LIABILITIES

17

(36,997

)

-

NET ASSETS

436,891

247,090

CAPITAL AND RESERVES

Called up share capital

18

3

3

Retained earnings

19

436,888

247,087

SHAREHOLDERS' FUNDS

436,891

247,090

The financial statements were approved by the Board of Directors on 26th October 2017 and were signed on its behalf by:

D Middlemiss - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 2nd February 2015

3

478,560

478,563

Changes in equity

Total comprehensive income

-

(231,473

)

(231,473

)

Balance at 31st January 2016

3

247,087

247,090

Changes in equity

Total comprehensive income

-

189,801

189,801

Balance at 29th January 2017

3

436,888

436,891

1.	STATUTORY INFORMATION

Rutland Water Cycling Ltd 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 exemption 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.

Exemption has been taken from preparing a Statement of Cash Flows on the grounds that the parent Rutland

Cycling 2013 Limited includes the subsidiary in its published financial statements.The consolidated financial

statements can be obtained from companieshouse.gov.uk.

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.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates,

value added tax and other sales taxes.

Goodwill

Goodwill, being the amount paid in connection with the acquisition of a business in 2000, is being amortised evenly over its estimated useful life of twenty years.

Rebranding costs

Rebranding costs are being amortised evenly over their estimated useful life of five years.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Short leasehold

-

in accordance with the property

Fixtures and fittings

-

25% on reducing balance, 15% on reducing balance and 10% on cost

Motor vehicles

-

25% on reducing balance

Computer equipment

-

25% on cost

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and

slow moving items.

Taxation

Taxation for the period 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 period 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.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those

held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance

leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The capital element

of the future payments is treated as a liability.

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 profit (2016 - loss) before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

Period

Period

1.2.16

2.2.15

to

to

29.1.17

31.1.16

£

£

United Kingdom

15,553,902

11,027,067

Europe

395,032

78,239

Rest of world

52,219

15,342

16,001,153

11,120,648

4.	EMPLOYEES AND DIRECTORS

Period

Period

1.2.16

2.2.15

to

to

29.1.17

31.1.16

£

£

Wages and salaries

2,439,869

1,908,383

Social security costs

188,433

153,753

Other pension costs

14,902

12,095

2,643,204

2,074,231

The average monthly number of employees during the period was as follows:

Period

Period

1.2.16

2.2.15

to

to

29.1.17

31.1.16

Directors

4

4

Administration and sales

144

105

148

109

Period

Period

1.2.16

2.2.15

to

to

29.1.17

31.1.16

£

£

Directors' remuneration

224,419

216,599

Directors' pension contributions to money purchase schemes

1,482

1,456

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

4

4

Information regarding the highest paid director is as follows:

Period

Period

1.2.16

2.2.15

to

to

29.1.17

31.1.16

£

£

Emoluments etc

70,211

69,573

Pension contributions to money purchase schemes

370

365

5.	OPERATING PROFIT/(LOSS)

The operating profit (2016 - operating loss) is stated after charging:

Period

Period

1.2.16

2.2.15

to

to

29.1.17

31.1.16

£

£

Other operating leases

424,987

183,167

Depreciation - owned assets

200,480

203,088

Depreciation - assets on hire purchase contracts

1,545

-

Goodwill amortisation

18,750

18,750

Rebranding costs amortisation

6,239

6,239

Auditors' remuneration

7,500

7,500

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

Period

Period

1.2.16

2.2.15

to

to

29.1.17

31.1.16

£

£

Bank interest

1,916

7,869

7.

TAXATION

Analysis of the tax charge/(credit)

The tax charge/(credit) on the profit for the period was as follows:

Period

Period

1.2.16

2.2.15

to

to

29.1.17

31.1.16

£

£

Deferred tax

67,997

(37,200

)

Tax on profit/(loss)

67,997

(37,200

)

Reconciliation of total tax charge/(credit) included in profit and loss

The tax assessed for the period is higher than the standard rate of corporation tax in the UK. The difference is

explained below:

Period

Period

1.2.16

2.2.15

to

to

29.1.17

31.1.16

£

£

Profit/(loss) before tax

257,798

(268,673

)

Profit/(loss) multiplied by the standard rate of corporation tax in the UK of 20% (2016 - 20%)

51,560

(53,735

)

Effects of:

Expenses not deductible for tax purposes

92

322

Depreciation in excess of capital allowances

2,909

40,622

Discounting effect of provision

13,436

-

Tax losses to carry forward

-

12,791

Deferred taxation:accelerated capital allowances

-

113,200

Deferred taxation:losses carried forward

-

(150,400

)

Total tax charge/(credit)

67,997

(37,200

)

8.	INTANGIBLE FIXED ASSETS

Rebranding

Goodwill

costs

Totals

£

£

£

COST

At 1st February 2016

and 29th January 2017

375,000

31,195

406,195

AMORTISATION

At 1st February 2016

296,875

11,233

308,108

Amortisation for period

18,750

6,239

24,989

At 29th January 2017

315,625

17,472

333,097

NET BOOK VALUE

At 29th January 2017

59,375

13,723

73,098

At 31st January 2016

78,125

19,962

98,087