Company registration number 10247588 (England and Wales)
ACE CASUAL LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
ACE CASUAL LIMITED
COMPANY INFORMATION
Directors
Mr M S Valene
Mr R A McNae
Mr G C Shaw
Company number
10247588
Registered office
Bradford Road
Brighouse
HD6 4DJ
Auditor
CBW Audit Limited
66 Prescot Street
London
E1 8NN
ACE CASUAL LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 25
ACE CASUAL LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The directors present the strategic report for the year ended 31 December 2022.
The directors have provided information regarding the Company's decisions and strategies during the financial year in the ‘fair review of the business’ section of this report.
Fair review of the business
The principal activity of the Company is the design, manufacture, sales and marketing of gaming furniture, wholesale to retailers and direct to customers through online channels. The Group’s objective is to grow turnover and profitability, by increasing the product portfolio and looking to expand into different geographies.
In pursuit of these objectives the Group aims to maintain sound financial management and avoid excessive risks.
During the year, the Company has continued to progress in the implementation of its strategic objectives. This is focused on delivering a high degree of perceived customer value through our products and services, which is monitored with the help of online review platforms. The Group has further invested in infrastructure and in people to achieve its strategic objectives.
The strategy is under constant review by the Board and Senior Executives to ensure it remains appropriate to achieve the Group’s objectives.
Financial performance and KPI’s
Sustainable and profitable financial growth is the core of the Company’s strategy. The Company uses several financial measures to monitor progress against strategies and objectives
These are:
| 12-month period ended 31 December 2022 £’000 | 7-month period ended 31 December 2021 £’000 |
| | |
| | |
The Company showed reduced turnover for the period, behind the prior equivalent period (7 months in prior financial year). The post-pandemic retail environment has proven to be challenging for the company. Many retailers globally have found themselves in an overstock position with inventory due to supply chain issues during covid. In addition to this the rapid increase in inflation in the US, UK and EU along with uncertainties created by the war in Ukraine resulted in reduced consumer disposable income. Retailers have also shifted their buying patterns, and are being very conservative, until there is more clarity on inflation. Recent moves by the central banks and increased interest rates have also dampened demand. As inflation starts to retreat and retailers find themselves in a better inventory position, sales will increase. The company sells product that is focused on gaming that is proving resilient and will continue to show growth. The group has been and will continue to be proactive in cutting costs and shifting operations to meet the demands of the new retail environment.
ACE CASUAL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
Principal risks and uncertainties
Ace Casual is exposed to various operational risks in the course of its business. To further support its successful growth Ace Casual undertakes adequate operational risk management, and focuses on effective risk assessment, implementing adequate controls, senior management commitment, as well as recruiting and retaining the right personnel. The following describes the material risks that could affect the Company.
External Risks
Growth of unregulated/non-compliant product on E-commerce Market Places and Ship-from-China, affecting our value proposition
Fluctuations in commodity prices and foreign exchange rates impacting the cost of goods
Inflation impacting discretionary spend in the furniture market
Managing risks and uncertainties
The Company seeks to manage, as far as possible, the key risks that it faces.
The Company seeks to manage external risks, through the diversification of its portfolio of products and geographies into which it sells. The Company looks to build and maintain good relationships with retail partners and suppliers alike. Further the Company seeks to ensure that operating margins are maintain by trying to diversify the supplier base to maintain continuity of supply and ensuring competitive costs for supplies.
In consideration of the above the directors have a strong expectation that the Company has the resources and experience to continue operating for the foreseeable future.
Although the UK left the EU at the end of 2020, the Company has been largely unaffected as stocks are sourced from the Far East and sales into European customers are on a Direct Import basis.
During 2021 COVID 19 (Coronavirus) had a significant impact on global markets. and the Company has seen the impact of this in 2022. The Group continues to manage risks to customers, financial stability, and integrity. The Company maintains a strong retail presence, sufficient financial resources, and is prepared to meet the challenges coronavirus could have on customers and staff even in a long-term slow down.
Mr R A McNae
Director
25 August 2023
ACE CASUAL LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2022.
Principal activities
The principle activity of the company continues to be that of the wholesale of gaming equipment and furniture.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr M S Valene
Mr R A McNae
Mr G C Shaw
Auditor
In accordance with the company's articles, a resolution proposing that CBW Audit Limited be reappointed as auditor of the company will be put at a General Meeting.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report 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 of disclosure to auditor
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 company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
ACE CASUAL LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -
On behalf of the board
Mr R A McNae
Director
25 August 2023
ACE CASUAL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF ACE CASUAL LIMITED
- 5 -
Opinion
We have audited the financial statements of Ace Casual Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the 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 company's affairs as at 31 December 2022 and of its 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.
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 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.
Material uncertainty relating to going concern
We draw attention to note 1.3 in the financial statements, which states that the parent company is reliant on the renewal of a revolving credit facility with JP Morgan Chase Bank which amounts to a maximum US$7,500,000 as at 31 December 2023. The facility is renewed on an annual basis and is due for renewal on 31 December 2023. As at the date of signing these financial statements, the group has yet to receive confirmation that the facility will be renewed.
As stated in note 1.3, these events or conditions, along with other matters as set forth in note 1.3, indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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.
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 directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
ACE CASUAL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF ACE CASUAL LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' 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, 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 remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the 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 company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue 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 ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations. The laws and regulations applicable to the company were identified through discussions with directors and other management, and from our commercial knowledge and experience of the industry. Of these laws and regulations, we focused on those that we considered may have a direct material effect on the financial statements or the operations of the company, including Companies Act 2006, taxation legislation, data protection, anti-bribery, anti-money-laundering, employment, environmental and health and safety legislation. The extent of compliance with these laws and regulations identified above was assessed through making enquiries of management and inspecting legal correspondence. The identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and
understanding the design of the company’s remuneration policies.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out in note 2 were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
ACE CASUAL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF ACE CASUAL LIMITED
- 7 -
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC, relevant regulators including the company’s legal advisors.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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.
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
Daniel Howarth
Senior Statutory Auditor
For and on behalf of CBW Audit Limited
25 August 2023
Chartered Accountants
Statutory Auditor
66 Prescot Street
London
E1 8NN
ACE CASUAL LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 8 -
Year
Period
ended
ended
31 December
31 December
2022
2021
Notes
£
£
Turnover
3
21,111,949
24,197,497
Cost of sales
(15,749,206)
(17,119,484)
Gross profit
5,362,743
7,078,013
Administrative expenses
(3,072,000)
(3,082,653)
Other operating income
74,500
Operating profit
4
2,365,243
3,995,360
Interest receivable and similar income
7
1
Interest payable and similar expenses
8
(341)
(5,612)
Profit before taxation
2,364,902
3,989,749
Tax on profit
9
(223,027)
(657,821)
Profit for the financial year
2,141,875
3,331,928
The profit and loss account has been prepared on the basis that all operations are continuing operations.
ACE CASUAL LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2022
31 December 2022
- 9 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
11
130,591
89,258
Investments
12
21,625
152,216
89,258
Current assets
Stocks
14
1,370,056
2,728,872
Debtors
15
6,530,524
8,074,210
Cash at bank and in hand
2,648,427
2,486,956
10,549,007
13,290,038
Creditors: amounts falling due within one year
16
(3,070,982)
(7,897,981)
Net current assets
7,478,025
5,392,057
Total assets less current liabilities
7,630,241
5,481,315
Provisions for liabilities
Deferred tax liability
18
24,812
17,761
(24,812)
(17,761)
Net assets
7,605,429
5,463,554
Capital and reserves
Called up share capital
20
105
105
Profit and loss reserves
7,605,324
5,463,449
Total equity
7,605,429
5,463,554
The financial statements were approved by the board of directors and authorised for issue on 25 August 2023 and are signed on its behalf by:
Mr R A McNae
Director
Company Registration No. 10247588
ACE CASUAL LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 June 2021
105
2,621,278
2,621,383
Period ended 31 December 2021:
Profit and total comprehensive income for the period
-
3,331,928
3,331,928
Dividends
10
-
(489,757)
(489,757)
Balance at 31 December 2021
105
5,463,449
5,463,554
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
2,141,875
2,141,875
Balance at 31 December 2022
105
7,605,324
7,605,429
ACE CASUAL LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
25
1,191,667
3,631,049
Interest paid
(341)
(5,612)
Income taxes paid
(839,798)
(296,218)
Net cash inflow from operating activities
351,528
3,329,219
Investing activities
Purchase of tangible fixed assets
(89,975)
(45,091)
Proceeds from disposal of subsidiaries
(21,625)
Repayment of loans
(74,921)
(66,840)
Interest received
7,207
Net cash used in investing activities
(186,521)
(104,724)
Financing activities
Repayment of borrowings
(2,303)
Payment of finance leases obligations
(3,536)
(1,619)
Dividends paid
(489,757)
Net cash used in financing activities
(3,536)
(493,679)
Net increase in cash and cash equivalents
161,471
2,730,816
Cash and cash equivalents at beginning of year
2,486,956
(243,860)
Cash and cash equivalents at end of year
2,648,427
2,486,956
ACE CASUAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 12 -
1
Accounting policies
Company information
Ace Casual Limited is a private company limited by shares incorporated in England and Wales. The registered office is Bradford Road, Brighouse, HD6 4DJ.
1.1
Accounting convention
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, although the functional currency of the company is US Dollars. 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 has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
Ace Casual Limited is a wholly owned subsidiary of XR Holdings Limited and the results of Ace Casual Limited are included in the consolidated financial statements of XR Holdings Limited which are available from Companies House.
1.2
Change in accounting estimate
The company changed its estimate of the useful economic life for plant and equipment and updated the policy (to reflect the change in depreciation method to be 20% - 33% straight line)) - the change will be applied prospectively.
1.3
Going concern
These financial statements are prepared on the going concern basis, as the directors have a reasonable expectation that the company will continue in operational existence for the foreseeable future.true
The parent company has a revolving credit facility with JP Morgan Chase Bank which amounts to a maximum of US$7,500,000 to 31st December 2023. The facility is renewed on an annual basis and is due for renewal on 31st December 2023. As at the date of signing these financial statements, the group has yet to receive confirmation that the facility will be renewed.
The parent company has not been made aware that this facility will be withdrawn, and the bank have the ability to draw on assets of Ace Casual Limited if the facility is not renewed. The Directors expect the facility to be renewed. However, should the facility not be renewed, the parent does not have sufficient liquid resources to repay the facility and will be reliant on the Company's resources.
The directors are therefore aware of certain material uncertainties which may cause doubt on the group's ability to continue as a going concern, should the facility not be renewed. However, the directors continue to adopt the going concern basis of accounting in preparing these financial statements, which do not reflect any adjustments that would be necessary if the facility was not renewed.
1.4
Turnover
Turnover is recognised at the fair value of the consideration receivable for goods 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.
ACE CASUAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
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.
1.5
Tangible fixed assets
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:
Plant and equipment
20-33% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
1.7
Impairment of fixed assets
At each reporting period end date, the company 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.
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.
ACE CASUAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
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.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price.
Stocks held for distribution at no or nominal consideration are measured at the lower of replacement cost and cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of 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.
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include deposits held at call with banks.
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair 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.
ACE CASUAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
Impairment of financial assets
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.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company 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.
Classification of financial liabilities
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 company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, are initially recognised at transaction price. 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.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
ACE CASUAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 16 -
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current 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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
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 when the company has 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.
1.13
Employee benefits
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.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
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.
ACE CASUAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 17 -
1.16
Foreign exchange
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.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Accruals
The company makes estimates of accruals based on expenditure incurred for which invoices have not been received however can be reliably estimated as per the terms agreed on supplier contracts.
Tangible fixed assets
Tangible fixed assets are depreciated based on their useful lives. The actual useful lives are based on judgements made by management.
Stocks
Stocks are valued at the lower of cost and net realisable value. Net realisable value includes, where necessary, provisions for slow-moving and obsolete stock items. Calculation of these provisions requires judgements to be made, which include forecast consumer demand, likely repair cost and sale price and the economic environment.
Investments
Investments are measured at cost and reviewed for impairment at each reporting date.
Trade debtors
Trade debtors are provided net of any potential bad debt provisions.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
ACE CASUAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
3
Turnover and other revenue
(Continued)
- 18 -
2022
2021
£
£
Turnover analysed by geographical market
U.K. sales
16,090,886
18,565,764
E.U. sales
4,703,595
4,841,597
Rest of the world sales
317,468
790,136
21,111,949
24,197,497
2022
2021
£
£
Other revenue
Interest income
-
1
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(380,658)
(87,933)
Fees payable to the company's auditor for the audit of the company's financial statements
78,220
70,000
Depreciation of owned tangible fixed assets
46,704
15,894
Depreciation of tangible fixed assets held under finance leases
1,938
3,270
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
22
19
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
1,315,281
1,020,085
Social security costs
134,781
118,681
Pension costs
20,871
10,587
1,470,933
1,149,353
ACE CASUAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 19 -
6
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
301,466
531,683
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2021 - 0).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
301,466
322,088
Company pension contributions to defined contribution schemes
42,432
-
7
Interest receivable and similar income
2022
2021
£
£
Interest income
Interest on bank deposits
1
Investment income includes the following:
Interest on financial assets not measured at fair value through profit or loss
1
8
Interest payable and similar expenses
2022
2021
£
£
Other finance costs:
Other interest
341
5,612
9
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
215,976
678,610
Adjustments in respect of prior periods
(26,517)
Total current tax
215,976
652,093
Deferred tax
Origination and reversal of timing differences
7,051
5,728
Total tax charge
223,027
657,821
ACE CASUAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
9
Taxation
(Continued)
- 20 -
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:
2022
2021
£
£
Profit before taxation
2,364,902
3,989,749
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
449,331
758,052
Tax effect of expenses that are not deductible in determining taxable profit
17,125
9,929
Group relief
(237,014)
(18,634)
Permanent capital allowances in excess of depreciation
(12,982)
(6,945)
Research and development tax credit
(64,307)
Under/(over) provided in prior years
(26,517)
Deferred tax
7,051
5,728
Tax charge arising on timing differences
(484)
515
Taxation charge for the year
223,027
657,821
10
Dividends
2022
2021
£
£
Interim paid
489,757
11
Tangible fixed assets
Plant and equipment
£
Cost
At 1 January 2022
152,642
Additions
89,975
At 31 December 2022
242,617
Depreciation and impairment
At 1 January 2022
63,384
Depreciation charged in the year
48,642
At 31 December 2022
112,026
Carrying amount
At 31 December 2022
130,591
At 31 December 2021
89,258
ACE CASUAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
11
Tangible fixed assets
(Continued)
- 21 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2022
2021
£
£
Plant and equipment
2,543
7,750
12
Fixed asset investments
2022
2021
Notes
£
£
Investments in subsidiaries
13
21,625
Movements in fixed asset investments
Shares in subsidiaries
£
Cost or valuation
At 1 January 2022
-
Additions
21,625
At 31 December 2022
21,625
Carrying amount
At 31 December 2022
21,625
At 31 December 2021
-
13
Subsidiaries
Details of the company's subsidiaries at 31 December 2022 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
XRocker GmbH
Bahnhofsplatz 42, 28195 Bremen, Germany
Ordinary
100.00
14
Stocks
2022
2021
£
£
Finished goods and goods for resale
1,370,056
2,728,872
ACE CASUAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
15
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
2,718,024
6,828,281
Amounts owed by group undertakings
3,286,107
367,791
Other debtors
333,765
771,795
Prepayments and accrued income
192,628
106,343
6,530,524
8,074,210
16
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Obligations under finance leases
17
3,536
Trade creditors
1,028,976
4,157,466
Amounts owed to group undertakings
54,378
Corporation tax
248,370
872,192
Other taxation and social security
508,744
433,942
Other creditors
223,881
195,309
Accruals and deferred income
1,061,011
2,181,158
3,070,982
7,897,981
Within the comparative figure for bank loans and overdrafts are amounts owed under invoice financing agreements. The security over these facilities are available for inspection at Companies House.
17
Finance lease obligations
2022
2021
Future minimum lease payments due under finance leases:
£
£
Within one year
2,578
In two to five years
958
3,536
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. 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 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
ACE CASUAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 23 -
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
24,812
17,761
2022
Movements in the year:
£
Liability at 1 January 2022
17,761
Charge to profit or loss
7,051
Liability at 31 December 2022
24,812
The deferred tax liability set out above is expected to reverse within 48 months and relates to accelerated capital allowances that are expected to mature within the same period.
19
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
20,871
10,587
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. The pension cost charge represents contributions payable by the company to the fund. Contributions totalling £4,900 (2021 - £4,181) were payable to the fund at the balance sheet date.
20
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of 1p each
4,000
4,000
40
40
Ordinary B shares of 1p each
500
500
5
5
Ordinary C shares of 1p each
6,000
6,000
60
60
10,500
10,500
105
105
Each class of share ranks pari-passu in all respects.
ACE CASUAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 24 -
21
Operating lease commitments
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2022
2021
£
£
Within one year
199,500
199,500
Between two and five years
89,667
289,167
289,167
488,667
22
Contingent liabilities
As at 31 December 2022, the company has made claims for Research & Development relief in the amount of £195,000. In addition, there are penalties & interest accruing in the region of £40,000. HM Revenue & Customs (HMRC) has contested this claim and the outcome of HMRC enquiries is uncertain. However, the directors believe that their claim for relief qualifies under the regulations in place at the reporting date and they will contest any attempt to disclaim the relief.
Whilst the directors recognise that the relief may require to be repaid, under FRS102 section 21.4(b), it is not probable (i.e. more likely than not) that the company will be required to transfer economic benefits to HMRC. On that basis, no provision has been made in these financial statements in relation to this contingent liability.
23
Related party transactions
Transactions with related parties
At the reporting date the company was owed £323,795 (2021: £248,874) by a company under common control and management. The amount is interest free and repayable upon demand.
At the reporting date the company owed £96 (2021: nil) to ultimate parent entity. The amount is interest free and repayable on demand.
The company has taken advantage of the exemption in accordance with Section 33 of FRS 102 'Related Party Disclosures' not to disclose transactions entered into between two or more members of a group, as the company is a wholly owned subsidiary undertaking of the group to which it is a party to the transactions.
24
Ultimate controlling party
The parent company of Ace Casual Limited is XR Holdings Limited and its registered office is Bradford Road, Brighouse, HD6 4DJ.
The ultimate parent company is Norval Inc., company incorporated in United States of America.
The smallest and largest group preparing consolidated accounts is that headed by XR Holdings Limited.
Copies of consolidated accounts are available from Companies House.
ACE CASUAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 25 -
25
Cash generated from operations
2022
2021
£
£
Profit for the year after tax
2,141,875
3,331,928
Adjustments for:
Taxation charged
223,027
657,821
Finance costs
341
5,612
Investment income
(1)
Depreciation and impairment of tangible fixed assets
48,642
19,164
Movements in working capital:
Decrease/(increase) in stocks
1,358,816
(1,052,999)
Decrease/(increase) in debtors
1,618,607
(825,163)
(Decrease)/increase in creditors
(4,199,641)
1,494,687
Cash generated from operations
1,191,667
3,631,049
26
Analysis of changes in net funds
1 January 2022
Cash flows
31 December 2022
£
£
£
Cash at bank and in hand
2,486,956
161,471
2,648,427
Obligations under finance leases
(3,536)
3,536
-
2,483,420
165,007
2,648,427
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