Company registration number:
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COMPANY INFORMATION
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CONTENTS
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STRATEGIC REPORT
FOR THE YEAR ENDED 31 JANUARY 2023
The directors present their strategic report for the year ended 31 January 2023.
The principal activity of the company is the design, manufacture and sale of smart pet products that help owners better care for their pets throughout the day.
During the period, the Company continued to experience the impact of the COVID pandemic. The positive increase in market demand, driven by a boom in pet ownership, was somewhat counter balanced by an increase in competitive activity from cheaper overseas product at the lower end of the product range in particular. Equally, the sector continued to experience challenges within the supply chain in terms of shipping costs, lead times and component availability.
A number of steps were taken to maintain availability of products for customers and protect the company against both increasing freight costs and component shortages however this did result in higher than usual stock levels and the associated cost of this. Price increases were implemented in an attempt to mitigate margin erosion (due to increased costs) and to off-set an increase in products manufactured in the UK again at higher cost. The full impact of these actions will take some time to feed through to financial performance. On a positive note, the company continues to develop new products and launch these successfully into new online marketplaces and sales channels to drive future revenue growth. Total sales decreased slightly in the year to January 2023 by 5.6% to £11,602,630. The company generated a loss before tax of £132,787 for the year ended 31 January 2023 (2022 profit: £1,091,335). The balance sheet shows net assets at 31 January 2023 £6,591,190 (2022: £6,694,947).
The board has a policy of continuous identification and review of key business risks and oversees the development of processes to ensure that these risks are managed appropriately.
The company generally allows customers to pay in their own currencies. As a result, the company is exposed to currency risks associated with accounts receivables denominated in foreign currency. Production is predominantly denominated in US Dollars and whilst a significant percentage is subject to a natural hedge from our US Dollar denominated sales there is an underlying risk. The company does not enter into any derivative instruments for hedging or other purposes. The company is part of a group that operates within a leveraged debt scenario and therefore carries the risk of future debt repayment. In late 2023, due to continued trading pressures and a significant increase in debt servicing costs (due to interest rate rises), the company concluded a successful refinancing process. This process resulted in a significant debt write off, alongside a new investment of £1.3m. The debt restructure and working capital injection will allow the business to continue trading with sufficient cash head room for the foreseeable future Finally the company is reliant on its people to drive the strategic business plan and future success of the business. It is a highly motivated team who are confident of delivering the plan.
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
The main KPIs are revenue and profit before tax which are included in the business review section.
This report was approved by the board and signed on its behalf.
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JANUARY 2023
The directors present their report and the financial statements for the year ended 31 January 2023.
The directors who served during the year were:
The directors are responsible for preparing the Strategic Report, the Directors' 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 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'. 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 for the Company's financial statements and then apply them consistently;
∙make judgments 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 to 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.
The loss for the year, after taxation, amounted to £103,757 (2022 - profit £956,619).
The Company undertakes research and development activity focused on developing new and innovative pet products.
The Company has chosen, in accordance with Section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013, to set out within the Company's Strategic Report, the Company's Strategic Report Information as required by Schedule 7 of the Large and Medium Sized Companies and Groups (Accounts and Reports) Regulation 2008. This includes information that would have been included in the business review and details of principal risks and uncertainties and future developments.
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2023
Under section 487(2) of the Companies Act 2006, Menzies LLP will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
This report was approved by the board and signed on its behalf.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PET MATE LIMITED
We have audited the financial statements of Pet Mate Limited (the 'Company') for the year ended 31 January 2023, which comprise the Statement of Income and Retained Earnings, the Statement of Financial Position, the Statement of Cash Flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' 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.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PET MATE LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
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.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PET MATE LIMITED (CONTINUED)
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 Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
The company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation. We determined that the following laws and regulations were most significant including:
∙The Companies Act 2006;
∙Financial Reporting Standard 102;
∙UK employment legislation;
∙UK health and safety legislation; and
∙General Data Protection Regulations
We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items including:
We understood how the company are complying with those legal and regulatory frameworks by making inquiries to management and those responsible for legal and compliance procedures.
The engagement partner assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The assessment did not identify any issues in this area.
We assessed the susceptibility of the company's financial statements to material misstatement, including how fraud might occur. Audit procedures performed by the engagement team included:
∙Identifying and assessing the design effectiveness of controls that management has in place to prevent and detect fraud;
∙Understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process;
∙Challenging assumptions and judgments made by management in its significant accounting estimates; and
∙Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations
As a result of the above procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas:
∙Posting of journals to the accounting software which are of a non-routine nature in terms of timing and amount;
∙Management override of controls to manipulate results; and
∙Timing of revenue recognition.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF PET MATE LIMITED (CONTINUED)
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 Auditors' 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.
for and on behalf of
Chartered Accountants
Statutory Auditor
1st Floor
Midas House
62 Goldsworth Road
Surrey
GU21 6LQ
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STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 JANUARY 2023
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STATEMENT OF FINANCIAL POSITION
AS AT 31 JANUARY 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 13 to 25 form part of these financial statements.
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STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JANUARY 2023
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ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 JANUARY 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
Pet Mate Limited is a private company limited by shares, incorporated in the United Kingdom under the Companies Act 2006, registered in England and Wales. The address of the registered office and principal place of business is disclosed on the company information page. The principal activity is the sale of pet accessories.
2.Accounting policies
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The Company made a loss of £103,757 but had net assets of £6,591,190 at 31 January 2023, meaning that it was in a strong financial position at that point. It is however part of a group which was heavily indebted and required significant funds to service the debt, which impacted the ability of the Company to continue to trade as a going concern. In light of this, a refinancing package was agreed in late 2023, which significantly reduced the interest commitment from the group, with nothing due until January 2025. This has led the Directors to conclude that there are sufficient funds within the entity and wider group to ensure that the Company can continue to trade as a going concern. The financial statements have therefore been prepared on that basis.
Functional and presentation currency
Transactions and balances
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
2.Accounting policies (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
2.Accounting policies (continued)
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed five years.
The development costs capitalised in the year relate to a project to develop the software for a new product. It’s currently still in the beta testing phase and therefore is not yet being amortised. The costs in relation to this project have been capitalised as it is in the beta testing phase and so is technically feasible and all other criteria for capitalisation has been met.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
The directors have determined that a stock provision is required. The provision has been calculated through reviewing stock values and quantities at 31 January 2024 compared to unit sales in the year to 31 January 2024. For any items which are slow moving management have used their judgement to determine whether a provision is required at 50%, 75% or 100% of the stock value at 31 January 2024. They have then determined that only 50% of the provision calculated should be recognised at 31 January 2023, which resulted in a provision of £338,569 being recognised. The Directors have determined that it was reasonable to determine that a provision of such scale would have been required if being assessed at 31 January 2023, and that the results in the year to 31 January 2024 merely proved this to be the case.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
Analysis of turnover by country of destination:
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
11.Taxation (continued)
There were no factors that may affect future tax charges.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
13.Tangible fixed assets (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
Share premium account
Profit and loss account
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2023
The Company’s immediate parent company is Pet Mate Finance Limited.
The ultimate parent company is Pet Mate Holdco Limited, a company incorporated in the United Kingdom, which is controlled by Mnl Nominees Limited. The directors consider there to be no ultimate controlling party.
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