Company Registration No. 11346255 (England and Wales)
HUNZA G LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
HUNZA G LIMITED
COMPANY INFORMATION
Directors
Georgiana Huddart
Peter Meadows
Company number
11346255
Registered office
First Floor
51-52 Frith Street
London
W1D 4SH
England
Auditor
HW Fisher LLP
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
HUNZA G LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
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 - 21
HUNZA G LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 1 -
The directors present the strategic report for the year ended 31 May 2023.
Fair review of the business
The principal activity of Hunza G continued to be the design and sale of swimwear through strategic wholesale partners and the company’s direct to consumer (DTC) website. Performance in all channels in the year was strong with YoY total revenue growth of +42%.
The wholesale order book grew significantly in the period as the company worked closely with factories to increase production capacity. DTC growth throughout the year has largely been supported by strategic investment in digital marketing.
Despite a challenging macro-economic environment, the company was able to partially offset increased costs in distribution and supply chain by implementing various cost reduction strategies and as a result saw EBITDA growth of 33%.
Principal risks and uncertainties
Where possible, risks to the business are mitigated through a robust internal control environment. Business risks are reviewed on an ongoing basis by senior management.
Foreign Currency Risk
The company is exposed to currency risk through purchase invoices in foreign currency, and revenues generated in other currencies. The exposure is limited as the company is able to naturally hedge a large proportion of costs.
Liquidity Risk
Liquidity is an ongoing risk as the company seeks to finance growth as well as maintain a reasonable level of cash to ensure the company can manage unforeseen economic events. The company manages potential liquidity risk by carefully monitoring cash flow forecasts and future working capital requirements to ensure there is significant cash available for future liabilities.
Uncertain Economic Climate
The company is affected by fluctuations in consumer spending and rising costs. To mitigate potential risks arising from the wider context, the company has invested in the DTC channel which benefits from a higher margin, as well as focusing the growth in key markets overseas to spread the wholesale customer base.
Supply Chain Risk
The company works with a limited number of factories to ensure quality and best in class. Management regularly reviews the supply chain and works closely alongside factories to mitigate supply chain risk through disruptions and capacity restrictions.
Credit Risk
The company has some credit risk exposure from its trade debtors. To manage risk, debtor ageing is closely monitored and terms are regularly reviewed, with many wholesale customers on prepayment and deposit terms.
Key performance indicators
The company monitors and reports on Key Performance Indicators (KPIs) monthly. The KPIs used to review performance, include, but are not limited to, Revenue, Gross Profit Margin, EBITDA and EBITDA margin. These KPIs are used to assess current performance against business strategy and inform decision making.
2023
2022
Revenue
22,339,969
15,774,795
EBITDA
8,202,221
6,169,971
EBITDA Margin
37%
39%
EBITDA is calculated as follows:
2023
2022
Operating profit
8,069,063
6,152,623
Depreciation & FX
28,218
17,347
Non-recurring costs
104,940
-
8,202,221
6,169,970
HUNZA G LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 2 -
Future Developments
The company will continue to invest in the DTC channel and focus growth in key international markets.
Georgiana Huddart
Director
1 February 2024
HUNZA G LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 May 2023.
Principal activities
The principal activity of the company continued to be that of wholesale and retail sales of clothing and accessories.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £4,320,000. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Georgiana Huddart
Peter Meadows
Auditor
HW Fisher LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of the information on and exposure to financial risk and future developments.
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.
On behalf of the board
Georgiana Huddart
Director
1 February 2024
HUNZA G LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MAY 2023
- 4 -
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.
HUNZA G LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HUNZA G LIMITED
- 5 -
Opinion
We have audited the financial statements of Hunza G Limited (the 'company') for the year ended 31 May 2023 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 FRS 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 May 2023 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.
Conclusions relating to going concern
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 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.
HUNZA G LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HUNZA G 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 and the directors' report.
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 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.
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.
As part of our planning process:
We enquired of management the systems and controls the company has in place, the areas of the financial statements that are most susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The company did not inform us of any known, suspected or alleged fraud.
We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102 and Companies Act 2006.
We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.
Using our knowledge of the company, together with the discussions held with the company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Identifying and testing journal entries and the overall accounting records, in particular those that were significant and unusual.
Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.
Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates, in particular in relation to valuation of stock.
Assessing the reasonableness of assertions made by the company regarding sustainability.
Testing key revenue lines, in particular cut-off, for evidence of management bias.
Performing physical verification of stock.
Obtaining third-party confirmation of material bank balances.
Documenting and verifying all significant related party balances and transactions.
Reviewing documentation such as the company board minutes for discussions of irregularities including fraud.
HUNZA G LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HUNZA G LIMITED
- 7 -
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditors responsibilities. This description forms part of our auditor's report.
The financial statements of Hunza G Limited for the year ended 31 May 2022 were unaudited.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Katherine Montgomery (Senior Statutory Auditor)
For and on behalf of HW Fisher LLP
Chartered Accountants
Statutory Auditor
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
1 February 2024
HUNZA G LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
22,339,969
15,774,795
Cost of sales
(8,367,912)
(6,128,348)
Gross profit
13,972,057
9,646,447
Distribution costs
(1,561,691)
(945,447)
Administrative expenses
(4,341,303)
(2,548,377)
Operating profit
4
8,069,063
6,152,623
Interest receivable and similar income
28,283
96
Profit before taxation
8,097,346
6,152,719
Tax on profit
8
(1,640,149)
(1,156,930)
Profit for the financial year
6,457,197
4,995,789
The profit and loss account has been prepared on the basis that all operations are continuing operations.
HUNZA G LIMITED
BALANCE SHEET
AS AT 31 MAY 2023
31 May 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
77,851
76,016
Current assets
Stocks
11
1,946,962
1,198,357
Debtors
12
4,775,723
2,848,818
Cash at bank and in hand
5,652,976
4,719,670
12,375,661
8,766,845
Creditors: amounts falling due within one year
13
(3,482,684)
(1,798,686)
Net current assets
8,892,977
6,968,159
Total assets less current liabilities
8,970,828
7,044,175
Capital and reserves
Called up share capital
16
1,100
1,100
Own shares
(210,544)
Profit and loss reserves
9,180,272
7,043,075
Total equity
8,970,828
7,044,175
The financial statements were approved by the board of directors and authorised for issue on 1 February 2024 and are signed on its behalf by:
Georgiana Huddart
Director
Company Registration No. 11346255
HUNZA G LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2023
- 10 -
Share capital
Own shares
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 June 2021
1,100
2,847,286
2,848,386
Year ended 31 May 2022:
Profit and total comprehensive income for the year
-
-
4,995,789
4,995,789
Dividends
9
-
-
(800,000)
(800,000)
Balance at 31 May 2022
1,100
7,043,075
7,044,175
Year ended 31 May 2023:
Profit and total comprehensive income for the year
-
-
6,457,197
6,457,197
Dividends
9
-
-
(4,320,000)
(4,320,000)
Own shares acquired
-
(210,544)
-
(210,544)
Balance at 31 May 2023
1,100
(210,544)
9,180,272
8,970,828
HUNZA G LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MAY 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
19
7,194,697
3,832,716
Income taxes paid
(1,458,351)
(398,579)
Net cash inflow from operating activities
5,736,346
3,434,137
Investing activities
Purchase of tangible fixed assets
(24,227)
(73,320)
Proceeds on disposal of tangible fixed assets
2,431
Loans made
(278,983)
Interest received
28,283
96
Net cash used in investing activities
(272,496)
(73,224)
Financing activities
Purchase of treasury shares
(210,544)
Dividends paid
(4,320,000)
(800,000)
Net cash used in financing activities
(4,530,544)
(800,000)
Net increase in cash and cash equivalents
933,306
2,560,913
Cash and cash equivalents at beginning of year
4,719,670
2,158,757
Cash and cash equivalents at end of year
5,652,976
4,719,670
HUNZA G LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
- 12 -
1
Accounting policies
Company information
Hunza G Limited is a private company limited by shares incorporated in England and Wales. The registered office is First Floor, 51-52 Frith Street, London, W1D 4SH, England.
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, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
The company has performed well during the year ended 31 May 2023 and this performance has continued post year end. The directors have considered the ability of the company to trade for a period of twelve months post year end, considering current financial performance, liquidity and forecast performance.true
At the time of approving the financial statements, the directors are confident the company will have adequate resources to continue in operational existence for a period of at least twelve months and meet all their liabilities as and when they fall due. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for clothing & accessories provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when substantially all risks and rewards associated to stock is passed to the customer.
1.4
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred.
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
over 5 years
Fixtures and fittings
over 5 years
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.
HUNZA G LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 13 -
1.6
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.
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs.
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.
1.8
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 cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
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.
HUNZA G LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 14 -
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 unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
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.
1.10
Taxation
The tax expense represents the sum of the tax currently payable.
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.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Share-based payments
Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity
instruments granted. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity. As the total fair value of the options granted by the company is immaterial to the accounts, no expense has been recognised in
respect of the options this year.
HUNZA G LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 15 -
1.14
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease.
1.15
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.
Stock provision
The company produces clothes which are subject to changing consumer demand and fashion trends. As a result of this, it
is necessary to consider the net realizable value of stock and associated provision required. When calculating this provision,
the company considers the nature and condition of the stock as well as the ability for it to be re-purposed for future manufacture. As at 31 May 2023, a total provision of £133,553 had been recognised (2022: £79,494)
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Sale of clothing and accessories
22,339,969
15,774,795
2023
2022
£
£
Other significant revenue
Interest income
28,283
96
2023
2022
£
£
Turnover analysed by geographical market
Europe
6,794,834
4,961,611
UK
5,160,700
3,437,730
Rest of world
10,384,435
7,375,454
22,339,969
15,774,795
HUNZA G LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 16 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
8,257
4,946
Research and development costs
16,316
Depreciation of owned tangible fixed assets
19,961
12,401
Operating lease charges
128,898
120,634
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
28,000
For other services
Taxation compliance services
2,500
All other non-audit services
4,380
6,880
-
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Selling and distribution
16
16
Administrative
9
4
Total
25
20
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,639,258
994,496
Social security costs
200,609
88,092
Pension costs
255,095
36,146
2,094,962
1,118,734
HUNZA G LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 17 -
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
476,000
241,800
Company pension contributions to defined contribution schemes
8,400
7,200
484,400
249,000
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 1).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
356,000
241,800
Company pension contributions to defined contribution schemes
8,400
7,200
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
1,640,149
1,158,351
Adjustments in respect of prior periods
(1,421)
Total current tax
1,640,149
1,156,930
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:
2023
2022
£
£
Profit before taxation
8,097,346
6,152,719
Expected tax charge based on the standard rate of corporation tax in the UK of 20.00% (2022: 19.00%)
1,619,469
1,169,017
Tax effect of expenses that are not deductible in determining taxable profit
23,574
4,908
Profit from non-trading loan relationships
(19)
Fixed asset - capital allowances
(2,894)
(16,976)
Taxation charge for the year
1,640,149
1,156,930
HUNZA G LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 18 -
9
Dividends
2023
2022
£
£
Final paid
4,320,000
800,000
10
Tangible fixed assets
Plant and equipment
Fixtures and fittings
Total
£
£
£
Cost
At 1 June 2022
48,870
48,791
97,661
Additions
13,256
10,971
24,227
Disposals
(2,431)
(2,431)
At 31 May 2023
62,126
57,331
119,457
Depreciation and impairment
At 1 June 2022
15,087
6,558
21,645
Depreciation charged in the year
9,723
10,238
19,961
At 31 May 2023
24,810
16,796
41,606
Carrying amount
At 31 May 2023
37,316
40,535
77,851
At 31 May 2022
33,783
42,233
76,016
11
Stocks
2023
2022
£
£
Raw materials and consumables
854,272
330,801
Goods in transit
25,546
232,872
Finished goods and goods for resale
1,067,144
634,684
1,946,962
1,198,357
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
4,318,854
2,782,082
Other debtors
319,199
21,578
Prepayments and accrued income
137,670
45,158
4,775,723
2,848,818
HUNZA G LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 19 -
13
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
943,168
464,765
Corporation tax
940,149
758,351
Other taxation and social security
414,951
164,425
Other creditors
468,768
3,756
Accruals and deferred income
715,648
407,389
3,482,684
1,798,686
14
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
255,095
36,146
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.
15
Share-based payment transactions
Number of share options
Weighted average exercise price
2023
2022
2023
2022
Number
Number
£
£
Outstanding at 1 June 2022
Granted
440
0.10
Outstanding at 31 May 2023
440
0.10
Exercisable at 31 May 2023
The options outstanding at 31 May 2023 have an exercise price of £0.10. The options granted vest immediately, or over a period of 3 years.
During 2023, the company entered into an EMI scheme with certain employees. Under this scheme, 440 share options were granted to certain employees of the company. Each option entitles to holder to subscribe for new shares in Hunza G Limited.
These options may only be exercised upon an exit event. An exit event is defined as a Listing, change of control, voluntary winding up, comprise or arrangement between the company and its shareholders or an asset sale.
The Directors consider the fair value of the options at the grant date to be immaterial to the financial statements.
HUNZA G LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 20 -
16
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares (voting) of 10p each
1,000
100
100
100
Ordinary shares (non-voting) of 10p each
10,000
1,000
1,000
1,000
11,000
1,100
1,100
1,100
On 16 August 2022, the company entered into an agreement with a former shareholder to repurchase 440 shares for a total consideration of £210,544 from distributable reserves.
These shares are held as treasury shares. The transaction gave rise to 'own shares' reserve of £210,544.
Both voting and non-voting ordinary shares outstanding at year end confer full dividend and capital distribution rights, but no right to redemption. Only ordinary voting shares carry voting rights.
17
Operating lease commitments
Lessee
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:
2023
2022
£
£
Within one year
162,200
127,488
Between two and five years
238,700
358,050
In over five years
10,850
400,900
496,388
18
Related party transactions
At year end a director owed a balance of £3,983 to Hunza G Limited (2022: £nil).
In the year dividends declared to shareholders of £2,731,500 (2022: £nil) were paid to a company under common control. In the year (2022: £nil) , Hunza G Limited paid commission of £nil (2022: £335,267) to a company under common control.
HUNZA G LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 21 -
19
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
6,457,197
4,995,789
Adjustments for:
Taxation charged
1,640,149
1,156,930
Investment income
(28,283)
(96)
Depreciation and impairment of tangible fixed assets
19,961
12,401
Movements in working capital:
Increase in stocks
(748,605)
(1,079,917)
Increase in debtors
(1,647,922)
(1,230,259)
Increase/(decrease) in creditors
1,502,200
(22,132)
Cash generated from operations
7,194,697
3,832,716
20
Analysis of changes in net funds
1 June 2022
Cash flows
31 May 2023
£
£
£
Cash at bank and in hand
4,719,670
933,306
5,652,976
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