ANNUAL REPORT For the year ended 31st December 2016 Annual Report 2017.pdf · Chairman’s Statement Share Placing At the end of June 2016, we raised £3,750,000 (gross) through a

ANNUAL REPORTFor the year ended 31st December 2016

G A M EC A R P

SEA

CONSUMABLES

C O A R S EL U G G A G E

C L O T H I N G

Fishing Republic was established when we opened our first store in Barnsley in 2005. Since then Fishing Republic has grown to

be one of the largest fishing tackle retailers in the UK.

Fishing Republic’s origins date back to 1985 when its Founder and Chief Executive, Steve Gross, aged 13, established a business selling fishing flies and fly tying materials

to fishing tackle wholesalers. Operating from physical stores and online, the Group today caters for all types of anglers (coarse, carp, game and sea fishing), supplying a

comprehensive range of products, including leading brands.

Strategic Report

5 Key Highlights

6 Chairman’s Statement

8 Chief Executive’s Report

10 Financial Review

- Key Performance Indicators

11 Principal Risks and Uncertainties

Governance

12 Directors’ Report

14 Governance Report

Financial Statements

18 Independent Auditor’s Report

19 Consolidated Income Statement

20 Consolidated and Company Statement of Financial Position

21 Consolidated and Company Statement of Changes in Equity

22 Consolidated and Company Statement of Cash Flows

23 Notes to the Financial Statements

Contents

Con

tents Strategic R

eport and K

ey High

lights

• A year of strong progress in line with Board’s goal of building a significant position in the fishing tackle marketplace

• Revenue up by 41% to £5,799,000 (2015: £4,124,000) - reflecting store expansion programme and organic growth

• Profit before tax and exceptional items (see reconciliation in the Financial Review) up by 32% to £403,000 (2015: £305,000) Reported profit before tax up to £403,000 (2015: £6,000)

• Reported earnings per share of 0.99p (2015: loss per share of 0.16p) Underlying earnings per share before exceptional items (see Note 11) of 0.99p (2015: 1.36p) • Store network significantly increased - expansion into new trading regions - five new stores added (in Hull, South Birmingham, Crewe, Lincoln and Mildenhall in Cambridgeshire), taking store network to 12 at 31 December 2016

- total store sales rose by 82% to £4,143,000; like-for-like growth (which measures the sales performance of stores operating for 12 months in FY2015 with same stores operating for 12 months in FY2016) of 16%

- three further stores opened in Q1 2017, in Milton Keynes, Ipswich and Reading, with an additional three to open over the coming months

• Online sales strategy is progressing well

- major focus is on transitioning sales away from historic model of third party platforms to own website sales

- own website sales rose by 132% to £662,000 and accounted for 40% of total online sales (2015: 16%)

• Share placing in June 2016 raised £3,750,000 (gross) to support expansion plans

- new shareholders include Bill Currie, Iain McDonald and Sir Terry Leahy

• Group remains well placed for further expansion and main fishing season has started well

Introduction

The Directors present the Strategic Report of the Company for the year ended 31 December 2016, comprising Key Highlights, the Chairman’s Statement, Chief Executive’s Report, Financial Review, Key Performance Indicators and the Review of Principal Risks and Uncertainties.

Key Highlights

Strategic Report

www.fishingrepublic.net 5

6 Fishing Republic plc - Annual Report for the Year Ended 31st December 2016

Chairman’s Statement

Introduction

I am pleased to report that the Group has made very good progress over the last year as it has continued with its growth plans to build a significant position in the fishing tackle marketplace. Results show strong revenue growth accompanied by a significant increase in profit before tax and exceptional items, in line with market expectations. The Group’s encouraging results reflect both our store expansion programme and organic growth across the existing store network.

The second half of the year was especially active as we began to deploy the funds raised in a major share placing in June 2016. A key area of investment of the proceeds was in the Group’s online platform and digital strategy as well as in the ongoing expansion of our store network. Historically, the majority of the Group’s online sales have derived from third party websites and the new funds have enabled us to accelerate our strategy to transition sales to our own websites, where margins are higher and where we ‘own’ the customer relationship. This transition is progressing well and I am pleased to report that our own website sales in the second half more than doubled over the same period in 2015.

The fishing tackle marketplace is large but highly fragmented, with over 2,000 mainly owner-managed operators. Consequently, we see a substantial growth opportunity for the Group, and believe that our multi-channel model, which combines ‘destination’ stores, offering an extensive product range, and a leading online offering, is well suited to our cus-tomers’ buying habits. Over the coming year and beyond, we anticipate adding further ‘destination’ stores to build geographical coverage and investing in the development of our technology platform and digital customer acquisition model.

Financial Results

It should be noted that in the comparative period, the business was in private ownership until 4 June 2015, when the Company joined AIM.

Revenue for the year to 31 December rose by 41% to £5,799,000 (2015: £4,124,000), with the major part of this increase reflecting new store openings. On a like-for-like basis (which measures the sales performance of stores operating for 12 months in FY2015 with same stores operating for 12 months in FY2016), store sales increased by 16% over 2015, benefiting from our investment in increasing the product range and in marketing. Including online sales, like-for-like revenues increased by 4% to £4,175,000 (2015: £4,014,000), which reflected the transition away from third party websites.

Gross profits rose by 47% to £2,760,000 (2015: £1,881,000), helped by our improved purchasing power. Profit before tax and exceptional items (see reconciliation in the Financial Review) increased by 32% to £403,000 (2015: £305,000) even after the increase in resource across the business as we invested in growth. Reported profit before tax rose to £403,000 (2015: £6,000). Basic earnings per share before exceptional items was 0.99p (2015: 1.36p) and reported basic earnings per share was 0.99p (2015: loss per share of 0.16p).

Capital expenditure over the year, excluding business combinations, totalled £833,000, with the major part of this investment focused on new store fit-outs, upgrades to existing stores, website development and new management and operating systems.


Ch

airman

’s Statemen

t

Share Placing

At the end of June 2016, we raised £3,750,000 (gross) through a placing of new ordinary shares. The net proceeds are supporting the Company’s continuing expansion, both digitally and via further store openings. We were delighted to welcome a number of new shareholders, who participated in the placing, including Bill Currie, Iain McDonald and Sir Terry Leahy. Their combined holding represents approximately 15.9% of the Company’s issued share capital.

Dividend

The Board is focused on increasing the scale of the Group and is reinvesting all its surplus cash resources back into the business. In the short term, therefore, the Directors do not recommend dividend payments. However, the dividend policy will be kept regularly under review.

The Board

On 1 January 2016, we were very pleased to appoint Russell Holmes, FCCA, as Finance Director. Russell has been working with Fishing Republic since 2008 and succeeded Robert Tippett in the role. We would like to thank Robert for his contribution to the business, especially at the time of the AIM flotation.

After the year end, on 1 March 2017, we were also very pleased to welcome Iain McDonald to the Board as a Non-executive Director. Iain has over 20 years’ experience in investment, particularly in retail and e-commerce. He has been investing directly in the online and technology sectors for over a decade, and a number of his long-term investments have been into some of the most successful e-commerce businesses in Europe.

Outlook

Prospects for the Group are very positive. Since the start of the new financial year, we have opened three stores, in Milton Keynes, Ipswich, and Reading, and plan to open a further three stores, in King’s Lynn, Huntingdon and Essex, over the coming months. These new stores will take the Company’s network of outlets to 18.

Our model is to offer an unrivalled range of product, catering for all fishing disciplines, from typically out-of-town, easy to access, light-industrial locations. Customer service is important to us and we aim to employ staff who share our customers’ passion for angling and can offer expert advice on both products and fishing techniques.

The main fishing season, which typically begins in the second quarter of the year, has started well, helped by the recent warm weather, and the Board looks forward to reporting on further progress in due course.

James H Newman OBEChairman


Chief Executive’s Report

Introduction

The Group has grown significantly since it joined AIM in June 2015 and we are pleased to report on another encouraging year of progress. The new funds we raised in late June 2016 have helped to support the continuing development and expansion of our store network, and have also enabled us to accelerate our plans to transition online sales to our own websites, away from our historical model of third party retailers.

Review of Operations

Stores

We opened three new stores in the first quarter of 2016, in Hull, South Birmingham and Crewe. The new store in Hull replaced a much smaller outlet in the city. Later in the year, in September and November, we added two further stores, in Lincoln and Mildenhall, Cambridgeshire, respectively.

These new stores expanded our geographic footprint from our North of England base into the West and East Midlands and further south into East Anglia. They also took the number of Fishing Republic outlets to 12 by the end of the year. In the first quarter of 2017, we opened three stores, in Milton Keynes, Ipswich and Reading. We have also signed leases on three further stores, in King’s Lynn, Huntingdon and Clavering in Essex, which we expect to open over the coming months.

The new stores follow our ‘destination’ store format, catering for all types of anglers - coarse, carp, game and sea fishing - from large sites, typically on light-industrial locations, with ample car parking facilities and offering easy access. Our extensive product range is a key sales driver, with customers prepared to travel significant distances to our stores, which stock the leading brands as well as our own-brand products.

The new store openings in the year, as well as the addition of Cotswold Angling, in Swindon, in December 2015, helped to drive a significant increase in the Group’s store revenues.

These rose by 82% year-on-year to £4,143,000 (2015: £2,272,000). Like-for-like store sales (which measures the sales performance of stores operating for 12 months in FY2015 with same stores operating for 12 months in FY2016) also grew strongly, increasing by 16% over 2015. This significant increase in like-for-like store sales reflects our investment in broadening our product range as well as increased marketing activity. Store revenues accounted for 71% of the Group’s total revenues (2015: 55%) and the full benefits of the new stores added in 2016 will come through in 2017 and beyond as the stores firmly establish themselves in their localities.

Online

The potential to develop the Group’s online sales is significant. To date, online revenues have been driven from third party websites. In the second half of the year, we accelerated our investment in our digital strategy in order to transition sales to our own websites, where margins are higher and where we can develop a direct relationship with the customer. We are pleased with the results so far and the continuing development of our online platform and digital strategy will remain a major focus in the year to come.

Sales from the Group’s own websites over the year increased by 132% to £662,000 (2015: £286,000). As anticipated, overall online sales decreased to £1,656,000 (2015: £1,835,000) as we transitioned from third party platforms.

As we further develop our online presence and with the continuing expansion of our store network, we expect to see online sales accelerate.

Own-brand products

Own-brand sales increased by 24% to £770,000 (2015: £619,000) and accounted for 13% of Group sales (2015: 15%). We continue to focus on our key brands, including Klobba for clothing and Theseus for carp fishing products, both of which will benefit from our ongoing store expansion programme.


Ch

ief Executive’s R

eport

Staff

We would like to welcome all new staff, who have joined the Fishing Republic team over the last twelve months and to thank all our employees for their hard work and dedication, over what has been a tremendous year of progress for the Group.

Outlook

We are very positive about the outlook for the Group. There remains a significant opportunity to scale the business and capitalise on our ‘first mover’ advantage. We have a further three store openings planned over the coming months in complementary geographic locations to existing outlets. We will continue to consider further suitable locations as well as drive our online and digital sales strategy.

Steve GrossChief Executive


Financial Review

Income Statement

In the year ended 31 December 2016, sales increased by 41% to £5,799,000 (2015: £4,124,000) as the Group continued its expansion. Gross profit margin also increased to 48% (2015: 46%), with the Group leveraging its improved buying power. This helped to deliver a 47% rise in gross profit to £2,760,000 (2015: £1,881,000).

Administrative costs rose, partly reflecting a first full year of costs as a quoted company but also investment in additional resources to implement the Group’s growth strategy, with particular areas of focus on new store marketing and our digital platforms.

Operating profit before exceptional items increased to £420,000 (2015: £321,000). The comparative 2015 operating profit, after the exceptional costs of the IPO in June 2015, was £22,000. There were no exceptional items in 2016.

After finance costs of £17,000 (2015: £16,000), profit before tax and exceptional items increased by 32% to £403,000 (2015: £305,000), which equates to earnings per share of 0.99p (2015: 1.36p). Reported profit before tax was £403,000 (2015: £6,000) and reported basic earnings per share was 0.99p (2015: loss per share of 0.16p). A reconciliation of profit before tax and exceptional items is shown below:

2016 2015Profit before taxation 402,901 5,718Exceptional items - 299,040Profit before tax and 402,901 304,758exceptional items Statement of Financial Position

Total equity at 31 December 2016 more than doubled to £6,837,000 against the same point in the prior year (2015: £2,929,000). Investment in working capital has played a key part in the Group’s expansion throughout 2016, and inventories (carried at the lower of cost and net realisable value) at the year-end totalled £4,257,000, an increase of £1,810,000 on the value at 31 December 2015.

The Group repaid its bank loan of £268,000 in the year, leaving it debt free. Total liabilities increased to £921,000 (2015: £708,000) reflecting the Group’s expansion.

Cash Flow

At the year end, the Group’s net cash position (being cash and bank balances less loans and borrowings) was £2,056,000 (2015: £379,000).

Proceeds from the shares issued in the year totalled £3,786,000 gross. Net proceeds amounted to £3,588,000 after costs of £198,000.

£1,262,000 has been invested in working capital in the year (2015: £956,000) and a further £833,000 (2015: £135,000) has been invested in fixed assets (excluding business combinations) to support the continued growth of the Group.

Russell Holmes FCCAFinance Director Key Performance Indicators

The Directors consider the following to be the KPIs of the Group:

2016 2015Group sales £5.80m £4.12mGross profit percentage 47.6% 45.6%Net profit (before tax and 6.9% 7.4%exceptional items) percentage

Average customer baskets

Own website platforms £56.28 £52.88Third party website £14.02 £13.21platforms In store £25.68 £21.92


Finan

cial Review

Principle R

isks and U

ncertain

ties

Principal Risks and Uncertainties

Principal Risks and Uncertainties

The Board has a policy of reviewing key business risks and oversees the development of processes to ensure that these risks are managed appropriately. The key risks identified by the Board are split into business risks, operational risks and financial risks and are summarised below:

Business Risks

A decline in consumer spending or a change in consumer preferences.

The Group’s sales depend on consumer spending, which is influenced by factors beyond the Group’s control, including consumer confidence, general economic conditions in the UK and general global macroeconomic conditions. A significant decline could have a material adverse effect on the Group’s business, results of operations or financial condi-tion.

The Board regularly reviews business strategy to determine how sales can be achieved or bettered and in doing so considers wider economic and industry specific trends that affect the Group and the competitive position of its product offering to determine the most appropriate sales strategies.

Weather conditions

The Group’s sales are sensitive to weather conditions. In general, the Group sees a reduction of sales, in particular consumables such as bait, lines and hooks, during the winter period as customers tend not to go fishing when the weather is less favourable. Consequently, prolonged periods of bad weather could adversely affect the Group’s business.

The Group’s product offering and staff hours are adjusted in line with seasonality to reduce the impact on profitability.

Operational Risks

Failure of the Group’s information technology, network or communications systems.

The efficient operation of the Group’s business is dependent on its key operational business systems. Any significant disruption to these information technology or communications systems could have an adverse effect on the proper functioning of the Group’s businesses and therefore the Group’s financial condition.

The Group has a robust enterprise management system and communications network. Its dedicated in-house IT team works under the IT Director to monitor the proper functioning and suitability of the Company’s IT systems. Operating from the Group’s head office, the team is responsible for resolving any IT-related issues as they arise.

Financial risks

Currency fluctuations could materiallyadversely affect the Group’s results.

The Group’s results can be affected by fluctuations in currency exchange rates. The Group’s sales are denominated in pounds sterling. However, the Group sources some of its products from outside the UK and in particular from the Far East, where the principal currency of purchase is US dollars. The Group’s non-UK purchases in US dollars give rise to an exposure to changes in exchange rates between pounds sterling and US dollars.

The Directors regularly monitor foreign exchange rates and may use forward contracts to fix exchange rates for future purchases to mitigate against the risk of currency fluctuations. The Group may also source substitute goods from the European market.

This report was approved by the board on 24 April 2017 and signed on its behalf by S J Gross, Chief Executive Officer.


Governance

Statement of Directors’ Responsibilities

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 International Financial Reporting Standards (IFRSs) as adopted by the EU 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 af-fairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;• make judgments and accounting estimates that are reasonable and prudent;• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and• 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.

They are further responsible for ensuring that the Strategic Report and the Report of the Directors and other information included in the Annual Report and financial statements is prepared in accordance with applicable law in the United Kingdom.

The maintenance and integrity of the Fishing Republic Group web site is the responsibility of the Directors; the work carried out by the auditors does not involve the consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred in the accounts since they were initially presented on the website.

Legislation in the United Kingdom governing the preparation and dissemination of the accounts and the other information included in annual reports may differ from legislation in other jurisdictions.

Results and Dividends

The profit for the year, after taxation, amounted to £320,771.

The Directors do not recommend the payment of a dividend.

Capital Structure

A placing of Ordinary Shares occurred in June 2016. Full details of changes in the capital structure are disclosed in Note 22.

Directors

The Directors who served during the year and up to the date of signing the financial statements, unless stated, were:

ExecutiveS J GrossR Holmes (Appointed 1 January 2016)P HagertyMrs Z Gross

Non-ExecutiveJ H Newman OBE (Chairman)E McDermottI McDonald (Appointed 1 March 2017)

Z Gross and J H Newman are due to retire by rotation and are eligible for re-election at the forthcoming Annual General Meeting. I McDonald, having been appointed a Director since the last Annual General Meeting, offers himself up for re-election.

The Governance section comprises the Directors’ Report and Governance Report.

Directors’ Report

The Directors present their report together with the Group financial statements for the year ended 31 December 2016.


Govern

ance D

irectors’ Report

Directors’ Interests

The interests of the Directors in the shares of Fishing Republic plc at 31 December 2016 were as follows:

Director Number of ordinary shares of 1pS J Gross 9,140,822Mrs Z Gross 2,100,000J H Newman OBE 161,906R Holmes 13,750

I McDonald, appointed to the board on 1 March 2017, held 300,000 shares in the company at 31 Dec 2016.

Certain Directors have been granted options to subscribe for the Company’s shares, the terms of which are disclosed in Note 27. The Directors’ interests in share options at 31 December 2016 were as follows:

Director Number of ordinary shares of 1pR Holmes 235,294P Hagerty 176,470J H Newman OBE 117,647E McDermott 117,647

All of the above options were held at 1 January 2016 and 31 December 2016.

Shareholders

At 31 December 2016 the Company had been notified of the following shareholdings amounting to more than 3% of the Parent Company’s share capital of 37,826,788 ordinary shares of 1p:

Shareholder Number of % of voting ordinary shares rightsS J Gross 9,140,822 24.2Tinley Nominees Limited 6,014,286 15.9Miton Group plc 4,895,833 12.9Mrs Z Gross 2,100,000 5.6Hedley & Co Clients 1,428,571 3.8J H Gross 1,362,500 3.6Hargreave Hale 1,285,714 3.4P Turner 1,237,500 3.3

Going Concern

The Directors have reviewed the future viability and going concern position of the Group for the foreseeable future, based upon forecasts and anticipated cash flows extending for a period of at least 12 months from the date of approval of the financial statements. The Directors have accordingly prepared the financial statements on the going concern basis.

Risk Management

The risks to which the business is exposed are detailed in the Strategic Report and Note 25 to the financial statements.

Directors’ Remuneration

A full breakdown of Directors’ remuneration is provided in Note 10 to the financial statements.

Disclosure of Information to Auditors

The Directors confirm that:• so far as each Director is aware, there is no relevant audit information of which the Company’s Auditor is unaware; and• The Directors have taken all the steps that the ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Auditors are aware of that information.

Charitable and Political Donations

There were no donations during the year.

Post Balance Sheet Events

Since the year end, the Company has continued to expand its store network with the opening of three stores in the first quarter of 2017.

Future Developments

Developments since the end of the financial year, including the continued expansion of the Group and initial trading results are covered in the Strategic Report. There are no other significant developments which are expected to impact upon the Group.

Research and Development

The Group invests in technology, both in terms of skills capability, through the recruitment of in-house specialists and in allocating resource into developing its own website with the objective of driving online sales. Where it is considered that an asset has been created which provides economic benefits extending to future periods, related costs are capitalised. The amounts included as additions to software development costs for the year (Note 14) amounted to £220,453. All other development costs are expensed as incurred.

Auditors

The Auditors, Crowe Clark Whitehill LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

Annual General Meeting

The Annual General Meeting will be held at 10am on 29 June 2017 at the Company’s registered office.

This report was approved by the Board on 24 April 2017 and signed on its behalf by S J Gross, Director.


Governance Report

Corporate Governance

The AIM rules do not require the company to comply with the UK Corporate Governance Code. However, the Company recognises the importance of good governance and has adopted governance procedures as are appropriate for the size and nature of the Group. These procedures have been selected with due regard to the provisions of the UK Corporate Governance Code.

The Board of Directors currently comprises the Non-Executive Chairman, Chief Executive Officer, three other Executive Directors and two further Non-Executive Directors. The Board considers that this structure is suitable for the Company having considered the specific skills and experience deemed necessary.

The Executive & Non-Executive Directors

James is an experienced Non-Executive Chairman and Director of both Main Market and AIM-quoted companies. He has been Chairman or a Non-Executive Director of a number of public companies, including Dignity plc, Scott Wilson Group plc and Straight plc. He is currently Chairman of Finance Yorkshire and the South Yorkshire Community Foundation and retired at the end of 2015 as the founder Chairman of the Sheffield City Region Local Enterprise Partnership. James’s

executive career was as a Group Finance Director at a number of public companies, including Kelda Group plc, Bridon plc and Watmoughs (Holdings) plc. He is a Fellow of both the Institute of Chartered Accountants and of the Association of Corporate Treasurers and has an Honorary Doctorate from Sheffield Hallam University. He was Master Cutler in 2010 and was awarded an OBE for services to business, the economy and charity in the 2017 New Year’s Honours List.

Russell qualified as a Chartered Certified Accountant in 2010 and has been working with Fishing Republic

since 2008. He was appointed to the Board in 2016.

Steve is the founder of the Group and has over 30 years’ experience in the fishing tackle industry. He is well known in angling circles and is a Director and Board member of the Angling Trade Association and the

Angling Foundation, the two guiding bodies for the UK’s fishing tackle trade. He is also an accomplished angler, who represented England in competition and was captain of the England under 21 fly fishing team.

James Henry Newman OBEAged 67, Independent Non-Executive Chairman

Russell Holmes FCCAAged 32, Finance Director

Steven John GrossAged 46, Chief Executive Officer


Govern

ance R

eport

Following a 20-year corporate career with NatWest, Zoe joined the Group in 2009 and is a key member of the management team. Her role involves

the operational management of the online business, all distribution and warehousing activities and human resources.

Ed has over 10 years’ experience within financial services in the City of London and is currently a corporate finance adviser at Optiva Securities Limited. He is a former Director of AIM-quoted

Noricum Gold Limited and Stellar Resources plc. Ed is a keen angler and is a co-owner of Farlows Lake, a coarse fishery in Buckinghamshire.

Iain has over 20 years’ experience in investment, in particular in the retail and e-commerce sectors. Over the last 10 years he has been investing directly into the online and technology sectors

and a number of Iain’s long-term investments have been into the most successful e-commerce businesses in Europe.

Paul joined the Company in 2005 and plays an important role in developing the Group’s IT systems, which include stock control and management information. More recently his focus has been developing the Group’s online presence, particularly via its

‘Fishing Republic’ website. Before joining the Group he worked as a technical director at an independent website development company. He has a background in software programming and development.

Zoe Gross Aged 51, Operations Director

Edward Peter McDermottAged 34, Independent Non-Executive Director

Iain McDonaldAged 45, Independent Non-Executive Director

Paul HagertyAged 33, IT Director

The Board’s role is to agree the Group’s long-term direction and strategy and monitor achievement of its business objectives. The Board meets monthly for these purposes and holds additional meetings when necessary to transact other business. The Board receives reports for consideration on all significant strategic and operational matters.

The Non-Executive Directors are considered by the Board to be independent of management, and free from any business or other relationship which could materially interfere with the exercise of their judgement.

The Board delegates certain of its responsibilities to the Audit and Remuneration Committees of the Board. These Committees operate within clearly defined, written Terms of Reference.

Role of the Board


Governance Report Continued

Audit Committee

The Audit Committee, composed of the three Non-Executive Directors, is chaired by Edward McDermott. The Committee meets at least twice a year and assists the Board in meeting responsibilities in respect of external financial reporting and internal controls. The Audit Committee also keeps under review the scope and results of the annual financial audit. It also considers the cost-effectiveness, independence and objectivity of the Auditors, taking account of any non-audit services provided by them.

Remuneration Committee

The Remuneration Committee also comprises the Non-Executive Directors and is chaired by James Newman. The Remuneration Committee meets at least once a year to determine the appropriate remuneration for the Company’s Executive Directors, ensuring that this reflects their performance and that of the Group, and to demonstrate to shareholders that executive remuneration is set by Board members who have no personal interest in theoutcome of their decisions.

The Group operates a performance bonus scheme for the Executive Directors. The objective of adopting the scheme is to provide the appropriate reward and incentive for the successful financial performance of the Group in line with the Company’s aims and strategy. The Company also has in place an HM Revenue and Customs approved share option scheme and unapproved options to subscribe for shares. These have been granted to most of the Directors and employees. Directors’ emoluments are disclosed in Note 10 to the financial statements and details of Directors’ options are disclosed in the Directors’ report.

Conflicts of Interest

Companies Act 2006 permits the Directors of public companies to authorise Directors’ conflicts and potential conflicts, where appropriate. There are considered to be no conflicts of interest apart from those identified in Note 24 to the financial statements.

Corporate Responsibility

The Board takes regular account of the significance of social, environmental and ethical matters affecting the business of the Group. At this stage in the Group’s development, the Board has not adopted a specific written policy on Corporate Social Responsibility as it has a limited pool of stakeholders other than its shareholders.

In establishing businesses in different regions, however, the objective will be to engage positively with local communities and stakeholders as necessary.

Shareholders

The Board seeks to protect shareholders’ interests and the Directors are always prepared, where practicable, to enter into a dialogue with shareholders to promote a mutual understanding of the objectives of the Group. The Annual General Meeting provides the Board with an opportunity to informally meet and communicate directly with investors.

Environment

The Board recognises that its activities can have an impact, to some extent, on the local environment with regard to packaging etc. The Group’s activities are carried out to achieve a minimal environmental impact and this policy is regularly reviewed.

Employees

The Group encourages its employees to understand all aspects of the Group’s business and seeks to remunerate its employees fairly, being flexible where practicable. The Group gives full and fair consideration to applications for employment received regardless of age, gender, colour, ethnicity, disability, nationality, religious beliefs, transgender status or sexual orientation. The Board takes account of employees’ interests when making decisions, and suggestions from employees aimed at improving the Group’s performance are welcomed.

The Company has adopted an Anti-corruption Policy and Code of Conduct.


Govern

ance R

eport Con

tinu

ed

Suppliers

The Group recognises that the goodwill of its suppliers is important to its business success and seeks to build and maintain this goodwill through fair dealings. The Group has instituted a prompt payment policy and seeks to settle all agreed liabilities within the terms agreed with suppliers. The amount shown in the Consolidated and Company Statement of Financial Position in respect of trade payables at the end of the financial year represents 67 days of average daily purchases (2015: 31 days).

Health and Safety

The Board recognises it has a responsibility to provide strategic leadership and direction in the development of the Group’s Health and Safety strategy in order to protect all of its stakeholders. The Company takes into account its Health and Safety Policy to clearly define roles and responsibilities and in order to identify and manage risk.

This report was approved by the Board on 24 April 2017 and signed on its behalf by J H Newman OBE, Chairman.


Financial Statements

Independent Auditor’s Report to the Members of Fishing Republic plc

We have audited the financial statements of Fishing Republic plc for the year ended 31 December 2016 which comprise the Consolidated Income Statement, the Consolidated and Company Statement of Financial Position, the Consolidated and Company Statement of Changes in Equity, the Consolidated and Company Statement of Cash Flows and the related Notes numbered 1 to 29.

The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

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.

Respective responsibilities of Directors and Auditors

As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at:

www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements

In our opinion:• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2016 and of the Group and the Parent Company’s profit for the year then ended;• the financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion based on the work undertaken in the course of our audit: • the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and • the Directors’ Report and Strategic report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In 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 where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or• the Parent Company financial statements are not in agreement with the accounting records and returns; or• certain disclosures of Directors’ remuneration specified by law are not made; or• we have not received all the information and explanations we require for our audit.

Michael JaysonSenior Statutory AuditorFor and on behalf of Crowe Clark Whitehill LLPStatutory Auditor, Manchester - 5 May 2017.


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Notes 2016£

2015£

Revenue 5 5,799,065 4,124,257Cost of sales (3,038,895) (2,243,036)Gross profit 2,760,170 1,881,221Other income 6 5,155 2,057Selling and distribution expenses (1,303,721) (1,050,066)Administration expenses (1,041,638) (512,415)Operating profit before exceptional costs of IPO 419,966 320,797Exceptional costs of IPO treated as an expense - (299,040)Operating profit after exceptional costs of IPO 419,966 21,757Finance costs 7 (17,065) (16,039)Profit on ordinary activities before taxation 8 402,901 5,718Taxation 12 (82,130) (37,176)Profit/(loss) after taxation 320,771 (31,458)Other comprehensive income - -Total comprehensive income attributable to the equity owner 320,771 (31,458)Basic earnings per share (pence) 11 0.99 (0.16)Diluted earnings per share (pence) 11 0.96 (0.16)

Consolidated Income StatementYear ended 31 December 2016


Consolidated and Company Statement of Financial Position

As at 31 December 2016

Notes Group2016

£

Company2016

£

Group2015

£

Company2015

£Non-current assetsProperty, plant & equipment 13 795,495 - 181,291 -Intangible assets 14 445,283 6,832 84,987 6,384Investments 16 - 514,500 - 514,500

1,240,778 521,332 266,278 520,884Current assets Inventories 17 4,256,630 - 2,446,905 -Trade and other receivables 18 205,678 3,110,694 236,323 753,560Deferred tax asset 15 - - 40,743 14Cash and cash equivalents 19 2,055,699 1,500,135 646,303 271,902

6,518,007 4,610,829 3,370,274 1,025,476Total assets 7,758,785 5,132,161 3,636,552 1,546,360

Non-current liabilitiesInterest bearing loans and borrowing 21 - - 243,677 -Current liabilitiesTrade and other payables 20 880,056 - 440,108 2,058Deferred tax liability 15 41,389 - - -Loans and borrowing 21 - - 24,000 -

921,445 - 464,108 2,058Total liabilities 921,445 - 707,785 2,058

Equity Share capital 22 378,268 378,268 268,750 268,750Share premium 5,052,933 5,052,933 1,574,649 1,574,649Retained earnings 1,406,139 (299,040) 1,085,368 (299,097)Total equity 6,837,340 5,132,161 2,928,767 1,544,302Total equity and liabilities 7,758,785 5,132,161 3,636,552 1,546,360

Company profit/ (loss) after taxation 57 (299,097)

The financial statements were approved and authorised for issue by the Board on 24 April 2017 and were signed on its behalf by R Holmes, Finance Director.


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Statement of changes in Equity

Year ended 31 December 2016

CONSOLIDATED Sharecapital

£

Sharepremium

£

Retainedprofits

£

Totalequity

£Balance at 1 January 2015 1,375,000 - (120,674) 1,254,326Loss after taxation for the financial year - - (31,458) (31,458) Capital reduction in subsidiary undertaking (1,237,500) - 1,237,500 -Issue of shares 131,250 1,868,750 - 2,000,000Share issue costs deducted from equity - (294,101) - (294,101)Balance at 31 December 2015 and brought forward at 1 January 2016

268,750 1,574,649 1,085,368 2,928,767

Profit after taxation for the financial year - - 320,771 320,771Issue of shares 109,518 3,676,108 - 3,785,626Share issue costs deducted from equity - (197,824) - (197,824)Balance at 31 December 2016 378,268 5,052,933 1,406,139 6,837,340

COMPANY Sharecapital

£

Sharepremium

£

Retainedprofits

£

Totalequity

£Balance at 1 January 2015 100 - - 100Loss after taxation for the financial year - - (299,097) (299,097)Issue of shares 268,650 1,868,750 - 2,137,400Share issue costs - (294,101) - (294,101)Balance at 31 December 2015 and brought forward at 1 January 2016

268,750 1,574,649 (299,097) 1,544,302

Profit after taxation for the financial year - - 57 57Issue of shares 109,518 3,676,108 - 3,785,626Share issue costs - (197,824) - (197,824)Balance at 31 December 2016 378,268 5,052,933 (299,040) 5,132,161


Consolidated and Company Statement of Cash Flows


Notes Group2016

£

Company2016

£

Group2015

£

Company2015

£Operating activityTotal profit before tax 402,901 71 5,718 (299,097)Depreciation and amortisation charge 70,962 - 15,078 -Interest expense 17,065 - 16,039 -Profit on disposal of plant and equipment - - - -(Increase)/decrease in inventories (1,809,725) - (538,239) -Decrease/ (increase) in receivables 30,645 (2,357,134) (23,850) (753,574)Increase/(decrease) in payables 517,339 (2,058) (393,607) 2,058Net cash outflow/(inflow) from operating activity

(770,813) (2,359,121) (918,861) (1,050,613)

Investing activityPurchase of property, plant and equipment (612,100) - (58,872) -Acquisition of intangible assets (220,901) (448) (76,406) (6,384)Acquisition of subsidiary undertakings - - - (377,100)Outflows in respect of business combinations

(212,462) - - -

Net cash (outflow) from investing activity (1,045,463) (448) (135,278) (383,484)Financing activityLoan repayments in year (267,677) - (8,077) -Interest paid (17,065) - (16,039) -Repayment of loans from directors (77,388) - (33,057) -Proceeds from share issue net of costs 23 3,587,802 3,587,802 1,705,899 1,705,899Net cash inflow/(outflow) from financing activity

3,225,672 3,587,802 1,648,726 1,705,899

Cash and cash equivalents at start of year 646,303 271,902 51,716 100Cash and cash equivalents at period end 19 2,055,699 1,500,135 646,303 271,902


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Notes to the Financial Statements


1. General Information

Fishing Republic plc is a Public Company incorporated and domiciled in England. The Company is traded on the Alternative Investment Market (“AIM”) of the London Stock Exchange.

The registered office and principal place of business is:

Vulcan Works Chesterton Road, Eastwood Trading Estate, Rotherham, South Yorkshire, S65 1SU.

Other business locations are detailed in Note 4.12.

2. Principal Activities

The principal activities of the Group are the retailing and production of fishing equipment.

3. Basis Of Preparation

The financial statements have been prepared in accordance with IFRS as adopted by the EU issued by the International Accounting Standards Board (“IASB”), including related Interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”).

Standards, amendments and interpretations not yet effective

A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and in some cases have not yet been adopted by the EU.

The Directors have reviewed the potential impact of the introduction of these new accounting standards and interpretations (including the consequential amendments) and consider that they will either be not relevant or immaterial to Fishing Republic plc’s operations. In particular, it is considered that IFRS 15 Revenue from Contracts with Customers will not have an impact upon a straightforward retail business. In January 2016, the IASB issued IFRS 16 Leases, which will replace IAS 17. Under the new requirements, lessees will be required to recognise assets and liabilities arising from both operating and finance leases on the balance sheet. The expected effective date is 1 January 2019. The EU has not yet adopted this standard.

Basis of consolidation

The Group’s financial statements consolidate the financial statements of Fishing Republic plc and its subsidiary undertakings, Fishing Republic Trading Limited and Fishing Republic Retail Limited.

On the basis that the main objective of the effective Group reconstruction and AIM listing was to facilitate raising finance for future expansion, and that the ultimate equity holders and their rights were unchanged following the transaction, it was deemed appropriate to adopt the merger method of accounting in respect of the combination.

The share capital of Lureflash International Limited prior to the reconstruction was 13,750,000 ordinary shares of 10p each (nominal value £1,375,000). These were converted to by means of a capital reduction to 1p shares (nominal value £137,500) and £1,237,500 was transferred to distributable reserves. Following this, there was a share for share exchange, whereby shares in Fishing Republic plc were exchanged for existing shares in Lureflash International Limited. The nominal value of shares before and after the transaction was unchanged before and no merger reserve arose.

There is no guidance within IFRS in relating to merger accounting and therefore the principles set out in UK GAAP, FRS 102 section 19.27 to 19.33 were adopted:

• the carrying values of the assets and liabilities of the parties are not adjusted to fair value;• the results and cash flows of all the combining entities are brought into the consolidated financial statements from the beginning of the financial year in which the combination occurred;• in the prior period’s accounts, the comparative information was restated by including the total comprehensive income for all combining entities for the previous reporting period, and their statement of financial position for the previous reporting date; and• the difference, if any, between the nominal value of the shares issued plus the fair value of any other consideration given, and the nominal value of the shares received in exchange is shown as a movement on other reserves in the consolidated financial statements.


Presentation of company statement of comprehensive income

In accordance with section 408 of the Companies Act 2006, Fishing Republic plc is exempt from the requirement to present its own Statement of Comprehensive Income. The amount of profit for the financial year recorded within the financial statements of Fishing Republic plc was £57 (2015: loss £299,097).

Going Concern

The Directors have reviewed the future viability and going concern position of the Group for the foreseeable future, based upon forecasts and anticipated cash flows extending for a period of at least 12 months from the date of approval of the financial statements. The Directors have accordingly prepared the financial statements on the going concern basis.

4. Significant Accounting Policies

4.1 Critical accounting estimates and judgements

Estimates and judgements are continually evaluated by the Directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of Fishing Republic plc’s accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below:

(a) Goodwill and impairment

As explained in Note 14, the acquisition of the trade and assets of existing businesses is a strategy adopted to develop the geographical coverage of the Group. This usually results mainly in acquired goodwill, as few other separable assets are acquired. Following acquisition, the businesses are subsumed within the business. Based upon forecasts of future earnings, and taking into account the carrying values and revenue contribution, management assess the carrying value of accumulated goodwill for the single CGU.

(b) Provisions and adjustment to inventories

Management take particular care over buying policies and when acquiring bulk stocks, they consider the saleability and commercial sales history. Also the acquisition of stock relies upon the internal expertise which management and employees possess. Consequently stock impairment is maintained at

the lowest possible levels. Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories.

(c) Costs of raising finance

In accordance with IAS 32, only directly attributable transaction costs incurred as a result of the issue of equity instruments are deducted from equity (share premium). Other costs not considered to be directly attributable to the issue of shares are expensed and charged to the income statement in the year. In assessing which costs fall into each category, an element of judgement is necessary and apportionment methods have been adopted in accordance with available technical guidance.

(d) Capitalisation of software development costs

Some internal employment costs of technology specialists specifically attributable to the acquisition, development and testing of new operational software are capitalised as intangible assets, providing these meet the criteria established and the definition of an asset under the guidance within IAS 38 - Intangible Assets; identifiability, control over a resource and existence of future economic benefits. If the expenditure does not meet the required criteria it is expensed as incurred.

4.2 Functional and foreign currencies

(a) Functional and presentation currency

The financial information is presented in the currency of the primary economic environment in which the entity operates.

The financial information is presented in British Sterling (“£”), which is the functional currency and the presentation currency.

(b) Transactions and balances

Transactions in foreign currencies are converted into British Sterling on initial recognition, using exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities at the end of the reporting period are translated at the rates ruling as of that date. Non-monetary assets and liabilities are translated using the exchange rates at the date the values were determined. All exchange differences are recognised in the profit or loss for the year.


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4.3 Financial instruments

Financial instruments are recognised in the statements of financial position when Fishing Republic plc has become a party to the contractual provisions of the instruments.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity.

Financial instruments are offset when Fishing Republic plc has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

A financial instrument is recognised initially at its fair value.

Transaction costs that are directly attributable to the acquisition or issue of the financial instrument (other than a financial instrument at fair value through profit or loss) are added to/ deducted from the fair value on initial recognition, as appropriate. Transaction costs on the financial instrument at fair value through profit or loss are recognised immediately in profit or loss.

Financial instruments recognised in the statements of financial position are disclosed in the individual policy statement associated with each item.

(a) Financial assets

On initial recognition, financial assets are classi-fied as either financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables financial assets or available -for-sale financial assets as appropriate.

Loans and receivables financial assets

Trade and other receivables that have fixed or determinable payments and are not quoted in an active market are classified as loans and receivables financial assets. Loans and receivables financial assets are measured at amortised cost using the effective interest method, less any impairment loss. Interest income is recognised by applying the effective interest rate, except for short-term receivables for which the recognition of interest would be immaterial.

(b) Financial liabilities

All financial liabilities are initially measured at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method other than those categorised as fair value through profit or loss.

Fair value through profit or loss category comprises financial liabilities that are either held for trading or are designated to eliminate or significantly reduce a measurement or recognition inconsistency that would otherwise arise. Derivatives are also classified as held for trading unless they are designated as hedges.

4.4 Property, plant and equipment

(a) Owned assets

Items of property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses, if any. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to the location and condition for its intended use.

(b) Depreciation

Depreciation is charged to profit or loss (unless it is included in the carrying amount of another asset) on the straight-line basis to write off the depreciable amount of the assets net of the estimated residual values over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual rates used for this purpose are:

Estimated useful livesFreehold property 50 yearsShort leasehold 4 yearsPlant and machinery 6.67 yearsFixture and fittings 10 yearsMotor vehicles 4 yearsComputer equipment 4 years

The depreciation method, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each reporting period to ensure that the amounts, method and periods of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of the property, plant and equipment.

The estimated useful lives of fixtures and fittings have been reviewed and changed to 10 years for the year ended 31 December 2016 (6.67 years for the year ended 31 December 2015).


4.5 Impairment

(a) Impairment of financial assets

All financial assets (other than those categorised at fair value through profit or loss), are assessed at the end of each reporting period whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset.

An impairment loss in respect of receivables financial assets is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

(b) Impairment of non-financial assets

The carrying values of assets are reviewed at the end of each reporting period for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets’ fair value less costs to sell and their value in use, which is measured by reference to discounted future cash flow. An impairment loss is recognised immediately and charged to the income statement

4.6 InventoriesInventories are stated at the lower of cost and net realisable value. The cost of goods for resale is determined on a weighted average basis and comprises the purchase price and incidental costs, such as transportation and duty, incurred in bringing stock to its present location and condition.

Net realisable value represents the estimated sell-ing price less the necessary incremental costs to achieve the sale.

4.7 Income taxes

Income tax for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the reporting period and is measured using the

tax rates that have been enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the end of the reporting period.

4.8 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, bank overdrafts and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value with original maturity periods of three months or less.

4.9 Employee benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are measured on an undiscounted basis and are recognised in profit or loss in the period in which the associated services are rendered by employees of the Group.

4.10 Revenue and other income

(a) Sale of goods

Revenue from the sale of goods is measured at fair value of consideration received or receivable, net of returns and trade discounts where applicable. Revenue is recognised upon delivery of goods when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably.


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(b) Other income

Other income is recognised on an accrual basis, based upon amounts receivable for the financial period. Interest income is recognised using the effective interest method.

4.11 Intangible fixed assets

(a) Goodwill

Goodwill represents the excess of the consideration paid for an acquired business over the fair value of the net assets acquired. Goodwill is deemed to have an indefinite useful life and is subject to annual impairment reviews in accordance with 4.5(b) above.

(b) Software Development

Costs that are directly attributable to the design and testing of identifiable and unique software controlled by the Group for its own use are recognised as intangible assets when the following criteria are met:

• it is technically feasible to complete the software product so that it will be available for use;• management intends to complete the software product and use it;• there is an ability to use the software product;• it can be demonstrated how the software product will generate probable future economic benefits;• adequate technical, financial and other resources to complete the development and to use the software product are available; and• the expenditure attributable to the software product during its development can be reliably measured.

Internally generated software products and development costs for the Group’s own use are deemed to have a finite useful life and are amortised on a straight-line basis over their estimated useful lives of eight years. The amortisation charge is recognised in administration expenses.

(c) Trademarks

Trademarks are carried at acquisition cost. They are deemed to have indefinite useful lives and are reviewed for impairment annually.

4.12 Operating segments

The Group’s operating segments under IFRS 8 have been assessed based on the management accounts reviewed by the Board, with the conclusion being that there is a single operating segment of the business, that of retail operations.

Whilst branches are separate retail units and produce and report regular revenues to management, the strategy, management, controls and resources of the business are all managed centrally. Furthermore, the Directors do not use the revenue per store numbers to make decisions about the resources to be allocated to the business. It is considered that, although branches are geographically dispersed retail outlets, they are not autonomous, distinct business segments per IFRS 8, operating in their own right.

During 2016, Fishing Republic plc operated with twelve retail branches in the UK; Rotherham (including Head Office), Manchester, Barnsley, Doncaster, Hull, Sheffield, Sunderland, Swindon, Birmingham, Crewe, Lincoln and Mildenhall. There are also internet sales, administered and supplied from Head Office. The revenue split between these areas is detailed in Note 5.

5. RevenueRevenue represents the net invoiced value of goods sold, after allowances for returns and trade discounts.

6. Other Income

7. Finance Costs

8. Profit Before Taxation

2016 2015£ £

Retail store sales 4,143,213 2,272,279Online sales 1,655,852 1,835,167Trade sales - 16,811

5,799,065 4,124,257

2016 2015£ £

Rent 1,440 -Sundry income 3,000 2,000Interest receivable 715 57

5,155 2,057

2016 2015£ £

Bank loan interest 6,184 11,126Bank overdraft interest - 277Other interest and finance costs 10,881 4,636

17,065 16,039

2016 2015£ £

Wages and salaries 1,023,172 614,712Social security costs 68,347 41,755

1,091,519 656,467Average number of employees - Group 80 46

2016 2015£ £

Profit before taxation is arrived at after charging:Audit fee 11,500 8,100Auditor’s fees for non-audit services:- In relation to the flotation in June 2015 - 42,875- In relation to the 2015 interim report - 1,500Depreciation of property, plant and equipment 47,895 10,222Key management personnel - Directors’ remuneration 189,666 86,171Interest expense 17,065 16,039


9. Staff CostsStaff costs for the Group, including Directors’ remuneration, were as follows:

All staff are employed by Fishing Republic Trading Limited. There are no staff costs in the Company.

10. Key Management Personnel

Key management personnel are considered to be the Directors of Fishing Republic plc. Their aggregate remuneration for the year ended 31 December 2016 was £224,666 (2015: £96,970) for their services to the Group;

There are outstanding options for certain Directors to subscribe for 647,058 ordinary shares at an exercise price of 17p. Details are disclosed in the Directors’ Report. No options were issued in the year.

11. Earnings Per Share

Earnings per share has been calculated on the attributable profit for the period and the weighted average number of shares in issue during the period.

Comparative year ended 31 December 2015

Earnings per share before the exceptional IPO costs were disclosed on the basis that these were “one-off” costs of the flotation and the result after deducting these expenses did not reflect the operating result of the business.

The earnings attributable to ordinary shareholders is profit/loss after tax. The weighted average number of ordinary shares in issue during the period is used for the purpose of calculating basic earnings per share. Diluted earnings per share takes into account share options in issue throughout the period as follows:

Approved EMI share options for 1,099,975 shares

Unapproved share options for 496,122 shares

Diluted earnings per share has been calculated using the Treasury Method.


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2016 2015Emoluments Capitalised

software development

Net chargeto incomestatement

Emoluments

£ £ £ £S J Gross 60,000 - 60,000 31,268R Holmes 45,000 - 45,000 -Z Gross 35,000 - 35,000 19,602P Hagerty 35,000 35,000 - 17,500R Tippett - - - 6,100J Newman 28,000 - 28,000 12,500E McDermott 21,666 - 21,666 10,000

224,666 35,000 189,666 96,970

2016 2015Profit/(loss) for the year (£) 320,771 (31,458)Profit before IPO costs charged to income statement (£) 320,771 267,582Weighted average shares in issue - Number 32,473,108 19,623,288Basic earnings/(loss) per share (pence) 0.99 (0.16)Earnings per share before exceptional IPO costsBasic earnings per share (pence) 0.99 1.36Diluted earnings per share (pence) 0.96 1.36


12. Income Tax

13. Property, Plant & Equipment

Group2016

Group2015

£ £Deferred tax charge; Reversal of timing differences 82,130 37,176

Reconciliation of income tax expense to profit before taxation:

2016£

2015£

Profit before taxation 402,901 5,718Tax thereon at the applicable tax rate of 20% 80,580 1,144Tax effects of:Non-deductible expenses 14,372 62,824Non-taxable income and capital allowances in excess of deprecia-tion

(12,822) (26,792)

Total tax charge 82,130 37,176

Movements are in respect of:Trading losses 31,300 37,176Accelerated capital allowances 50,830

82,130 37,176

FreeholdProperty

ShortLeasehold

Fixturesand Fittings

Plant,Equipment

and Vehicles

Total

2016 2016 2016 2016 2016£ £ £ £ £

Cost At 1 January 2016 160,790 17,564 420,273 127,790 726,417Additions - 60,051 521,983 80,065 662,099At 31 December 2016 160,790 77,615 942,256 207,855 1,388,516DepreciationAt 1 January 2016 55,297 14,890 366,536 108,403 545,126Charge for the year 3,201 5,744 29,694 9,256 47,895At 31 December 2016 58,498 20,634 396,230 117,659 593,021Net Book Value At 31 December 2016 102,292 56,981 546,026 90,196 795,495At 1 January 2016 105,493 2,674 53,737 19,387 181,291

Year ended 31 December 2016 - Group


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(a) All property, plant and equipment is held in subsidiary undertakings and is located in the UK.


Freehold Property

ShortLeasehold

Fixturesand Fittings

Plant,Equipment

and Vehicles

Total

2015 2015 2015 2015 2015£ £ £ £ £

CostAt 1 January 2015 160,790 14,774 372,598 119,383 667,545Additions - 2,790 47,675 8,407 58,872At 31 December 2015 160,790 17,564 420,273 127,790 726,417DepreciationAt 1 January 2015 52,096 14,774 362,560 105,474 534,904Charge for the year 3,201 116 3,976 2,929 10,222At 31 December 2015 55,297 14,890 366,536 108,403 545,126Net Book Value At 31 December 2015 105,493 2,674 53,737 19,387 181,291At 1 January 2015 108,694 - 10,038 13,909 132,641


14. Intangible Assets

15. Deferred Tax Asset / Liability

Impairment Review

Goodwill on the acquisition of businesses as detailed in Note 26 has been assessed for potential impairment. Following acquisition, businesses are subsumed within the overall business and do not operate as separate cash generating units.

The recoverable amount of the goodwill has been determined on a value in use basis. The key assumptions on which the valuation is based are that:

• Sector focus will over time result in growth of the business above long term retail industry growth rates. Management consider this to be appropriate for a new specialist retail sector;• Prices will rise in line with inflation and market trends; and• Staff wage inflation will be higher than general inflation but will not rise in line with sales.

These assumptions were determined from the Directors’ knowledge and experience.

The cash flows are based upon a 5-year period which is the period over which there is relative certainty, and, in accordance with historical trends and current expectations, an average growth rate for the organic income streams has been applied to periods beyond the current 12 month budget. In making these calculations Management have not included an assessment of the terminal value. The Company’s Weighted Average Cost of Capital for discounting purposes has been estimated at 15%. The cash-flows are based upon approved budgets for the following 12 months, beyond this they are based upon management’s expectations of future developments.

On the above basis it is considered that there is no impairment of goodwill. Based upon their recent acquisition, trademarks are not considered to be impaired.

Company

Within the Company financial statements are trademarks at a carrying value equivalent to cost of £6,832 (2015: £6,384).


Goodwill 2016

Trademarks2016

SoftwareDevelopment

2016

Total2016

£ £ £ £CostAt 1 January 2016 25,000 6,384 70,024 101,408Additions 162,462 448 220,453 383,363At 31 December 2016 187,462 6,832 290,477 484,771Amortisation & ImpairmentAt 1 January 2016 12,813 - 3,608 16,421Amortisation charge 1,250 - 21,817 23,067At 31 December 2016 14,063 - 25,425 39,488Net Book Value At 31 December 2016 173,399 6,832 265,052 445,283At 31 December 2015 12,187 6,384 66,416 84,987

Group2016

Company2016

Group2015

Company2015

£ £ £ £Deferred tax asset in respect of trading losses 9,443 - 40,743 14Deferred tax liability in respect of accelerated capital allowances 50,832 - - -Current liabilities 41,389 - - -Current assets - - 40,743 14

The applicable tax rate is the enacted rate of 18 percent.


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Names of subsidiary undertakingsFishing Republic Trading LimitedFishing Republic Retail Limited

Both subsidiary undertakings are 100% owned, are registered in England and their principal activities are the retailing and production of fishing equipment. The registered office of both subsidiaries is Vulcan Works, Eastwood Trading Estate, Chesterton Road, Rotherham, S65 1SU.

In relation to inventories included above:

• all were carried at acquisition cost and none at realisable value, less costs to sell; • there were no write downs recognised as an expense in the period; and• the cost of inventories recognised as an expense (cost of goods sold) in the year ended 31 December 2016 totalled £3,038,895 (2015: £2,243,036).

16. Investments in Subsidiary Undertakings - Company

Company2016

Company2015

£ £Share capital owned in Fishing Republic Trading Limited 137,500 137,500Share capital owned in Fishing Republic Retail Limited 377,000 377,000At 31 December 514,500 514,500

18. Trade and Other Receivables

17. Inventories

19. Cash and Cash Equivalents

Group2016

Company2016

Group2015

Company2015

£ £ £ £At cost:Finished goods for resale 4,256,630 - 2,446,905 -At 31 December 4,256,630 - 2,446,905 -

Group2016

Company2016

Group2015

Company2015

£ £ £ £Trade receivables 4,622 - 8,187 -Other receivables 135,680 3,110,694 104,550 753,560Prepayments 65,376 - 123,586 -At 31 December 205,678 3,110,694 236,323 753,560

Group2016

Company2016

Group2015

Company2015

£ £ £ £Cash in hand 3,664 - 7,960 -Short-term bank deposits 2,052,035 1,500,135 638,343 271,902At 31 December 2,055,699 1,500,135 646,303 271,902


Group2016

Company2016

Group2015

Company2015

£ £ £ £Trade payables 800,437 - 244,274 2,058Other taxes and social security costs 31,012 - 14,003 -Accruals 29,426 - 21,855 -VAT payable - - 77,203 -Non-interest bearing loans from directors 250 - 77,638 -Other payables 18,931 - 5,135 -At 31 December 880,056 - 440,108 2,058

20. Trade and Other Payables

21. Loans and Borrowing

22. Share Capital and Reserves

Group2016

Company2016

Group2015

Company2015

£ £ £ £Non-current:Bank loans - - 243,677 -Current:Bank loans - - 24,000 -Total loans and borrowing - - 267,677 -

Group 2016 No.

2016£

2015No.

2015£

Allotted, called up and fully paid Ordinary shares of 1p each Balance at start of year 26,875,000 268,750 13,750,000 1,375,000Capital reduction (conversion to 1p shares) - - - (1,237,500)New shares issued in the year (Note 23) 10,951,788 109,518 13,125,000 131,250Balance at 31 December 37,826,788 378,268 26,875,000 268,750

Share capital at 1 January 2015 related to the closing share capital of Lureflash International Limited before the Group reconstruction and IPO, 13,750,000 ordinary shares of 10p each, £1,375,000.

On 20 May 2015, there was a capital reduction to reduce the share capital to 13,750,000 ordinary shares of 1p, £137,500.

23. Changes in Share Capital

237,500 ordinary 1p shares were issued on 10 May 2016 upon the exercise of options held in the Company for a total consideration of £35,625.

A placement on 29 June 2016 of 10,714,288 ordinary 1p shares raised consideration of £3,750,001, net £3,552,177 after attributable costs of £197,824.

Total proceeds from shares issued in the year were therefore £3,587,802.


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24. Related Party Disclosures

(a) Identification of related parties

Fishing Republic plc has related party relationships with its subsidiary undertakings, Directors and shareholders, key management personnel and entities in which a Director, S J Gross, has a controlling financial interest.

(b) Related party disclosures

Fishing Republic plc - the Company

During the year working capital loans were advanced as required to the subsidiary, Fishing Republic Trading Limited. These advances have no fixed repayment terms and are interest free. The amount outstanding at 31 December 2016, included in Other receivables (Note 18) was £3,110,694 (2015 £752,885).

The financial statements of Fishing Republic Trading Limited included the following transactions and balances with related parties:

Directors’ loans have no fixed repayment terms and are therefore classified as repayable on demand. No interest is charged.

Directors’ remuneration is disclosed in Note 10 and relates entirely to salaried remuneration. Six of the branch properties from which the Company operates its retail business are owned by the Directors, S J and Z Gross. Rents of £74,063 (2015: £30,000) were payable by the Group for the year and S J and Z Gross hold bonds for £10,000 under rental arrangements.

2016£

2015£

AK Construction (South Yorkshire) Limited, a company controlled by S J Gross;Other receivables - 2,996Dearne Valley Property Limited, a company controlled by S J Gross;Other payables - 1,994Wickham Homes (Northern) Limited, a company controlled by S J Gross;Other receivables - 396Other payables 250 -Current liabilities included the following amounts owed to directors;S J Gross 250 77,638


25. Financial Instruments

Fishing Republic plc’s activities are exposed to a variety of market risks (including foreign currency risk, interest rate risk), credit risk and liquidity risk. Fishing Republic plc’s overall financial risk management policy focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on Fishing Republic plc’s financial performance.

There were no financial assets or liabilities classified either as ‘held to maturity’ or as ‘fair value’ through the income statement during the year.

25.1 Financial Risk Management Policies

Fishing Republic plc’s policies in respect of the major areas of treasury activity are as follows:

(a) Market Risk

(i) Foreign currency risk

Fishing Republic plc has limited exposure to foreign currency risk on purchases in US Dollars from China. This is managed by fixing rates within a window for settlement. No balances at 31 December 2016 are denominated in currencies other than GBP Sterling and there were no open forward currency contracts at the year end.

(b) Credit Risk

Fishing Republic plc’s exposure to credit risk, or the risk of counterparties defaulting is minimal because this is a retail, cash-based business and trade receivables were £4,622 in total at 31 December 2016 (2015: £8,187). Fishing Republic plc would manage its exposure to any potential credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. For other financial assets (including cash and bank balances), Fishing Republic plc minimises credit risk by dealing exclusively with high credit rating counterparties.

(i) Credit risk concentration profile

Fishing Republic plc does not have any major concentration of credit risk related to any individual customer or counterparty.

(ii) Exposure to credit risk

As Fishing Republic plc does not hold any collateral, the maximum exposure to credit risk is represented by the carrying amount of the financial assets at the end of the reporting periods. All of these expenses are to UK entities.

(iii) Age Analysis

The age analysis of Fishing Republic plc’s trade receivables at the end of the reporting periods was as follows:

(iv) Trade receivables that are past due but not impaired

No impairment allowance is necessary in respect of these trade receivables on grounds of materiality.

2016£

2015£

Not past due and not impaired 1,004 238Past due but not impaired:- 2 to 4 months 349 152- over 4 months 3,269 7,797

4,622 8,187


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(c) Liquidity Risk

Liquidity risk arises mainly from general funding and business activities. Fishing Republic plc practises prudent risk management by maintaining sufficient cash balances.

The following table sets out the maturity profile of the financial liabilities as at the end of the reporting periods based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on the rates at the end of the reporting periods):

25.2 Capital Risk Management

There was no change in Fishing Republic plc’s approach to capital management during the financial period under review.

The debt-to-equity ratio of Fishing Republic plc at the end of the financial year is not presented as its cash and cash equivalents exceeded the total debts.

25.3 Classification of Financial Instruments

WeightedAverage

Effective Rate

ContractualCarryingAmount

UndiscountedCash Flows

OverWithin1 Year

1 - 5Years

5Years

% £ £ £ £ £As at 31 December 2016Trade payables - 800,437 800,437 800,437 - -Other payables and accruals - 79,619 79,619 79,619 - -Total financial liabilities 880,056 880,056 880,056 - -

WeightedAverage

Effective Rate

ContractualCarryingAmount

UndiscountedCash Flows

OverWithin1 Year

1 - 5Years

5Years

% £ £ £ £ £As at 31 December 2015Trade payables - 244,274 244,274 244,274 - -Other payables and accurals - 195,834 195,834 195,834 - -Interest-bearing bank borrowings

3.76 267,677 270,654 43,885 175,542 51,227

Total financial liabilities 707,785 710,762 483,993 175,542 51,227

2016£

2015£

Financial assetsTrade receivables 4,622 8,187Cash and bank balances 2,055,699 646,303

2,060,321 654,490Financial liabilitiesTrade payables 800,437 244,274Other payables and accruals 48,607 195,834Interest-bearing bank borrowings - 267,677

849,044 707,785

As at 31 December


25.4 Fair Values Measurement

At 31 December 2016 and 2015, there were no financial instruments carried at fair values. The fair values of the financial assets and financial liabilities approximated their carrying amounts due to the relatively short-term maturity. The fair values are determined by discounting the relevant cash flows at rates equal to the current market interest rate plus appropriate credit rating, where necessary.

26. Business Combinations

As referred to in the Strategic Report, five new retail locations were added during 2016. Three of these were newly established retail branches and two were acquisitions;

(a) Acquisition of Fantackletastic On 1 September 2016, as part of the Company’s strategy to increase its geographical spread of sales, 100% of the trade and assets of Fantackletastic in Lincoln were acquired. The consideration paid was £166,616 (all cash) which included the trading stock, fixtures and fittings and goodwill of the business. The identifiable assets of the business have been valued by the Directors at £79,154 (including fixed assets of £50,000 and trading stock of £29,154), leaving a goodwill valuation of £87,462. The acquired business contributed revenue of £130,576 between the acquisition date and 31 December 2016, included in the Income Statement. As part of the Group, the profitability of the acquired business is not considered to be a meaningful measure and as such has not been disclosed separately.

(b) Acquisition of Tackle Warehouse

On 19 September 2016, as part of the Company’s strategy to increase its geographical spread of sales, 100% of the trade of Tackle Warehouse in Cambridgeshire was acquired for consideration of £75,000 (all cash). In the opinion of the Directors, no material identifiable assets were acquired and the transaction has therefore been recorded as the purchase of goodwill. The acquired business began to contribute revenue in November 2016 and contributed revenue of £32,744 by 31 December 2016, included in the Income Statement. As part of the Group, the profitability of the acquired business is not considered to be a meaningful measure and as such has not been disclosed separately.

The business combinations therefore resulted in total purchased goodwill of £162,462 (Note 14), which represents access to customer bases.

Acquisition of subsidiary undertakings in 2015

On 4 June 2015, Fishing Republic plc acquired the entire issued share capital of Fishing Republic Trading Limited (formerly Lureflash International Limited) for consideration equal to the nominal value of shares issued, £137,500. The consideration was satisfied by the issue of 13,750,000 ordinary shares of 1p.

On 13 July 2015, Fishing Republic plc acquired the entire issued share capital of the newly incorporated Fishing Republic Retail Limited for consideration of £377,000.

The business combinations have been accounted for using merger accounting and therefore:

• the carrying values of the assets and liabilities of the parties are not adjusted to fair values and the combination consolidates assets and liabilities at book values. Therefore, no goodwill arises; and

• the results and cash flows of all the combining entities are brought into the consolidated financial statements from the beginning of the financial year in which the combination occurred. The results of the Group reflect the consolidated results of the parent and its two subsidiaries for the full year ended 31 December 2015. The combined profits of the subsidiary undertakings for the year were £267,639, the loss incurred by the parent was £299,097 and the Group consolidated loss was therefore £31,458.

27. Share Based Payments

There are share options outstanding to Directors and employees in relation to 1,511,739 ordinary shares of 1p each issued in 2015. No options were issued during 2016.

Options can be exercised at an exercise price of 17p per share three years from the grant date and those remaining unexercised after ten years from the grant date expire. Options issued to employees are forfeited if the employee leaves the Company. In addition, the Company has issued warrants to Directors outside the approved scheme on varying terms and conditions.

The Directors have assessed the estimated fair values of the options at the time of grant, using the Black–Scholes–Merton Option Pricing Model on the basis of reasonable assumptions. Based upon the valuation derived, the annual charge to income statement is not considered material to the financial statements.

The Directors have also assessed the potential deferred tax asset arising in relation to share options over the vesting period. The potential asset is not deemed material, but this position will be kept under review.


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28. Operating Lease Commitments

As detailed in Note 4.12, the business operated from twelve locations during the year and retail/ warehouse premises are rented under operating lease agreements.

As disclosed in Note 24, six of the branch properties are leased from the Directors (S J and Z Gross) on commercial terms. The remaining six are leased from third party landlords.

Future minimum lease payments under non-cancellable operating leases are:

Lease payments recognised in the Income Statement for the period amounted to £157,427 (2015: £30,000).

29. Subsequent Events

In early 2017, the following new trading sites were established: new start-ups in Milton Keynes, Ipswich and Reading.

2016 Land &

buildings

2015Land &

buildings£ £

Business retail premises;Within one year 243,526 75,000One to two years 243,526 100,000Two to five years 704,583 300,000Over five years 2,510,246 1,742,466

Fishing Republic plcVulcan Works, Chesterton Road, Eastwood Trading Estate, Rotherham, S65 1SUTelephone: 01709 724 [email protected]

Company No. 09196822

RegistrarsShare Registrars LimitedSuite E, First Floor, 9 Lion & Lamb Yard,Farnham, Surrey, GU9 7LL AuditorCrowe Clark Whitehill LLP3rd floor, The Lexicon, Mount StreetManchester, M2 5NT Nominated Adviser and BrokerNorthland Capital Partners Limited60 Gresham Street, 4th Floor, London, EC2V 7BB

Financial PRKTZ CommunicationsNo. 1 Cornhill, London, EC3V 3ND SolicitorWalker Morris LLPKings Court, 12 King Street, Leeds, LS1 2HL

Advisers

www.fishingrepublic.net

Documents

ANNUAL REPORT For the year ended 31st December 2016 Annual Report 2017.pdf · Chairman’s Statement Share Placing At the end of June 2016, we raised £3,750,000 (gross) through a