Company registration number 08527463 (England and Wales)
KAZAI CAPITAL LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
KAZAI CAPITAL LIMITED
COMPANY INFORMATION
Director
E Castle
Company number
08527463
Registered office
30 City Road
London
EC1Y 2AB
Auditor
Gravita II LLP
30 City Road
London
EC1Y 2AB
Business address
First Floor
50 St Mary Axe
London
EC3A 8FR
KAZAI CAPITAL LIMITED
CONTENTS
Page
Strategic report
1 - 2
Director's report
3 - 4
Independent auditor's report
5 - 8
Statement of comprehensive income
9
Statement of financial position
10
Statement of changes in equity
11
Notes to the financial statements
12 - 23
KAZAI CAPITAL LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The director presents the strategic report for the year ended 31 December 2022.
Fair review of the Business
The company’s principal trading activity during the year continued to be that of dealing in residential properties under the Webuyanyhome brand, together with managing a portfolio of properties which are let to tenants on market rents.
Management undertook a review of processes and procedures across the business and took actions to strengthen these and especially in the valuation of properties being considered for purchase given the anticipated softening of the housing market. Management also identified some matters where improvements were required to third party corroboration of property values prior to purchase and to procedures relating to the use of digital marketing services. Management has continued its work on these matters and has commissioned a specialist third party firm to assess any potential contingent VAT liability relating to the purchase of digital marketing services and its practice of recharging costs across the group to ensure that any liability arising is appropriately reflected. It is not currently possible to quantify either the amount or timing of any liability that may be determined.
The company reported a Profit before Tax of £941,734 (2021: £6,050,125).
Principal Risks and Uncertainties
The Company faces a number of business risks and uncertainties which the Director considers with the management team on a regular basis whilst assessing the trading performance of the business. The table below sets out the key risks that have been identified together with the Company’s approach to mitigating those risks.
| | | | |
Uncertainty around UK residential housing market New entrants to the market | | Volatility in the housing market and general decrease in the property values could deteriorate Company’s profits due to decreased property resale value. Increased competition for those customers who need a faster sale and are prepared to accept a discount to market value could limit opportunities to purchase properties leading in turn to turnover and gross profit being suppressed. | | Management introduced stricter buying criteria, ensuring protection and maintenance of profit margins. Property valuation was based on pre covid levels to ensure prudence was applied. Weekly stock review was introduced. The Director continuously seeks to trial and introduce new commercial and marketing initiatives to ensure the Company retains its leading position in the market. |
Shortage of suitably trained employees | | A shortage of sufficiently experienced employees could reduce capacity to progress leads and hence adversely impact the volume of residential property purchases. | | Management continuously reviews the performance of key staff and assesses the need to recruit additional employees in advance of expected shortages. Management works closely with staff to promote their development and progression, helping to promote longer tenure. |
KAZAI CAPITAL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
Promoting the success of the company
The Director of the Company recognizes its responsibility to maintain high standards of business conduction and to recognize the impact on all stakeholders when making business decisions including the long-term impact of these decisions. The management team meets monthly, to consider key business decisions.
The analysis of how it has exercised its duty to promote the long-term success of the company is set out below.
Consequences of decision in the long term
When making key business decisions, the management team consider the longer-term impact of these decisions on all stakeholders
Key investment decisions normally include a financial model extending to 5 years to ensure the long-term financial impacts are considered.
Consideration of longer-term risks are set out in Principal Risks and Uncertainties.
Interests of the company's employees
Business relationships with suppliers, customers and others
·The Director has implemented a customer feedback framework. This includes surveys and responding to positive and negative feedback. The Director ensures that actions are developed to address feedback from customers.
·The Director has facilitated a fortnightly payment run process to maximise the number of supplier invoices that are paid on time.
Impact on the community and the environment
Maintaining a reputation for high standards of business conduct
Acting fairly between members of the Company
E Castle
Director
29 September 2023
KAZAI CAPITAL LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
The director presents his annual report and financial statements for the year ended 31 December 2022.
Principal activities
The principal activity of the company continued to be that of residential property trading and residential property investment.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £3,691,237. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
E Castle
Financial instruments
The Company has a normal level of exposure to price, credit, liquidity and cash flow risks arising from trading activities which are conducted in Sterling. The Company does not enter into any formally designated hedging arrangements.
Research and development
The nature of the Company’s activities mean it does not commit a material level of resources to research and development.
Future developments
The Director believes that the market for trading in residential properties will continue to offer a plentiful supply of opportunities whilst remaining competitive. The market discontinuity caused by the September 2022 mini budget provided a challenge to the business model to operate and be profitable in a downward market. The business responded by adjusting the discounts it offers to maintain the profit levels. The Director believes that the Company has developed a leading position in the market and is in a good financial position such that, by professionally managing the risks identified, the business will and has continued to perform profitably. With a continuous focus on introducing new commercial initiatives, recruiting and training quality employees, trialling new marketing opportunities and ensuring sound financial management, the Director is confident in the Company’s ability to maintain and build on its performance.
Energy and carbon report
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
KAZAI CAPITAL LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -
Statement of director's responsibilities
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is 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 director is required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is 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. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
E Castle
Director
29 September 2023
KAZAI CAPITAL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF KAZAI CAPITAL LIMITED
- 5 -
Opinion
We have audited the financial statements of Kazai Capital Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's 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. However, because not all future events or conditions can be predicted this statement is not a guarantee as to the company's ability to continue as a going concern.
Our responsibilities and the responsibilities of the director 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 director is 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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
KAZAI CAPITAL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF KAZAI CAPITAL LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has 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. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.
KAZAI CAPITAL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF KAZAI CAPITAL LIMITED
- 7 -
The extent to which the audit was considered capable of detecting irregularities including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the property sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company including, but not limited to, the Companies Act 2006 and taxation legislation.
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
understanding the business model as part of the control and business environment;
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations and;
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence and enquiring with the company of actual and potential non-compliance with laws and regulations.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment by for example forgery, or intentional misrepresentation or through collusion. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
KAZAI CAPITAL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF KAZAI CAPITAL LIMITED
- 8 -
This report is made solely to the company's member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to the member in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's member, for our audit work, for this report, or for the opinions we have formed.
Sarah Wilson FCA
Senior Statutory Auditor
For and on behalf of Gravita II LLP
30 September 2023
2023-09-30
Chartered Accountants
Statutory Auditor
30 City Road
London
EC1Y 2AB
KAZAI CAPITAL LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
2022
2021
Notes
£
£
Turnover
2
857,233
279,888
Cost of sales
(198,994)
(20,716)
Gross profit
658,239
259,172
Administrative expenses
(5,387,780)
(4,925,184)
Other operating income
3,002
299,711
Profit and loss on disposal of investments
(166,404)
Operating loss
3
(4,892,943)
(4,366,301)
Interest receivable and similar income
7
5,898,029
10,306,763
Interest payable and similar expenses
8
(63,352)
(55,097)
Fair value on investments
164,760
Profit before taxation
941,734
6,050,125
Tax on profit
9
Profit for the financial year
941,734
6,050,125
KAZAI CAPITAL LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2022
31 December 2022
- 10 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
11
55,140
81,512
Investments
12
310
1,000,310
55,450
1,081,822
Current assets
Debtors
14
4,854,983
6,824,250
Cash at bank and in hand
319,358
379,032
5,174,341
7,203,282
Creditors: amounts falling due within one year
15
(1,116,431)
(1,252,821)
Net current assets
4,057,910
5,950,461
Total assets less current liabilities
4,113,360
7,032,283
Creditors: amounts falling due after more than one year
16
(345,221)
(514,641)
Net assets
3,768,139
6,517,642
Capital and reserves
Called up share capital
19
50,000
50,000
Profit and loss reserves
20
3,718,139
6,467,642
Total equity
3,768,139
6,517,642
The financial statements were approved and signed by the director and authorised for issue on 29 September 2023
E Castle
Director
Company Registration No. 08527463
KAZAI CAPITAL LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2021
50,000
1,538,752
1,588,752
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
6,050,125
6,050,125
Dividends
10
-
(1,121,235)
(1,121,235)
Balance at 31 December 2021
50,000
6,467,642
6,517,642
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
941,734
941,734
Dividends
10
-
(3,691,237)
(3,691,237)
Balance at 31 December 2022
50,000
3,718,139
3,768,139
KAZAI CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 12 -
1
Accounting policies
Company information
Kazai Capital Limited is a private company limited by shares incorporated in England and Wales. The registered office is 30 City Road, London, EC1Y 2AB. The principal place of business is First Floor, 50 St Mary Axe, London, EC3A 8FR.
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.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
Kazai Capital Limited is a wholly owned subsidiary of ECX Investments Ltd and the results of Kazai Capital Limited are included in the consolidated financial statements of ECX Investments Ltd which are available from its registered office, 30 City Road, London, EC1Y 2AB.
1.2
Going concern
Atruet the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues 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 traded residential sales and back to back residential sales 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 trade sales and back to back sales is recognised by reference to the stage of completion (usually when the sale of the residential property is completed).
KAZAI CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
1.4
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:
Fixtures and fittings
3 year straight line
Computers
3 year straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
The assets’ residual values and useful lives are reviewed, and adjusted, if appropriate, at the end of each reporting period. The effect of any change is accounted for prospectively.
1.5
Fixed asset investments
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
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.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
KAZAI CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position 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.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
KAZAI CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, 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.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
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
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
KAZAI CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 16 -
1.12
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
2
Turnover and other revenue
2022
2021
£
£
Turnover analysed by class of business
Trade and back to back sales
620,670
279,888
Recharged costs
236,563
-
857,233
279,888
2022
2021
£
£
Other revenue
Dividends received
5,800,000
9,500,000
Grants received
-
29,530
3
Operating loss
2022
2021
Operating loss for the year is stated after charging/(crediting):
£
£
Exchange losses
1,258
Government grants
-
(29,530)
Depreciation of owned tangible fixed assets
46,247
37,812
Profit on disposal of investment property
(166,654)
KAZAI CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 17 -
4
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
14,400
28,800
Audit of the financial statements of the company's subsidiaries
12,960
12,300
27,360
41,100
For other services
Taxation compliance services
6,000
6,000
All other non-audit services
37,638
30,984
43,638
36,984
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Director
1
1
Admin
14
14
Sales
14
10
Marketing and Web
2
2
Total
31
27
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
1,597,191
1,431,769
Social security costs
226,671
176,467
Pension costs
22,994
86,015
1,846,856
1,694,251
6
Director's remuneration
2022
2021
£
£
Remuneration for qualifying services
102,500
100,000
KAZAI CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
7
Interest receivable and similar income
2022
2021
£
£
Interest income
Other interest income
629
6,135
Income from fixed asset investments
Income from shares in group undertakings
5,800,000
9,500,000
Income from other fixed asset investments
97,400
800,628
Total income
5,898,029
10,306,763
8
Interest payable and similar expenses
2022
2021
£
£
Interest on bank overdrafts and loans
63,352
55,097
KAZAI CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 19 -
9
Taxation
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit before taxation
941,734
6,050,125
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
178,929
1,149,524
Tax effect of expenses that are not deductible in determining taxable profit
9,548
14,065
Tax effect of income not taxable in determining taxable profit
(1,102,000)
(1,805,000)
Group relief
880,464
697,997
Other adjustments
33,059
(56,586)
Taxation charge for the year
-
-
On 1 April 2023, the main rate of tax has increased from 19% to 25%. The deferred tax liabilities reflect this rate.
10
Dividends
2022
2021
£
£
Interim paid
3,691,237
1,121,235
11
Tangible fixed assets
Fixtures and fittings
Computers
Total
£
£
£
Cost
At 1 January 2022
47,871
189,862
237,733
Additions
19,875
19,875
At 31 December 2022
47,871
209,737
257,608
Depreciation and impairment
At 1 January 2022
45,638
110,583
156,221
Depreciation charged in the year
2,233
44,014
46,247
At 31 December 2022
47,871
154,597
202,468
Carrying amount
At 31 December 2022
55,140
55,140
At 31 December 2021
2,233
79,279
81,512
KAZAI CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
12
Fixed asset investments
2022
2021
Notes
£
£
Investments in subsidiaries
13
310
310
Listed investments
1,000,000
310
1,000,310
Movements in fixed asset investments
Shares in subsidiaries
Other investments
Total
£
£
£
Cost or valuation
At 1 January 2022
310
1,000,000
1,000,310
Disposals
-
(1,000,000)
(1,000,000)
At 31 December 2022
310
-
310
Carrying amount
At 31 December 2022
310
-
310
At 31 December 2021
310
1,000,000
1,000,310
KAZAI CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
13
Subsidiaries
Details of the company's subsidiaries at 31 December 2022 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Asus Investments Ltd
30 City Road, London, EC1Y 2AB
Ordinary
100.00
Ferrybridge Capital Limited
30 City Road, London, EC1Y 2AB
Ordinary
100.00
Proffered Ltd
30 City Road, London, EC1Y 2AB
Ordinary
100.00
LC Capital Limited
30 City Road, London, EC1Y 2AB
Ordinary
100.00
14
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
121,139
189,787
Amounts owed by group undertakings
3,491,050
2,326,261
Other debtors
898,731
4,113,496
Prepayments and accrued income
344,063
194,706
4,854,983
6,824,250
15
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Other borrowings
17
169,420
12,559
Trade creditors
212,123
92,041
Taxation and social security
63,087
55,190
Other creditors
417,520
731,505
Accruals and deferred income
254,281
361,526
1,116,431
1,252,821
16
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Other borrowings
17
345,221
514,641
KAZAI CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
17
Loans and overdrafts
2022
2021
£
£
Other loans
514,641
527,200
Payable within one year
169,420
12,559
Payable after one year
345,221
514,641
18
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
22,994
86,015
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.
19
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
50,000
50,000
50,000
50,000
There is a single class of Ordinary shares. There are no restrictions on the distribution of dividends and repayment of capital.
20
Reserves
Profit and loss reserves
Retained earnings represents accumulated comprehensive income for the year and prior periods less dividends paid.
21
Financial commitments, guarantees and contingent liabilities
The company's wholly owned subsidiary Asus Investments Limited has loans of £9.4m from HWSIL Finance Co Limited, which have been secured on the assets of Asus Investments Limited. Kazai Capital Limited acts as a cross guarantor of the loan. The loans from HWSIL Finance Co Limited are repayable at an interest rate of 6.00%. The loan was due to be repaid on 30 September 2023 and was refinanced on 27 September 2023.
During the year management identified some matters in relation to procedures relating to the use of digital marketing services within the company. As a result management commissioned a specialist third party firm to assess any potential contingent VAT liability relating to the purchase of digital marketing services and its practice of recharging costs across the group to ensure that any liability arising is appropriately reflected. It is not currently possible to quantify either the amount or timing of any liability that may be determined.
KAZAI CAPITAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 23 -
22
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Rent and service charge
Management recharges
2022
2021
2022
2021
£
£
£
£
Other related parties
94,439
90,275
499,205
-
2022
2021
Amounts due to related parties
£
£
Other related parties
395,010
684,816
The following amounts were outstanding at the reporting end date:
2022
2021
Amounts due from related parties
£
£
Other related parties
842,955
3,554,844
Other information
During the period, the company paid dividends to associates totalling £60,000.
The company has taken advantage of the exemption available in FRS 102 "Related party disclosures" whereby it has not disclosed transactions with the ultimate parent company or any wholly owned subsidiary undertaking of the group.
23
Directors' transactions
Dividends totalling £0 (2021 - £1,121,235) were paid in the year in respect of shares held by the company's directors.
Description
% Rate
Opening balance
Amounts advanced
Interest charged
Closing balance
£
£
£
£
Director's loan
2.00
7,445
39,577
629
47,651
7,445
39,577
629
47,651
2022-12-312022-01-01falseCCH SoftwareCCH Accounts Production 2023.200E Castle085274632022-01-012022-12-3108527463bus:Director12022-01-012022-12-3108527463bus:RegisteredOffice2022-01-012022-12-31085274632022-12-31085274632021-01-012021-12-310852746312022-01-012022-12-310852746312021-01-012021-12-3108527463core:RetainedEarningsAccumulatedLosses2021-01-012021-12-3108527463core:RetainedEarningsAccumulatedLosses2022-01-012022-12-31085274632021-12-3108527463core:FurnitureFittings2022-12-3108527463core:ComputerEquipment2022-12-3108527463core:FurnitureFittings2021-12-3108527463core:ComputerEquipment2021-12-3108527463core:CurrentFinancialInstrumentscore:WithinOneYear2022-12-3108527463core:CurrentFinancialInstrumentscore:WithinOneYear2021-12-3108527463core:Non-currentFinancialInstrumentscore:AfterOneYear2022-12-3108527463core:Non-currentFinancialInstrumentscore:AfterOneYear2021-12-3108527463core:CurrentFinancialInstruments2022-12-3108527463core:CurrentFinancialInstruments2021-12-3108527463core:ShareCapital2022-12-3108527463core:ShareCapital2021-12-3108527463core:RetainedEarningsAccumulatedLosses2022-12-3108527463core:RetainedEarningsAccumulatedLosses2021-12-3108527463core:ShareCapital2020-12-3108527463core:RetainedEarningsAccumulatedLosses2020-12-3108527463core:FurnitureFittings2022-01-012022-12-3108527463core:ComputerEquipment2022-01-012022-12-3108527463core:UKTax2022-01-012022-12-3108527463core:UKTax2021-01-012021-12-3108527463core:FurnitureFittings2021-12-3108527463core:ComputerEquipment2021-12-31085274632021-12-3108527463core:Non-currentFinancialInstruments2022-12-3108527463core:Non-currentFinancialInstruments2021-12-3108527463core:Non-currentFinancialInstrumentscore:ListedExchangeTraded2022-12-3108527463core:Non-currentFinancialInstrumentscore:ListedExchangeTraded2021-12-3108527463bus:PrivateLimitedCompanyLtd2022-01-012022-12-3108527463bus:FRS1022022-01-012022-12-3108527463bus:Audited2022-01-012022-12-3108527463bus:FullAccounts2022-01-012022-12-31xbrli:purexbrli:sharesiso4217:GBP