Caseware UK (AP4) 2022.0.179 2022.0.179 2022-12-312022-12-312022-12-312022-01-01110117falseThe Company and Group's principal activity is the retail of luxury fashion accessories, homeware and beauty products made available only to registered members at competitive discounts. The Company and the Group run flash sales of leading brands throughout the year while maintaining permanent designer catalogue in their online outlet stores.falsefalse 03885013 2022-01-01 2022-12-31 03885013 2021-01-01 2021-12-31 03885013 2022-12-31 03885013 2021-12-31 03885013 2021-01-01 03885013 c:Director3 2022-01-01 2022-12-31 03885013 c:Director4 2022-01-01 2022-12-31 03885013 c:Director6 2022-01-01 2022-12-31 03885013 c:Director8 2022-01-01 2022-12-31 03885013 c:Director9 2022-01-01 2022-12-31 03885013 c:Director9 2022-12-31 03885013 c:RegisteredOffice 2022-01-01 2022-12-31 03885013 d:FurnitureFittings 2022-01-01 2022-12-31 03885013 d:FurnitureFittings 2022-12-31 03885013 d:FurnitureFittings 2021-12-31 03885013 d:FurnitureFittings d:OwnedOrFreeholdAssets 2022-01-01 2022-12-31 03885013 d:OfficeEquipment 2022-01-01 2022-12-31 03885013 d:OfficeEquipment 2022-12-31 03885013 d:OfficeEquipment 2021-12-31 03885013 d:OfficeEquipment d:OwnedOrFreeholdAssets 2022-01-01 2022-12-31 03885013 d:ComputerEquipment 2022-01-01 2022-12-31 03885013 d:OtherPropertyPlantEquipment 2022-01-01 2022-12-31 03885013 d:OtherPropertyPlantEquipment 2022-12-31 03885013 d:OtherPropertyPlantEquipment 2021-12-31 03885013 d:OtherPropertyPlantEquipment d:OwnedOrFreeholdAssets 2022-01-01 2022-12-31 03885013 d:OwnedOrFreeholdAssets 2022-01-01 2022-12-31 03885013 d:PatentsTrademarksLicencesConcessionsSimilar 2022-01-01 2022-12-31 03885013 d:PatentsTrademarksLicencesConcessionsSimilar 2022-12-31 03885013 d:PatentsTrademarksLicencesConcessionsSimilar 2021-12-31 03885013 d:DevelopmentCostsCapitalisedDevelopmentExpenditure 2022-01-01 2022-12-31 03885013 d:DevelopmentCostsCapitalisedDevelopmentExpenditure 2022-12-31 03885013 d:DevelopmentCostsCapitalisedDevelopmentExpenditure 2021-12-31 03885013 d:Goodwill 2022-01-01 2022-12-31 03885013 d:Goodwill 2022-12-31 03885013 d:Goodwill 2021-12-31 03885013 d:CurrentFinancialInstruments 2022-12-31 03885013 d:CurrentFinancialInstruments 2021-12-31 03885013 d:CurrentFinancialInstruments d:WithinOneYear 2022-12-31 03885013 d:CurrentFinancialInstruments d:WithinOneYear 2021-12-31 03885013 d:ShareCapital 2022-01-01 2022-12-31 03885013 d:ShareCapital 2022-12-31 03885013 d:ShareCapital 2021-01-01 2021-12-31 03885013 d:ShareCapital 2021-12-31 03885013 d:ShareCapital 2021-01-01 03885013 d:SharePremium 2022-01-01 2022-12-31 03885013 d:SharePremium 2022-12-31 03885013 d:SharePremium 2021-01-01 2021-12-31 03885013 d:SharePremium 2021-12-31 03885013 d:SharePremium 2021-01-01 03885013 d:CapitalRedemptionReserve 2022-12-31 03885013 d:CapitalRedemptionReserve 2021-12-31 03885013 d:CapitalRedemptionReserve 2021-01-01 03885013 d:RetainedEarningsAccumulatedLosses 2022-01-01 2022-12-31 03885013 d:RetainedEarningsAccumulatedLosses 2022-12-31 03885013 d:RetainedEarningsAccumulatedLosses 2021-01-01 2021-12-31 03885013 d:RetainedEarningsAccumulatedLosses 2021-12-31 03885013 d:RetainedEarningsAccumulatedLosses 2021-01-01 03885013 d:FinancialAssetsDesignatedFairValueThroughProfitOrLoss 2022-12-31 03885013 d:FinancialAssetsDesignatedFairValueThroughProfitOrLoss 2021-12-31 03885013 d:FinancialLiabilitiesFairValueThroughProfitOrLoss d:UnlistedNon-exchangeTraded 2022-12-31 03885013 d:FinancialLiabilitiesFairValueThroughProfitOrLoss d:UnlistedNon-exchangeTraded 2021-12-31 03885013 d:AcceleratedTaxDepreciationDeferredTax 2022-12-31 03885013 d:AcceleratedTaxDepreciationDeferredTax 2021-12-31 03885013 d:TaxLossesCarry-forwardsDeferredTax 2022-12-31 03885013 d:TaxLossesCarry-forwardsDeferredTax 2021-12-31 03885013 d:FurtherSpecificTypeProvisionContingentLiability1ComponentTotalProvisionsContingentLiabilities 2022-01-01 2022-12-31 03885013 d:FurtherSpecificTypeProvisionContingentLiability1ComponentTotalProvisionsContingentLiabilities 2022-12-31 03885013 d:FurtherSpecificTypeProvisionContingentLiability1ComponentTotalProvisionsContingentLiabilities 2021-12-31 03885013 c:OrdinaryShareClass1 2022-01-01 2022-12-31 03885013 c:OrdinaryShareClass1 2022-12-31 03885013 c:OrdinaryShareClass2 2022-01-01 2022-12-31 03885013 c:OrdinaryShareClass2 2022-12-31 03885013 c:OrdinaryShareClass3 2022-01-01 2022-12-31 03885013 c:OrdinaryShareClass3 2022-12-31 03885013 c:OrdinaryShareClass4 2022-01-01 2022-12-31 03885013 c:OrdinaryShareClass4 2022-12-31 03885013 c:FRS102 2022-01-01 2022-12-31 03885013 c:Audited 2022-01-01 2022-12-31 03885013 c:FullAccounts 2022-01-01 2022-12-31 03885013 c:PrivateLimitedCompanyLtd 2022-01-01 2022-12-31 03885013 d:Subsidiary1 2022-01-01 2022-12-31 03885013 d:Subsidiary1 1 2022-01-01 2022-12-31 03885013 d:WithinOneYear 2022-12-31 03885013 d:WithinOneYear 2021-12-31 03885013 d:BetweenOneFiveYears 2022-12-31 03885013 d:BetweenOneFiveYears 2021-12-31 03885013 c:Consolidated 2022-12-31 03885013 c:ConsolidatedGroupCompanyAccounts 2022-01-01 2022-12-31 03885013 d:PatentsTrademarksLicencesConcessionsSimilar d:ExternallyAcquiredIntangibleAssets 2022-01-01 2022-12-31 03885013 d:DevelopmentCostsCapitalisedDevelopmentExpenditure d:ExternallyAcquiredIntangibleAssets 2022-01-01 2022-12-31 03885013 d:Goodwill d:ExternallyAcquiredIntangibleAssets 2022-01-01 2022-12-31 03885013 2 2022-01-01 2022-12-31 03885013 6 2022-01-01 2022-12-31 03885013 d:ExternallyAcquiredIntangibleAssets 2022-01-01 2022-12-31 03885013 d:Goodwill d:OwnedIntangibleAssets 2022-01-01 2022-12-31 03885013 d:PatentsTrademarksLicencesConcessionsSimilar d:OwnedIntangibleAssets 2022-01-01 2022-12-31 03885013 d:DevelopmentCostsCapitalisedDevelopmentExpenditure d:OwnedIntangibleAssets 2022-01-01 2022-12-31 xbrli:shares iso4217:GBP xbrli:pure
Registered number: 03885013




 





BRANDALLEY UK LIMITED
 
ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
 
FOR THE YEAR ENDED 31 DECEMBER 2022

 
BRANDALLEY UK LIMITED
 

COMPANY INFORMATION


Directors
M Feldmann 
R Feldmann 
R Clacher 
T Feldmann 
S M Smith (appointed 17 July 2023)




Registered number
03885013



Registered office
Telephone House
69-77 Paul Street

London

EC2A 4NW




Independent auditors
Wilder Coe Ltd
Chartered Accountants & Statutory Auditors

1st Floor Sackville House

143-149 Fenchurch Street

London

EC3M 6BL





 
BRANDALLEY UK LIMITED
 

CONTENTS



Page
Group Strategic Report
 
1 - 4
Directors' Report
 
5 - 7
Independent Auditors' Report
 
8 - 11
Consolidated Statement of Comprehensive Income
 
12
Consolidated Balance Sheet
 
13
Company Balance Sheet
 
14
Consolidated Statement of Changes in Equity
 
15
Company Statement of Changes in Equity
 
16
Consolidated Statement of Cash Flows
 
17
Consolidated Analysis of Net Debt
 
18
Notes to the Financial Statements
 
19 - 41

 
BRANDALLEY UK LIMITED
 

GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022

Introduction
The directors present their Group Strategic Report for the year ended 31 December 2022.
The Group, comprised of BrandAlley UK Limited and BrandAlley France SAS, is a leading online retailer of luxury fashion, homeware, accessories and beauty products made available to only registered members at competitive discounts. The Group runs flash sales of leading brands throughout the year while maintaining permanent designer catalogue in its online outlet store.
Business review
The Group is the off-price sales partner of first choice for over 500 brands across the premium clothing, footwear, accessories, homeware and beauty product sectors, sourced largely from the UK and mainland Europe.
In line with other online retailers, BrandAlley has been impacted by customers returning to pre-pandemic spending habits in 2022 as they return to the high street. This has led to less spending being made on-line. In February 2021 the Office for National Statistics stated that overall, in the UK the share of online sales peaked at 37.5% of total retail sales, but in 2022 this has fallen back to around 25%. This cross-industry trend has impacted sales for BrandAlley when compared to last year, along with significantly less stock packs being made available from brands across 2022 due to many brands pulling back stock production due to fears of an ongoing recession.
That said the business had a very successful last quarter with excellent trading through Black Friday and the Christmas gifting and sale period. In November, Black Friday promotional days alongside “Black Friday Steals of the Day” has had amazing traction with customers. Promotional activity continued into December with the beginning of the month being driven by Christmas gifting and the back half from “Boxing Day” sales. Net revenue and EBITDA for quarter four was up on last year, bucking the trend across most UK retailers who saw sales volumes fall in both November and December 2022. BrandAlley can capitalise on this trend seen by other retailers, as many brand partners are going into 2023 with excess stock that they will need to clear.
On the cost side, the EBITDA has been impacted by increases in warehousing and distribution costs driven by significant fuel price and hourly labour rate increases. Marketing costs have also increased materially, due to both a significant increase in competition online and both legal and regulatory changes in customer privacy legislation. The Group’s trading margin also continues to be impacted by the increase in import duty introduced following the UK leaving the European Union. The Directors are investing in systems in 2023 to address this rise in underlying costs in the business and to drive efficiencies. 
This is the third full year of consolidation of BrandAlley France SAS which BrandAlley UK bought out of administration in 2019. Since then, a staggered turnaround plan has been in place in order to comply with French Company Law which should end in 2023. The financial losses in 2022 remained in line with 2021 at a loss after tax of £2.3m, which included £0.4m of exceptional costs in relation to redundancies. In 2023 IT projects which will create a channel for future growth within the international market, coupled with further cost savings will enable the business to move into a profitable position in 2024.
As part of the strategy for 2022 the business has undertaken a full review of the current IT systems and has decided to impair some legacy systems ready to transition to new platforms in 2023. This one off cost to the business of £0.8m has been included in administrative expenses.
 

Page 1

 
BRANDALLEY UK LIMITED
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

Financial performance for the period

Group sales decreased by 20.0% in 2022 from £102.3m to £81.8m. Gross profit margin decreased from 36.0% to 34.9%. Distribution costs fell by 17.1% with a drop in sales volume offset slightly by the underlying increase in fuel, labour and the cost of marketing. Administrative expenses decreased by 8.7% to £12.9m due to savings made through the restructuring of the French business and the capitalisation of IT staff in relation to inhouse built IT system. Administration costs in 2022 include £2.0m of one-off costs in relation to redundancy costs, prior year accounting adjustments and the impairment of old IT software.
Operating profit has moved from being a profit of £1.3m in 2021 to a £2.0m operating loss in 2022. Without the £2m of one off administration costs listed above the Group would have made an operating profit.
The Group’s post-operating exceptional EBITDA was £0.8m 
(2021: £2.5m) with BrandAlley UK achieving an EBITDA of £2.5m which was partly offset by the loss of £1.7m made in the French business. 
The Balance Sheet remains in a strong position at December 2022, with cash at bank of £9.2m and net current assets of £3.7m. The Group invested heavily in stock prior to peak trading in 2021 in anticipation of supplier delivery delays due to labour shortages, resulting in closing stock of £12.5m. These issues were not expected or seen in 2022 and therefore stock levels have reduced to a more normal level for the business of £11.1m.

Post year-end trading update

After the exceptional, lockdown driven boom in on-line sales in 2020 and 2021 has adjusted, the long-term trend of the growth of on-line retail will be re-established, reconfirming the long-term potential of the BrandAlley business. As suppliers and brands normalised production and inventory levels, partners who have not had excess stock since before the pandemic are now returning to work with BrandAlley.
In terms of the post year-end trading environment, 2023 has started strongly, with suppliers having large amounts of excess stock and an increase in stock pack availability for BrandAlley giving a great brand line up for the start of the year.
In April 2023 BrandAlley purchased the intellectual property, the logistics operation and customer service division of the multi-platform online business Internet Fusion Group (IFG) as part of its expansion plans. The move marks a significant strategic opportunity to enhance BrandAlley’s infrastructure and will render BrandAlley operations more cost effective. In addition to IFG’s intellectual property across multiple domains, BrandAlley is acquiring the logistics operation and customer service division out of administration and preserving over 125 jobs.
Whilst the directors are confident in the Group strategy for growth they also remain focused on the potential risks ahead due to the current economic climate of rising cost inflation, the cost of living crisis and the conflict in Ukraine. However, through strong engagement with suppliers, on-going system upgrades and investment in customer engagement and satisfaction they believe that 2023 will be a year of strong sales growth for the business.

Page 2

 
BRANDALLEY UK LIMITED
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

Section 172 Companies Act 2006
 
This report sets out how the directors comply with the requirements of Section 172 Companies Act 2006 and how these requirements have impacted BrandAlley Board’s decision making throughout the financial year 2022.
S172a) The likely consequences of any decision in the long term
Board and management decisions have consistently been taken with the long-term perspective focused on creating, first, the UK’s, and then one of mainland Europe’s, leading online flash sales retailer of premium fashion, homeware and related product sectors.
The Board has continued to deploy a long-term perspective throughout 2022, evidenced in particular by the approach to BrandAlley France. The French business holds key Group intellectual property assets and is the designated platform for the rollout of the BrandAlley business model to the mainland European market, which is many times the size of the UK market. Consequently, the Board has supported the operating losses of the French business and investment in its staff, IT platform and logistics operations whilst implementing a turnaround plan for this business.
Furthermore, the Board takes a long-term perspective on colleagues who work for the the Group – they are our most important asset. Decisions about retention, motivation, remuneration and career development of all employees are taken with the long-term in mind.
S172b) The interests of the Group’s employees
As mentioned above, the Board considers that the employees of the company are its principal asset. The directors recognise that the employees are at the heart of all operations at BrandAlley and the success of the business is dependent on attracting, training and motivating them.
Colleagues have regular one-to-ones and annual reviews with an opportunity to build a career within the Group. The senior management team actively promote an open and inclusive culture where colleagues are encouraged to raise concerns they have regarding the business or their own wellbeing.
The Group has a heightened focus on employee wellbeing offering support for both physical and mental health with free access to counselling, virtual GP appointments and financial wellbeing support.

S172c) The need to foster the Group’s business relationships with suppliers, customers and others
The directors delegate the day-to-day responsibility for the company’s business relationships with suppliers, customer and other stakeholders to the executive management of the business. However, this delegation is within the clear long-term orientated framework which requires that all relationships are sustainable and based on the principle of mutual benefit and partnership. Periodically the Board will review key issues and key performance indicators to assess the status and approach being taken. Furthermore, the approach to board level decision making is consistent with this.
The Board acknowledges that the long-term success of BrandAlley will depend on sustainable long term business relationships.
The critical brand supplier relationships already in place have been built over multi-year periods during which trust and confidence has been established. Core to this is both the excellent customer service levels that the business has put in place and the inter-personal relationships that specific members of the management team have with key suppliers, based on professional competence and a track record of delivering consistently against common goals.
Equally important are the relationships with hundreds of thousands of active members and customers. The Board and the executive management are aligned on a vision of long-term customer relationships which means, where necessary, short-term costs are incurred and investments are made to ensure customer retention and satisfaction. This culture has underpinned the growth of the business.

 
Page 3

 
BRANDALLEY UK LIMITED
 

GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

S172d) The impact of the Group’s operations on the community and the environment
The directors are committed to supporting local businesses and being environmentally responsible from the packaging used to the way in which goods are transported to customers.
The COVID-19 pandemic highlighted the importance of community and BrandAlley has provided donations of products to charities and personal protective equipment to businesses. 
S172e) The desirability of the Group maintaining a reputation for high standards of business conduct.
BrandAlley’s Board of directors is absolutely committed to the highest levels of ethical and compliant business dealings with all stakeholders. The long-term nature of the business relationships that the business is built on with all stakeholders demands and necessitates this and the Board seeks to ensure this is maintained at all times, with the avoidance of any reputational damage an absolute priority.
S172f) The need to act fairly between members of the Group
BrandAlley operates with regular board meetings in place to ensure members of the Board are updated and communicated to regularly on business performance.
Quarterly board meetings take place with clear agendas to ensure no key areas or stakeholders are overlooked. 
Monthly management accounts are prepared for the board to enable review of key performance metrics of the business. An annual budget is prepared and approved, after which quarterly forecasts are prepared highlighting any movements or significant changes throughout the year.
 
Principal risks and uncertainties
 
The principal risks and uncertainties facing the Group are outlined below:

Financial risk management objectives and policies
 
BrandAlley has a £2m revolving Trade Finance facility. The group has no other external debt aside from this.
The Group has a multi-currency banking facility to minimise currency exposure when purchasing stock for resale in other currencies.
The Group's principal assets are stock and bank balances. The valuation for stock in the Balance Sheet is presented net of a conservative provision for impairment where required.
Credit risk on liquid funds is limited because these are held with a bank with a high credit rating assigned by international credit rating agencies.
In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the Group maintains careful working capital management.

Other key performance indicators
 
The directors monitor company performance using financial and non-financial indicators including turnover, gross profit, operating profit, new members, new customers, member conversion and number of orders.  These indicators are monitored daily, weekly and monthly.


This report was approved by the board on 29 September 2023 and signed on its behalf.



R Feldmann
Director
Page 4

 
BRANDALLEY UK LIMITED
 

 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022

The directors present their report and the audited financial statements for the year ended 31 December 2022.

Directors' responsibilities statement

The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
 
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and 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 for the Group's financial statements and then apply them consistently;

make judgments and accounting estimates that are reasonable and prudent; and

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Results and dividends

The loss for the year, after taxation, amounted to £1,763,000 (2021 - profit of £560,000).

No interim dividend was paid during the period and the directors do not recommend the payment of a final dividend.

Directors

The directors who served during the year were:

M Feldmann 
R Feldmann 
R Clacher (resigned 20 September 2022 and re-appointed on 14 December 2022) 
T Feldmann 
B MacInnes (resigned 16 November 2022)
S MacInnes (resigned 16 November 2022)
T R Pickles (resigned 27 February 2023)
Following the year end, S M Smith was appointed as director on 17 July 2023.
 
Future developments

Details relating to future developments are addressed in the Group Strategic Report.

Page 5

 
BRANDALLEY UK LIMITED
 

 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

Financial instruments

The risks in relation to the use of financial instruments are addressed in the Group Strategic Report.
Engagement with suppliers, customers and others in a business relationship with the Group
Details relating to engagement with suppliers, customers and others in a business relationship with the Group are addressed in the Group Strategic Report.

Energy and carbon report

BrandAlley is monitoring its electricity usage and continuously seeks ways to reduce its carbon footprint.

UK Government GHG Conversion Factors for Company Reporting 2022 guidelines and factors have been applied in calculation of Scope 2 consumption and CO2e emission data.




2022
2021

UK Electricity usage kWH

111,836

104,324
 
Associated Greenhouse gas emissions


 
kg CO2e

21,627

22,151
 
kg CO2

21,384

21,925
 
kg CH4

89

83
 
kg N2O

153

143
 
Intensity ratio CO2e per £m sales

0.0003

0.0002
 

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditors are aware of that information.

Post balance sheet events

The post balance sheet events are disclosed in the 'Post year end trading update' section of the Strategic Report.
Page 6

 
BRANDALLEY UK LIMITED
 

 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022


Auditors

The auditorsWilder Coe Ltdwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board on 29 September 2023 and signed on its behalf.
 





R Feldmann
Director
Page 7

 
BRANDALLEY UK LIMITED
 

 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BRANDALLEY UK LIMITED
 

Opinion


We have audited the financial statements of BrandAlley UK Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2022, which comprise the Group Statement of Comprehensive Income, the Group and Company Balance Sheets, the Group Statement of Cash Flows, the Group and Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe 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 Group's and of the parent Company's affairs as at 31 December 2022 and of the Group's loss 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.


Basis for opinion


We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' Responsibilities For The Audit Of The Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.


Conclusions relating to going concern


In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.


Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.


Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.


Other information


The other information comprises the information included in the Annual Report other than the financial statements and  our Auditors' Report thereon.  The directors are responsible for the other information contained within the Annual Report.  Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.  If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves.  If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.


We have nothing to report in this regard.


Page 8

 
BRANDALLEY UK LIMITED
 

 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BRANDALLEY UK LIMITED (CONTINUED)


Opinion on other matters prescribed by the Companies Act 2006
 

In our opinion, based on the work undertaken in the course of the audit:


the information given in the Group 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 Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.


Matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.


We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:


adequate accounting records have not been kept 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.


Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 5, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


In preparing the financial statements, the directors are responsible for assessing the Group's and the parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.


Page 9

 
BRANDALLEY UK LIMITED
 

 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BRANDALLEY UK LIMITED (CONTINUED)


Auditors' 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 Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group 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:

Discussions with and enquiries of management and those charged with governance were held with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.
The following laws and regulations were identified as being of significance to the entity:
 
Those laws and regulations considered to have a direct effect on the financial statements include UK financial reporting standards, Company Law, Tax and Pensions legislation and distributable profits legislation.
Those laws and regulations for which non-compliance may be fundamental to the operating aspects of the
business and therefore may have a material effect on the financial statements.

Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: enquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; review of board minutes; testing the appropriateness of journal entries; and the performance of analytical review to identify unexpected movements in account balances which may be indicative of fraud.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).


A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.
Page 10

 
BRANDALLEY UK LIMITED
 

 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF BRANDALLEY UK LIMITED (CONTINUED)


Use of our report
 

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 2006Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.





Bee-Lean Chew MSc BA (Hons) FCA (Senior Statutory Auditor)
  
for and on behalf of
 
 
 
 
 
 
Wilder Coe Ltd
 
Chartered Accountants & Statutory Auditors
  
1st Floor Sackville House
143-149 Fenchurch Street
London
EC3M 6BL
 

29 September 2023
Page 11

 
BRANDALLEY UK LIMITED
 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022

2022
2021
Note
£000
£000

  

Turnover
 4 
81,791
102,284

Cost of sales
  
(53,208)
(65,474)

Gross profit
  
28,583
36,810

Distribution costs
  
(17,720)
(21,380)

Administrative expenses
  
(12,869)
(14,086)

Operating (loss)/profit
 5 
(2,006)
1,344

Interest receivable and similar income
 9 
2
1

Interest payable and similar expenses
 10 
-
(54)

(Loss)/profit on ordinary activities before taxation
  
(2,004)
1,291

Taxation on (loss)/profit on ordinary activities
 11 
241
(731)

(Loss)/profit for the financial year
  
(1,763)
560

  

Foreign exchange difference
  
(113)
163

  

Total comprehensive (loss)/income for the year
  
(1,876)
723

(Loss)/profit for the year attributable to:
  

Owners of the parent Company
  
(1,763)
560

Total comprehensive (loss)/income for the year attributable to:
  

Owners of the parent Company
  
(1,876)
723


.





EBITDA, adjusted for rounding, foreign exchange differences, finance costs and exceptional items
780
2,436




There were no recognised gains or losses for 2022 or 2021 other than those included in the Consolidated Statement of Comprehensive Income.
The notes of pages 20 to 42 form part of these financial statements. 
Page 12

 
BRANDALLEY UK LIMITED
REGISTERED NUMBER: 03885013

CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2022

2022
2021
Note
£000
£000

Fixed assets
  

Intangible fixed assets
 13 
3,081
3,277

Tangible assets
 14 
77
141

  
3,158
3,418

Current assets
  

Stocks
 16 
11,094
12,535

Debtors
 17 
2,056
2,186

Cash at bank and in hand
 18 
9,163
7,893

  
22,313
22,614

Creditors: amounts falling due within one year
 19 
(18,626)
(17,112)

Net current assets
  
 
 
3,687
 
 
5,502

Total assets less current liabilities
  
6,845
8,920

Provisions for liabilities
  

Other provisions
 22 
(433)
(635)

Net assets
  
6,412
8,285


Capital and reserves
  

Called up share capital 
 23 
1
1

Share premium account
  
22,453
22,450

Capital redemption reserve
  
7,567
7,567

Foreign exchange reserve
  
50
163

Profit and loss account
  
(23,659)
(21,896)

Equity attributable to owners of the parent Company
  
6,412
8,285

Equity shareholders' funds
  
6,412
8,285


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 
29 September 2023.




R Feldmann
Director

The notes on pages 19 to 41 form part of these financial statements.
Page 13

 
BRANDALLEY UK LIMITED
REGISTERED NUMBER: 03885013

COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2022

2022
2021
Note
£000
£000

Fixed assets
  

Intangible fixed assets
 13 
2,753
3,170

Tangible assets
 14 
73
128

Investments
 15 
1
1

  
2,827
3,299

Current assets
  

Stocks
 16 
10,170
10,906

Debtors
 17 
8,442
5,471

Cash at bank and in hand
 18 
8,767
7,702

  
27,379
24,079

Creditors: amounts falling due within one year
 19 
(16,125)
(13,638)

Net current assets
  
 
 
11,254
 
 
10,441

Total assets less current liabilities
  
14,081
13,740

Provisions for liabilities
  

Other provisions
 22 
(394)
(577)

Net assets
  
13,687
13,163


Capital and reserves
  

Called up share capital 
 23 
1
1

Share premium account
  
22,453
22,450

Capital redemption reserve
  
7,567
7,567

Profit and loss account brought forward
  
(16,855)
(19,623)

Profit for the year

  

521
2,768

Profit and loss account carried forward
  
(16,334)
(16,855)

Equity shareholders' funds
  
13,687
13,163


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 
29 September 2023.


R Feldmann
Director

The notes on pages 19 to 41 form part of these financial statements.
Page 14

 

 
BRANDALLEY UK LIMITED


 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022



Called up share capital
Share premium account
Capital redemption reserve
Foreign exchange reserve
Profit and loss account
Equity attributable to owners of parent Company
Total equity


£000
£000
£000
£000
£000
£000
£000



At 1 January 2021
1
22,449
7,567
-
(22,456)
7,561
7,561



Comprehensive income for the year


Profit for the year
-
-
-
-
560
560
560


Foreign exchange differences
-
-
-
163
-
163
163


Share options granted
-
1
-
-
-
1
1





At 1 January 2022
1
22,450
7,567
163
(21,896)
8,285
8,285



Comprehensive income for the year


Loss for the year
-
-
-
-
(1,763)
(1,763)
(1,763)


Foreign exchange difference
-
-
-
(113)
-
(113)
(113)


Share option revaluation
-
3
-
-
-
3
3



At 31 December 2022
1
22,453
7,567
50
(23,659)
6,412
6,412



The notes on pages 19 to 41 form part of these financial statements.
Page 15

 

 
BRANDALLEY UK LIMITED


 

COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022



Called up share capital
Share premium account
Capital redemption reserve
Profit and loss account
Total equity


£000
£000
£000
£000
£000



At 1 January 2021
1
22,449
7,567
(19,623)
10,394



Comprehensive income for the year


Profit for the year
-
-
-
2,768
2,768


Share options granted
-
1
-
-
1





At 1 January 2022
1
22,450
7,567
(16,855)
13,163



Comprehensive income for the year


Profit for the year
-
-
-
521
521


Share options granted
-
3
-
-
3



At 31 December 2022
1
22,453
7,567
(16,334)
13,687



The notes on pages 19 to 41 form part of these financial statements.
Page 16

 
BRANDALLEY UK LIMITED
 

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022

2022
2021
£000
£000

Cash flows from operating activities

(Loss)/profit for the financial year
(1,763)
560

Adjustments for:

Amortisation of intangible assets
902
746

Depreciation of tangible assets
94
70

Interest paid
-
54

Interest received
(2)
(1)

Taxation charge
(241)
731

Decrease/(increase) in stocks
1,441
(4,181)

Decrease in debtors
393
278

Increase/(decrease) in creditors
1,493
(8,466)

(Decrease)/increase in provisions
(202)
173

Corporation tax paid
(10)
(79)

Foreign exchange movement
(113)
163

Impairment of intangible fixed assets
811
-

Net cash generated from/(used in) operating activities

2,803
(9,952)


Cash flows from investing activities

Purchase of intangible fixed assets
(1,547)
(539)

Deposits received for capitalised intangible fixed assets
42
-

Purchase of tangible fixed assets
(30)
(29)

Sale of tangible fixed assets
-
2

Interest received
2
1

Net cash used in investing activities

(1,533)
(565)

Cash flows from financing activities

Share options granted
-
1

Interest paid
-
(54)

Net cash generated from/(used in) financing activities
-
(53)

Net increase/(decrease) in cash and cash equivalents
1,270
(10,570)

Cash and cash equivalents at beginning of year
7,893
18,463

Cash and cash equivalents at the end of year
9,163
7,893


Cash and cash equivalents at the end of year comprise:

Cash at bank and in hand
9,163
7,893


Page 17

 
BRANDALLEY UK LIMITED
 

CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2022




At 1 January 2022
Cash flows
At 31 December 2022
£000

£000

£000

Cash at bank and in hand

7,893

1,270

9,163


The notes on pages 19 to 41 form part of these financial statements.
Page 18

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

1.


General information

BrandAlley UK Limited ("the Company") (Company number: 03885013), having its registered office and trading address at Telephone House, 69-77 Paul Street, London, EC2A 4NW, is a private limited company incorporated in England and Wales.
The Company and the Group's principal activity is the retail of luxury fashion accessories, homeware and beauty products made available only to registered members at competitive discounts. The Company and the Group run flash sales of leading brands throughout the year while maintaining permanent designer catalogue in their online outlet stores.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.

The following principal accounting policies have been applied:

 
2.2

Basis of consolidation

The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.
FRS 102 allows a qualifying entity certain disclosure exemptions, subject to conditions.
The Company has taken advantage of the following exemptions in its individual financial statements:
- from preparing a statement of cash flows, on the basis that it is a qualifying entity and the consolidated statement of cash flows, included in these financial statements, includes the Company's cash flows; and
- from the financial instrument disclosures, required under FRS 102 paragraphs 11.41(b), 11.41(c), 11.41(e), 11.41(f), 11.42, 11.45, 11.47, 11.48(a)9iii), 11.48(a)(iv), 11.48(b), 12.26, 12.27, 12.29(a), 12.29(b) and 12.29A, as the information is provided in the consolidated financial statement disclosures.
Except where stated, information reported in the notes to the financial statements relate to the Group.

Page 19

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.3

Turnover

The Company and Group's turnover is derived from online flash sales of discounted luxury fashion and homeware products to its registered members database.
Turnover is the net amount receivable by the Company and Group in the ordinary course of its business excluding trade discounts, value added tax and other sales related taxes. Turnover is recognised at the point of despatch from the Group's third party stock holder and deferred income relates to the orders that have been placed but not dispatched as at 31 December 2022.
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Group and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:

Sale of goods

Turnover from the sale of goods is recognised when all of the following conditions are satisfied:
the Group has transferred the significant risks and rewards of ownership to the buyer;
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of turnover can be measured reliably;
it is probable that the Group will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Page 20

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

  
2.4

Intangible assets

Intangible assets comprise software licences, IT systems and goodwill.
The software licences and IT systems are initially recognised at cost. After initial recognition, under the cost model, these assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer's interest in the fair value of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets have not been recognised separately where they do not arise from contractual or other legal rights.
Goodwill is considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Licenses and IT sytems are amortised straight-line over their expected useful economic lives or anticipated length of use by the Company in order to write off their costs less estimated residual value. These are stated at cost, net of amortisation and any provision for impairment. The principal rates are as follows:
    Licenses                                  -     33 % on a straight-line basis
    IT System                                -     20 % on cost
    Goodwill                                   -    10 % on a straight-line basis
The amortisation of intangible assets is recognised in administrative expenses on the Statement of Comprehensive Income.
At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
Page 21

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.5

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

The Group adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the Group. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to the Consolidated Statement of Comprehensive Income during the period in which they are incurred.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

Furniture, fittings and equipment
-
20% on cost
Computer equipment
-
20% on cost
IT Systems
-
20% on cost

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Consolidated Statement of Comprehensive Income.

 
2.6

Operating leases: the Group as lessee

Rentals paid under operating leases are charged to the Consolidated Statement of Comprehensive Income on a straight-line basis over the lease term.

  
2.7

Stock

Stocks are stated at the lower of cost and net realisable value.
The net realisable value is based on an estimated selling price, less further costs expected to be incurred to completion and disposal. A provision is made for obsolete, slow moving or defective items where appropriate.

 
2.8

Debtors

Short-term debtors are measured at transaction price, less any impairment. 

 
2.9

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours.
Page 22

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.10

Financial instruments

The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.

Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received.

Investments in non-derivative instruments that are equity to the issuer are measured:
at fair value with changes recognised in the Consolidated Statement of Comprehensive Income if the shares are publicly traded or their fair value can otherwise be measured reliably;
at cost less impairment for all other investments.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the Balance Sheet date.

 
2.11

Creditors

Short-term creditors are measured at the transaction price. 

  
2.12

Business combinations

Business combinations are accounted for by applying the purchase method.
The cost of a business combination is the fair value of the consideration given, liabilities incurred or assumed and of equity instruments issued plus the costs directly attributable to the business combination.

Page 23

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.13

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is British Pound Sterling (GBP).

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period-end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated Statement of Comprehensive Income  except when deferred in other comprehensive income as qualifying cash flow hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated Statement of Comprehensive Income within 'finance income or costs'. All other foreign exchange gains and losses are presented in the Consolidated Statement of Comprehensive Income within 'other operating income'.

On consolidation, the results of overseas operations are translated into British Pound Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.

 
2.14

Finance costs

Finance costs are charged to the Consolidated Statement of Comprehensive Income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 
2.15

Pensions

Defined contribution pension plan

The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.

The contributions are recognised as an expense in the Consolidated Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Group in independently administered funds.

Page 24

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.16

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. 

The current corporation tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date in the countries where the Company and the Group operate and generate income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance Sheet date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date.

 
2.17

Research and development

Expenditure on research and development is written off in the year in which it is incurred, except for those items relating to the IT systems referred to above.

 
2.18

Interest income

Interest income is recognised in the Consolidated Statement of Comprehensive Income using the effective interest method.

  
2.19

Impairment of fixed assets and goodwill

Assets that are subject to depreciation or amortisation are assessed at each Balance Sheet date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each Balance Sheet date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.

 
2.20

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

Page 25

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.21

Provisions for liabilities

Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to the Consolidated Statement of Comprehensive Income in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet.

 
2.22

Share based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the Consolidated Statement of Comprehensive Income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each Balance Sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Group keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the Consolidated Statement of Comprehensive Income over the remaining vesting period.
Where equity instruments are granted to persons other than employees, the Consolidated Statement of Comprehensive Income is charged with fair value of goods and services received.

Page 26

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

3.


Judgments in applying accounting policies and key sources of estimation uncertainty

Stock Provisions
Stock comprises items subject to changing consumer demands and fashion trends. As a result it is necessary to consider the recoverability of the cost of stock and the associated provisioning required. When calculating the stock provisions, management considers the nature and condition of the stock, as well as applying assumptions around anticipated saleability of goods for resale. See note 16 for the net carrying amount of the stock with associated provision.
Useful economic lives of tangible and intangible assets
The annual depreciation and amortisation charges for tangible and intangible assets are sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See notes 13 and 14 for the carrying amount of the intangible and tangible assets respectively, and notes 2.4 and 2.5 for the useful economic lives of intangible and tangible assets respectively.
Returns Provision
The Returns Provision comprises a provision for sales, based on the estimate of the calculated expected returns less the actual returns excluding provisions. These estimates are based on industry and the Company's own historic averages.


4.


Turnover

The whole of the turnover is attributable to the principal activity of the business, being that of the retail of luxury fashion, accessories, homeware and beauty made available only to registered members at competitive discounts. BrandAlley runs flash sales of leading brands throughout the year and also has a permanent designer catalogue in its online outlet store.
The directors consider that the disclosure of turnover per geographic location is seriously prejudicial to the interests of the Group and the Company and have thus not disclosed this information.


5.


Operating (loss)/profit

The operating (loss)/profit is stated after charging:

2022
2021
£000
£000

Depreciation - owned assets
94
70

Intangible fixed assets amortisation
902
746

Auditor's remuneration
56
38

Exchange differences
(127)
(85)

Other operating lease rentals
292
329

Impairment of intangible fixed assets
811
-

Page 27

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

6.


Auditors' remuneration

2022
2021
£000
£000


Fees payable to the Group's auditor and its associates for the audit of the Group's annual financial statements
36
38


Fees payable to the Group's auditor and its associates in respect of:


Audit-related assurance services
34
36

Taxation compliance services
2
2

36
38


7.


Employees

Staff costs, including directors' remuneration, were as follows:


Group
Group
Company
Company
2022
2021
2022
2021
£000
£000
£000
£000


Wages and salaries
4,843
6,019
3,929
4,293

Social security costs
724
899
455
472

Cost of defined contribution scheme
453
435
324
332

6,020
7,353
4,708
5,097


.



The average number of employees, including the directors, during the year was as follows:


Group
Group
Company
Company
2022
2021
2022
2021
No.
No.
No.
No.


Sales
78
79
59
58

Administration
67
72
55
52

145
151
114
110

Page 28

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

8.


Directors' remuneration

2022
2021
£000
£000



Directors' emoluments
31
33

Company contributions to defined contribution pension schemes
2
2

33
35


9.


Interest receivable and similar income

2022
2021
£000
£000


Other interest receivable
2
1


10.


Interest payable and similar charges

2022
2021
£000
£000


Other interest payable
-
54
Page 29

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

11.


Taxation


2022
2021
£000
£000

Corporation tax


Current tax on (loss)/profits for the year
22
10


Origination and reversal of timing differences
(263)
721

Factors affecting tax charge for the year

The tax assessed for the year is higher than (2021 - higher than) the standard rate of corporation tax in the UK of 19% (2021 - 19%). The differences are explained below:

2022
2021
£000
£000


(Loss)/profit on ordinary activities before tax
(2,004)
1,291


(Loss)/profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)
(381)
245

Effects of:


Expenses not deductible for tax purposes
6
38

Depreciation in excess of capital allowances
3
-

Pension contributions
-
6

Intangible asset amortisation
168
140

Trade intangible fixed assets allowance on capitalised amounts
(300)
(118)

Intangible asset impairment losses
154
-

Creation/(utilisation) of tax losses
372
(301)

Deferred taxation
(263)
721

Total tax charge for the year
(241)
731


Factors that may affect future tax charges

The Company has £5,132,715 (2021: £5,475,705) of trading losses to carry forward and offset against future taxable trading profits.


12.


Parent company profit for the year

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The profit after tax of the parent Company for the year was £521,000 (2021 - £2,768,000).

Page 30

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

13.


Intangible assets

Group





Licences
IT system
Goodwill
Total

£000
£000
£000
£000



Cost


At 1 January 2022
13
5,274
2,372
7,659


Additions
-
1,558
1
1,559


Disposals
-
(42)
-
(42)



At 31 December 2022

13
6,790
2,373
9,176



Amortisation


At 1 January 2022
10
3,552
820
4,382


Charge for the year
1
680
221
902


Impairment charge
-
811
-
811



At 31 December 2022

11
5,043
1,041
6,095



Net book value



At 31 December 2022
2
1,747
1,332
3,081



At 31 December 2021
3
1,722
1,552
3,277

During the current year, the Group reviewed the valuation of its IT systems and has impaired £811,000 of this balance.
In the year ended 31 December 2019, additions were made to goodwill of £1,539,000, relating to the purchase of Cocosa Lifestyle Limited, and £162,000 relating to the purchase of the trade and assets by BrandAlley France SAS.
In the year ended 31 December 2020, the Company acquired the Lombok trademarks and related assets from Angora Retail Limited for consideration of £30,000, including related legal costs. The assets were all internally generated intangible assets inseparable from goodwill. As such, these assets cannot be attributed with an individual and distinguishable fair value.



Page 31

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
 
           13.Intangible assets (continued)

Company




Licences
IT system
Goodwill
Total

£000
£000
£000
£000



Cost


At 1 January 2022
13
5,159
2,210
7,382


Additions
-
1,278
1
1,279



At 31 December 2022

13
6,437
2,211
8,661



Amortisation


At 1 January 2022
10
3,544
658
4,212


Charge for the year
1
663
221
885


Impairment charge
-
811
-
811



At 31 December 2022

11
5,018
879
5,908



Net book value



At 31 December 2022
2
1,419
1,332
2,753



At 31 December 2021
3
1,615
1,552
3,170

The IT System relates to the platform on which the online outlet store operates. Development costs are capitalised where the system is demonstrably improved.
During the current year, the Company reviewed the valuation of its IT systems and has impaired £811,000 of this balance.

Page 32

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

14.


Tangible fixed assets

Group






IT systems
Fixtures and fittings
Computer equipment
Total

£000
£000
£000
£000



Cost 


At 1 January 2022
1,239
349
155
1,743


Additions
-
17
13
30



At 31 December 2022

1,239
366
168
1,773



Depreciation


At 1 January 2022
1,239
255
108
1,602


Charge for the year
-
72
22
94



At 31 December 2022

1,239
327
130
1,696



Net book value



At 31 December 2022
-
39
38
77



At 31 December 2021
-
94
47
141

Page 33

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

           14.Tangible fixed assets (continued)


Company






IT Systems
Fixtures and fittings
Computer equipment
Total

£000
£000
£000
£000

Cost 


At 1 January 2022
1,239
327
149
1,715


Additions
-
17
12
29



At 31 December 2022

1,239
344
161
1,744



Depreciation


At 1 January 2022
1,239
241
107
1,587


Charge for the year
-
64
20
84



At 31 December 2022

1,239
305
127
1,671



Net book value



At 31 December 2022
-
39
34
73



At 31 December 2021
-
86
42
128






Page 34

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

15.


Fixed asset investments

Company





Investments in subsidiary companies

£000



Cost or valuation


At 1 January 2022 and 31 December 2022
1





Subsidiary undertaking


The following was a subsidiary undertaking of the Company:

Name

Registered office

Class of shares

Holding

BrandAlley France SAS
7 rue Paul Louis
Courier 75007
Paris, France
Ordinary
100%

The aggregate of the share capital and reserves as at 31 December 2022 and the profit or loss for the year ended on that date for the subsidiary undertaking were as follows:

Name
Aggregate of share capital and reserves
£000
Profit/(Loss)
£000

BrandAlley France SAS
(7,272)
(2,281)


16.


Stocks

Group
Group
Company
Company
2022
2021
2022
2021
£000
£000
£000
£000

Goods for resale
11,094
12,535
10,170
10,906


Page 35

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

17.


Debtors

Group
Group
Company
Company
2022
2021
2022
2021
£000
£000
£000
£000

Due within one year

Trade debtors
31
-
31
-

Amounts owed by group undertakings
-
-
6,573
3,452

Other debtors
185
415
105
393

Prepayments and accrued income
519
713
412
568

Deferred taxation
1,321
1,058
1,321
1,058

2,056
2,186
8,442
5,471


Amounts owed by group undertakings are unsecured, carry an interest rate of 2.87% (2021: 2.87%), have no fixed date of repayment and are repayable on demand.


18.


Cash and cash equivalents

Group
Group
Company
Company
2022
2021
2022
2021
£000
£000
£000
£000

Cash at bank and in hand
9,163
7,893
8,767
7,702



19.


Creditors: Amounts falling due within one year

Group
Group
Company
Company
2022
2021
2022
2021
£000
£000
£000
£000

Trade creditors
6,495
1,767
5,814
881

Corporation tax
22
10
22
10

Other taxation and social security
1,843
2,165
1,120
287

Other creditors
158
1,468
1
1,468

Accruals and deferred income
10,108
11,702
9,168
10,992

18,626
17,112
16,125
13,638


The Company has a trade finance facility with HSBC with a limit of £2,000,000 (2021: £2,000,000), used to pay suppliers, and repayable within 90 days from the shipping date. This facility is secured by way of fixed and floating charges over the whole of the undertaking and assets of the Company.

Page 36

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

20.


Financial instruments

Group
Group
Company
Company
2022
2021
2022
2021
£000
£000
£000
£000

Financial assets

Financial assets measured at amortised cost
9,379
8,308
15,476
11,547


Financial liabilities

Other financial liabilities measured at amortised cost
16,761
14,937
14,983
13,341


Financial assets measured at amortised cost through the Statement of Comprehensive Income comprise trade debtors, other debtors and cash at bank and in hand. For the Company, they also include amounts owed by group undertakings.


Other financial liabilities measured at amortised cost through the Statement of Comprehensive Income comprise trade creditors, other creditors, accruals and deferred income.
Page 37

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

21.


Deferred taxation


Group



2022


£000






At beginning of year
1,058


Credited to profit or loss
263



At end of year
1,321

Company


2022


£000






At beginning of year
1,058


Credited to profit or loss
263



At end of year
1,321

The deferred tax asset is made up as follows:

Group
Group
Company
Company
2022
2021
2022
2021
£000
£000
£000
£000

Accelerated capital allowances
36
16
36
16

Tax losses carried forward
1,285
1,042
1,285
1,042

1,321
1,058
1,321
1,058
Page 38

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

22.


Provisions


Group



Returns Provision

£000





At 1 January 2022
635


Charged to profit or loss
4,138


Utilised in year
(4,340)



At 31 December 2022
433

Company


Returns Provision
Total

£000
£000





At 1 January 2022
577
577


Charged to profit or loss
3,672
3,672


Utilised in year
(3,855)
(3,855)



At 31 December 2022
394
394


23.


Called up share capital

2022
2021
£000
£000
Allotted, called up and fully paid



666,898 (2021 - 666,898) A Ordinary shares of £0.001000- each
1
1
1,806,955 (2021 - 1,806,955 ) A Preferred shares of £0.000001 each
-
-
5,000 (2021 - 5,000 ) B Ordinary shares of £0.100000 each
-
-
270,286 (2021 - 270,286 ) Preferred shares of £0.001000 each
-
-

1

1

The holders of the A Ordinary shares have rights to dividends and rights to vote.
Holders of Preferred shares are subject to the payment of a preferred dividend. The Preferred shares have a right to vote and a right to a preferred dividend of an equal amount to 10% of the original Preferred share subscription price and are non-redeemable.
The A Preferred shares and B Ordinary shares have no voting rights and are non-redeemable.


Page 39

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

24.


Share based payments

The Company has an Enterprise Management Incentive Share Option Scheme in place, under which three tranches have been granted. In all tranches the options lapse on termination of employment.
The first and third tranches of options have vesting conditions spread across 4 years from the date of grant, and vested options may be exercised at any point after vesting.
The terms of the second tranche of options are that shares vest in line with agreed performance targets over a specified vesting period, and that vested options may not be exercised before the occurrence of a specified exit event.

Weighted average exercise price (pence)
2022
Number
2022
Weighted average exercise price
(pence)
2021
Number
2021

Outstanding at the beginning of the year

51

30,375

1
 
5,375
 
Granted during the year

0

-

50
 
25,000
 
Forfeited during the year

(11)

(5,000)

 
-
 
Outstanding at the end of the year
40

25,375

51
 
30,375
 


2022
2021
£000
£000

Fair value at date of grant


Equity-settled schemes
10,054
12,554


25.


Pension commitments

The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £453,000 (2021: £332,000).


26.


Commitments under operating leases

At 31 December 2022 the Group and the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:


Group
Group
Company
Company
2022
2021
2022
2021
£000
£000
£000
£000

Not later than 1 year
202
255
161
255

Later than 1 year and not later than 5 years
219
-
215
-

421
255
376
255
Page 40

 
BRANDALLEY UK LIMITED
 

 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

27.


Transactions with directors

Included in Other Debtors at the year-end is a balance of £1,143 (2021: £205,000) due from a former director and shareholder of the Company. The amount is repayable within 12 months of the year-end.


28.


Related party transactions

The Group has taken advantage of the exemptions in FRS 102, Section 33.1A in respect of disclosing transactions between wholly-owned members of a group.
Amounts due at the year-end are disclosed in detail in note 17.


29.


Controlling party

As at 31 December 2022 and 31 December 2021, M Feldmann, a director, held ultimate control over the Company by virtue of his shareholding.

Page 41