REGISTERED NUMBER: |
Strategic Report, Report of the Director and |
Audited Financial Statements for the Year Ended 28 February 2023 |
for |
KARTELL UK LIMITED |
REGISTERED NUMBER: |
Strategic Report, Report of the Director and |
Audited Financial Statements for the Year Ended 28 February 2023 |
for |
KARTELL UK LIMITED |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Contents of the Financial Statements |
for the year ended 28 FEBRUARY 2023 |
Page |
Company Information | 1 |
Strategic Report | 2 |
Report of the Director | 6 |
Report of the Independent Auditors | 9 |
Statement of Comprehensive Income | 12 |
Balance Sheet | 13 |
Statement of Changes in Equity | 14 |
Notes to the Financial Statements | 15 |
KARTELL UK LIMITED |
Company Information |
for the year ended 28 FEBRUARY 2023 |
DIRECTOR: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Chartered Accountants |
& Statutory Auditors |
Strelley Hall, Strelley |
Nottingham |
NG8 6PE |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Strategic Report |
for the year ended 28 FEBRUARY 2023 |
The director presents his strategic report for the year ended 28 February 2023. The director in preparing the strategic report has complied with s414c of the Companies Act 2006. |
REVIEW OF BUSINESS |
The company is engaged in the supply of radiator and bathroom products to the heating and plumbing industry, specialising in supplying a wide range of products quickly to its customer base. |
The company has continued to grow its turnover in a period of uncertainty in the marketplace and has maintained good gross profit margins. Turnover for the year was £83.0m (2022 - £77.6m), with a gross profit of £29.3m (2022 - £27.8m), gross profit margin of 35.3% (2022 - 35.8%), and an operating profit of £6.0m (2022 - £8.1m). |
Profit before taxation was impacted by the inclusion of an exceptional item relating to an adjustment to the fair value of a derivative financial instrument at year end amounting to a net expense, after a tax credit, of £4,011,740, details of which are disclosed in Note 9. The practical circumstances of this event are as follows: |
- When the USD:GBP spot rate was unfavourable, the company entered into a significant contract to purchase USD at a favourable rate for a 3-year period, with conditions attached. |
- Rates subsequently increased, which resulted in a significant loss in the fair value of the contract. The company is required to report under accounting standards the estimated movement in fair value of this contract to the reporting date as a snapshot in time. |
- When the exchange rate started to increase, the company entered into a further contract to sell USD, in order to hedge against the contract described above. This contract contained conditions, and the rate subsequently decreased slightly, resulting in this contract being valued at a loss. |
The director is pleased to have secured beneficial fixed currency rates until October 2025, but currency rates have since moved against the contracts, resulting in the fair value adjustment. |
Net Assets of the company decreased by 2% to £12.3m (2022 - £12.6m). The director is pleased that, in spite of the fair value adjustment referred to above, the company has retained profits from positive trading which has offset the fair value adjustment. |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Strategic Report |
for the year ended 28 FEBRUARY 2023 |
PRINCIPAL RISKS AND UNCERTAINTIES |
Strategic, financial, commercial, operational, social, environmental and ethical risks are all considered as part of the group's controls, which are designed to manage rather than eliminate the risk of failure to achieve business objectives. Therefore, they can only provide reasonable, not absolute, assurance against material misstatement or loss. |
Although at present there are no immediate risks considered likely to have a significant impact on the short- or long-term value of the company, the principal risks identified are as follows: |
Liquidity risks: |
The company is part of a group which relies on bank lending facilities which require it to trade within certain financial criteria. Management closely manages the financial position of the company and group and reviews future cash flows on a regular basis, in order to meet the conditions. The director is confident that the group has sufficient cash facilities to enable it to trade within its terms and to continue to meet its liabilities as they fall due. |
Market risks: |
Worldwide events such as Brexit and the war in Ukraine have created a position of uncertainty of how consumer markets will react in the future. The cost of living crisis has added to the uncertainty. Although to date, demand has continued to be healthy, it remains a risk that economic conditions could have a negative impact on demand for home improvement products in the future. The director feels that the company's operational methods help to protect it against market risk, as it specialises in the fast delivery of small stock quantities to its customers. The company has also taken various measures to reduce its cost base to minimise any risk. |
Credit risks: |
The company's credit risk is primarily attributable to its trade debtors. The amounts presented in the balance sheet are net of allowances for doubtful debts, estimated by the management based on prior experience, the current economic environment or specific customer issues. The company has implemented policies that require appropriate credit checks on potential customers or review of existing customer credit history before a sale is made together with having in force a credit insurance policy. |
Competitive risk: |
The company operates in a competitive industry where price is important. Conditions which can suddenly affect the buying price present a risk, such as exchange rates, as the company sources a significant amount of its supplies from overseas. To manage this risk, the company trades with its largest supplier in sterling, and it forward purchases foreign currency which allows it to withstand sudden changes. Additionally, the group is set up to supply small quantities with next day delivery, enabling customers to make smaller, more frequent orders, meaning that the group has an advantage in turbulent market conditions. |
Exchange rate risks: |
Movements in the exchange rates can have a significant impact on the supply costs for the company. From time to time, the company enters into foreign exchange contracts with the aim of mitigating these risks. |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Strategic Report |
for the year ended 28 FEBRUARY 2023 |
SECTION 172(1) STATEMENT |
The company is committed to being a responsible business. Our behaviour is aligned with the expectations of our people, customers, suppliers and society as a whole. A governance framework exists to ensure active business management and the reduction of risk within all areas of the business. A number of policies are employed to manage key areas, including anti-bribery & corruption, competition law, trade sanctions, data protection, risk management, labour & human rights, diversity & inclusion, finance and marketing. |
The senior management team are responsible for ensuring an adequate system exists, along with the resources to ensure compliance with these policies. The Director of the Company is responsible for the identification, evaluation, qualification, recording and reporting of the risks identified. The Company follows the same principles and methodology as those assessed by the Brand K group risk assessment, as well as any further risks. |
Responsibility lies with the Managing Director to ensure that risk management is incorporated into relevant meetings with all key decision makers. Once identified, local risk owners are assigned responsibility for mitigating any risks identified. Review of any such risks is a continual process and they are revisited to ensure continual compliance/avoidance of slippage. |
The director has acted in a way they consider, in good faith, promotes the success of the company and the group for the benefit of its members as a whole and in doing so has given regard (amongst other matters) to: |
Engagement with suppliers, customers and others |
The director has had regard to the need to foster the Company's business relationships by keeping in regular contact with suppliers and customers (and bankers) and working with these interested parties to foster mutually beneficial and informed relationships. |
Community and the environment |
With Kartell UK Ltd being part of a wider group, it is expected they adopt the same principles as all other group companies. At present across the Group, large emphasis has been placed on the environment and the group's impact from its gas emissions. As part of this commitment, the group elected to take up the offer of an independent ESOS (Energy Savings Opportunity Scheme) audit to assess this, with such audit taking place post 28 February 2023 on a date yet to be determined. |
Our people and employee involvement |
As part of the ongoing employee engagement programme, opinion and feedback is regularly welcomed from our Employees as to how things might be improved, both for them personally and for the wider issues of their working environment. |
Culture and values |
The director recognises the importance of how this company attains its set plans, relying heavily on having the right corporate and governance culture in place. Such culture seeks to reward as well as hold individuals accountable for the actions of both themselves and their respective teams (where applicable). |
The director seeks continual improvement as part of the culture, with said director continually making himself available to all employees, through the adoption of his own "open door" policy. |
ENGAGEMENT WITH SUPPLIERS, CUSTOMERS AND OTHERS |
This is covered as part of the Section 172(1) Statement. |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Strategic Report |
for the year ended 28 FEBRUARY 2023 |
DEVELOPMENT AND PERFORMANCE |
During the Financial Year, key appointments made to the Group senior leadership team took place in order to support the development and growth specifically in the Kartell UK Ltd business unit. From such appointments, it is clear that the Kartell business now has far greater structure in terms of analysis and the reporting of key metrics, with such seen as the key foundation and building blocked for further sustained and targeted growth. |
Development of relationships with both customers and suppliers is seen as the methodology to achieve the planned market growth through the organic growth of the current service offering. From such dialogue and relationships, feedback has been received, and analysed to the point that Kartell UK Ltd now has strategic business plans in place to increase its own service offering, through the introduction of additional product lines to its catalogue. |
The company's key performance indicators for the year were as follows: |
2023 | 2022 |
Turnover | £83.0m | £77.6m |
Gross profit margin % | 35.3% | 35.8% |
Operating profit | £6.0m | £8.1m |
Net profit before taxation* | £0.5m | £7.6m |
Net assets | £12.3m | £12.6m |
* Net profit before taxation was impacted by an exceptional item being a fair value adjustment as described in the Business Review. |
The company's non-financial key performance indicators for the year were as follows: |
Missed Calls - Sales Offices |
Backorders/Stock Outs - Purchasing |
3PL Deliveries (Kg) - Transport |
3PL Deliveries (Drop Count) - Transport |
Returns as a percentage of Invoices - Warehouse/Returns |
Picking and processing errors - Warehouse |
New Account Generation - Sales Managers |
Above non-financial measures have been specifically designed to target all areas of the business where the respective Managers are incentivised by way of bonus to improve. All are measured utilising a RAG system with specific targets attached to monitor progress against target. Such progress is monitored by way of the specific Weekly/Year-To-Date Performance reporting. |
ON BEHALF OF THE BOARD: |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Report of the Director |
for the year ended 28 FEBRUARY 2023 |
The director presents his report with the financial statements of the company for the year ended 28 February 2023. |
PRINCIPAL ACTIVITY |
The principal activity of the company in the year under review was that of the supply of radiator and bathroom products to the heating and plumbing industry. |
DIVIDENDS |
Interim dividends per share on the Ordinary £1 shares were paid as follows: |
£35.17 - 1 March 2022 |
After the year end dividends of £961,000 were proposed and paid. |
RESEARCH AND DEVELOPMENT |
As part of the strategic plan of increasing the service offering, large amounts of Research and Development activity were committed to by The Director of Kartell UK Limited. Such activity is very much centered on finding new innovative products, assessing their suitability and their place in both the specific and wider Bathroom market place. |
Investment in this area is seen as key to the delivery of the overall objective of growing Kartell UK Limited as the Group's Flagship Distributor, with much of the costs in regard to this genre being staff costs. This is primarily owing to the fact that once said products are identified, large amounts of research activity are undertaken before making any firm commitment to suppliers, who have been initially secured through first stage commercial negotiations. |
FUTURE DEVELOPMENTS |
The company intends to grow turnover through new opportunities resulting from the expansion of the group. There is a positive outlook because some key costs, such as freight and fuel, have reduced, and UK inflation appears to be reducing, which allows better control of margins. |
DIRECTORS |
Other changes in directors holding office are as follows: |
FINANCIAL INSTRUMENTS |
The Company's principal financial instruments are comprised of bank balances, invoice discounting, asset based lending, loans, forward exchange contracts and other financial derivative contracts for foreign currency, trade debtors and trade creditors. The main purpose of these instruments is to provide finance for the company's operations. |
In respect of bank balances, loans, and asset based lending, the company manages its cashflow tightly, and monitors the relationship between these financial instruments, ensuring there are sufficient funds to meet amounts due, and that the company is operating within contractual limits. |
Trade debtors and the invoice discounting facility are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers, together with insurance against bad debts. |
Trade creditor risk is managed by close relationships with key suppliers and ensuring that sufficient funds are available to meet amounts due. |
Forward exchange contracts which are complex derivative financial instruments are managed by ensuring that sufficient funds are available to meet commitments, and from time to time by hedging certain contracts to mitigate the financial impact of exchange rate fluctuations. |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Report of the Director |
for the year ended 28 FEBRUARY 2023 |
ENERGY AND CARBON REPORT |
The table below illustrates the energy consumption and emissions for the current financial year: |
Reported Energy and Emission | 2023 Consumption | 2022 Consumption |
('000) | ('000) |
Energy Consumption (kWh) | 13,126 | 14,594 |
Emissions from combustion of fuels (kg CO2e) | 2,806 | 2,733 |
Emissions from purchased electricity (kg CO2e) | 210 | 120 |
Total gross kg CO2e based on above | 3,016 | 2,853 |
Intensity ratio (kg CO2e per £1,000 turnover) | 36.34 | 29.45 |
The methodology used has been to calculate these figures by reference to units of consumption, and to apply conversion factors provided by DEFRA. |
As an organisation Kartell continues to assess measures whereby the overall operational carbon footprint can be reduced. Having previously upgraded all warehouse lighting, biomass boilers have now been installed into both Wigan & Bedford locations, whose impact is to dramatically reduce the need for fossil fuels. Such boilers are fuelled through the controlled burning of waste pallet wood, whose own emissions are released having been filtered through purpose-built flues. |
DISCLOSURE IN THE STRATEGIC REPORT |
Certain disclosures in the Report of the Director required by s.414c(II) of the Companies Act 2005 and Schedule 7 of the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008 are given in the strategic report. |
STATEMENT OF DIRECTOR'S RESPONSIBILITIES |
The director is responsible for preparing the Strategic Report, the Report of the Director 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 him 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. |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Report of the Director |
for the year ended 28 FEBRUARY 2023 |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the director is aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
ON BEHALF OF THE BOARD: |
Report of the Independent Auditors to the Members of |
Kartell UK Limited |
Opinion |
We have audited the financial statements of Kartell UK Limited (the 'company') for the year ended 28 February 2023 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice). |
In our opinion the financial statements: |
- | give a true and fair view of the state of the company's affairs as at 28 February 2023 and of its profit for the year then ended; |
- | have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and |
- | have been prepared in accordance with the requirements of the Companies Act 2006. |
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 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. |
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report. |
Other information |
The director is responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Director, but does not include the financial statements and our Report of the Auditors thereon. |
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. |
In connection with our audit of the financial statements, 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 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 the audit: |
- | the information given in the Strategic Report and the Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Strategic Report and the Report of the Director have been prepared in accordance with applicable legal requirements. |
Report of the Independent Auditors to the Members of |
Kartell UK Limited |
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 Report of the Director. |
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: |
- | adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
- | the financial statements are not in agreement with the accounting records and returns; or |
- | certain disclosures of director's 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 Statement of Director's Responsibilities set out on page seven, 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 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. |
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 a Report of the Auditors 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: |
We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the risk, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. We focused on laws and regulations which could give rise to a material misstatement in the financial statements, including, but not limited to, the Companies Act 2006 and UK tax legislation. Our tests included agreeing the financial statement disclosures to underlying supporting documentation and enquiries with management. There are inherent limitations in the audit procedures described above and, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. We did not identify any key audit matters relating to irregularities, including fraud. As in all our audits, we also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the director that represented a risk of material misstatement due to fraud. |
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 Report of the Auditors. |
Report of the Independent Auditors to the Members of |
Kartell UK Limited |
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 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. |
for and on behalf of |
Chartered Accountants |
& Statutory Auditors |
Strelley Hall, Strelley |
Nottingham |
NG8 6PE |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Statement of Comprehensive |
Income |
for the year ended 28 FEBRUARY 2023 |
2023 | 2022 |
Notes | £ | £ | £ | £ |
TURNOVER | 4 |
Cost of sales |
GROSS PROFIT |
Distribution costs |
Administrative expenses |
23,376,202 | 20,192,838 |
5,941,523 | 7,627,048 |
Other operating income | 5 |
OPERATING PROFIT | 7 |
Derivative fair value |
adjustment | 9 |
1,090,012 | 8,073,760 |
Interest receivable and similar income |
1,101,411 | 8,073,766 |
Interest payable and similar expenses | 10 |
PROFIT BEFORE TAXATION |
Tax on profit | 11 |
PROFIT FOR THE FINANCIAL YEAR |
OTHER COMPREHENSIVE INCOME | - | - |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Balance Sheet |
28 FEBRUARY 2023 |
2023 | 2022 |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Intangible assets | 13 |
Tangible assets | 14 |
CURRENT ASSETS |
Stocks | 15 |
Debtors | 16 |
Cash at bank and in hand | 17 |
CREDITORS |
Amounts falling due within one year | 18 |
NET CURRENT ASSETS |
TOTAL ASSETS LESS CURRENT LIABILITIES |
CREDITORS |
Amounts falling due after more than one year | 19 | ( |
) | ( |
) |
PROVISIONS FOR LIABILITIES | 23 | ( |
) | ( |
) |
NET ASSETS |
CAPITAL AND RESERVES |
Called up share capital | 24 |
Revaluation reserve | 25 |
Retained earnings | 25 |
SHAREHOLDERS' FUNDS |
The financial statements were approved by the director and authorised for issue on |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Statement of Changes in Equity |
for the year ended 28 FEBRUARY 2023 |
Called up |
share | Retained | Revaluation | Total |
capital | earnings | reserve | equity |
£ | £ | £ | £ |
Balance at 1 March 2021 |
Changes in equity |
Dividends | - | ( |
) | - | ( |
) |
Total comprehensive income | - | ( |
) |
Balance at 28 February 2022 |
Changes in equity |
Dividends | - | ( |
) | - | ( |
) |
Total comprehensive income | - | ( |
) |
Balance at 28 February 2023 |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements |
for the year ended 28 FEBRUARY 2023 |
1. | STATUTORY INFORMATION |
Kartell UK Limited is a |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
The presentation currency of Kartell UK Limited is pounds sterling. |
Financial Reporting Standard 102 - reduced disclosure exemptions |
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland": |
• | the requirements of Section 7 Statement of Cash Flows; |
• | the requirement of paragraph 3.17(d); |
• | the requirement of paragraph 33.7. |
Related party exemption |
The company has taken advantage of the exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group, on the grounds that consolidated financial statements for the year ended 28th February 2023 of its ultimate parent company, Brand K Holdings Limited, are publicly available. |
Turnover |
In accordance with the provisions of FRS 102, turnover represents the right to consideration for goods sold. Turnover is recognised on dispatch. |
Intangible fixed assets |
Amortisation is provided on website development in order to write off the asset over its estimated useful life of 5 years on a straight line basis. |
Tangible fixed assets |
Tangible fixed assets are initially measured at cost or valuation and subsequently at cost or valuation less accumulated depreciation and any impairment losses. |
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter. |
Improvements to property | - | 20% on reducing balance |
Plant and machinery | - | 20% on reducing balance |
Fixtures and fittings | - | 20% on reducing balance |
Motor vehicles | - | 25% on reducing balance |
Office equipment | - | 20% on reducing balance |
Stocks |
Cost includes all costs incurred in bringing each product to its present location and condition on a first in first out basis after making due allowance for obsolete and slow moving items. Net realisable value is based on estimated selling price less any further costs expected to be incurred to completion and disposal. |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements - continued |
for the year ended 28 FEBRUARY 2023 |
2. | ACCOUNTING POLICIES - continued |
Taxation |
Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. |
Current or deferred taxation assets and liabilities are not discounted. |
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. |
Deferred tax |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. |
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference. |
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
Foreign currencies |
Transactions in foreign currencies are translated at the exchange rates ruling at the dates of the transactions. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. All exchange differences are dealt with through the statement of comprehensive income. |
Leases |
Assets held under finance leases, hire purchase contracts and other similar arrangements, which confer rights and obligations similar to those attached to owned assets, are capitalised as tangible fixed assets at the fair value of the leased asset (or, if lower, the present value of the minimum lease payments as determined at the inception of the lease) and are depreciated over the shorter of the lease terms and their useful lives. The capital elements of future lease obligations are recorded as liabilities, while the interest elements are charged to the statement of comprehensive income over the period of the leases to produce a constant periodic rate of interest on the remaining balance of the liabilities. |
Rentals under operating leases are charged on a straight-line basis over the lease term, even if the payments are not made on such a basis. Benefits received and receivable as an incentive to sign an operating lease are similarly spread on a straight-line basis over the lease term. |
Pension costs and other post-retirement benefits |
The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate. |
Going concern |
These financial statements have been prepared on a going concern basis, which the director believes to be appropriate. The company is part of a group of companies and some group companies have incurred losses in this financial period. This company provides cross-company guarantees to secure group debts. Also, as described in Note 9, the company has reported an exceptional item which has impacted the result for the year. The director has reviewed the latest group forecasts for the following year and has a reasonable expectation that the company and the group have adequate resources to continue in operational existence for the foreseeable future. Therefore he continues to adopt the going concern basis of accounting in preparing the annual financial statements. |
Finance costs |
Finance costs of debt are recognised in the statement of comprehensive income over the term of such instruments at a constant rate on the carrying amount. |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements - continued |
for the year ended 28 FEBRUARY 2023 |
2. | ACCOUNTING POLICIES - continued |
Confidential invoice discounting |
Amounts due in respect of invoice discounting are included within either cash at bank or within other loans, depending on if the balance is positive or negative. The company can use these facilities to draw down a percentage of the value of certain sales invoices. The management and collection of trade debtors remains with the company. |
Financial instruments |
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. |
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. |
(i) Financial assets and liabilities |
All financial assets and liabilities are initially measured at transaction price (including transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a financing transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. |
Debt instruments that are classified as payable or receivable within one year on initial recognition and which meet the above conditions are measured at the undiscounted amount of the cash or other consideration expected to be paid or received, net of impairment. |
Other debt instruments not meeting these conditions are measured at fair value through profit or loss. |
Financial assets are derecognised when and only when a) the contractual rights to the cash flows from the financial asset expire or are settled, b) the Company transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or c) the Company, despite having retained some but not all of the significant risks and rewards of ownership, has transferred control of the asset to another party. |
Financial liabilities are derecognised only when the obligation specified in the contract is discharged, cancelled or expires. |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements - continued |
for the year ended 28 FEBRUARY 2023 |
2. | ACCOUNTING POLICIES - continued |
Derivative financial instruments |
The company enters into foreign exchange options to manage its exposure to exchange rate risk. Further details of derivative financial instruments are disclosed in note 17 and 27. |
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each balance sheet date. The resulting gain or loss is recognised in profit or loss immediately. |
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities. |
Exceptional items |
Exceptional items are material items which derive from events or transactions falling within the ordinary activities of the company which need to be disclosed by nature of their size or incidence, in order that the accounts represent fairly the transactions for the year. |
Exceptional items are charged to the Statement of Comprehensive Income, and included under the normal format headings to which they relate. The amount of each item is disclosed separately by way of a note, or on the face of the Statement of Comprehensive Income if that degree of prominence is warranted because of the nature of the item. |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements - continued |
for the year ended 28 FEBRUARY 2023 |
3. | CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY |
In the application of the Company's accounting policies, which are described in note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. |
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. |
Critical judgements in applying the Company's accounting policies |
The following are the critical judgements that the director has made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognised in the financial statements. |
Derivative financial instruments fair value |
Derivative financial instruments are valued at Fair Value which is an estimate reflecting the amount that the instruments could be sold for on the open market. The estimate used is the value provided by the instrument provider, which is derivated from Bloomberg's 'Mark-to-Market' calculation of the instruments at the reporting date. The valuation is based on the probability of future movements in exchange markets and therefore includes elements of uncertainty. |
The classification between amounts falling due within one year and after more than one year in creditors is also subject to estimation uncertainty. As the contracts are settled in tranches, an assumption has been made that the liabilities will be realised evenly over the remaining term of the contracts, which end in October 2025. In reality this is unlikely to be the case, but it is not practical to estimate with any greater degree of accuracy. |
Impairment of assets |
The director constantly reviews factors likely to impact the value or recoverability of assets held by the company. In conducting his review, he considers both internal and external sources of information as well as past experiences and market conditions. As far as the director is aware there are no prevailing indications that assets held without impairment require one, or where an impairment has already been made that the amount of that impairment requires adjustment. |
Key sources of estimation uncertainty |
The key assumptions concerning the future, and other key sources of estimation uncertainty, that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below: |
Debtor provisioning |
The company exercises judgement as to its ability to collect outstanding receivables and in the event that any such recoverability becomes uncertain makes a provision against that debt. The company analyses its historical collection experience and current economic trends when determining the extent to which a provision should be made. |
Inventory and finished goods provisions |
The accounting estimate related to valuation of inventories is considered a "critical accounting estimate" because it is susceptible to changes from period-to-period due to the requirement for management to make estimates relative to each of the underlying factors, ranging from purchasing, to sales, to production. If actual demand or market conditions differ from estimates, inventory adjustments to lower market values would result in a reduction to the carrying value of inventory, an increase in inventory write-offs and a decrease to gross margins. |
Depreciation |
The company estimates the residual value and useful economic life of fixed assets. |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements - continued |
for the year ended 28 FEBRUARY 2023 |
4. | TURNOVER |
The turnover and profit before taxation are attributable to the one principal activity of the company. |
An analysis of turnover by class of business is given below: |
2023 | 2022 |
£ | £ |
An analysis of turnover by geographical market is given below: |
2023 | 2022 |
£ | £ |
United Kingdom |
Europe |
5. | OTHER OPERATING INCOME |
2023 | 2022 |
£ | £ |
Rents received |
Sundry receipts | 87,254 | - |
Government grants |
101,254 | 446,712 |
Other Operating Income includes Government Grants and Assistance. |
In the prior year, the Company received government support designed to mitigate the impact of COVID-19. |
In the UK, the Government has provided funding towards the salary costs of employees who have been 'furloughed' through the Coronavirus Job Retention Scheme. This funding meets the definition of a government grant under FRS 102 Section 24 Government Grants and a total of £nil (2022 - £431,597) has been recorded within other operating income. |
6. | EMPLOYEES AND DIRECTORS |
2023 | 2022 |
£ | £ |
Wages and salaries |
Social security costs |
Other pension costs |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements - continued |
for the year ended 28 FEBRUARY 2023 |
6. | EMPLOYEES AND DIRECTORS - continued |
The average number of employees during the year was as follows: |
2023 | 2022 |
Management | 2 | 2 |
Warehouse | 66 | 64 |
Sales | 38 | 37 |
Transport | 61 | 63 |
Stock and operations | 5 | 5 |
Finance | 13 | 13 |
Repairs | 3 | 3 |
Office | 17 | 15 |
2023 | 2022 |
£ | £ |
Directors' remuneration |
7. | OPERATING PROFIT |
The operating profit is stated after charging/(crediting): |
2023 | 2022 |
£ | £ |
Depreciation - owned assets |
Depreciation - assets on hire purchase contracts |
Loss on disposal of fixed assets |
Website development amortisation |
Foreign exchange differences | ( |
) | ( |
) |
Rent of property |
8. | AUDITORS' REMUNERATION |
2023 | 2022 |
£ | £ |
Just Audit Limited | 44,519 | 57,200 |
44,519 | 57,200 |
9. | EXCEPTIONAL ITEMS |
2023 | 2022 |
£ | £ |
Derivative fair value |
adjustment | ( |
) |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements - continued |
for the year ended 28 FEBRUARY 2023 |
The exceptional item relates to complex financial derivatives entered into before the end of the year. It includes Counter Target Accrual Redemption Forward (TARF) contracts entered into in order to fix into foreign currency rates until October 2025. FRS 102 requires these contracts to be valued at fair value and currency rates have moved in a direction which has led to a loss in fair value, as disclosed in this note. Net of tax, this exceptional item affects the profit for the financial year by £4,011,740. Further details are included in the Strategic Report and in Note 27. |
10. | INTEREST PAYABLE AND SIMILAR EXPENSES |
2023 | 2022 |
£ | £ |
Loan interest |
Other interest |
Hire purchase interest |
Invoice financing charges |
11. | TAXATION |
Analysis of the tax charge |
The tax charge on the profit for the year was as follows: |
2023 | 2022 |
£ | £ |
Current tax: |
UK corporation tax |
Deferred tax | ( |
) |
Tax on profit |
Reconciliation of total tax charge included in profit and loss |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
2023 | 2022 |
£ | £ |
Profit before tax |
Profit multiplied by the standard rate of corporation tax in the UK of |
Effects of: |
Expenses not deductible for tax purposes |
Adjustments to tax charge in respect of previous periods | ( |
) |
Research and development claim | - | (78,168 | ) |
Effect of change in rate on deferred tax balance | 9,693 | (102,637 | ) |
Tax effect of super deduction | (11,321 | ) | (3,948 | ) |
Total tax charge | 118,716 | 1,298,636 |
From 1 April 2023, the Corporation Tax main rate for non-ring-fenced profits has been increased to 25%. |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements - continued |
for the year ended 28 FEBRUARY 2023 |
12. | DIVIDENDS |
2023 | 2022 |
£ | £ |
Ordinary shares of £1 each |
Interim |
13. | INTANGIBLE FIXED ASSETS |
Website |
development |
£ |
COST |
At 1 March 2022 |
and 28 February 2023 |
AMORTISATION |
At 1 March 2022 |
Amortisation for year |
At 28 February 2023 |
NET BOOK VALUE |
At 28 February 2023 |
At 28 February 2022 |
14. | TANGIBLE FIXED ASSETS |
Improvements | Fixtures |
to | Plant and | and |
property | machinery | fittings |
£ | £ | £ |
COST OR VALUATION |
At 1 March 2022 |
Additions |
Disposals | ( |
) | ( |
) |
At 28 February 2023 |
DEPRECIATION |
At 1 March 2022 |
Charge for year |
Eliminated on disposal | ( |
) | ( |
) |
At 28 February 2023 |
NET BOOK VALUE |
At 28 February 2023 |
At 28 February 2022 |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements - continued |
for the year ended 28 FEBRUARY 2023 |
14. | TANGIBLE FIXED ASSETS - continued |
Motor | Office |
vehicles | equipment | Totals |
£ | £ | £ |
COST OR VALUATION |
At 1 March 2022 |
Additions |
Disposals | ( |
) | ( |
) | ( |
) |
At 28 February 2023 |
DEPRECIATION |
At 1 March 2022 |
Charge for year |
Eliminated on disposal | ( |
) | ( |
) | ( |
) |
At 28 February 2023 |
NET BOOK VALUE |
At 28 February 2023 |
At 28 February 2022 |
Cost or valuation at 28 February 2023 is represented by: |
Improvements | Fixtures |
to | Plant and | and |
property | machinery | fittings |
£ | £ | £ |
Valuation in 2011 | - | - | 35,415 |
Valuation in 2012 | - | 16,000 | 113,958 |
Valuation in 2013 | - | - | 9,259 |
Cost | 558,527 | 1,828,336 | 336,085 |
558,527 | 1,844,336 | 494,717 |
Motor | Office |
vehicles | equipment | Totals |
£ | £ | £ |
Valuation in 2011 | - | - | 35,415 |
Valuation in 2012 | - | - | 129,958 |
Valuation in 2013 | - | - | 9,259 |
Cost | 249,971 | 1,031,892 | 4,004,811 |
249,971 | 1,031,892 | 4,179,443 |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements - continued |
for the year ended 28 FEBRUARY 2023 |
14. | TANGIBLE FIXED ASSETS - continued |
If revalued assets detailed above had not been revalued they would have been included at the following historical cost: |
2023 | 2022 |
£ | £ |
Cost | 78,217 | 78,217 |
Aggregate depreciation | 63,635 | 59,990 |
Fixtures and fittings and plant and machinery were valued on an open market basis by Chiltern Storage Systems Ltd, Warehouse Equipment Company Ltd on 27th October 2014 and Shelving & Racking Ltd on 28th October 2014. |
The net book value of tangible fixed assets includes £ 148,940 (2022 - £ 157,426 ) in respect of assets held under hire purchase contracts. |
15. | STOCKS |
2023 | 2022 |
£ | £ |
Finished goods |
16. | DEBTORS |
2023 | 2022 |
£ | £ |
Amounts falling due within one year: |
Trade debtors |
Amounts owed by group undertakings |
Other debtors |
Prepayments |
Amounts falling due after more than one year: |
Amounts owed by group undertakings |
Aggregate amounts |
Included within trade debtors is £11,499,905 (2022 - £11,605,749) which form part of a confidential invoice discounting facility. |
17. | CASH AT BANK AND IN HAND |
The Cash at bank and in hand balance of £2,889,345 includes a deposit of £2,800,000 (2022: £nil) which is reserved for use against the Company's obligations under derivative contracts, see Note 27 for more details. |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements - continued |
for the year ended 28 FEBRUARY 2023 |
18. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2023 | 2022 |
£ | £ |
Bank loans and overdrafts (see note 20) |
Other loans (see note 20) |
Hire purchase contracts (see note 21) |
Trade creditors |
Amounts owed to group undertakings |
Tax |
Social security and other taxes |
VAT | 1,734,055 | 1,599,249 |
Other creditors |
Accrued expenses |
Obligation under derivative |
contracts |
Details of the obligations under derivative contracts can be found in Note 27. |
19. | CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |
2023 | 2022 |
£ | £ |
Bank loans (see note 20) |
Hire purchase contracts (see note 21) |
Obligation under derivative contracts |
Details of the obligations under derivative contracts can be found in Note 27. |
20. | LOANS |
An analysis of the maturity of loans is given below: |
2023 | 2022 |
£ | £ |
Amounts falling due within one year or on demand: |
Bank loans |
Confidential invoice discounting | 8,683,531 | 8,495,676 |
Amounts falling due between one and two years: |
Bank loans - 1-2 years |
Amounts falling due between two and five years: |
Bank loans - 2-5 years |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements - continued |
for the year ended 28 FEBRUARY 2023 |
21. | LEASING AGREEMENTS |
Minimum lease payments fall due as follows: |
Hire purchase contracts |
2023 | 2022 |
£ | £ |
Net obligations repayable: |
Within one year |
Between one and five years |
Non-cancellable operating | leases |
2023 | 2022 |
£ | £ |
Within one year |
Between one and five years |
In more than five years |
Operating lease payments recognised as an expense during the year was £1,347,866 (2022 - £1,319,673). |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements - continued |
for the year ended 28 FEBRUARY 2023 |
22. | SECURED DEBTS |
The following secured debts are included within creditors: |
2023 | 2022 |
£ | £ |
Hire purchase contracts | 730,974 | 16,059 |
Invoice financing creditor | 8,683,531 | 8,495,676 |
Bank loans | 4,316,667 | 5,607,365 |
The obligations under hire purchase contracts are secured on the assets to which they relate. |
The Company has the following securities at the balance sheet date: |
Shawbrook Bank Limited holds a fixed and floating charge over the assets of the group in respect of a Brand K Group facility of up to £23.6m (2022: £23m). The group facilities include invoice discounting over receivables of up to £21.5m (2022: £20m), in aggregate with an inventory facility of up to £5m (2022: £5m) and a cashflow facility of up to £1.16m (2022: £3m) and a hire purchase agreement with a purchase price of £1m (2022: £1m). The cashflow facility is repayable in 36 monthly instalments. The advance rate for the invoice discounting facility is 85%. There is a group cross company guarantee in place as security for the charge. The bank also holds a right of group set-off. |
After the year end, the group entered a new facility agreement of invoice discounting over receivables of up to £29.5m, in aggregate with the inventory facility of up to £5m, a cashflow facility of up to £3.4m and a hire purchase agreement with a purchase price of £1m. . |
The total balances secured at the year end across the group are as follows: confidential invoice discounting facility: £14.1m (2022 - £13.5m), inventory facility: £3.2m (2022 - £2.7m), cashflow facility: £1.2m (2022 - £2.2m) and hire purchase balance: £0.7m (2022 - £0.7m). |
Bridgewood Holdings Limited and SL2 Prop Co Limited hold a fixed and floating charge over all property of Summerbridge Holdings Limited, a subsidiary of Brand K Holdings Limited. Brand K Holdings Limited and its other subsidiaries act as guarantors over the loans in Summerbridge Holdings Limited, which totalled £483,659 as at 28 February 2023. |
The balance due on the Company's confidential invoice discount facility at the balance sheet date was £8,683,531 (2022 - £8,495,676). The balance due on the Company's inventory facility at the balance sheet date was £3,150,000 (2022 - £2,675,000). The balance due on the Company's cashflow facility at the balance sheet date was £1,166,667 (2022 - £2,206,666). |
There is a hire purchase agreement in place with Shawbrook Bank Limited of £723,896 (2022 - £725,700) in order to purchase two items of plant and machinery. The loan is repayable in instalments over 72 months. The loan is secured on the assets to which it relates. |
23. | PROVISIONS FOR LIABILITIES |
2023 | 2022 |
£ | £ |
Deferred tax | 493,702 | 469,882 |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements - continued |
for the year ended 28 FEBRUARY 2023 |
23. | PROVISIONS FOR LIABILITIES - continued |
Deferred |
tax |
£ |
Balance at 1 March 2022 |
Provided during year |
Balance at 28 February 2023 |
The main rate of corporation tax increased from 19% to 25% effective from 1 April 2023. The rate has been reflected in the calculation of deferred tax at the balance sheet date. |
24. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2023 | 2022 |
value: | £ | £ |
Ordinary | £1 | 18,500 | 18,500 |
Ordinary A | £1 | 1,500 | 1,500 |
20,000 | 20,000 |
The called-up share capital represents the nominal value of the shares that have been issued. |
Ordinary Shares hold all rights. |
Ordinary A Shares hold all rights except the right to appoint a director to the company. |
25. | RESERVES |
Retained | Revaluation |
earnings | reserve | Totals |
£ | £ | £ |
At 1 March 2022 | 12,567,665 |
Profit for the year |
Dividends | ( |
) | ( |
) |
Fixed Asset revaluation | 8,217 | (8,217 | ) | - |
At 28 February 2023 | 12,314,842 |
Retained Earnings |
The retained earnings reserve includes current and cumulative prior period profits and losses, less dividends. |
Revaluation Reserve |
The revaluation reserve includes current and cumulative prior period revaluations. |
26. | PENSION COMMITMENTS |
The company operates a defined contribution pension scheme for the benefit of its employees. At the year end, there are outstanding contributions payable to the pension provider of £30,661 (2022: £19,199). |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements - continued |
for the year ended 28 FEBRUARY 2023 |
27. | OTHER COMMITMENTS |
The company has entered into contractual commitments regarding financial derivatives. These foreign currency derivative contracts have led to a financial liability as at 28 February 2023 with a total estimated fair value of £4,952,765, which is included in Creditors: amounts falling due within one year and after more than one year, and as an exceptional item in the Statement of Comprehensive Income. The contracts outstanding at the year end are as follows: |
Contract type | Buy | Sell | Start date | End date | Frequency | Notional amount | Geared amount | Strike rate |
Counter TARF | USD | GBP | 22/03/2022 | 27/02/2025 | Monthly | $150k p/m | $300k p/m | £1:$1.3550 |
Counter TARF | USD | EUR | 22/03/2022 | 27/02/2025 | Monthly | $80k p/m | $160k p/m | €1:$1.1550 |
TARF | USD | GBP | 13/10/2022 | 10/10/2025 | Weekly | $300k p/w | $600k p/w | £1:$1.1650 |
Forward+ | GBP | USD | 17/01/2023 | 10/10/2025 | Weekly | $600k p/w | N/A | £1:$1.2575 |
Forward | USD | GBP | 18/01/2023 | 31/05/2023 | One-off | $5m | N/A | £1:$1.2400 |
For the Counter TARF and TARF Buy USD contracts, when the spot rate is below the 'strike rate' at the monthly/weekly expiry dates, the company has the right to buy the 'notional amount' at the 'strike rate', provided they have not met the 'Counter limit' or the Cumulative Accrued Profit (CAP)', described below. If the spot rate is above the 'strike rate' at the monthly/weekly expiry dates, the company has the obligation to buy the 'geared amount' at the 'strike rate'. |
For the Sell USD contract, when the spot rate is above the 'strike rate' at the weekly expiry dates, the company has the right to sell the 'notional amount' at the 'strike rate'.If the spot rate is below the 'strike rate' and above the 'European Knock In' rate of £1:$1.1575, there are no obligations and the company has the right to exchange in the spot market.If the spot rate is below the 'European Knock In' rate, the company has the obligation to sell the 'notional amount' at the 'strike rate'. |
The Counter TARFs have a 'Counter' of 18, which sets the maximum number of monthly exchanges that are favourable to the company, where the spot rate is below the 'strike rate'. Once the 'Counter' is reached, trade on the contract ceases. |
The weekly Buy USD TARF has a CAP on gains of 1.20, where once it is reached the trade on the contract ceases. |
Each month that the spot rate is below the strike rate, the difference between the two is added to the CAP. When this cumulative profit reaches 1.20 the contract ceases to exist. |
The Company has a contract with a provider of the financial derivatives contracts which requires a margin of £400,000 be paid by the Client and held on their account in the event that the net market value of all open positions has declined and the unrealised loss when marked to market exceeds £2,000,000. Each time the net market value of all open positions declines by a further £400,000, a cash margin of the same amount is required to be transferred. The provider has sole discretion that all or part of such margin is repayable to the Company. |
See also further explanation within the Strategic Report. |
28. | RELATED PARTY DISCLOSURES |
During the period the Company made purchases totalling £80,693 (2022: £115,018) from a company with a connected person as director. |
KARTELL UK LIMITED (REGISTERED NUMBER: 06682104) |
Notes to the Financial Statements - continued |
for the year ended 28 FEBRUARY 2023 |
29. | PARENT COMPANY |
The immediate parent company is Brand K Limited. The registered office address is the same as for Brand K Holdings Limited given below. |
At 28 February 2022, the ultimate parent company was Brand K Limited, a company under the control of the board of directors, with no one individual being an ultimate controlling party. |
On 24 August 2022, Brand K Limited was acquired by Brand K Holdings Limited, a company under the control of Alex Norford. |
At 28 February 2023, the ultimate parent company was Brand K Holdings Limited. The registered office for the ultimate parent company was Thistle Down Barn, Holcot Lane, Sywell, Northampton, NN6 0BG. The group accounts of Brand K Holdings Limited, which include the results of this company, can be obtained from Companies House. |
At 28 February 2023, Brand K Holdings Limited was under the control of Alex Norford. |