REGISTERED NUMBER: 13974101 (England and Wales) |
Group Strategic Report, Report of the Director and |
Audited Consolidated Financial Statements |
for the Period 14 March 2022 to 28 February 2023 |
for |
BRAND K HOLDINGS LTD |
REGISTERED NUMBER: 13974101 (England and Wales) |
Group Strategic Report, Report of the Director and |
Audited Consolidated Financial Statements |
for the Period 14 March 2022 to 28 February 2023 |
for |
BRAND K HOLDINGS LTD |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Contents of the Consolidated Financial Statements |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
Page |
Company Information | 1 |
Group Strategic Report | 2 |
Report of the Director | 7 |
Report of the Independent Auditors | 10 |
Consolidated Statement of Comprehensive Income | 13 |
Consolidated Balance Sheet | 14 |
Company Balance Sheet | 15 |
Consolidated Statement of Changes in Equity | 16 |
Company Statement of Changes in Equity | 17 |
Consolidated Cash Flow Statement | 18 |
Notes to the Consolidated Cash Flow Statement | 19 |
Notes to the Consolidated Financial Statements | 21 |
BRAND K HOLDINGS LTD |
Company Information |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
DIRECTOR: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Chartered Accountants |
& Statutory Auditors |
Strelley Hall, Strelley |
Nottingham |
NG8 6PE |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Group Strategic Report |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
The director presents his strategic report and the financial statements for the company and the group for the period ended 28 February 2023. The director in preparing the strategic report has complied with s414c of the Companies Act 2006. |
The company incorporated on 14 March 2022 and acquired all the shares in Brand K Ltd (and its group companies) on 24 August 2022. The results of all subsidiaries are included from the date of acquisition, so this period of financial statements reports 6 months of data for the group. |
REVIEW OF BUSINESS |
The principal activity of the company is that of a holding company. |
The Brand K Group is engaged in the supply of radiator and bathroom products to the heating and plumbing industry, the manufacture of shower trays and the manufacture of kitchen and bathroom cabinets. |
Group turnover in the period amounted to £60.6m, with a gross profit of £20.9m, a gross profit margin of 34.6% and an operating profit of £3.8m. |
The result 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 the period end amounting to a net expense, after a tax credit, of £4,173,493, details of which are disclosed in Note 8. The practical circumstances of this event are as follows: |
- When the USD:GBP spot rate was unfavourable, a subsidiary 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 group 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 subsidiary 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 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 group amounted to £2.5m at the reporting date. The director is pleased to have achieved that result in spite of the fair value adjustment referred to above. He is pleased that the operating profits of £3.8m have contributed to that position. |
The director is pleased with the progress of the group which has continued after the period end and he intends to grow turnover through new opportunities. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Group Strategic Report |
for the period 14 MARCH 2022 TO 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 group, the principal risks identified are as follows: |
Competitive risk: |
The Group 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 Group sources a significant amount of its supplies from overseas. To manage this risk, the Group 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. |
Liquidity risks: |
The Group relies on bank lending facilities which require it to trade within certain financial criteria. Management closely manages the financial position of the 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 as to 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 Group'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 Group has also taken various measures to reduce its cost base to minimise any risk. |
Credit risks: |
The Group's credit risk is primarily attributable to its trade debtors. The amounts presented in the consolidated balance sheet are net of allowances for doubtful debts, estimated by the management based on prior experience, the current economic environment and specific customer issues. The Group 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. |
Exchange rate risks: |
Movements in the exchange rates can have a significant impact on the supply costs for the group. From time to time, the group enters into foreign exchange contracts with the aim of mitigating these risks. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Group Strategic Report |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
SECTION 172(1) STATEMENT |
The Group is committed to being a responsible business. Its behaviour is aligned with the expectations of its 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 Group is responsible for the identification, evaluation, qualification, recording and reporting of the risks identified. The Group follows the principles and methodology as assessed by the Brand K group risk assessment. |
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 he considers, in good faith, promotes the success of the Group for the benefit of its shareholder 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 Group'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 |
Across the Group, large emphasis has been placed on the environment and the 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 the 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 Group 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 Group 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, continually making himself available to all employees, through the adoption of his own "open door" policy. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Group Strategic Report |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
DEVELOPMENT AND PERFORMANCE |
During the period, key appointments and restructures were made to the Group Senior Leadership Team (SLT) in order to support the development and growth specifically in the Group, and the interaction between different companies within the Group. From such appointments, it is clear that the business now has far greater structure in terms of analysis and the reporting of key metrics, which are seen as the key foundations and building blocks 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 companies in the Group now have strategic business plans in place to increase their own service offering, through the introduction of additional product lines to their catalogues. |
In addition, the Group targets strategic acquisitions which could enhance the achievement of the Group's overall objectives. |
The group's key performance indicators for the period were as follows: |
2023 (6 months) |
Turnover | £60.6m |
Gross profit margin | 34.6% |
Operating profit | £3.8m |
Net loss before taxation* | £(2.0m) |
Net assets | £2.5m |
* Net loss before Taxation was impacted by an exceptional item being a fair value adjustment as described in the Business Review. |
The Director is pleased with the Operating Profit achieved of £3.8m and believes that the Group is well positioned to improve its performance and asset base in the future. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Group Strategic Report |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
OTHER KEY PERFORMANCE INDICATORS |
The director considers the following Key Performance Indicators when assessing the non-financial performance of the Group: |
Staff Turnover/Retention % - Whilst staff Turnover is inevitable in the current environment, the Group as a whole have managed to retain all key personnel, and further make additions to the wider SLT, bringing in further expertise to facilitate better strategy and ultimately sustained growth. |
Creation of employment opportunities - Overall staff numbers have continued to increase in line with volume increases, with the approach of making such appointments as linear as possible and such increases are expected to continue. |
3PL Deliveries (Kg) - Transport |
3PL Deliveries (Drop Count) - Transport |
Returns as a percentage of Invoices - Warehouse/Returns |
New Account Generation - Sales Managers |
Picking and processing errors - Warehouse |
Backorders/Stock Outs - Purchasing |
Missed Calls - Sales Offices |
All KPI's continue to be monitored on a weekly basis by the respective Business Unit's SLT, where once discussed, the results are communicated upward to the Director and wider Group SLT for further discussion. |
ON BEHALF OF THE BOARD: |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Report of the Director |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
The director presents his report with the financial statements of the company and the group for the period 14 March 2022 to 28 February 2023. |
INCORPORATION |
The company was incorporated on 14 March 2022. |
DIVIDENDS |
The total distribution of dividends for the period ended 28 February 2023 was £35,680. |
After the period end dividends of £32,240 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 across the Group by the Director. 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 the Group, 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 Group 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. |
EVENTS SINCE THE END OF THE PERIOD |
Information relating to events since the end of the period is given in the notes to the financial statements. |
DIRECTOR |
FINANCIAL INSTRUMENTS |
The Group's principal financial instruments are comprised of bank balances, invoice discounting, asset based lending, loans, forward exchange contracts for foreign currency, trade debtors and trade creditors. The main purpose of these instruments is to provide finance for the group's operations. |
In respect of bank balances, loans, and asset based lending, the group manages its cashflow tightly, and monitors the relationship between these financial instruments, ensuring there are sufficient funds to meet amounts due, and that the group 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. |
ENGAGEMENT WITH EMPLOYEES |
This is covered as part of the Section 172(1) Statement in the Strategic Report. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Report of the Director |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
ENGAGEMENT WITH SUPPLIERS, CUSTOMERS AND OTHERS |
This is covered as part of the Section 172(1) Statement in the Strategic Report. |
STREAMLINED ENERGY AND CARBON REPORTING |
The table below illustrates the group's energy consumption and emissions for the financial period: |
Reported Energy and Emission |
2023 Consumption for the 6 month period |
('000) |
Energy Consumption (kWh) | 6,563 |
Emissions from combustion of fuels (kg CO2e) | 1,403 |
Emissions from purchased electricity (kg CO2e) | 105 |
Total gross kg CO2e based on above | 1,508 |
Intensity ratio (kg CO2e per £1,000 turnover) | 24.88 |
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, Brand K Group continue to assess measures whereby the overall operational carbon footprint can be reduced. Having upgraded warehouse lighting in all warehouses, biomass boilers have been installed into both Wigan and 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 2006 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 Group 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 period. 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 the group and of the profit or loss of the group 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 and the group will continue in business. |
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group and hence taking reasonable steps for the prevention and detection of fraud and other irregularities. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Report of the Director |
for the period 14 MARCH 2022 TO 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 group'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 group's auditors are aware of that information. |
AUDITORS |
Just Audit Limited were appointed as first auditors to the company by the director. |
ON BEHALF OF THE BOARD: |
Report of the Independent Auditors to the Members of |
Brand K Holdings Ltd |
Opinion |
We have audited the financial statements of Brand K Holdings Ltd (the 'parent company') and its subsidiaries (the 'group') for the period ended 28 February 2023 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, 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 group's and of the parent company affairs as at 28 February 2023 and of the group's loss for the period 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 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 group's and 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 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 Group 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 Group 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 Group 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 |
Brand K Holdings Ltd |
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 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 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 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 eight, 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 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 director either intends to liquidate the group or the parent 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 parent company and the group and the industry in which it operates and considered the risk of acts by the parent company and the group 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 |
Brand K Holdings Ltd |
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 |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Consolidated |
Statement of Comprehensive |
Income |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
Notes | £ | £ |
TURNOVER | 4 | 60,606,567 |
Cost of sales | 39,654,283 |
GROSS PROFIT | 20,952,284 |
Distribution costs | 6,004,002 |
Administrative expenses | 11,235,034 |
17,239,036 |
3,713,248 |
Other operating income | 81,615 |
OPERATING PROFIT | 6 | 3,794,863 |
Derivative fair value adjustment | 8 | 5,152,461 |
(1,357,598 | ) |
Interest receivable and similar income | 1,652 |
(1,355,946 | ) |
Interest payable and similar expenses | 9 | 614,113 |
LOSS BEFORE TAXATION | (1,970,059 | ) |
Tax on loss | 10 | (404,165 | ) |
LOSS FOR THE FINANCIAL PERIOD | ( |
) |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Consolidated Balance Sheet |
28 FEBRUARY 2023 |
Notes | £ | £ |
FIXED ASSETS |
Intangible assets | 13 | 6,541,591 |
Tangible assets | 14 | 6,064,167 |
Investments | 15 | - |
Investment property | 16 | 1,537,298 |
14,143,056 |
CURRENT ASSETS |
Stocks | 17 | 19,226,286 |
Debtors | 18 | 21,442,997 |
Cash at bank and in hand | 19 | 3,212,004 |
43,881,287 |
CREDITORS |
Amounts falling due within one year | 20 | 48,932,750 |
NET CURRENT LIABILITIES | (5,051,463 | ) |
TOTAL ASSETS LESS CURRENT LIABILITIES |
9,091,593 |
CREDITORS |
Amounts falling due after more than one year | 21 | (6,397,360 | ) |
PROVISIONS FOR LIABILITIES | 25 | (215,468 | ) |
NET ASSETS | 2,478,765 |
CAPITAL AND RESERVES |
Called up share capital | 26 | 4,080,339 |
Retained earnings | 27 | (1,601,574 | ) |
SHAREHOLDERS' FUNDS | 2,478,765 |
The financial statements were approved by the director and authorised for issue on 31 October 2023 and were signed by: |
A D Norford - Director |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Company Balance Sheet |
28 FEBRUARY 2023 |
Notes | £ | £ |
FIXED ASSETS |
Intangible assets | 13 |
Tangible assets | 14 |
Investments | 15 |
Investment property | 16 |
CURRENT ASSETS |
Debtors | 18 |
Cash at bank | 19 |
CREDITORS |
Amounts falling due within one year | 20 |
NET CURRENT LIABILITIES | ( |
) |
TOTAL ASSETS LESS CURRENT LIABILITIES |
CREDITORS |
Amounts falling due after more than one year | 21 |
NET ASSETS |
CAPITAL AND RESERVES |
Called up share capital | 26 |
Retained earnings | 27 |
SHAREHOLDERS' FUNDS |
Company's profit for the financial year | 202,183 |
The financial statements were approved by the director and authorised for issue on |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Consolidated Statement of Changes in Equity |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Changes in equity |
Issue of share capital | 4,080,339 | - | 4,080,339 |
Dividends | - | (35,680 | ) | (35,680 | ) |
Total comprehensive loss | - | (1,565,894 | ) | (1,565,894 | ) |
Balance at 28 February 2023 | 4,080,339 | (1,601,574 | ) | 2,478,765 |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Company Statement of Changes in Equity |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Changes in equity |
Issue of share capital | - |
Dividends | - | ( |
) | ( |
) |
Total comprehensive income | - |
Balance at 28 February 2023 |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Consolidated Cash Flow Statement |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
Notes | £ |
Cash flows from operating activities |
Cash generated from operations | 1 | 5,452,325 |
Interest paid | (234,415 | ) |
Interest element of hire purchase payments paid | (28,173 | ) |
Finance costs paid | (351,525 | ) |
Tax paid | (575,118 | ) |
Net cash from operating activities | 4,263,094 |
Cash flows from investing activities |
Purchase of tangible fixed assets | (515,126 | ) |
Purchase of investment property | (1,537,298 | ) |
Sale of tangible fixed assets | 22,954 |
Purchase of subsidiary companies | (896,259 | ) |
Cash balances on acquisition | 867,155 |
Interest received | 1,652 |
Net cash from investing activities | (2,056,922 | ) |
Cash flows from financing activities |
New loans in period | 150,000 |
Loan repayments in period | (875,068 | ) |
Hire purchase repayments in period | (134,050 | ) |
Amount introduced by directors | 17,281 |
Equity dividends paid | (35,680 | ) |
Invoice discounting movement | 1,883,349 |
Net cash from financing activities | 1,005,832 |
Increase in cash and cash equivalents | 3,212,004 |
Cash and cash equivalents at beginning of period |
2 |
- |
Cash and cash equivalents at end of period | 2 | 3,212,004 |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Cash Flow Statement |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
1. | RECONCILIATION OF LOSS BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS |
£ |
Loss before taxation | (1,970,059 | ) |
Depreciation charges | 832,509 |
Loss on disposal of fixed assets | 21,689 |
Derivative fair value adjustment | 5,152,461 |
Finance costs | 614,113 |
Finance income | (1,652 | ) |
4,649,061 |
Increase in stocks | (1,816,329 | ) |
Decrease in trade and other debtors | 4,263,092 |
Decrease in trade and other creditors | (1,643,499 | ) |
Cash generated from operations | 5,452,325 |
2. | CASH AND CASH EQUIVALENTS |
The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts: |
Period ended 28 February 2023 |
28.2.23 | 14.3.22 |
£ | £ |
Cash and cash equivalents | 3,212,004 | - |
3. | ANALYSIS OF CHANGES IN NET DEBT |
Other |
On | non-cash |
At 14.3.22 | Cash flow | acquisition | changes | At 28.2.23 |
£ | £ | £ | £ | £ |
Net cash |
Cash at bank |
and in hand | - | 2,344,849 | 867,155 | 3,212,004 |
- | 2,344,849 | 867,155 | 3,212,004 |
Debt |
Finance leases | - | 134,049 | (1,012,468 | ) | (133,260 | ) | (1,011,679 | ) |
Debts falling due |
within 1 year | - | (2,033,349 | ) | (16,864,679 | ) | (1,096,800 | ) | (19,994,828 | ) |
Debts falling due |
after 1 year | - | 875,068 | (925,062 | ) | (2,019,556 | ) | (2,069,550 | ) |
- | (1,024,232 | ) | (18,802,209 | ) | (3,249,616 | ) | (23,076,057 | ) |
Total | - | 1,320,617 | (17,935,054 | ) | (3,249,616 | ) | (19,864,053 | ) |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Cash Flow Statement |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
4. | NON-CASH TRANSACTIONS |
Non-cash transactions consist of £3.5m in respect of secured loan notes (before repayments in the period) and £4m in respect of a share-for-share exchange (see note 13). |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
1. | STATUTORY INFORMATION |
Brand K Holdings Ltd is a private company, limited by shares, registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page. |
Length of reporting period |
The company incorporated on 14 March 2022. This is the first set of Brand K Holdings Ltd financial statements which cover a period of 14 March 2022 to 28 February 2023, an 11.5 month period to coincide with the group reporting period end. |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention as modified by the revaluation and fair value of certain assets. |
The functional currency of Brand K Holdings Ltd is considered to be pounds sterling because that is the currency of the primary economic environment in which the Group operates. |
The group has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own income statement in these financial statements. |
Basis of consolidation |
The consolidated financial statements present the results of the Company and its subsidiaries ('Group') as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full. |
On 24 August 2022, Brand K Holdings Ltd acquired the entire share capital of Brand K Ltd. The consolidated financial statements incorporate the results of Brand K Ltd and its subsidiaries, using the purchase method with effect from 24 August 2022. In the balance sheet, the acquirer's identifiable assets and liabilities are initially recognised at their fair value 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. |
Uniform group accounting policies are used for determining the amounts to be included in the consolidated financial statements. Where necessary, amounts which have been reported by subsidiary undertakings in their individual financial statements are adjusted for on consolidation. |
Parent company disclosure exemptions |
In preparing the separate financial statements of the parent company, advantage has been taken of the following disclosure exemptions available in FRS 102: |
- Only one reconciliation of the number of shares outstanding at the beginning and end of the period has been presented as the reconciliations for the group and the parent company would be identical; |
- No cashflow statement has been presented for the company. |
Related party exemption |
The Group has taken advantage of 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. |
Transactions between group entities which have been eliminated on consolidation are not disclosed within the financial statements. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
2. | ACCOUNTING POLICIES - continued |
Turnover |
In accordance with the provisions of FRS 102, turnover represents the right to consideration for goods sold. Turnover is recognised on dispatch. |
Goodwill |
Goodwill represents the differences between amounts paid on the cost of a business combination and the acquirer's interest in the fair value of the group's share of its identifiable assets and liabilities at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the Consolidated Statement of Comprehensive Income over its estimated useful economic life of 10 years, net of any accumulated impairment losses. |
Other intangible assets |
Intangible assets are initially measured at cost less any accumulated amortisation and any accumulated impairment losses. |
Patents and licences are being amortised evenly over their expected useful life of 20 years. |
Computer software is being amortised evenly over its estimated useful life of 20 years or 20% on a reducing balance. |
Tangible fixed assets |
Improvements to property | - |
Plant and machinery | - |
Fixtures and fittings | - |
Motor vehicles | - |
Computer equipment | - |
Tangible fixed assets are initially measured at cost and subsequently at cost less accumulated depreciation and any impairment losses. |
Investment property |
Investment property is shown at most recent valuation. Any aggregate surplus or deficit arising from changes in fair value is recognised in profit or loss. |
Stocks |
Stocks and work in progress are valued at the lower of cost and net realisable value, after making due allowance for obsolete or slow moving stock. Cost includes all costs incurred in bringing each product to its present location and condition on a first in first out basis. Net realisable value is based on estimated selling price less any further costs expected to be incurred to completion and disposal. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
2. | ACCOUNTING POLICIES - continued |
Taxation |
Taxation for the period comprises current and deferred tax. Tax is recognised in the Consolidated Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. |
Deferred taxation is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. |
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. |
Foreign currencies |
Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. 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 Consolidated 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 Consolidated 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 group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to profit or loss in the period to which they relate. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
2. | ACCOUNTING POLICIES - continued |
Going concern |
These financial statements have been prepared on a going concern basis, which the director believes to be appropriate. |
The company is the parent of a group of companies and some group companies have incurred losses in this financial period. The group's subsidiaries provide cross-company guarantees to secure group debts. The owner of the group, who is also Managing Director, has confirmed the group will continue to provide financial support for loss-making companies in the group. The group itself has incurred a loss after taxation of £(1,565,894), after an exceptional item explained in note 8. The director has reviewed the latest group forecasts for the following year and has a reasonable expectation that the group has 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 consolidated financial statements. |
Valuation of investments |
Investments in subsidiaries are measured at cost less accumulated impairment. |
Finance costs |
Finance costs of debt are recognised in the Consolidated Statement of Comprehensive Income over the term of such instruments at a constant rate on the carrying amount. |
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 group 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 group. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
2. | ACCOUNTING POLICIES - continued |
Financial instruments |
Financial assets and financial liabilities are recognised when the Group 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 Group 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 Group transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or c) the Group, 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. |
Derivative financial instruments |
The Group uses forward currency contracts to manage its exposures to fluctuations in foreign currency exchange rates. |
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 reporting 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 group 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 Consolidated 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 Consolidated Statement of Comprehensive Income if that degree of prominence is warranted because of the nature of the item. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
3. | CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY |
In the application of the Group's accounting policies, which are described in note 2, the director is 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 Group's accounting policies |
The following are the critical judgements that the director has made in the process of applying the group'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 derived 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 group. 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 group 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 group analyses its historical collection experience and current economic trends when determining the extent to which a provision should be made, as well as any debt insurance cover available. |
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. |
Rebate accruals |
The group estimates the accrual required for volume rebates to be paid after the period end. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
Depreciation |
The group estimates the residual value and useful economic life of fixed assets. |
Goodwill |
On consolidation, the director estimates the fair value of the acquired assets and liabilities. The excess of the fair value of consideration above the fair value of the acquired assets and liabilities is recognised as goodwill on consolidation. This is regularly reviewed for impairment based on the trading position. Goodwill is being amortised evenly over 10 years as it is not possible to estimate its useful economic life. |
4. | TURNOVER |
The turnover and loss before taxation are attributable to the principal activities of the group. |
An analysis of turnover by class of business is given below: |
£ |
Sale of goods | 60,223,811 |
Rendering of services | 382,756 |
60,606,567 |
An analysis of turnover by geographical market is given below: |
£ |
United Kingdom | 56,853,187 |
Europe | 3,604,252 |
Rest of the world | 149,128 |
60,606,567 |
5. | EMPLOYEES AND DIRECTORS |
£ |
Wages and salaries | 8,395,352 |
Social security costs | 850,342 |
Other pension costs | 192,787 |
9,438,481 |
The average number of employees during the period was as follows: |
Management | 6 |
Warehouse | 108 |
Sales | 32 |
Transport | 34 |
Stock and operations | 76 |
Finance | 13 |
Repairs | 3 |
Office | 23 |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
5. | EMPLOYEES AND DIRECTORS - continued |
The average number of employees by undertakings that were proportionately consolidated during the period was 295 . |
Total key management personnel compensation for the period was £322,449. |
£ |
Director's remuneration | 10,835 |
6. | OPERATING PROFIT |
The operating profit is stated after charging/(crediting): |
£ |
Hire of plant and machinery | 69,173 |
Other operating leases | 251,711 |
Depreciation - owned assets | 430,662 |
Depreciation - assets on hire purchase contracts | 57,024 |
Loss on disposal of fixed assets | 21,689 |
Goodwill amortisation | 341,488 |
Patents and licences amortisation | 1,438 |
Computer software amortisation | 1,893 |
Foreign exchange differences | (155,543 | ) |
Rent of property | 1,145,166 |
7. | AUDITORS' REMUNERATION |
2023 |
£ |
Just Audit Limited, Auditor's remuneration |
- Audit of the group financial statements | 25,875 |
- Audit of the subsidiary financial statements | 71,741 |
- Taxation services | - |
- Other advisory services | - |
97,616 |
Elsby & Co Limited |
- Audit of the group financial statements | - |
- Audit of the subsidiary financial statements | 76,621 |
- Taxation services | 23,440 |
- Other advisory services | 94,250 |
194,311 |
8. | EXCEPTIONAL ITEMS |
£ |
Derivative fair value adjustment | (5,152,461 | ) |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
The exceptional item relates to complex financial derivatives entered into before the end of the period. 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 loss for the financial period by £4,173,493. Further details are included in the Group Strategic Report and in Note 29. |
9. | INTEREST PAYABLE AND SIMILAR EXPENSES |
£ |
Invoice discounting interest | 107,182 |
Loan interest | 84,311 |
Inland Revenue interest | 9,321 |
Hire purchase interest | 28,173 |
Other interest paid | 33,601 |
Invoice financing charges | 351,525 |
614,113 |
10. | TAXATION |
Analysis of the tax credit |
The tax credit on the loss for the period was as follows: |
£ |
Current tax: |
UK corporation tax | (218,850 | ) |
Deferred tax | (185,315 | ) |
Tax on loss | (404,165 | ) |
Reconciliation of total tax credit included in profit and loss |
The tax assessed for the period is lower than the standard rate of corporation tax in the UK. The difference is explained below: |
£ |
Loss before tax | (1,970,059 | ) |
Loss multiplied by the standard rate of corporation tax in the UK of 19 % | (374,311 | ) |
Effects of: |
Expenses not deductible for tax purposes | (21,159 | ) |
Income not taxable for tax purposes | 66,610 |
Utilisation of tax losses | (59,455 | ) |
Effect of change in rate on deferred tax balance | (15,850 | ) |
Total tax credit | (404,165 | ) |
From 1 April 2023, the Corporation Tax main rate for non-ring-fenced profits has been increased to 25%. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
11. | INDIVIDUAL STATEMENT OF COMPREHENSIVE INCOME |
As permitted by Section 408 of the Companies Act 2006, the Income Statement of the parent company is not presented as part of these financial statements. |
12. | DIVIDENDS |
£ |
Interim | 35,680 |
13. | INTANGIBLE FIXED ASSETS |
Group |
Patents |
and | Computer |
Goodwill | licences | software | Totals |
£ | £ | £ | £ |
COST |
Additions | 6,829,765 | - | - | 6,829,765 |
Arising on acquisition | - | 57,531 | 51,754 | 109,285 |
At 28 February 2023 | 6,829,765 | 57,531 | 51,754 | 6,939,050 |
AMORTISATION |
Amortisation for period | 341,488 | 1,438 | 1,893 | 344,819 |
Arising on acquisition | - | 31,741 | 20,899 | 52,640 |
At 28 February 2023 | 341,488 | 33,179 | 22,792 | 397,459 |
NET BOOK VALUE |
At 28 February 2023 | 6,488,277 | 24,352 | 28,962 | 6,541,591 |
On 24 August 2022, Brand K Holdings Ltd acquired the shares of Brand K Ltd for a combined total cost of £8,160,675. This consisted of 4,080,338 shares, issued as a share for share exchange for 102 shares in Brand K Ltd, £1m as cash plus £3.5m as secured loan notes. Revenue of the acquired subsidiaries for the 6 months ending 28 February 2023 was £60.6m and loss after tax was £1.0m. Acquisition accounting has been applied. The assets and liabilities acquired were as follows: |
Carrying value | Fair value |
£ | £ |
Tangible fixed assets | 6,004,758 | 6,004,758 |
Stocks | 17,409,960 | 17,409,960 |
Debtors | 25,887,585 | 25,887,585 |
Cash at bank | 867,155 | 867,155 |
Creditors falling due within one year | (46,045,750 | ) | (46,045,750 | ) |
Creditors falling due after one year | (2,392,014 | ) | (2,392,014 | ) |
Provisions for liabilities | (400,784 | ) | (400,784 | ) |
Total identifiable assets and liabilities | 1,330,910 | 1,330,910 |
Goodwill | - | 6,829,765 |
1,330,910 | 8,160,675 |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
14. | TANGIBLE FIXED ASSETS |
Group |
Improvements | Fixtures |
to | Plant and | and |
property | machinery | fittings |
£ | £ | £ |
COST |
Additions | 8,027 | 74,329 | 203,220 |
Disposals | - | (4,326 | ) | (3,545 | ) |
Arising on acquisition | 627,106 | 8,583,495 | 1,917,561 |
At 28 February 2023 | 635,133 | 8,653,498 | 2,117,236 |
DEPRECIATION |
Charge for period | 27,964 | 324,104 | 64,696 |
Eliminated on disposal | - | (468 | ) | (2,796 | ) |
Arising on acquisition | 349,043 | 4,365,859 | 1,304,850 |
At 28 February 2023 | 377,007 | 4,689,495 | 1,366,750 |
NET BOOK VALUE |
At 28 February 2023 | 258,126 | 3,964,003 | 750,486 |
Motor | Computer |
vehicles | equipment | Totals |
£ | £ | £ |
COST |
Additions | 342,980 | 19,830 | 648,386 |
Disposals | (53,576 | ) | (15,733 | ) | (77,180 | ) |
Arising on acquisition | 294,172 | 1,034,610 | 12,456,944 |
At 28 February 2023 | 583,576 | 1,038,707 | 13,028,150 |
DEPRECIATION |
Charge for period | 46,756 | 24,166 | 487,686 |
Eliminated on disposal | (16,415 | ) | (12,858 | ) | (32,537 | ) |
Arising on acquisition | 81,990 | 407,092 | 6,508,834 |
At 28 February 2023 | 112,331 | 418,400 | 6,963,983 |
NET BOOK VALUE |
At 28 February 2023 | 471,245 | 620,307 | 6,064,167 |
The net book value of tangible fixed assets includes £577,689 in respect of assets held under hire purchase contracts. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
15. | FIXED ASSET INVESTMENTS |
Company |
Shares in |
group |
undertakings |
£ |
COST |
Additions |
At 28 February 2023 |
NET BOOK VALUE |
At 28 February 2023 |
The group or the company's investments at the Balance Sheet date in the share capital of companies include the following: |
Subsidiaries |
Registered office: Thistle Down Barn, Holcot Lane, Sywell, Northampton, Northamptonshire, NN6 0BG |
Nature of business: |
% |
Class of shares: | holding |
Registered office: Thistle Down Barn, Holcot Lane, Sywell, Northampton, Northamptonshire, NN6 0BG |
Nature of business: |
% |
Class of shares: | holding |
Shares are held by a subsidiary undertaking, Brand K Limited. |
Registered office: Unit 12 Manton Centre, Manton Lane, Manton Industrial Estate, Bedford, MK41 7PX |
Nature of business: |
% |
Class of shares: | holding |
Shares are held by a subsidiary undertaking, Brand K Limited. |
Brand K Holdings Ltd has provided a guarantee to its subsidiary, The Shower Tray Company Ltd, which is exempt from the requirements of the Act relating to the audit of individual accounts. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
15. | FIXED ASSET INVESTMENTS - continued |
Registered office: Unit 1-4 Whitehall Industrial Estate, Ashfield Way Farnley, Leeds, West Yorkshire, LS12 5JB |
Nature of business: |
% |
Class of shares: | holding |
Shares are held by a subsidiary undertaking, Brand K Limited. |
Registered office: Units 1-4 Whitehall Industrial Estate, Ashfield Way, Farnley, Leeds, West Yorkshire, LS12 5JB |
Nature of business: |
% |
Class of shares: | holding |
Shares are held by a subsidiary undertaking, JT Holdings (UK) Limited. |
Registered office: Units 1-4 Whitehall Industrial Estate, Ashfield Way, Farnley, Leeds, West Yorkshire, LS12 5JB |
Nature of business: |
% |
Class of shares: | holding |
Shares are held by a subsidiary undertaking, JT Group (UK) Limited. |
Registered office: Units 1-4 Whitehall Estate, Ashfield Way, Farnley, Leeds, West Yorkshire, LS12 5JB |
Nature of business: |
% |
Class of shares: | holding |
Shares are held by a subsidiary undertaking, JT Group (UK) Limited. |
Registered office: Units 1-4 Whitehall Industrial Estate, Ashfield Way, Farnley, Leeds, West Yorkshire, LS12 5JB |
Nature of business: |
% |
Class of shares: | holding |
Shares are held by a subsidiary undertaking, Just Trays Limited. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
15. | FIXED ASSET INVESTMENTS - continued |
Registered office: Units 1-4 Whitehall Industrial Estate, Ashfield Way, Farnley, Leeds, West Yorkshire, LS12 5JB |
Nature of business: |
% |
Class of shares: | holding |
Shares are held by a subsidiary undertaking, Choice Criteria Limited. |
Registered office: Units 1-4 Whitehall Industrial Estate, Ashfield Way, Farnley, Leeds, West Yorkshire, LS12 5JB |
Nature of business: |
% |
Class of shares: | holding |
Shares are held by a subsidiary undertaking, JT Group (UK) Limited. |
Registered office: 26 Springfield Way, Anlaby, East Yorkshire, HU10 6RJ |
Nature of business: |
% |
Class of shares: | holding |
Shares are held by a subsidiary undertaking, Brand K Limited. |
Brand K Holdings Ltd has provided a guarantee to its subsidiary, Summerbridge Holdings Ltd, which is exempt from the requirements of the Act relating to the audit of individual accounts. |
Registered office: 26 Springfield Way, Anlaby, East Yorkshire, HU10 6RJ |
Nature of business: |
% |
Class of shares: | holding |
Shares are held by a subsidiary undertaking, Summerbridge Holdings Limited. |
Registered office: Unit 20 Strawberry Lane Industrial Estate, Strawberry Lane, Willenhall, West Midlands, WV13 3RS |
Nature of business: |
% |
Class of shares: | holding |
Shares are held by a subsidiary undertaking, Brand K Limited. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
15. | FIXED ASSET INVESTMENTS - continued |
Registered office: 20 Strawberry Lane Industrial Estate, Strawberry Lane, Willenhall, West Midlands, WV13 3RS |
Nature of business: |
% |
Class of shares: | holding |
Shares are held by a subsidiary undertaking, Brand K Limited. |
Brand K Holdings Ltd has provided a guarantee to its subsidiary, UK Bespoke Products Ltd, which is exempt from the requirements of the Act relating to the audit of individual accounts. |
All companies above are incorporated in England and Wales. |
16. | INVESTMENT PROPERTY |
Group |
Total |
£ |
FAIR VALUE |
Additions | 1,537,298 |
At 28 February 2023 | 1,537,298 |
NET BOOK VALUE |
At 28 February 2023 | 1,537,298 |
The investment property was purchased during the period for £1,537,298 and in the director's opinion there has been no significant change in valuation since it was purchased. |
Company |
Total |
£ |
FAIR VALUE |
Additions |
At 28 February 2023 |
NET BOOK VALUE |
At 28 February 2023 |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
17. | STOCKS |
Group |
£ |
Raw materials | 2,022,228 |
Work-in-progress | 162,290 |
Finished goods | 17,041,768 |
19,226,286 |
18. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
Group | Company |
£ | £ |
Trade debtors | 19,252,807 |
Amounts owed by group undertakings | - |
Other debtors | 306,472 |
VAT | 92,637 | - |
Tax | 223,063 |
Called up share capital not paid | 102 |
Prepayments | 1,567,916 |
21,442,997 |
Included within trade debtors is £17,125,165 which form part of a confidential invoice discounting facility. |
19. | CASH AT BANK AND IN HAND |
The group cash at bank and in hand balance of £3,212,004 includes a deposit of £2,800,000 (2022 - £nil) which is reserved for use against the group's obligations under derivative contracts, see Note 29 for more details. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
20. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
Group | Company |
£ | £ |
Bank loans and overdrafts (see note 22) | 3,826,667 |
Other loans (see note 22) | 15,684,968 |
Hire purchase contracts (see note 23) | 299,507 |
Trade creditors | 19,874,768 |
Amounts owed to group undertakings | - |
Tax | 37,093 |
Social security and other taxes | 381,127 |
VAT | 2,340,342 | - |
Other creditors | 1,830,868 |
Directors' current accounts | 812 | 812 |
Accrued expenses | 2,836,278 |
Obligation under derivative |
contracts | 1,820,320 |
48,932,750 |
Details of the obligations under derivative contracts can be found in Note 29. |
21. | CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |
Group | Company |
£ | £ |
Bank loans (see note 22) | 533,187 |
Other loans (see note 22) | 2,019,556 |
Hire purchase contracts (see note 23) | 712,172 |
Obligation under derivative |
contracts | 3,132,445 |
6,397,360 |
Details of the obligations under derivative contracts can be found in Note 29. |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
22. | LOANS |
An analysis of the maturity of loans is given below: |
Group | Company |
£ | £ |
Amounts falling due within one year or on | demand: |
Bank loans | 3,826,667 |
Other loans | 1,580,459 |
Confidential invoice discounting | 14,104,509 | - |
19,511,635 |
Amounts falling due between one and two years: |
Bank loans - 1-2 years | 510,000 |
Other loans - 1-2 years | 1,096,800 | 1,096,800 |
1,606,800 |
Amounts falling due between two and five years: |
Bank loans - 2-5 years | 23,187 |
Other loans - 2-5 years | 922,756 |
945,943 |
23. | LEASING AGREEMENTS |
Minimum lease payments fall due as follows: |
Group |
Hire |
purchase |
contracts |
£ |
Net obligations repayable: |
Within one year | 299,507 |
Between one and five years | 712,172 |
1,011,679 |
Group |
Non- cancellable | operating leases |
£ |
Within one year | 2,617,900 |
Between one and five years | 4,956,825 |
In more than five years | 2,802,958 |
10,377,683 |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
24. | SECURED DEBTS |
The following secured debts are included within creditors: |
Group | Company |
£ | £ |
Bank loans | 4,359,854 |
Other loans | 3,600,015 | 3,116,356 |
Hire purchase contracts | 1,011,679 | - |
Invoice discounting | 14,104,509 | - |
23,076,057 |
The obligations under hire purchase contracts are secured on the assets to which they relate. |
The Group 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 the Brand K Group facility of up to £23.6m. The group facilities include invoice discounting over receivables of up to £21.5m, in aggregate with an inventory facility of up to £5m, a cashflow facility of up to £1.16m and a hire purchase agreement with a purchase price of £1m. The cashflow facility is repayable in instalments up to the date of termination of the overall facility. The advance rate for the invoice discounting facility is 85%. There is a group cross guarantee in place as security for the charge. The bank also holds a right of group set-off. |
Post period end, the group entered a new facility agreement up to £32.9m. It includes 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 period end across the group are as follows: confidential invoice discounting facility: £14.1m, inventory facility: £3.2m, cashflow facility: £1.2m and hire purchase balance: £0.7m. |
A former shareholder of the subsidiary, Brand K Limited, holds a charge over 50% of the entire share capital of Brand K Limited. The amount outstanding as at 28 February 2023, discounted to present value and included in Other loans, was £3,116,356. |
Bridegwood Holdings Ltd and SLD 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. |
25. | PROVISIONS FOR LIABILITIES |
Group |
£ |
Deferred tax | 215,468 |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
25. | PROVISIONS FOR LIABILITIES - continued |
Group |
Deferred |
tax |
£ |
Balance on acquisition | 400,784 |
Movement during the period | (185,316 | ) |
Balance at 28 February 2023 | 215,468 |
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. |
26. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal Value: | £ |
4,080,339 | Ordinary | £1 | 4,080,339 |
1 Ordinary share was issued at par on 14 March 2022 on incorporation of the company. On 24 August 2022 a further 4,080,338 shares were issued in a share for share exchange for 102 shares in Brand K Ltd (100 Ordinary £1 shares and 2 Ordinary A £1 shares). |
27. | RESERVES |
Group |
Retained |
earnings |
£ |
Deficit for the period | (1,565,894 | ) |
Dividends | (35,680 | ) |
At 28 February 2023 | (1,601,574 | ) |
Company |
Retained |
earnings |
£ |
Profit for the period |
Dividends | ( |
) |
At 28 February 2023 |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
28. | PENSION COMMITMENTS |
The Group operates defined contribution pension schemes for the benefit of its employees. At the period end, there are outstanding contributions payable to the pension provider of £55,587. |
29. | OTHER COMMITMENTS |
A group company has entered into contractual commitments regarding financial derivatives. The total estimated fair value of these foreign currency derivative contracts as at 28 February 2023 is £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 post acquisition of £5,152,461 included in the Consolidated Statement of Comprehensive Income (see note 8). The contracts outstanding at the period 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 group 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 group 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 group 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 group has the right to exchange in the spot market. If the spot rate is below the 'European Knock In' rate, the group 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 group, 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 group has a contract with a provider of the financial derivatives contracts which requires a margin of £400,000 be paid by the group 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 group. |
For further information see group strategic report. |
30. | RELATED PARTY DISCLOSURES |
During the period, total dividends of £35,680 were paid to the director . |
BRAND K HOLDINGS LTD (REGISTERED NUMBER: 13974101) |
Notes to the Consolidated Financial Statements - continued |
for the period 14 MARCH 2022 TO 28 FEBRUARY 2023 |
30. | RELATED PARTY DISCLOSURES - continued |
During the period, the Group made purchases totalling £3,265,325 from companies with a connected person as director. At the period end, the Group owed a company with a common director £964,415. |
31. | POST BALANCE SHEET EVENTS |
Since period end, the Group have acquired a new subsidiary, Marleton Cross Limited, for a purchase price of £4.1m. Turnover reported in that company's latest financial statements for the year ended 31 December 2022 was £20.6m. The registered office for the subsidiary is Thistle Down Barn, Sywell, Northampton, NN6 0BG. |
32. | CONTROLLING PARTY |
The controlling party is A D Norford. |