Company registration number 02182529 (England and Wales)
ARIAT EUROPE LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
ARIAT EUROPE LTD
COMPANY INFORMATION
Directors
E Cross
A V Hagen
T A Levy
M T M Inglis
Company number
02182529
Registered office
Princes Manor Barn, Reading Road
Harwell
Didcot
Oxfordshire
OX11 0LU
Auditor
Critchleys Audit LLP
Beaver House
23-38 Hythe Bridge Street
Oxford
OX1 2EP
ARIAT EUROPE LTD
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Profit and loss account
7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 23
ARIAT EUROPE LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 1 -
The directors present the strategic report for the year ended 30 June 2023.
Review of the business
In FY23 Ariat Europe experienced a challenging year compared to the previous year in both the Ecom and wholesale channels. The economic downturn and loss in consumer confidence has resulted in slowdown of customer orders as sell through of stock has reduced. However, alongside this, the business has invested in the mainland European business by opening a new subsidiary company, AriatEU B.V., from which we can service our EU customers. This not only improves our service to our EU customers but also mitigates and removes much of the increased costs related to trading with Europe post Brexit. Ariat Europe Ltd owns 100% of AriatEU B.V. The brand remains strong in the UK and many EU countries, but with the economic climate & consumer confidence not yet showing strong signs of recovery, FY24 is expected at similar levels as FY23. The business though will remain focused on growth of the brand, our consumer and operational excellence.
The main financial key performance indicators that are used to monitor business performance are sales, gross profit margin, EBITDA and inventory turnover. The directors are fully satisfied with the results for the year against key performance indicators.
Principal risks and uncertainties
Ariat Europe’s business activities exposed it to the post-Brexit trade arrangements and its implications which had driven increased complexity & cost. In FY24, the operational efficiencies offered by having a successful operation set up in the EU will help mitigate this risk by focusing on developing an operating structure to minimise these impacts while keeping service levels high for customers.
The significant increases in inflation and subsequent increased cost of living could result in consumer demand shifting with buying behaviour becoming more cautious and consumer spend focusing more on key elements of cost of living. Operating costs will be under constant review to ensure we balance the need to keep operating costs in line with business activity while ensuring we are investing for growth of the brand in the future.
The business principal financial instruments comprise bank balances, trade debtors and trade creditors. The main purpose of these instruments is to finance the business operations.
In respect of bank balances, the liquidity risk is managed by ensuring that all the business cash balances are held in such a way that achieves a competitive rate of interest. Liquidity is guaranteed by parent company by providing company internal loans at market competitive interest rates.
Due to the company operating in overseas countries, mainly mainland Europe, there was an exchange rate risk during FY23, this risk is managed through application of a prudent currency exchange risk policy which is reviewed annually. These exchange rate losses will reduce in FY24 with the introduction of the new EU business.
Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. The amounts presented in the balance sheet are net of allowances for doubtful debtors. We have been prudent with regard to our bad debt provision.
Trade creditors liquidity risk is managed by ensuring sufficient funds are available to meets amounts due.
A V Hagen
Director
19 October 2023
ARIAT EUROPE LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 2 -
The directors present their annual report and financial statements for the year ended 30 June 2023.
Principal activities
The principal activity of the company is that of the sale, marketing and distribution of equestrian and country outdoor footwear, apparel and accessories.
Results and dividends
The results for the year are set out on page 7.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
E Cross
A V Hagen
T A Levy
M T M Inglis
Financial instruments
Objectives and policies
The business' principal financial instruments comprise bank balances, trade debtors and trade creditors. The main purpose of these instruments is to finance the business' operations.
Price risk, credit risk, liquidity risk and cash flow risk
In respect of bank balances, the liquidity risk is managed by ensuring that all of the business' cash balances are held in such a way that achieves a competitive rate of interest.
Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. The amounts presented in the balance sheet are net of allowances for doubtful debtors.
Trade creditors' liquidity risk is managed by ensuring sufficient funds are available to meet amounts due.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
A V Hagen
Director
19 October 2023
ARIAT EUROPE LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
- 3 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are 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 directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
ARIAT EUROPE LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ARIAT EUROPE LTD
- 4 -
Opinion
We have audited the financial statements of Ariat Europe Ltd (the 'company') for the year ended 30 June 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 30 June 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.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
ARIAT EUROPE LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ARIAT EUROPE LTD
- 5 -
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 directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our knowledge and experience;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence where applicable; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
ARIAT EUROPE LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ARIAT EUROPE LTD
- 6 -
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims;
reviewing relevant correspondence.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Katherine Wilkes
Senior Statutory Auditor
For and on behalf of Critchleys Audit LLP
20 October 2023
Chartered Accountants
Statutory Auditor
Beaver House
23-38 Hythe Bridge Street
Oxford
OX1 2EP
ARIAT EUROPE LTD
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 2023
- 7 -
2023
2022
Notes
£
£
Turnover
3
26,966,709
29,566,352
Cost of sales
(16,442,791)
(17,721,220)
Gross profit
10,523,918
11,845,132
Distribution costs
(4,207,361)
(4,117,895)
Administrative expenses
(6,374,585)
(7,558,574)
Other operating income
59,843
68,946
Operating profit
4
1,815
237,609
Interest receivable and similar income
6
34,448
1,173
Profit before taxation
36,263
238,782
Tax on profit
9
15,580
(51,039)
Profit for the financial year
51,843
187,743
The profit and loss account has been prepared on the basis that all operations are continuing operations.
ARIAT EUROPE LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
- 8 -
2023
2022
£
£
Profit for the year
51,843
187,743
Other comprehensive income
-
-
Total comprehensive income for the year
51,843
187,743
ARIAT EUROPE LTD
BALANCE SHEET
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
442,173
521,496
Investments
11
10
442,183
521,496
Current assets
Stocks
13
11,283,874
10,844,724
Debtors
14
6,619,015
2,102,500
Cash at bank and in hand
3,553,069
5,616,693
21,455,958
18,563,917
Creditors: amounts falling due within one year
15
(17,139,714)
(14,310,496)
Net current assets
4,316,244
4,253,421
Total assets less current liabilities
4,758,427
4,774,917
Creditors: amounts falling due after more than one year
16
(68,333)
Net assets
4,758,427
4,706,584
Capital and reserves
Called up share capital
19
6,000,436
6,000,436
Share premium account
219,685
219,685
Profit and loss reserves
(1,461,694)
(1,513,537)
Total equity
4,758,427
4,706,584
The financial statements were approved by the board of directors and authorised for issue on 19 October 2023 and are signed on its behalf by:
A V Hagen
Director
Company registration number 02182529 (England and Wales)
ARIAT EUROPE LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 10 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 July 2021
6,000,436
219,685
(1,701,280)
4,518,841
Year ended 30 June 2022:
Profit and total comprehensive income
-
-
187,743
187,743
Balance at 30 June 2022
6,000,436
219,685
(1,513,537)
4,706,584
Year ended 30 June 2023:
Profit and total comprehensive income
-
-
51,843
51,843
Balance at 30 June 2023
6,000,436
219,685
(1,461,694)
4,758,427
ARIAT EUROPE LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
23
(1,921,868)
1,493,339
Income taxes paid
(3,600)
(13,632)
Net cash (outflow)/inflow from operating activities
(1,925,468)
1,479,707
Investing activities
Purchase of tangible fixed assets
(173,027)
(316,554)
Proceeds from disposal of tangible fixed assets
433
1,842
Proceeds from disposal of subsidiaries
(10)
Interest received
34,448
1,173
Net cash used in investing activities
(138,156)
(313,539)
Net (decrease)/increase in cash and cash equivalents
(2,063,624)
1,166,168
Cash and cash equivalents at beginning of year
5,616,693
4,450,525
Cash and cash equivalents at end of year
3,553,069
5,616,693
ARIAT EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 12 -
1
Accounting policies
Company information
Ariat Europe Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Princes Manor Barn, Reading Road, Harwell, Didcot, Oxfordshire, OX11 0LU.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, except that as disclosed in the accounting policies certain items are shown at fair value. The principal accounting policies adopted are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
Ariat Europe Ltd is a wholly owned subsidiary of Ariat International Inc and the results of Ariat Europe Ltd are included in the consolidated financial statements of Ariat International Inc which are available from 1300 Evans Ave No.880154, San Francisco, CA, 94188, USA.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover comprises the fair value of the consideration received or receivable for the sale of merchandise in the ordinary course of the company’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts.
The company recognises revenue when:
The amount of revenue can be reliably measured;
it is probable that future economic benefits will flow to the entity;
and specific criteria have been met for each of the company's activities.
Revenue from the sale of merchandise to retailers and other customers is recognised on the day of dispatch from Ariat to the customer.
1.4
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred.
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.
ARIAT EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 13 -
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold land and buildings
20% straight line
Fixtures and fittings
20% straight line
Office equipment
33.3% straight line
Motor vehicles
25% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in, first-out (FIFO) method.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.8
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
ARIAT EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 14 -
Basic financial assets
Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business. Trade debtors are recognised initially at the transaction price.
A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Basic financial liabilities
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
ARIAT EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 15 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
Equity instruments
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax is recognised in respect of all timing differences between taxable profits and profits reported in the financial statements.
Unrelieved tax losses and other deferred tax assets are recognised when it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference.
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.
1.14
Leases
Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.
ARIAT EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 16 -
1.15
Foreign exchange
Profit and loss account transactions in foreign currencies are translated into sterling at the exchange rate ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the closing rates at the balance sheet date and the exchange differences are included in the profit and loss account.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount 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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Useful economic lives
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives. Land element is considered to have unlimited useful life and therefore not depreciated.
Bad debt provision
A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.
Stock provision
A provision has made at the year end to account for obsolete and slow moving stock based on historical sales data and how long stock has been held for across the various stock categories.
3
Revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Sale of goods
26,966,709
29,566,352
In the directors opinion disclosure of the company's geographical analysis of turnover for each market would be seriously prejudicial to the company's interest and therefore no such disclosure has been made.
ARIAT EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 17 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
(7,849)
267,933
Research and development costs
3,435
2,691
Fees payable to the company's auditor for the audit of the company's financial statements
14,150
13,550
Depreciation of owned tangible fixed assets
252,350
206,820
Profit on disposal of tangible fixed assets
(433)
(1,842)
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Administration and support
22
17
Sales, marketing and distribution
34
31
Other departments
14
16
Total
70
64
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
4,509,538
4,450,354
Social security costs
407,334
421,059
Pension costs
132,679
114,280
5,049,551
4,985,693
6
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
34,448
1,173
ARIAT EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 18 -
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
800,596
721,738
Company pension contributions to defined contribution schemes
39,767
36,019
840,363
757,757
The number of company directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
318,972
295,590
Company pension contributions to defined contribution schemes
13,586
13,001
8
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
14,150
13,550
9
Taxation
2023
2022
£
£
Current tax
Double tax relief
3,599
13,631
Deferred tax
Origination and reversal of timing differences
(19,179)
37,408
Total tax (credit)/charge
(15,580)
51,039
ARIAT EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
9
Taxation
(Continued)
- 19 -
The actual (credit)/charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
36,263
238,782
Expected tax charge based on the standard rate of corporation tax in the UK of 20.50% (2022: 19.00%)
7,434
45,369
Tax effect of expenses that are not deductible in determining taxable profit
466
Tax effect of income not taxable in determining taxable profit
(10,474)
Tax effect of utilisation of tax losses not previously recognised
(20,234)
Change in unrecognised deferred tax assets
37,408
Adjustments in respect of prior years
451
Effect of change in corporation tax rate
(3,533)
Group relief
3,266
Permanent capital allowances in excess of depreciation
(25,601)
Tax increase (decrease) arising from overseas tax suffered/expensed
992
13,631
Other tax effects for reconiliation between accounting profit and tax expense
(13,716)
Taxation (credit)/charge for the year
(15,580)
51,039
10
Tangible fixed assets
Leasehold land and buildings
Fixtures and fittings
Office equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 July 2022
94,456
550,458
1,377,256
9,995
2,032,165
Additions
27,349
145,678
173,027
At 30 June 2023
94,456
577,807
1,522,934
9,995
2,205,192
Depreciation and impairment
At 1 July 2022
94,453
356,336
1,050,299
9,581
1,510,669
Depreciation charged in the year
3
65,243
186,690
414
252,350
At 30 June 2023
94,456
421,579
1,236,989
9,995
1,763,019
Carrying amount
At 30 June 2023
156,228
285,945
442,173
At 30 June 2022
3
194,122
326,957
414
521,496
ARIAT EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 20 -
11
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
12
10
Movements in fixed asset investments
Shares in subsidiaries
£
Cost or valuation
At 1 July 2022
-
Additions
10
At 30 June 2023
10
Carrying amount
At 30 June 2023
10
At 30 June 2022
-
12
Subsidiaries
Details of the company's subsidiaries at 30 June 2023 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Ariat EU BV
Netherlands
Ordinary shares
100.00
13
Stocks
2023
2022
£
£
Finished goods and goods for resale
11,283,874
10,844,724
ARIAT EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 21 -
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,232,609
1,832,633
Amounts owed by group undertakings
5,015,859
Other debtors
23,153
4,824
Prepayments and accrued income
309,634
246,463
6,581,255
2,083,920
Deferred tax asset (note 17)
37,760
18,580
6,619,015
2,102,500
15
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
1,195,381
531,106
Amounts owed to related parties
14,677,585
11,390,779
Social security and other taxes
140,594
333,526
Other creditors
20,544
245,931
Accruals
1,105,610
1,809,154
17,139,714
14,310,496
16
Creditors: amounts falling due after more than one year
2023
2022
£
£
Accruals
68,333
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2023
2022
Balances:
£
£
Accelerated capital allowances and losses
37,760
18,580
ARIAT EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
17
Deferred taxation
(Continued)
- 22 -
2023
Movements in the year:
£
Asset at 1 July 2022
(18,580)
Credit to profit or loss
(19,180)
Asset at 30 June 2023
(37,760)
The UK corporation tax rate of 19% is set to increase to 25% from 1 April 2023. The legislation to effect these changes was enacted before the balance sheet date and UK deferred tax has been calculated accordingly.
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
132,679
114,280
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
Contributions totalling £20,028 (2022 - £17,636) were payable to the scheme at the end of the year and are included in creditors.
19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of 1p each
600,043,622
600,043,622
6,000,436
6,000,436
20
Operating lease commitments
Lessee
Amounts recognised in profit or loss as an expense during the period in respect of operating lease arrangements was £196,955 (2022 - £220,137).
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
110,463
163,609
Between two and five years
137,894
246,761
248,357
410,370
ARIAT EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 23 -
21
Related party transactions
Remuneration of key management personnel
There are no key management personnel requiring disclosure other than the directors of the company whose remuneration is disclosed in the directors' remuneration note.
22
Ultimate controlling party
The company's immediate parent is Ariat International Inc, incorporated in USA. The registered address is 3242 Whipple Road, Union City, CA, 94587.
Lipizzaner Inc is the ultimate controlling party and the largest group for which group accounts including the company are drawn up. The registered address is 1300 Evans Ave No.880154, San Francisco, CA, 94188, USA.
23
Cash (absorbed by)/generated from operations
2023
2022
£
£
Profit for the year after tax
51,843
187,743
Adjustments for:
Taxation (credited)/charged
(15,580)
51,039
Investment income
(34,448)
(1,173)
Gain on disposal of tangible fixed assets
(433)
(1,842)
Depreciation and impairment of tangible fixed assets
252,350
206,820
Movements in working capital:
Increase in stocks
(439,150)
(4,774,113)
Increase in debtors
(4,497,335)
(629)
Increase in creditors
2,760,885
5,825,494
Cash (absorbed by)/generated from operations
(1,921,868)
1,493,339
ARIAT EUROPE LTD
Management Information
For The Year Ended 30 June 2023
The following pages do not form part of the statutory financial statements.
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