Company registration number 11127556 (England and Wales)
NANUSHKA LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NANUSHKA LIMITED
COMPANY INFORMATION
Director
P Baldaszti
Company number
11127556
Registered office
6th Floor
Manfield House
1 Southampton Street
London
WC2R 0LR
Auditor
Alliotts LLP
Manfield House
1 Southampton Street
London
WC2R 0LR
Business address
30 Bruton Street
Mayfair
London
W1J 6QR
NANUSHKA LIMITED
CONTENTS
Page
Director's report
1 - 2
Independent auditor's report
3 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Notes to the financial statements
10 - 21
NANUSHKA LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The director presents his annual report and financial statements for the year ended 31 December 2022.
Principal activities
The principal activity of the company continued to be that of retail sale of clothing.
Results and dividends
The results for the year are set out on page 7.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
P Baldaszti
Statement of director's responsibilities
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Small companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
NANUSHKA LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
On behalf of the board
P Baldaszti
Director
6 March 2024
NANUSHKA LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF NANUSHKA LIMITED
- 3 -
Opinion
We have audited the financial statements of Nanushka Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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.
Material uncertainty relating to going concern.
We draw attention to Note 1.2 to the financial statements, which indicate that the company incurred a net loss of £1.16m and, as of that date, the company’s net current liabilities are £889,000. As further described in that note, the Group’s cashflow projections indicate that additional finance of €5.5m needs to be raised by the Group to provide the company with sufficient resources to continue its strategy and to ensure it is able to operate. The Group’s cashflow projections show significant increases in sales over the next 12 months which are required for the Group to be able to generate sufficient cash to continue in operation and to support the Company.
Whilst the successful completion of this investment round by the Group cannot be certain, the Directors are confident that the Group will secure the necessary funding shortly. The projections also have the inherent uncertainties as noted at 1.2.
These conditions indicate a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
NANUSHKA LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF NANUSHKA LIMITED
- 4 -
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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the director's report has been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the director's report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit; or
the director was not entitled to take advantage of the small companies exemption from the requirement to prepare a strategic report.
Responsibilities of director
As explained more fully in the director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
NANUSHKA LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF NANUSHKA LIMITED
- 5 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the clothing and retail sector
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation and data protection, anti-bribery and employment legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management
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;
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and
understanding the design of the company’s remuneration policies.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
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.
Audit response to risks identified
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 member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to the member in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's member, for our audit work, for this report, or for the opinions we have formed.
NANUSHKA LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF NANUSHKA LIMITED
- 6 -
Sudheer Gupta BA FCA
Senior Statutory Auditor
For and on behalf of Alliotts LLP
7 March 2024
Chartered Accountants
Statutory Auditor
Manfield House
1 Southampton Street
London
WC2R 0LR
NANUSHKA LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 7 -
2022
2021
Notes
£
£
Turnover
3
2,981,577
1,750,331
Cost of sales
(618,335)
(280,739)
Gross profit
2,363,242
1,469,592
Administrative expenses
(3,358,835)
(2,234,189)
Other operating income
32,221
Operating loss
4
(995,593)
(732,376)
Interest payable and similar expenses
6
(167,049)
(133,691)
Loss before taxation
(1,162,642)
(866,067)
Tax on loss
7
Loss for the financial year
(1,162,642)
(866,067)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
NANUSHKA LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 8 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
8
2,264,061
2,428,845
Current assets
Stocks
9
356,167
384,441
Debtors
10
2,764,698
1,463,489
Cash at bank and in hand
33,913
25,717
3,154,778
1,873,647
Creditors: amounts falling due within one year
11
(4,043,734)
(2,566,129)
Net current liabilities
(888,956)
(692,482)
Total assets less current liabilities
1,375,105
1,736,363
Creditors: amounts falling due after more than one year
12
(4,914,509)
(4,113,125)
Net liabilities
(3,539,404)
(2,376,762)
Capital and reserves
Called up share capital
15
1,000
1,000
Profit and loss reserves
(3,540,404)
(2,377,762)
Total equity
(3,539,404)
(2,376,762)
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true
The financial statements were approved and signed by the director and authorised for issue on 6 March 2024
P Baldaszti
Director
Company registration number 11127556 (England and Wales)
NANUSHKA LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2021
1,000
(1,511,695)
(1,510,695)
Year ended 31 December 2021:
Loss and total comprehensive income
-
(866,067)
(866,067)
Balance at 31 December 2021
1,000
(2,377,762)
(2,376,762)
Year ended 31 December 2022:
Loss and total comprehensive income
-
(1,162,642)
(1,162,642)
Balance at 31 December 2022
1,000
(3,540,404)
(3,539,404)
NANUSHKA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 10 -
1
Accounting policies
Company information
Nanushka Limited is a private company limited by shares incorporated in England and Wales. The registered office is 6th Floor, Manfield House, 1 Southampton Street, London, WC2R 0LR. The principal place of business is 30 Bruton Street, Mayfair, London, W1J 6QR.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of The smallest group into which the entity is consolidated is Nanushka International Zártkörűen Működő Részvénytársaság. These consolidated financial statements are available from its registered office.
NANUSHKA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 11 -
1.2
Going concern
In determining the appropriate basis of preparation of the financial statements, the directors are required to consider whether the Company can continue in operational existence for the foreseeable future, being a minimum period of 12 months from the date of approval of the financial statements.
During the year, the Company made a loss before tax of £1.162 million and had net current liabilities of £0.9m on 31 December 2022. On 31 December 2022 the Company had cash in hand of £33,913. Similar losses continued in the following year. Forecasting calculations indicate that despite the initial challenges, the store will exhibit an improving trend going forward. The improving trend and strengthening market presence are justified by the following factors: The London store opened in the second half of 2020, which was one of the most challenging years for the fashion industry due to the COVID-19 pandemic, evidenced by nearly one-third of publicly traded companies ending the year in losses. In 2021, the slow recovery of the market environment began as travel and trade restrictions were gradually lifted in more regions. Chinese travellers are returning to the global luxury market, significantly boosting sales at the London store. Demand for the company's products did not decrease in 2022; in fact, due to the luxury nature of the products, the demand increased even though the company was able to supply fewer products to the market in 2022, leading to increased demand. During the past year, the parent company faced cash flow difficulties, resulting in inadequate and untimely supply of inventory to the London store. External financial assistance was sought to address this issue, and production began to operate at the appropriate pace during 2023. Consequently, products can be delivered on time in 2024, facilitating the realisation of planned revenue. In summary, based on the aforementioned facts, along with analyses of neighbouring stores and markets, the established business plan is expected to generate profit in the coming years.
Management has considered the Company’s and the Group’s financial performance since the balance sheet date and has prepared cash flow projections through to 31 March 2025 for the Group, which indicates that additional finance of €5.5m will be raised to provide the resources necessary to execute its strategy and ensure that the Group and Company can continue to operate as a going concern. The Group is in discussions with investors at the date of signing of these financial statements and these negotiations are in an advance state.
The Cash flows of the group show significant increases in sales predicted in the coming year and these increased sales together with the anticipated funding is essential for the company to continue as a going concern. Cash flow projections inherently involve a level of judgments and assumptions as to existing and future product performance. Management is confident that the financing will be received subsequent to the signing of the accounts and the negotiations are currently at an advanced stage, and that these cash reserves along with anticipated increases in sales, will provide the Group, and therefore the Company, with sufficient liquidity to continue to operate.
The requirement for additional investment and the ability to deliver on the projections themselves are conditions that indicate the existence of material uncertainties, which may cast significant doubt about the Company’s ability to continue as a going concern. Nevertheless, after considering the uncertainties described above, the directors have a reasonable expectation that the Company can continue in operational existence for the foreseeable future. It is on this basis that the directors consider it appropriate to prepare the financial statements on a going concern basis. The financial statements do not include the adjustments that would result if the Company were unable to continue as a going concern.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
NANUSHKA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 12 -
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 improvements
4-7% on cost
Plant and equipment
25% on cost
Fixtures and fittings
33% on cost
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.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
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.
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
NANUSHKA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
1.8
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.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
NANUSHKA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.10
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.11
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
NANUSHKA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
1.12
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.13
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is 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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Stock valuation
The stock is valued at the lower of cost and net realisable value. Net realisable value includes, where necessary, provisions for slow moving and obsolete stocks. Calculation of these provisions requires judgements to be made, which include forecast consumer demand, the promotional, competitive and economic environment and inventory loss trends.
Impairment review
The Company has an impairment assessment policy designed to ensure accurate financial reporting by promptly recognising and measuring potential losses impacting the carrying values of its assets. The responsibility for coordinating and conducting these assessments lies with the relevant department or position. The process involves monitoring changes in circumstances, gathering pertinent information, determining recoverable amounts through unbiased analysis, and recognising impairment losses when necessary.
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.
Depreciation rates
The director has decided to use the depreciation rates set out in note 1.4. As there are a variety of assets with varying useful expected lives, the director will continue to review the rates used annually.
NANUSHKA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 16 -
3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by class of business
Sales
1,632,129
897,045
Intercompany recharges
1,349,448
853,286
2,981,577
1,750,331
2022
2021
£
£
Other significant revenue
Grants received
-
32,221
2022
2021
£
£
Turnover analysed by geographical market
United Kingdom
1,632,129
897,045
European Union
1,349,448
853,286
2,981,577
1,750,331
4
Operating loss
2022
2021
Operating loss for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
68,475
(44,407)
Government grants
-
(32,221)
Fees payable to the company's auditor for the audit of the company's financial statements
20,600
19,250
Depreciation of owned tangible fixed assets
198,901
118,164
Operating lease charges
482,386
480,885
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Employees
26
17
NANUSHKA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
5
Employees
(Continued)
- 17 -
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
1,556,697
1,077,893
Social security costs
163,511
103,738
Pension costs
18,738
11,827
1,738,946
1,193,458
6
Interest payable and similar expenses
2022
2021
£
£
Other interest on financial liabilities
167,049
133,691
7
Taxation
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Loss before taxation
(1,162,642)
(866,067)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
(220,902)
(164,553)
Tax effect of expenses that are not deductible in determining taxable profit
15,773
30,047
Unutilised tax losses carried forward
175,982
139,663
Permanent capital allowances in excess of depreciation
29,147
(5,157)
Taxation charge for the year
-
-
At the year-end date, the company had unutilised tax losses of £2,881,515 (2021: £2,341,376) that have not been recognised as a deferred tax asset.
NANUSHKA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
8
Tangible fixed assets
Leasehold improvements
Plant and equipment
Fixtures and fittings
Total
£
£
£
£
Cost
At 1 January 2022
2,447,928
25,985
78,523
2,552,436
Additions
6,373
17,180
10,564
34,117
At 31 December 2022
2,454,301
43,165
89,087
2,586,553
Depreciation and impairment
At 1 January 2022
95,328
7,173
21,090
123,591
Depreciation charged in the year
158,559
9,040
31,302
198,901
At 31 December 2022
253,887
16,213
52,392
322,492
Carrying amount
At 31 December 2022
2,200,414
26,952
36,695
2,264,061
At 31 December 2021
2,352,600
18,812
57,433
2,428,845
9
Stocks
2022
2021
£
£
Finished goods and goods for resale
356,167
384,441
10
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
73,009
36,170
Amounts owed by group undertakings
2,144,992
882,421
Other debtors
356,840
406,246
Prepayments and accrued income
189,857
138,652
2,764,698
1,463,489
NANUSHKA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 19 -
11
Creditors: amounts falling due within one year
2022
2021
£
£
Trade creditors
845,199
273,208
Amounts owed to group undertakings
2,137,862
1,239,504
Taxation and social security
283,034
43,466
Other creditors
106,272
275,358
Accruals and deferred income
671,367
734,593
4,043,734
2,566,129
12
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Other borrowings
13
4,541,559
4,113,125
Accruals and deferred income
372,950
4,914,509
4,113,125
13
Loans and overdrafts
2022
2021
£
£
Other loans
4,541,559
4,113,125
Payable after one year
4,541,559
4,113,125
The long-term loans are provided by the parent company Nanushka International Zártkörűen Működő Részvénytársaság at an annual interest rate of 3.85% and have a repayment date of 31 December 2024.
14
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
18,738
11,827
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.
NANUSHKA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
15
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of £1 each
1,000
1,000
1,000
1,000
The ordinary shares have full rights in the company with respect to voting, dividend, and distributions.
16
Operating lease commitments
Lessee
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:
2022
2021
£
£
Within one year
525,000
525,000
Between two and five years
2,100,000
2,100,000
In over five years
1,575,000
2,100,000
4,200,000
4,725,000
17
Related party transactions
2022
2021
Amounts due to related parties
£
£
Entities with control, joint control or significant influence over the company
6,679,421
5,558,525
The following amounts were outstanding at the reporting end date:
2022
2021
Amounts due from related parties
£
£
Entities with control, joint control or significant influence over the company
2,144,992
882,421
NANUSHKA LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
18
Ultimate controlling party
Nanushka Limited is 100% owned by Nanushka International Zártkörűen Működő Részvénytársaság, a company registered in Hungary at 1122 Budapest, Városmajor utca 12-14 C. Ép, under the registration number: 01-10-049880.
The majority owner of Nanushka International Zrt. Is Vanguards Fashion Group Zártkörűen Működő Részvénytársaság, which is majority owned by Exim Cross-Border PE Fund, managed by GB & Partners Kockázati-Tőkealapkezelő Zártkörűen Működő Részvénytársaság, a company registered in Hungary at 1122 Budapest, Városmajor utca 12-14 C. Ép, under the registration number: 01-10-047426.
The smallest group into which the entity is consolidated is Nanushka International Zártkörűen Működő Részvénytársaság.
The largest group into which the entity is consolidated is Exim Cross-Border PE Fund, managed by GB & Partners Kockázati-Tőkealapkezelő Zártkörűen Működő Részvénytársaság.
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