Company registration number 11784588 (England and Wales)
KARO HEALTHCARE UK LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
KARO HEALTHCARE UK LTD
COMPANY INFORMATION
Directors
J Aspin
C M Lorenzen
J Raniga
Company number
11784588
Registered office
The Pearce Building
4th Floor
West Street
Maidenhead
Berkshire
SL6 1RL
Auditor
Azets Audit Services
Suites B & D
Burnham Yard
London End
Beaconsfield
Buckinghamshire
United Kingdom
HP9 2JH
KARO HEALTHCARE UK LTD
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Income statement
8
Statement of financial position
9
Statement of changes in equity
10
Notes to the financial statements
11 - 19
KARO HEALTHCARE UK LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Review of the business
We are pleased to report that we have transformed Karo and grown our net sales four-fold. This achievement is largely attributed to the strategic acquisition of E45 and the successful introduction of new products within the E45 range through the year. We have invested significant amounts in our business and strengthened our capabilities across the consumer healthcare value chain.
Sales grew from £11m in 2022 to £39m in 2023. Our performance in 2023 prove that our nimble and resilient organisation responds quickly to opportunities and challenges.
The company's key financial and other performance indicators during the year were as follows:
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Total operating profit Total profit after tax | | | |
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Current assets as % of current liabilities | | | |
Average number of employees | | | |
No dividends were recommended.
Principal risks and uncertainties
The principal risks and uncertainties facing Karo Healthcare UK Limited can be broadly grouped as regulatory changes, consumer trends, economic downturns, competitive risks , financial instrument and credit risk. In addition, the consequences of the Russia-Ukraine conflict and the ongoing fallout around COVID-19 puts additional uncertainties on the economy and the supply chain including cost inflation and supply continuity.
Regulatory changes
Regulatory changes in the industry involve product safety standards, ingredient restrictions, labeling requirements, and advertising regulations, which can affect product development, marketing strategies, and overall compliance costs for businesses.
Consumer trends
Consumer trends in the industry include a growing demand for sustainable and cruelty-free products, a focus on wellness and self-care, increased interest in natural and organic ingredients, and a preference for personalized and inclusive beauty and health products, influencing purchasing decisions and brand strategies.
Economic downturns
Economic downturns in the industry can result in reduced consumer spending, shifts in purchasing behavior towards more affordable options, and decreased brand loyalty, impacting sales volumes, profit margins, and overall business sustainability, requiring companies to adapt marketing strategies and product offerings to remain competitive.
KARO HEALTHCARE UK LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Principal risks and uncertainties continued
Competitive risks
Competitive risks in the healthcare industry in the UK involve intense competition among brands, price wars, emerging competitors, and rapid market changes, which can lead to loss of market share, diminished brand value, and reduced profitability for businesses, necessitating constant innovation and strategic differentiation to maintain a competitive edge. Share of Voice remains challenging in this industry based on the proportion of competitor investment, their size and weight in the industry.
The company's main competitors are domestic and global other house of brands and generic/own brand product providers. The company sources most of its products within Europe. The company has a relative purchase cost disadvantage when the relative value of sterling to Euro or SEK is weak.
Financial instrument risks
The company has established a risk and financial management framework whose primary objective is to protect the company from events that hinder the achievement of the company’s performance objectives. The objective is to limit undue counterparty exposure, ensure sufficient working capital exists, monitor the credit risk of our clients and take appropriate action when required.
Foreign exchange rate risk
The company operates in GBP, its functional currency, and Euro and therefore is exposed to exchange rate risks that arise from transactions in currencies other than its functional currency. Steps are taken to manage and hedge this risk via the Karo Group global treasury department.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The company's credit policy is aimed at minimising such losses by trading to set credit limits and credit terms. If credit limits are to be exceeded, advance payments are sought and should invoices become overdue, the account is placed on hold. Debtors and creditors are continually monitored locally. Provisions for overdue and doubtful debts are made if necessary, in accordance with group guidelines.
Liquidity and cash flow risk
The group operates a cash pool facility for which makes local bank balances immaterial in day-to-day operations and reduces the liquidity risk. Karo Healthcare UK Limited would have access to longer term funding from its parent undertaking, if required.
Interest rate risk
The company has no external borrowing. Should funds be required, they would be provided by the parent undertaking and would incur variable rate interest. Management consider that the interest rate risk is at an acceptable level, and that appropriate safeguards are in place to mitigate such risk.
Industry risk and ongoing Covid-19
Supply chain pressures such as increases in raw material prices, the availability of raw materials or disrupted supply is relevant for the entire healthcare industry and not just Karo Healthcare UK Limited. All possible actions are taken by the group to mitigate supply chain disruption.
J Aspin
Director
5 April 2024
KARO HEALTHCARE UK LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of marketing and sales of pharmaceutical and healthcare goods.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
No preference 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:
J Aspin
C M Lorenzen
J Raniga
Auditor
The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
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; and
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.
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.
KARO HEALTHCARE UK LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
On behalf of the board
J Aspin
Director
5 April 2024
KARO HEALTHCARE UK LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF KARO HEALTHCARE UK LTD
- 5 -
Opinion
We have audited the financial statements of Karo Healthcare UK Ltd (the 'company') for the year ended 31 December 2023 which comprise the income statement, the statement of financial position, 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 101 Reduced Disclosure Framework (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 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.
KARO HEALTHCARE UK LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF KARO HEALTHCARE UK LTD
- 6 -
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.
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.
KARO HEALTHCARE UK LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF KARO HEALTHCARE UK LTD
- 7 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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.
David Green MA (Cantab) FCA (Senior Statutory Auditor)
For and on behalf of Azets Audit Services
5 April 2024
Chartered Accountants
Statutory Auditor
Suites B & D
Burnham Yard
London End
Beaconsfield
Buckinghamshire
United Kingdom
HP9 2JH
KARO HEALTHCARE UK LTD
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Revenue
3
38,626,611
10,564,893
Cost of sales
(15,004,856)
(2,837,193)
Gross profit
23,621,755
7,727,700
Administrative expenses
(22,462,210)
(7,324,077)
Operating profit
4
1,159,545
403,623
Investment income
7
208,826
8,381
Finance costs
8
(156,385)
(5,544)
Profit before taxation
1,211,986
406,460
Tax on profit
9
(290,807)
(75,828)
Profit and total comprehensive income for the financial year
921,179
330,632
KARO HEALTHCARE UK LTD
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Current assets
Inventories
10
4,562,104
2,928,387
Trade and other receivables
11
10,260,577
6,066,130
Cash and cash equivalents
5,575,541
1,161,529
20,398,222
10,156,046
Current liabilities
12
(19,014,177)
(9,693,180)
Net current assets
1,384,045
462,866
Net assets
1,384,045
462,866
Equity
Called up share capital
16
1,000
1,000
Retained earnings
1,383,045
461,866
Total equity
1,384,045
462,866
The financial statements were approved by the board of directors and authorised for issue on 5 April 2024 and are signed on its behalf by:
J Aspin
Director
Company registration number 11784588
KARO HEALTHCARE UK LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Retained earnings
Total
£
£
£
Balance at 1 January 2022
1,000
131,234
132,234
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
330,632
330,632
Balance at 31 December 2022
1,000
461,866
462,866
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
921,179
921,179
Balance at 31 December 2023
1,000
1,383,045
1,384,045
KARO HEALTHCARE UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information
Karo Healthcare UK Ltd is a private company limited by shares incorporated in England and Wales. The registered office is The Pearce Building, 4th Floor, West Street, Maidenhead, Berkshire, SL6 1RL. The company's principal activities and nature of its operations are disclosed in the directors' report.
1.1
Accounting convention
The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.
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.
The company meets the definition of a qualifying entity under FRS 101 Reduced Disclosure Framework. These financial statements for the year ended 31 December 2023 are the first financial statements of Karo Healthcare UK Ltd prepared in accordance with FRS 101. The company transitioned from FRS 102 to FRS 101 for all periods presented and the date of transition to FRS 101 was 1 January 2022.
The reported financial position and financial performance for the previous period are not affected by the transition to FRS 101.
As permitted by FRS 101, the company has taken advantage of following disclosure exemptions from the requirements of IFRS:
the requirements of IFRS 7 Financial Instruments: Disclosures;
the requirements of paragraphs 91-99 of IFRS 13 Fair Value Measurement;
the requirements of paragraphs 10(d), 10(f), 16, 38A to 38D,111 and 134-136 of IAS 1 Presentation of Financial Statements;
the requirements of IAS 7 Statement of Cash Flows;
the requirements of paragraph 17 of IAS 24 Related Party Disclosures;
the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member ; and
As permitted by FRS 101, the company has taken advantage of the disclosure exemptions available under that standard in relation to share based payments, financial instruments, capital management, presentation of a cash flow statement, presentation of comparative information in respect of certain assets, standards not yet effective, impairment of assets, business combinations, discontinued operations and related party transactions.
Where required, equivalent disclosures are given in the group accounts of Karo Intressenter Holding AB. The group accounts of Karo Intressenter Holding AB are available to the public and can be obtained as set out in note 18.
1.2
Going concern
The directors have at the time of approving the financial statements, a reasonable expectation that the truecompany 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.
KARO HEALTHCARE UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
1.3
Revenue
Revenue represents the invoiced value of goods supplied, net of trade rebates, and excluding value added tax. Revenue is recognised when the risks and rewards of ownership have passed to the buyer and the amount of revenue can be reliably measured.
Product sales are measured once the goods have been delivered to the customer. Rebates are accrued upon the sale of the product at the rates agreed with the customers.
The company recognises revenue from the sale of goods. There are no other sources of revenue.
Included within revenue is the transfer pricing adjustment, this represents the adjustment to third party sales which are due to the parent company inline with the transfer pricing agreement.
The performance obligations are satisfied once the goods are deliverd to the customers. Payment terms are dependant on individual customers.
1.4
Inventories
Inventories 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 inventories to their present location and condition.
Inventories 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.
Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
1.5
Cash and cash equivalents
Cash and cash equivalents 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.
1.6
Financial assets
Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.
At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.
Financial assets at fair value through profit or loss
When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are recognized initially at fair value and any transaction costs are recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting period in which it arises.
KARO HEALTHCARE UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
Financial assets held at amortised cost
Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.
Financial assets at fair value through other comprehensive income
Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.
The company has made an irrevocable election to recognize changes in fair value of investments in equity instruments through other comprehensive income, not through profit or loss. A gain or loss from fair value changes will be shown in other comprehensive income and will not be reclassified subsequently to profit or loss. Equity instruments measured at fair value through other comprehensive income are recognized initially at fair value plus transaction cost directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognized through other comprehensive income are directly transferred to retained earnings when the equity instrument is derecognized or its fair value substantially decreased. Dividends are recognized as finance income in profit or loss.
Impairment of financial assets
Financial assets carried at amortised cost and FVOCI are assessed for indicators of impairment at each reporting end date.
The expected credit losses associated with these assets are estimated on a forward-looking basis. A broad range of information is considered when assessing credit risk and measuring expected credit losses, including past events, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
1.7
Financial liabilities
The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
KARO HEALTHCARE UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Other financial liabilities
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.
1.8
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.9
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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.
1.10
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 inventories or non-current assets.
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.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.12
Leases
At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.
The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
KARO HEALTHCARE UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
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
Critical accounting estimates and judgements
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, 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.
3
Revenue
Revenue represents the invoiced value of goods supplied, net of trade rebates, and excluding value added tax. Revenue arises wholly in the UK from the company's principal activity, being the marketing and sale of pharmaceutical products.
2023
2022
£
£
Revenue analysed by class of business
Sales to third parties
34,783,597
8,170,000
Intercompany sales
3,843,014
2,394,893
38,626,611
10,564,893
2023
2022
£
£
Revenue analysed by geographical market
United Kingdom
34,783,597
8,170,000
Europe
3,843,014
2,394,893
38,626,611
10,564,893
KARO HEALTHCARE UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(19,674)
9,898
Fees payable to the company's auditor for the audit of the company's financial statements
58,500
45,000
Fees payable to the company's auditor for the preparation of the company's financial statements
4,000
2,500
Fees payable to the company's auditors for corporation tax compliance services
4,500
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Administration
9
6
Marketing and Distribution
35
12
Total
44
18
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,425,715
1,536,692
Social security costs
388,133
178,819
Pension costs
171,855
79,463
3,985,703
1,794,974
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
274,029
290,063
Company pension contributions to defined contribution schemes
16,150
13,416
290,179
303,479
KARO HEALTHCARE UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
6
Directors' remuneration
(Continued)
- 17 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
186,894
130,625
Company pension contributions to defined contribution schemes
10,426
7,200
During the year the company contributed to money purchase retirment benefit schemes for 2 (2022: 3) directors.
7
Investment income
2023
2022
£
£
Interest income
Interest on bank deposits
208,826
8,381
8
Finance costs
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on other loans
156,385
5,544
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
290,807
75,828
From 1st April 2023 the UK corporation tax changed to 25%
KARO HEALTHCARE UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
9
Taxation
(Continued)
- 18 -
The charge for the year can be reconciled to the profit per the income statement as follows:
2023
2022
£
£
Profit before taxation
1,211,986
406,460
Expected tax charge based on a corporation tax rate of 25.00% (2022: 19.00%)
302,997
77,227
Effect of expenses not deductible in determining taxable profit
6,103
510
Effect of change in UK corporation tax rate
(18,293)
Permanent capital allowances in excess of depreciation
(1,909)
Taxation charge for the year
290,807
75,828
10
Inventories
2023
2022
£
£
Finished goods
4,562,104
2,928,387
11
Trade and other receivables
2023
2022
£
£
Trade receivables
10,070,108
6,063,193
Corporation tax recoverable
160,630
-
Prepayments and accrued income
29,839
2,937
10,260,577
6,066,130
Trade receivables disclosed above are classified as loans and receivables and are therfore measured at amortised cost.
12
Liabilities
2023
2022
Notes
£
£
Borrowings
13
8,009,678
2,042,713
Trade and other payables
14
9,491,650
6,695,940
Corporation tax
-
61,891
Other taxation and social security
1,512,849
892,636
19,014,177
9,693,180
KARO HEALTHCARE UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
13
Borrowings
2023
2022
£
£
Borrowings held at amortised cost:
Bank overdrafts
8,009,678
2,042,713
14
Trade and other payables
2023
2022
£
£
Trade payables
1,896,401
1,148,508
Amount owed to parent undertaking
2,356,614
3,511,656
Accruals and deferred income
5,238,635
2,035,776
9,491,650
6,695,940
15
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
171,855
79,463
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.
16
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
1,000
1,000
1,000
1,000
17
Related party transactions
The Company has taken advantage of the exemption of FRS 101 not to disclose details of transactions with other wholly owned group undertakings.
18
Controlling party
At the year end, the immediate parent undertaking and the largest and smallest group of undertakings of which the company is a member and for which group financial statements are prepared, is Karo Intressenter Holding AB, a company incorporated in Sweden. Copies of the group financial statements of Karo Intressenter Holding AB are available from Box 16184, SE-103 24 Stockholm, Sweden.
The Company continues to receive the support of its parent undertaking, Karo Healthcare AB registered in Sweden.
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