The directors present the strategic report for the year ended 31 December 2023.
The results for the year and financial position of the company are as shown in the annexed financial statements.
The annexed financial statements show that the company made a profit before tax for the year ended 31 December 2023 of £4,485,239 and had accumulated retained earnings of £3,862,459.
Operating profit was £3,316,789 (2022: £2,487,593).
In 2019 the company reinforced its retail operations by establishing a network of 3 boutiques in London on New Bond Street (AP House), at Harrods and on Sloane Street. Since then and despite a challenging COVID context over 2020 and 2021 for the retail sector, the company has demonstrated strong & sustained financial performance.
The directors are pleased with the results presented by these financial statements for 2023, highlighting robust financial health and a successful operational strategy.
Along with its retail operations, the company carries out servicing & repair work but undertakes no manufacturing or assembling of products within the UK.
Business environment: Company activity is wholly within the high-end luxury goods market.
Risks and uncertainties
Company activity is the wholesale and retail of luxury goods. Retailers are selected to ensure the company is represented with different end consumer markets and has good geographic coverage. In addition to this the company has opened its own boutiques in recent years to expand the retail outlets and experience offered to its clientele.
Almost by definition the market for luxury goods is very international. The UK market is therefore exposed to movements between most of the major world currencies. Furthermore, a proportion of UK sales are to international business travellers and tourists. The internet creates the opportunity for seasoned travellers to compare prices on a global scale. Of course this uncertainty is common to all companies who operate in this high end market. On balance, the company considers this to be a low risk as London continues to enjoy the status of a global tourist destination.
Brexit in the short term has not had an adverse effect on the UK market as the fluctuation in exchange rate made the UK an attractive place to purchase. Mid to long term the company will be investing heavily in the market as there is great potential for growth in the UK.
Gross Profit Percentage:
2023: 24.4%
2022: 25.3%
Transfer pricing policy was set with parent company during the current year and is reviewed on an on-going basis.
Employees Cost:
2023: £3,001,638
2022: £2,746,637
Employee costs have increased in the year. The average number of employees in the year were 32 (2022: 30).
The company is dedicated to delivering world-class business to our customers through superior products and exceptional customer service by creating an environment for our employees where each person is valued, challenged to reach their potential, and contributes to the growth of the company, the community and themselves. The directors continue to set and review targets on a regular basis to ensure they remain a challenge but not unachievable. The company acknowledges its corporate social responsibility and aims to become a company trusted and desired by all our stakeholders, investors, employees, and the local community. To ensure we maintain the company’s high standards of business conduct, the directors review business operations on a regular basis and ensure clear actions are set and monitored to ensure high standards are maintained.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 11.
Ordinary dividends were paid amounting to £3,500,000. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The company's current policy concerning the payment of trade creditors is to:
settle the terms of payment with suppliers when agreeing the terms of each transaction;
ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
pay in accordance with the company's contractual and other legal obligations.
Trade creditors of the company at the year end were equivalent to 1 days' purchases, based on the average daily amount invoiced by suppliers during the year.
The company uses various financial instruments including cash, trade receivables and payables that arise directly from its operations. The existence of these financial instruments exposes the company to a number of financial risks, of which the more significant risks are liquidity risk and credit risk. The directors review and agree policies for managing each of these risks and they are summarised below:
The Company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade receivables are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
In order to ensure the future competitiveness of the group and its subsidiaries, our parent company continues to research innovative and new models to bring to the market.
Engagement with Suppliers, Customers and Others
Customers
The company prides itself on the development of innovative products and services to help our customers. We recognise our customers are the life blood of our organisation and their product satisfaction is key to our business. Our goal is to provide our customers with outstanding service and support, to develop new products and activities to help our customers achieve their goals and to work closely with them as trusted partners and not just a supplier. In the UK we have developed a robust organisation with a dynamic field-based team to work closely with the customer. Customer satisfaction and loyalty are crucial factors and determine our financial performance and we work to improve this constantly.
Suppliers
The company is committed to work closely with highly professional suppliers with excellent ethical standards whilst maintaining best practice, supporting them to ensure they align with our corporate code of conduct. We aim to mitigate the most significant risks to the business by working closely with our suppliers and focusing on those critical to our business continuity, sharing findings for continuous improvement.
Employees
Our objective is to successfully hire, train, and motivate employees who want to serve the customer. Everyone in the company must be committed to delivering customer satisfaction. We offer a range of private medical cover to suit all employees and we have salary sacrifice offerings.
Shareholders
Audemars Piguet (UK) Limited is a wholly owned subsidiary of Audemars Piguet Holding SA. The group remains independent and still owned by the founding families.
The group determines the direction for the business, but locally the management team ensures the company is compliant with local legislation and implements strategies to satisfy the requirements of the local market.
The management team have demonstrated their resilience during challenging market conditions, ensuring the company is well positioned to deliver value for the corporation.
The company has good communication with the group and reports monthly on the company’s performance and at the annual shareholders meeting.
Community
Our aim is to coexist in harmony and contribute to our community, we focus on minimising our environmental impact, supporting education and research, contributing to the continuing development of a learning society and fundraising for charities.
Society
The company adopts the corporate social responsibilities promoted by the group. By responding to our customer requests, the group will contribute to the sustainable growth of industries and expansion of technological innovations. We are also taking measures considering the protection of the environment throughout the whole process of our business activities, such as avoiding the use of substances of concern, promoting energy-saving and resource-saving and reducing packaging materials. This will lead to reducing the environmental impact for the entire society.
There have been no events since the balance sheet date to report.
The company is in a strong financial position and will continue to introduce new models and consolidate its geographic coverage within the UK.
The auditor, Ad Valorem Audit Services Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The board of directors of Audemars Piguet (UK) Limited understand the importance and risks posed by climate change to our stakeholders and supply chain and are keen to improve energy efficiency and reduce our carbon emissions. As a company and group we are focused on evaluating how our business activities interact with the wider environment and are looking to reduce our carbon footprint.
Our UK energy use, which relates to electricity only, is 66,106 kWh for the year ended 31 December 2023. Our carbon equivalent emissions for this period were 13,689 KgCO2e.
Audemars Piguet (UK) Limited remains committed to reducing its carbon footprint and is actively focused on the following areas:
1) Ensuring the Head office is as energy efficient as possible by using LED energy efficient lighting.
2) Ensuring computers and monitors are switched off at night.
3) Encouraging the use of virtual meetings where possible to reduce the amount of travel.
We have audited the financial statements of Audemars Piguet (UK) Limited (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, 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 UK adopted international accounting standards.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the 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.
Other information
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.
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 directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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.
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.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:
1) Enquiries of management concerning the company's policies and procedures relating to:
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance
detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; and
the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations;
2) The company's remuneration policies, key drivers for remuneration and bonus levels; and
3) Discussions among the engagement team regarding how and when fraud might occur in the financial statements and any potential indicators of fraud.
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory framework that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act and IFRS as issued by the IASB and adopted by the EU.
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In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company's ability to operate or avoid a material penalty.
As a result of performing the above, we did not identify any key audit matters related to the potential risk of fraud or non-compliance with laws and regulations.
In addition to the above, our procedures to respond to risks identified included the following:
Reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
Enquiring of management concerning actual and potential litigation and claims;
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
Reading minutes of meetings of those charged with governance and reviewing correspondence with relevant tax authorities; and
In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgments made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
We note that our audit is not primarily designed to detect non-compliance with laws and regulations and the Directors and other management are responsible for such internal control as the Directors and other management of the Company determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to errors or fraud, including compliance with laws and regulations. Additionally, owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
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.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in 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.
The income statement has been prepared on the basis that all operations are continuing operations.
Audemars Piguet (UK) Limited is a private company limited by shares incorporated in England and Wales. The registered office is 82-84 Grosvenor Street, 1st Floor, London, W1K 3JZ. The company's principal activities and nature of its operations are disclosed in the directors' report.
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 nature, timing of satisfaction of performance obligations and significant payment terms of the company's major sources of revenue are as follows:
Retail and wholesale
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer(usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the company and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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 recognised in the income statement.
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.
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.
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.
The company has a distribution agreement with the parent company's marketing subsidiary responsible for global distribution. The directors consider this transaction to be on arm's length basis. Under this agreement the company has the right to return slow moving or obsolete stock to the manufacturer. Therefore, the directors are not required to make any local provision for slow moving or obsolescent stocks.
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'.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost. They are not interest bearing and are stated at their nominal value.
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.
The tax expense represents the sum of the tax currently payable and deferred tax.
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 right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
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.
In the current year, the following new and revised Standards and Interpretations have been adopted by the company and have an effect on the current period or a prior period or may have an effect on future periods:
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 1).
The charge for the year can be reconciled to the profit per the income statement as follows:
Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions where the Group operates. The legislation will be effective for the Group’s financial year beginning 1 January 2024. The Group is in scope of the enacted or substantively enacted legislation and has performed an assessment of the Group’s potential exposure to Pillar Two income taxes.
This assessment of the potential exposure to Pillar Two income taxes is based on the most recent tax filings, country-by-country reporting and financial statements for the constituent entities in the Group.
In the UK, the effective tax rate for the Company is above 15% and therefore it does not expect a potential exposure to Pillar Two top-up taxes.
Property, plant and equipment includes right-of-use assets, as follows:
Promotional display & boutiques includes a premises lease capitalised in accordance with IFRS16. Acquisition cost is £6,354,239 (2022: £6,354,239), Accumulated depreciation is £3,258,586 (2022: £2,606,869).
Rights of use assets are included within promotional corners and boutiques.
The company has not designated any financial assets that are not classified as held for trading as financial assets at fair value through profit or loss.
Inventories are valued at the lower of cost and net realisable value. The company has a distribution agreement with the parent company's marketing subsidiary responsible for global distribution. Under this agreement the company has the right to return slow moving or obsolete stock to the manufacturer. Therefore, the directors do not make any local provision for slow moving or obsolescent stocks.
Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.
Included in trade and other receivables are amounts due after 1 year amounting to £nil (2021: £nil).
Amounts owed by group undertakings are repayable on demand and have no security, payment date or interest date.
The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.
No significant receivable balances are impaired at the reporting end date.
Amounts owed to group undertakings are repayable on demand and have no security, payment date or interest date.
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.
Deferred tax assets and liabilities are offset in the financial statements only where the company has a legally enforceable right to do so.
Amounts recognised in profit or loss as an expense during the period in respect of lease arrangements are as follows:
Set out below are the future cash outflows to which the lessee is potentially exposed that are not reflected in the measurement of lease liabilities:
The remuneration of key management personnel, including directors, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.
The key members of management are the directors D. Compton, M. Vigano and R. Sandoz-Dit-Bragard. D. Compton’s emoluments are disclosed within the employees and directors note (note 5). M. Vigano and R.Sandoz-Dit-Bragard are remunerated by other group companies and did not receive any emoluments from this company.
During the year the company entered into the following transactions with related parties:
During the year the company charged a management fee of £50,336 (2022 - £84,835) to its subsidiary Audemars Piguet (Sloane Street) UK Limited.
During the year the company charged a management fee of £138,238 (2022 - £161,976) to its fellow group company Audemars Piguet (Marketing) S.A.
During the year the company re-charged administrative expenses to Audemars Piguet (Sloane Street) UK Limited of £83,948 (2022 - £193,968).
During the year the company was re-charged various expenses by fellow group companies, which are included in administrative expenses, of £746,117 (2022 - £301,383).
During the year the company re-charged various expenses to fellow group companies, which are included in administrative expenses, of £96,930 (2022 - £nil).
Associated companies above are fellow group companies.
The following amounts were outstanding at the reporting end date:
The following amounts were outstanding at the reporting end date:
Associated companies above are fellow group companies.