The director presents the strategic report for the year ended 30 September 2023.
The principal activity of the group is that of fashion importers and distributors, selling its own branded clothes, footwear and accessories in the UK and internationally. Over the last few years the group kept an established presence in various sectors and will keep maintaining and growing this presence.
Turnover reduced in the last 12 months as a result of the cost-of-living crisis leading to a reduction in consumer spending. The reduction in revenue was mitigated by strong cost control. The Group maintains good relationships with suppliers and customers.
Commercial
Outlook and market pressures
The Director acknowledges responsibility for the systems and controls of the Group and continues to strengthen and develop those in place. The Director is aware of the risks and uncertainties that the current economic and trading environments bring to the business.
The Board meets on a monthly basis and the risks and uncertainties facing the Group are discussed and appropriate actions taken. At these monthly meetings, all areas of the business are discussed including Health & Safety and the Company's corporate and social responsibility.
Financial
Liquidity, cashflow and interest risk
Liquidity and cashflow risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Group aims to mitigate liquidity risk and cashflow risk by managing working capital and as a result we continue to closely monitor the working capital requirements of the business and work with the Groups bankers to ensure that these working capital requirements are met.
Credit risk
Financial risk also arises from credit extended to customers. This risk is mitigated by using strict credit control procedures, imposing appropriate credit limits and a credit insurance policy.
Foreign exchange risk
The Group is exposed to transaction foreign exchange risks. Transaction exposures are hedged, where known, on a net basis using a combination of forward contracts and fixing a sterling purchase price with suppliers for a set period.
If the activity does not mitigate the exposure, then the results and final condition of the Group could be adversely affected.
The Group maintains the goals of increasing the quality of products and delivered service to be able to increase the presence in international markets as well as in the domestic market. Despite the global supply chain issues experienced by all sectors over the last 12 months and the ongoing economic difficulties experienced globally, our professional partners have ensured a continuous supply to our European customers. The group will continue working to achieve growth in the coming financial year.
The company's key financial indicators during the year were as follows:
(as restated)
| 30/09/2023 | 30/09/2022 |
| Change |
| 12 Months | 12 Months |
|
|
| £ | £ |
| £ |
|
|
|
|
|
Turnover | 9,986,923 | 15,976,590 |
| (5,989,667) |
Operating profit | 263,412 | 1,269,159 |
| (1,005,747) |
(Loss)/Profit before tax | (129,348) | 906,637 |
| (1,035,985) |
Shareholders’ funds | 4,558,467 | 4,827,575 |
| (271,108) |
On behalf of the board
The director presents her annual report and financial statements for the year ended 30 September 2023.
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £120,000. The director does not recommend payment of a further dividend.
The director who held office during the year and up to the date of signature of the financial statements was as follows:
The Director aims to maintain the steady growth in the wholesale marketplace by seeking new valuable partners, continuously improving current relationships with the provision of good quality products, and continuing to broaden the range of products available. Also, the director will emphasise margin improvement and cost control by taking advantage of various synergies.
Following the merger of MHA Moore & Smalley with MHA, the company's independent auditor has now become MHA. A resolution to reappoint MHA as independent auditor will be proposed at the next Annual General Meeting.
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of:
Review of the business
Principal risks and uncertainties
Development and performance
Key performance indicators
We have audited the financial statements of Kacoo Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 September 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
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 group and parent 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 director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
Other information
The 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.
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 director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of 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 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 parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the parent company or to cease operations, or has 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.
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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud, is detailed below:
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness;
Enquiries with management, about any known or suspected instances of non-compliance with laws and regulations and fraud;
Reviewing legal and professional expenditure to identify any evidence of ongoing litigation or enquiries;
Challenging assumptions and judgements made by management in accounting estimates; and,
Auditing the risk of fraud in revenue, including through the testing of income cut-off at the year end, through sales transaction testing and consideration of post year end sales credit notes to provide comfort that revenue has been recognised in the correct accounting period.
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 is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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.
These financial statements have been prepared in accordance with the provisions relating to medium-sized groups.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £120,000 (2022 - £120,000 profit).
Kacoo Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Unit 7, 157 Great Ancoats Street, Manchester, M4 6DH.
The group consists of Kacoo Holdings Limited and all of its subsidiaries.
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, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The 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 for parent company information presented within the consolidated financial statements:
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 33 ‘Related Party Disclosures’: Compensation for key management personnel.
During the year to 30 September 2023, the Group changed its method of providing against older stock. The estimation was changed from fully writing down any stock older than two years to £nil value, to revaluing any stock over two years to the lowest wholesale net realisable value currently attainable in the market. This revised method is a more accurate reflection of the net realisable value of older stock when sold and is in accordance with the stock accounting policy of valuing stock at the lower of cost and net realisable value.
This change in stock valuation methodology, with reference to older stock, is a change in accounting estimate and not a change in accounting policy and is therefore accounted for in the period of the change (i.e. the current year) and in subsequent periods.
The consolidated group financial statements consist of the financial statements of the parent company Kacoo Holdings Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 30 September 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the director has a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is measured at the fair value of consideration received or receivable for goods supplied and services rendered, net of discounts and value added tax.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on dispatch of the goods); the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred in respect of the transactions can be measured reliably.
Research expenditure is written off against profits in the year in which it is incurred.
Development expenditure incurred is capitalised as an intangible asset only when all of the following criteria are met:
It is technically feasible to complete the intangible asset so that it will be available for use or
There is the intention to complete the intangible asset and use or sell it;
There is the ability to use or sell the intangible asset;
The use or sale of the intangible asset will generate probable future economic benefits;
There are adequate technical, financial and other resources available to complete the
development and to use or sell the intangible asset; and
The expenditure attributable to the intangible asset during its development can be
measured reliably.
Expenditure that does not meet the above criteria is expensed as incurred.
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 profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible 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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
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.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, 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, 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.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
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.
Derivatives, including forward foreign exchange contracts, are not basic financial instruments. Currently the Group has forward exchange contracts in place to cover the fluctuation in the exchange rates related to the dealing predominantly in USD. 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 or in finance costs or finance income as appropriate. The Group does not apply hedge accounting.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
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.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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 leased asset are consumed.
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.
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.
In the application of the group’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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
At each balance sheet date, management undertake a review of the outstanding trade debtor balances and estimate the balance that should either be impaired or provided against. This calculation is based on the financial position of the customers, the historical speed of payment and any ongoing discussions.
At the balance sheet date a significant number of items sold in the 100 days prior to the year end were expected to be returned. The director has duly provided for these returns in the form of a credit note provision which has encompassed the initial value of the sale along with any associated delivery costs and commission charges.
At the balance sheet date a significant unbilled expense remains relating to business rates on company leased premises with an uncertainty around the amount or extent of the liability. The directors have duly provided for this liability with the support of advice from professionally qualified experts in the field.
A review is performed of the relative carrying values of remaining prior season stock items with the amounts realisable in the marketplace. Where certain lines and/or quantities (exceeding two years since their acquisition) are likely to require writing down below their acquisition cost, the Group makes a provision based upon the current lowest wholesale/clearance price attainable in the market at the balance sheet date.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge/(credit) for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
From 1 April 2023 the government have enacted changes to the corporation tax rate, increasing the main tax rate to 25%. For companies where financial year ends straddle two tax years, pre and post the increase of corporation tax to 25%, profits are apportioned in the ratio to account for the number of months under 19% taxation rate and 25% rate. The effective tax rate for the year ended 30 September 2023 is therefore 22.01%.
Details of the company's subsidiaries at 30 September 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
The Group uses foreign exchange currency forward contracts to manage foreign currency risk of future transactions and cash flows. The contracts are valued on available market data. The Group does not adopt hedge accounting for forward exchange contracts, consequently, fair value gains and losses are recognised in the profit and loss.
These financial liabilities in respect of the exposure to foreign exchange losses on forward contracts, at the balance sheet date, can be found within creditors due within one year, note 18 of the financial statements.
At the year end, the total carrying amount of outstanding foreign exchange forward contracts that the Group has committed to settle in a future financial period is £1,779,741 (2022: £500,000).
The difference between purchase price stocks and their replacement cost is not material.
An impairment provision of £332,782 (2022 - £436,938) was charged to the Income Statement during the year.
Included within debtors above are amounts owed by related parties which are related by way of common control and directorship. During the previous financial year the amounts were formalised under a unsecured commercial loan agreement with a repayment term of 5 years. The closing balance as at 30 September 2023 is stated in amounts falling due after more than one year.
Included within trade debtors at the year end is £422,519 (2022 - £1,635,847) of debtors that are subject to invoice factoring.
At the year end trade debtors have been written down by £nil (2022: £8,863) in respect of bad and doubtful debts. Amounts totalling £20,374 (2022: £8,863 - charged) have been credited to the income statement in relation to bad debts previously written of and subsequently recovered.
There is a fixed and floating charge over the assets of the subsidiary Kacoo Fashion Ltd in relation to the invoice factoring facility and bank overdraft facility in favour of RBS Invoice Finance Ltd and National Westminster Bank PLC. At the year end there is a utilised invoice financing facility due within one year of £179,468 (2022: £1,320,906). The director has also provided a personal guarantee limited to £20,000 in relation to the invoice financing facility.
Included within amounts due on bank loans within and in greater than one year is £799,893 (2022: £1,091,544) in respect of Coronavirus Business Interruption Loans. These loans are unsecured by way of a government backed loan scheme and with the first year of interest covered via a government grant in the form of Business Interruption Payment. The loans are for terms of between 48 and 72 months with the first ending in March 2025 and the last ending in August 2027. Interest is accruing on the loans at fixed rates of between 8% and 11.5% per annum.
The terms of preference shares treated as debt are detailed in note 23 of the financial statements.
Finance lease payments represent rentals payable by the company for certain items of plant and machinery; finance was secured upon the assets to which they relate.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
Preference shares carry no capital or voting rights and have preferential dividend rights of 8% in accordance with the articles of association of the Kacoo Fashion Ltd. The Preference Shares shall be liable to be redeemed at the sole discretion and option of Kacoo Fashion Ltd, and the Directors may determine the terms, conditions and manner of redemption of any such Preference Shares. Preference share capital of this nature is treated in the financial statements as a liability due in greater than one year.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Sales were made totalling £1,680 (2022: £12,190) to Kacoo USA LLC, a company incorporated in the United States of America. The Group also levied management charges totalling £40,952 (2022: £38,514) on Kacoo USA LLC. At the year end Kacoo USA LLC owed £734,124 (2022: £816,377) to the Group, The companies are related through common ownership by close family members.
Sales were made totalling £102,069 (2022: £79,370) to Ka Gu (formerly Kacoo China), a company incorporated in China. At the year end Ka Gu owed £95,460 (2022: £97,222) to the Group. The companies are related through common ownership by close family members.
Management fees were received from Kacoo Investments Limited, a company related by common ownership and a previous subsidiary of Kacoo Group Limited, amounted to £42,060 (2022: £56,592). At the year end £2,559,634 (2022: £2,926,739) was due in total from Kacoo Investments Limited of which £2,394,973 (2022: £2,596,487) was formalised as payable in greater than one year and can be found within other debtors greater than one year, note 17 of the financial statements and £188,873 (2022: £330,252) due within one year, which is also included within note 17 of the financial statements.
Rent of £170,000 (2022: £122,778) was paid to Kacoo Investments Limited in the year for use of a commercial property. At the year end £23,912 (2022: £155,304) was due to this company and can be found within other creditors due within one year, note 18 of the financial statements.
At the year end, preference shares of £1,750,000 (2022: £1,750,000) are outstanding to a close family member of the Director. Due to the nature of these preference shares, they are categorised as a financial liability. During the year, dividends in the form of preference share interest (8%) was paid totalling £140,000 (2022: £140,000) of which £nil (2022: £nil) remains accrued for at the year end.
During the year the Director entered into the following advances and credits within the Group:
Dividends totalling £120,000 (2022 - £120,000) were paid in the year in respect of shares held by the company's directors.
Adjustments processed in the current year, within a wholly owned sibsidiary entity, relating to the prior period ended 30 September 2022 relate to:
1) The reduction of an over-accrued provision for business rates in respect of a business premises vacated in the prior year.
2) The provision of fair value gains and losses in respect of a foreign currency forward contract entered in to in the prior year.