Company registration number 01109326 (England and Wales)
EKORNES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
EKORNES LIMITED
COMPANY INFORMATION
Directors
J Thompson
F Nilsen
Secretary
J Thompson
A Davies
Company number
01109326
Registered office
Queens House
180 Tottenham Court Road
London
W1T 7PD
Auditor
Alliotts LLP
Friary Court
13-21 High Street
Guildford
Surrey
GU1 3DL
EKORNES LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 7
Income statement
8
Statement of comprehensive income
9
Statement of financial position
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 23
EKORNES LIMITED
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
2023 saw a return to the normal cyclical pattern for revenue of peaks during sale periods and troughs whilst out of sale. This resulted in 2023 revenues dropping back (-20%) from the record levels during 2022 caused by the global pandemic, but still well above (+23%) those recorded in 2019. The uncertainty caused by the pandemic has resulted in a strong cost control mindset which has ensured the business continues to make a healthy profit despite the fall in revenue.
The business was also able to generate a 3.5% improvement year on year in gross margin due to a strong focus on product mix. As the business continues to diversify its product portfolio, the challenge will be to maintain this margin improvement.
Key Performance Indicators:
Principal Risks and uncertainties
Looking forward to 2024, the challenging market conditions remain with several wider macro-economic factors potentially impacting on consumers propensity to spend; Ekornes must therefore maintain a focus on cost control, to protect the profits of the business.
J Thompson
Director
24 January 2024
EKORNES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
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 retailing Scandinavian furniture manufactured by group companies.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
J Thompson
F Nilsen
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.
Statement of disclosure to auditor
So far as the directors are aware, there is no relevant audit information of which the company's auditors are unaware. Additionally, the directors 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 auditors are aware of that information.
On behalf of the board
J Thompson
Director
24 January 2024
EKORNES LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice. 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;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business;
state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements.
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.
The directors are responsible for the maintenance and integrity of the company website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
EKORNES LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF EKORNES LIMITED
- 4 -
Opinion
We have audited the financial statements of Ekornes Limited (the 'company') for the year ended 31 December 2023 which comprise the income statement, the statement of comprehensive income, 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 United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 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.
EKORNES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF EKORNES LIMITED
- 5 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:
EKORNES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF EKORNES LIMITED
- 6 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation, employment, environmental and health and safety legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
To address the risk of fraud through management bias and override of controls, we:
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
reading the minutes of meetings of the board of directors;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
EKORNES LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF EKORNES LIMITED
- 7 -
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.
Stephen Meredith BA FCA DChA
Senior Statutory Auditor
For and on behalf of Alliotts LLP
24 January 2024
Chartered Accountants
Statutory Auditor
Friary Court
13-21 High Street
Guildford
Surrey
GU1 3DL
EKORNES LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Revenue
3
23,374,214
29,147,346
Cost of sales
(17,346,008)
(22,669,760)
Gross profit
6,028,206
6,477,586
Distribution costs
(2,970,958)
(2,811,295)
Administrative expenses
(2,072,360)
(2,288,362)
Operating profit
4
984,888
1,377,929
Investment income
7
40,191
10,990
Finance costs
8
(1,426)
Profit before taxation
1,025,079
1,387,493
Tax on profit
9
(242,198)
(284,097)
Profit for the financial year
782,881
1,103,396
The income statement has been prepared on the basis that all operations are continuing operations.
EKORNES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
£
£
Profit for the year
782,881
1,103,396
Other comprehensive income
-
-
Total comprehensive income for the year
782,881
1,103,396
EKORNES LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Non-current assets
Property, plant and equipment
10
75,399
175,676
Current assets
Inventories
11
2,164,179
2,913,790
Trade and other receivables
12
3,512,000
2,958,278
Cash and cash equivalents
722,439
683,053
6,398,618
6,555,121
Current liabilities
13
(3,180,143)
(4,189,307)
Net current assets
3,218,475
2,365,814
Total assets less current liabilities
3,293,874
2,541,490
Non-current liabilities
14
(29,750)
(42,083)
Provisions for liabilities
Deferred tax liability
15
10,811
28,975
(10,811)
(28,975)
Net assets
3,253,313
2,470,432
Equity
Called up share capital
17
20,000
20,000
Retained earnings
3,233,313
2,450,432
Total equity
3,253,313
2,470,432
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 24 January 2024 and are signed on its behalf by:
J Thompson
Director
Company registration number 01109326 (England and Wales)
EKORNES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
Share capital
Retained earnings
Total
£
£
£
Balance at 1 January 2022
20,000
1,347,036
1,367,036
Year ended 31 December 2022:
Profit and total comprehensive income
-
1,103,396
1,103,396
Balance at 31 December 2022
20,000
2,450,432
2,470,432
Year ended 31 December 2023:
Profit and total comprehensive income
-
782,881
782,881
Balance at 31 December 2023
20,000
3,233,313
3,253,313
EKORNES LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
21
95,261
87,246
Interest paid
(1,426)
Income taxes paid
(96,066)
(271,176)
Net cash outflow from operating activities
(805)
(185,356)
Investing activities
Purchase of property, plant and equipment
(82,666)
Interest received
40,191
10,990
Net cash generated from/(used in) investing activities
40,191
(71,676)
Net increase/(decrease) in cash and cash equivalents
39,386
(257,032)
Cash and cash equivalents at beginning of year
683,053
940,085
Cash and cash equivalents at end of year
722,439
683,053
EKORNES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
1
Accounting policies
Company information
Ekornes Limited is a private company limited by shares incorporated in England and Wales. The registered office is Queens House, 180 Tottenham Court Road, London, W1T 7PD.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Revenue
Turnover represents amounts receivable for the sale of despatched goods net of VAT and trade discounts.
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 the customer receipt 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 entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Land and buildings Leasehold
Over the lease term
Fixtures, fittings & equipment
15% or 33% on cost
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
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.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of inventories over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
EKORNES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.6
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.7
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Fair value measurement of financial instruments
Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
EKORNES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
Classification of financial liabilities
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 company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including trade and other payables, 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 payables 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.8
Equity instruments
Equity instruments issued by the company 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 company.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.9
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
Tax is recognised in profit and loss, except to the extent that it relates to items recognised directly in equity or in other comprehensive income. Tax payable is the expected tax payable on the taxable income for the year, using tax rates in effect on the balance sheet date, and any adjustment of tax payable in respect of previous years.
EKORNES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Deferred tax
Deferred tax is calculated on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax assets and liabilities are measured on the basis of anticipated future tax rates in the company in which temporary differences have arisen. Deferred tax assets and liabilities are recognised at nominal value.
Deferred tax assets are capitalised only to the extent that it is probable the asset could be applied to some future taxable income.
Deferred tax assets are reduced when it is no longer probable that the tax asset will be utilised.
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 stock 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.
All employees are entitled to a bonus based on the group’s profitability. The bonus is calculated as a percentage of each employee’s monthly salary. Accrued bonus is recognised as an expense in profit and loss, and as a liability in the balance sheet.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.12
Leases
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
Grants are recognised over the periods in which the expenses are recognised to which those grants relate.
1.13
Foreign exchange
Transactions in foreign currencies are translated at the foreign exchange rate in effect at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Sterling at the exchange rate in effect at that date. Foreign exchange differences arising on translation are recognised in the income statement.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
EKORNES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 17 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Stock Provision
Returned stock is provided for based on Ekornes Limited's experience in the past and the effect the differing return conditions have had on sales value. Stock is provided for as follows:
100% provided for stock items which were returned damaged.
25% provision for stock items which were returned used but undamaged.
0% provision for stock items which were returned in the condition they were distributed in.
3
Revenue
An analysis of the company's revenue is as follows:
2023
2022
£
£
Revenue analysed by class of business
Sales of Finished Goods
23,374,214
29,119,097
2023
2022
£
£
Other significant revenue
Interest income
40,191
10,990
2023
2022
£
£
Revenue analysed by geographical market
UK
23,066,004
28,632,506
Ireland
308,210
514,840
23,374,214
29,147,346
4
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Exchange losses
7,708
2,647
Fees payable to the company's auditor for the audit of the company's financial statements
23,617
23,650
Depreciation of owned property, plant and equipment
100,277
99,932
Operating lease charges
313,193
362,417
EKORNES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Sales
12
9
Administration
12
13
Directors
2
1
Total
26
23
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,173,196
1,318,470
Social security costs
129,199
151,200
Pension costs
37,455
33,863
1,339,850
1,503,533
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
126,192
126,192
Company pension contributions to defined contribution schemes
24,000
24,000
150,192
150,192
7
Investment income
2023
2022
£
£
Interest income
Interest on bank deposits
40,191
10,990
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
40,191
10,990
EKORNES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
8
Finance costs
2023
2022
£
£
Other finance costs:
Other interest
1,426
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
269,333
283,394
Adjustments in respect of prior periods
(8,971)
703
Total current tax
260,362
284,097
Deferred tax
Origination and reversal of timing differences
(18,164)
Total tax charge
242,198
284,097
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
1,025,079
1,387,493
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
241,099
263,624
Tax effect of expenses that are not deductible in determining taxable profit
4,289
11,927
Adjustments in respect of prior years
(8,971)
703
Depreciation on assets not qualifying for tax allowances
11,425
7,843
Deferred tax not recognised
(5,644)
Taxation charge for the year
242,198
284,097
EKORNES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
10
Property, plant and equipment
Land and buildings Leasehold
Fixtures, fittings & equipment
Total
£
£
£
Cost
At 1 January 2023 and 31 December 2023
555,704
195,192
750,896
Depreciation and impairment
At 1 January 2023
383,378
191,842
575,220
Depreciation charged in the year
97,113
3,164
100,277
At 31 December 2023
480,491
195,006
675,497
Carrying amount
At 31 December 2023
75,213
186
75,399
At 31 December 2022
172,326
3,350
175,676
11
Inventories
2023
2022
£
£
Finished goods and goods for resale
2,164,179
2,913,790
12
Trade and other receivables
2023
2022
Amounts falling due within one year:
£
£
Trade receivables
3,014,173
2,593,252
Other receivables
100,170
100,170
Prepayments and accrued income
397,657
264,856
3,512,000
2,958,278
13
Current liabilities
2023
2022
£
£
Trade payables
554,470
49,273
Amounts owed to group undertakings
1,695,353
2,626,948
Corporation tax
260,361
96,065
Other taxation and social security
59,748
152,273
Other payables
169,252
331,799
Accruals and deferred income
440,959
932,949
3,180,143
4,189,307
EKORNES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
14
Non-current liabilities
2023
2022
£
£
Other payables
29,750
42,083
15
Deferred taxation
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances timing differences
10,811
28,975
2023
Movements in the year:
£
Liability at 1 January 2023
28,975
Credit to profit or loss
(18,164)
Liability at 31 December 2023
10,811
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.
16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
37,455
33,863
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.
17
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
20,000
20,000
20,000
20,000
The company has one class of ordinary shares which carry no right to fixed income, all shares rank equally.
EKORNES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
18
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
171,205
332,556
Between two and five years
238,000
455,831
409,205
788,387
19
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel, who are also classed as related parties, is as follows.
2023
2022
£
£
Total remuneration
282,448
283,854
During the year key management personnel purchased £0 (2022: £10,456) worth of goods from the company. Remuneration and some benefits in kind were the only transactions with key management personnel during the prior year.
No guarantees have been given or received.
20
Ultimate controlling party
The parent company is Ekornes AS, a company incorporated in Norway.
Ekornes AS prepares group financial statements and copies can be obtained from this company's registered office and Ekornes website (www.ekornes.com).
During the year goods and services to the value of £17,252,901 (2022: £20,807,750) were purchased from group companies and in addition some expenses were recharged by the parent company. A dividend of £nil (2022: £Nil) was declared in the year, payable to the parent company. At the year end the company owed Ekornes AS £1,695,353 (2022: £2,626,948).
Qumei Home Furnishings Group Co Ltd, who are controlled by Mr Zhau, own Ekornes ASA who are the parent of Ekornes Limited. Mr Zhau as a result is judged to be the controlling party of Ekornes Limited.
EKORNES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
21
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
782,881
1,103,396
Adjustments for:
Taxation charged
242,198
284,097
Finance costs
1,426
Investment income
(40,191)
(10,990)
Depreciation and impairment of property, plant and equipment
100,277
99,932
Movements in working capital:
Decrease in inventories
749,611
414,687
(Increase)/decrease in trade and other receivables
(553,722)
1,420,827
Decrease in trade and other payables
(1,185,793)
(3,226,129)
Cash generated from operations
95,261
87,246
22
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
683,053
39,386
722,439
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