Caseware UK (AP4) 2023.0.135 2023.0.135 2023-12-312023-12-3110true2023-01-01false8falsefalse 12101175 2023-01-01 2023-12-31 12101175 2022-01-01 2022-12-31 12101175 2023-12-31 12101175 2022-12-31 12101175 2022-01-01 12101175 c:Director1 2023-01-01 2023-12-31 12101175 c:Director1 2023-12-31 12101175 c:Director2 2023-01-01 2023-12-31 12101175 c:RegisteredOffice 2023-01-01 2023-12-31 12101175 d:FurnitureFittings 2023-01-01 2023-12-31 12101175 d:FurnitureFittings 2023-12-31 12101175 d:FurnitureFittings 2022-12-31 12101175 d:FurnitureFittings d:OwnedOrFreeholdAssets 2023-01-01 2023-12-31 12101175 d:OfficeEquipment 2023-01-01 2023-12-31 12101175 d:OfficeEquipment 2023-12-31 12101175 d:OfficeEquipment 2022-12-31 12101175 d:OfficeEquipment d:OwnedOrFreeholdAssets 2023-01-01 2023-12-31 12101175 d:ComputerEquipment 2023-01-01 2023-12-31 12101175 d:ComputerEquipment 2023-12-31 12101175 d:ComputerEquipment 2022-12-31 12101175 d:ComputerEquipment d:OwnedOrFreeholdAssets 2023-01-01 2023-12-31 12101175 d:OwnedOrFreeholdAssets 2023-01-01 2023-12-31 12101175 d:CurrentFinancialInstruments 2023-12-31 12101175 d:CurrentFinancialInstruments 2022-12-31 12101175 d:CurrentFinancialInstruments d:WithinOneYear 2023-12-31 12101175 d:CurrentFinancialInstruments d:WithinOneYear 2022-12-31 12101175 d:ReportableOperatingSegment1 2023-01-01 2023-12-31 12101175 d:ReportableOperatingSegment1 2022-01-01 2022-12-31 12101175 d:ReportableOperatingSegment2 2023-01-01 2023-12-31 12101175 d:ReportableOperatingSegment2 2022-01-01 2022-12-31 12101175 d:ReportableOperatingSegment3 2023-01-01 2023-12-31 12101175 d:ReportableOperatingSegment3 2022-01-01 2022-12-31 12101175 d:ReportableOperatingSegment5 2023-01-01 2023-12-31 12101175 d:ReportableOperatingSegment5 2022-01-01 2022-12-31 12101175 d:ShareCapital 2023-12-31 12101175 d:ShareCapital 2022-12-31 12101175 d:ShareCapital 2022-01-01 12101175 d:RetainedEarningsAccumulatedLosses 2023-01-01 2023-12-31 12101175 d:RetainedEarningsAccumulatedLosses 2023-12-31 12101175 d:RetainedEarningsAccumulatedLosses 2022-01-01 2022-12-31 12101175 d:RetainedEarningsAccumulatedLosses 2022-12-31 12101175 d:RetainedEarningsAccumulatedLosses 2022-01-01 12101175 c:OrdinaryShareClass1 2023-01-01 2023-12-31 12101175 c:OrdinaryShareClass1 2023-12-31 12101175 c:OrdinaryShareClass1 2022-12-31 12101175 c:FRS102 2023-01-01 2023-12-31 12101175 c:Audited 2023-01-01 2023-12-31 12101175 c:FullAccounts 2023-01-01 2023-12-31 12101175 c:PrivateLimitedCompanyLtd 2023-01-01 2023-12-31 12101175 2 2023-01-01 2023-12-31 12101175 7 2023-01-01 2023-12-31 12101175 e:PoundSterling 2023-01-01 2023-12-31 iso4217:GBP xbrli:shares xbrli:pure

Registered number: 12101175










COLNAGHI UK LTD










ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 
COLNAGHI UK LTD
 
 
COMPANY INFORMATION


Director
K Whitley 




Registered number
12101175



Registered office
26 Bury Street

London

SW1Y 6AL




Independent auditors
Sumer Auditco Limited
Chartered Accountants & Statutory Auditors

14th Floor

33 Cavendish Square

London

W1G 0PW





 
COLNAGHI UK LTD
 

CONTENTS



Page
Strategic report
1
Directors' report
2 - 3
Independent auditors' report
4 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 23


 
COLNAGHI UK LTD
 
 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

Introduction
 
The directors present their strategic report together with the audited financial statements for the year ended 31 December 2023.

Business review
 
Its principal activity is the sale of artwork, mostly in consignment items.
The Company had a turnover of £24.9 million (2022 - £23.5 million) with a gross profit of £3.9 million (2022 - £2.4 million) and a net profit of £0.02 million (2022 - net loss of £0.7 million).
This represented a significant growth both in turnover and in terms of gross profit margin compared to 2022. 
Operating expenses decreased mostly due to the absence of the non-recurring administrative expenses which affected 2022 and the business went back to being profitable.

Financial key performance indicator
 
Year ended 31 December 2023
Year ended 31 December 2022
Variance
        £
        £
        %

Turnover



 
24,938,776
 
23,500,698

+6.1

Gross profit



 
3,877,672
 
2,371,492

+63.6

Gross profit margin



 
15.5%
 
10.1%

+5.4


Principal risks and uncertainties
 
Revenue streams are diversified across multiple currencies, exposing the Company to fluctuations in exchange rates. Recognising the significance of the exposure, the Company took proactive measures in 2023 by restructuring liabilities to mitigate the FX risk.

Future Developments

After a couple of difficult years, 2023 outlook will see the Company’s return to profitability and significant deals are expected to bring the Company to a profit in 2024. 
In the last part of 2023, the Company has also completed its transformation, completing its commercial team hires, which is expected to come to fruition in 2024.


This report was approved by the board and signed on its behalf.





K Whitley
Director

Date: 30 September 2024

Page 1

 
COLNAGHI UK LTD
 
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

The directors present their report and the financial statements for the year ended 31 December 2023.

Directors' responsibilities statement

The directors are responsible for preparing the Strategic report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the Company's financial statements and then apply them consistently;

make judgments and accounting estimates that are reasonable and prudent;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The 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 to enable them to ensure that the financial statements comply with the Companies Act 2006They 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.

Principal activity

The principal activity of the Company is that of the sale of artwork. 

Results and dividends

The profit for the year, after taxation, amounted to £16,281 (2022 - loss £701,386).

No dividends paid or declared in the year and prior year.

Director

The director who served during the year was:

J Coll Canellas (resigned 28 June 2024)

K Whitley was appointed as a company director on 28 June 2024.

Matters covered in the Strategic Report

Management's review of developments and future prospects and principal risks and uncertainties are included in the Strategic Report.

Page 2

 
COLNAGHI UK LTD
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Post balance sheet events

There have been no significant events affecting the Company since the period end.

Auditors

The auditorsSumer Auditco Limitedwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board and signed on its behalf.
 





K Whitley
Director

Date: 30 September 2024

Page 3

 
COLNAGHI UK LTD
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF COLNAGHI UK LTD
 

Opinion


We have audited the financial statements of Colnaghi UK Ltd (the 'Company') for the year ended 31 December 2023, which comprise the Statement of comprehensive income, the Balance sheet, the Statement of changes in equity and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the Company's affairs as at 31 December 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.


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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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.


Page 4

 
COLNAGHI UK LTD
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF COLNAGHI UK LTD (CONTINUED)


Other information


The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual ReportOur 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.


Opinion on other matters prescribed by the Companies Act 2006
 

In our opinion, based on the work undertaken in the course of the 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.


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 directors' 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 set out on page 2, 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.


Page 5

 
COLNAGHI UK LTD
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF COLNAGHI UK LTD (CONTINUED)


Auditors' 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 Auditors' 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:

In order to identify and assess the risks of material misstatements, including fraud and non-compliance with laws and regulations that could be expected to have a material impact on the financial statements, we have considered:
•        the results of our enquiries of management and those charged with governance of their assessment of the
         risks of fraud and irregularities;
•        the nature of the Company, including its management structure and control systems (including the
         opportunity for management to override such controls);
•        management’s incentives and opportunities for fraudulent manipulation of the financial statements
         including the Company’s remuneration and bonus policies and performance targets; and 
•        the industry and environment in which it operates.
We also considered UK tax and pension legislation and laws and regulations relating to employment and the preparation and presentation of the financial statements such as the Companies Act 2006.
Based on this understanding we identified the following matters as being of significance to the entity:
•        laws and regulations considered to have a direct effect on the financial statements including UK financial
         reporting standards, Company Law, tax and pension legislation and distributable profits legislation;
•        the timing of the recognition of commercial income;
•        management bias in selecting accounting policies and determining estimates;
•        recoverability of debtors; and
•        the requirement to impair its stocks and the amount of any such impairment.
We communicated the outcomes of these discussions and enquiries, as well as consideration as to where and how fraud may occur in the entity, to all engagement team members.
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised: 
•        enquiries of management and those charged with governance as to whether the entity complies with such
         laws and regulations;
•        enquiries with the same concerning any actual or potential litigation or claims;
•        discussion with the same regarding any known or suspected instances of non-compliance with laws and
         regulation and fraud; 
•        assessment of matters reported to management and the result of the subsequent investigation;
•        obtaining an understanding of the relevant controls during the year;
•        obtaining an understanding of the policies and controls over the recognition of income and testing their
         implementation during the year;
•        review documentation relating to compliance with the regulations relating to health and safety including
         health and safety certificates; and fire assessment reports;
 
Page 6

 
COLNAGHI UK LTD
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF COLNAGHI UK LTD (CONTINUED)


•        challenging assumptions made by management in their specific accounting policies and estimates, in
         particular in relation to the carrying value of stock;
•        identifying and testing journal entries, in particular any journal entries posted with unusual account
         combinations or crediting revenue;
•        assessing the recovery of debtors in the year since the balance sheet date and challenging assumptions
         made by management regarding the recovery of balances which remain outstanding;
•        reviewing the financial statements for compliance with the relevant disclosure requirements; 
•        performing analytical procedures to identify any unusual or unexpected relationships or unexpected
         movements in account balances which may be indicative of fraud;
•        reviewing the correspondence with HMRC; and
•        evaluating the underlying business reasons for any unusual transactions.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).


A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' 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 2006Our 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 Auditors' 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.







Shilen Manek ACA FCCA (Senior statutory auditor)
  
for and on behalf of
Sumer Auditco Limited
 
Chartered Accountants
Statutory Auditors
  
14th Floor
33 Cavendish Square
London
W1G 0PW

30 September 2024
Page 7

 
COLNAGHI UK LTD
 
 
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022
Note
£
£

  

Turnover
 4 
24,938,776
23,500,698

Cost of sales
  
(21,061,104)
(21,129,206)

Gross profit
  
3,877,672
2,371,492

Administrative expenses
  
(3,288,332)
(2,737,035)

Operating profit/(loss)
 5 
589,340
(365,543)

Interest receivable and similar income
 8 
7,797
6,456

Interest payable and similar expenses
 9 
(580,856)
(342,299)

Profit/(loss) before tax
  
16,281
(701,386)

Tax on profit/(loss)
 10 
-
-

Profit/(loss) for the financial year
  
16,281
(701,386)

There was no other comprehensive income for 2023 (2022£NIL).

The notes on pages 11 to 23 form part of these financial statements.

Page 8

 
COLNAGHI UK LTD
REGISTERED NUMBER: 12101175

BALANCE SHEET
AS AT 31 DECEMBER 2023

2023
2022
Note
£
£

Fixed assets
  

Tangible assets
 11 
23,316
13,108

  
23,316
13,108

Current assets
  

Stocks
 12 
10,064,577
10,072,198

Debtors: amounts falling due within one year
 13 
1,363,809
1,978,895

Cash at bank and in hand
 14 
1,884,193
1,573,047

  
13,312,579
13,624,140

Creditors: amounts falling due within one year
 15 
(12,983,704)
(13,301,338)

Net current assets
  
 
 
328,875
 
 
322,802

Total assets less current liabilities
  
352,191
335,910

  

Net assets
  
352,191
335,910


Capital and reserves
  

Called up share capital 
 16 
1,350,000
1,350,000

Profit and loss account
 17 
(997,809)
(1,014,090)

  
352,191
335,910


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 30 September 2024.




K Whitley
Director

The notes on pages 11 to 23 form part of these financial statements.

Page 9

 
COLNAGHI UK LTD
 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023


Called up share capital
Profit and loss account
Total equity

£
£
£


At 1 January 2022
1,350,000
(312,704)
1,037,296


Comprehensive income for the year

Loss for the year
-
(701,386)
(701,386)



At 1 January 2023
1,350,000
(1,014,090)
335,910


Comprehensive income for the year

Profit for the year
-
16,281
16,281


At 31 December 2023
1,350,000
(997,809)
352,191


The notes on pages 11 to 23 form part of these financial statements.

Page 10

 
COLNAGHI UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.


General information

Colnaghi UK Limited is a private company limited by shares, and is incorporated in England and Wales, registration number 12101175. The address of its registered office is 26 Bury Street, London, SW1Y 6AL.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).

The following principal accounting policies have been applied:

 
2.2

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
•    the requirements of Section 7 Statement of Cash Flows;
•    the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
•    the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.48(a)(iii), 11.48(a)(iv),
     11.48(b) and 11.48(c);
•    the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Colnaghi Holding Ltd as at 31 December 2023 and these financial statements may be obtained from 26 Bury Street, London, England, SW1Y 6AL.
 
Page 11

 
COLNAGHI UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.3

Foreign currency translation

The Company's presentational currency and functional currency are GBP.
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.

 
2.4

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of artwork on a consignment basis
The Company acts as a principal over the sale of artwork on a consignment basis. Sale on such basis is recognised when a final agreement has been made between both the Company and the buyer of the item. The sale agreement or invoice date would be the recognition point of sales.
Sale of artwork as inventory
Revenue generated from the sale of artwork from the inventory owned by the Company is recognised when the significant risks and rewards of ownership have been transferred to the customer. This is normally the sale agreement date. 
Sale of artwork as an intermediary
The Company recognises a commission income on the sale of artwork as an intermediary upon a sale agreement between both the seller and the buyer of the item. 

 
2.5

Interest income

Interest income is recognised in profit or loss using the effective interest method.

Page 12

 
COLNAGHI UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.6

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 
2.7

Borrowing costs

All borrowing costs are recognised in profit or loss in the year in which they are incurred.

 
2.8

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the Company in independently administered funds.

 
2.9

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

Fixtures and fittings
-
20%
Office equipment
-
20%
Computer equipment
-
33%

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

Page 13

 
COLNAGHI UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.10

Stocks

Stocks of art work are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase and attributable overheads.
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its new valuation. The impairment loss is recognised immediately in profit or loss.

 
2.11

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

 
2.12

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

 
2.13

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 
2.14

Holiday pay accrual

A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the balance sheet date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the balance sheet date.

 
2.15

Financial instruments

The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the Company's Balance sheet when the Company becomes party to the contractual provisions of the instrument.

Basic financial assets

Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.

Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of
Page 14

 
COLNAGHI UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.15
Financial instruments (continued)

financial instruments.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each reporting date. 

Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.

If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.

Financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.

Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.

Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.

Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.

Derecognition of financial instruments

Derecognition of financial assets

Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.

Derecognition of financial liabilities

Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.
Page 15

 
COLNAGHI UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.15
Financial instruments (continued)



3.


Judgments in applying accounting policies and key sources of estimation uncertainty

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The impairment of assets including stocks in the financial statements requires Management's estimation and judgements. The assessment process of stock valuation is described in the Stocks accounting policy in note 2.10.


4.


Turnover

An analysis of turnover by class of business is as follows:


2023
2022
£
£

Inventory sales
7,327,762
6,127,781

Consignment sales
12,904,883
16,218,813

Sale commission
4,367,812
1,067,548

Other
338,319
86,556

24,938,776
23,500,698



Analysis of turnover by country of destination:

2023
2022
        £
        £

United Kingdom

2,109,009

5,601,482

Europe

15,644,471

3,050,733

USA

7,185,296

4,706,138

Rest of the world

-

10,142,345


24,938,776

23,500,698


Page 16

 
COLNAGHI UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

5.


Operating profit/(loss)

The operating profit/(loss) is stated after charging:

2023
2022
£
£

Depreciation
7,025
4,164

Exchange differences
(74,269)
(117,271)


6.


Auditors' remuneration

During the year, the Company obtained the following services from the Company's auditors:


2023
2022
£
£

Fees payable to the Company's auditors for the audit of the Company's financial statements
10,500
9,500

The Company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the consolidated accounts of the parent Company.


7.


Employees

Staff costs were as follows:


2023
2022
£
£

Wages and salaries
423,756
575,369

Social security costs
43,690
62,259

Cost of defined contribution scheme
13,200
20,365

480,646
657,993


The average monthly number of employees, including the directors, during the year was as follows:


        2023
        2022
            No.
            No.







Directors
1
1



Administrative and support
6
8



Sales
1
1

8
10

Page 17

 
COLNAGHI UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

8.


Interest receivable

2023
2022
£
£


Other interest receivable
7,797
6,456

7,797
6,456


9.


Interest payable and similar expenses

2023
2022
£
£


Bank interest payable
368
12,751

Other loan interest payable
580,488
329,548

580,856
342,299

Page 18

 
COLNAGHI UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

10.


Taxation


2023
2022
£
£



Total current tax
-
-

Deferred tax

Total deferred tax
-
-


Taxation on profit on ordinary activities
-
-

Factors affecting tax charge for the year

The tax assessed for the year is higher than (2022 - higher than)  the applicable rate of corporation tax inthe UK of 23.5% (2022 - 19%). On 1 April 2023, the main rate of corporation tax increased from 19% to 25%, a combination of the two rates over the period is 23.5%. The differences are explained below:

2023
2022
£
£


Profit/(loss) on ordinary activities before tax
16,281
(701,386)


Profit/(loss) on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.5% (2022 - 19%)
3,826
(133,263)

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
9,374
69,277

Capital allowances for year in excess of depreciation
(2,685)
(773)

Unrelieved tax losses carried forward
(10,515)
64,759

Total tax charge for the year
-
-


Factors that may affect future tax charges

The Company has estimated tax losses of £971,633 (2022: £1,016,379) to carry forward against future taxable profits. No deferred tax asset is recognised on the tax losses as Management considers it is prudent not to do so.

Page 19

 
COLNAGHI UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

11.


Tangible fixed assets





Fixtures and fittings
Office equipment
Computer equipment
Total

£
£
£
£



Cost or valuation


At 1 January 2023
11,508
424
9,654
21,586


Additions
13,831
-
4,932
18,763


Disposals
-
-
(2,420)
(2,420)



At 31 December 2023

25,339
424
12,166
37,929



Depreciation


At 1 January 2023
3,045
255
5,178
8,478


Charge for the year on owned assets
4,310
85
2,630
7,025


Disposals
-
-
(890)
(890)



At 31 December 2023

7,355
340
6,918
14,613



Net book value



At 31 December 2023
17,984
84
5,248
23,316



At 31 December 2022
8,463
169
4,476
13,108

Page 20

 
COLNAGHI UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

12.


Stocks

2023
2022
£
£

Artwork inventory
10,064,577
10,072,198

10,064,577
10,072,198



13.


Debtors

2023
2022
£
£


Trade debtors
388,852
410,810

Amounts owed by group undertakings
565,271
356,061

Other debtors
149,389
494,357

Prepayments and accrued income
260,297
717,667

1,363,809
1,978,895



14.


Cash and cash equivalents

2023
2022
£
£

Cash at bank and in hand
1,884,193
1,573,047

Less: bank overdrafts
-
(11)

1,884,193
1,573,036


Page 21

 
COLNAGHI UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

15.


Creditors: Amounts falling due within one year

2023
2022
£
£

Bank overdrafts
-
11

Other loans
-
5,279,548

Trade creditors
595,472
477,050

Amounts owed to group undertakings
10,339,883
5,414,053

Other taxation and social security
20,080
20,109

Other creditors
47,025
104,553

Accruals and deferred income
1,981,244
2,006,014

12,983,704
13,301,338


Secured loans
In the prior year, included in Other loans was an unsecured non-related party loan of £5,279,548 with an interest at 13.5% per annum being charged. The loan was repaid by a novation to a new loan which is due by the parent company in the year.


16.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



1,350,000 (2022 - 1,350,000) Ordinary shares of £1.00 each
1,350,000
1,350,000



17.


Reserves

Profit and loss account

The profit and loss account consists of accumulated profits and losses.


18.


Pension commitments

The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £13,200 (2022: £20,365). 
Contributions totalling £1,955 (2022: £2,835) were payable to the fund at the balance sheet date and are included in creditors.

Page 22

 
COLNAGHI UK LTD
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

19.


Related party transactions

During the year, the Company paid consultancy fees of £169,270 (2022: £120,853) to connected companies by virtue of common substantial shareholding. The Company also paid sales commission of £714,018 (2022: £811,873) to these companies.
At the balance sheet date, the Company was owed £23,074 (2022: £186,419) by a connected company by virtue of common substantial shareholding.
During the year the Company made purchases of £6,716,059 (2022: made sales of £953,359) from a company connected to the Company's parent undertaking.
During the year, the Company made a donation of £87,068 (2022: £319,813) to a charity in which the Colnaghi Holding Ltd group has a 100% interest.


20.


Controlling party

The Company's parent undertaking is Colnaghi Holding Ltd. The results of the Company are included within the consolidated accounts of Colnaghi Holding Ltd which are available to the public and may be obtained from 26 Bury Street, London, England, SW1Y 6AL.

 
Page 23