Company registration number 08301967 (England and Wales)
JAZ TOYS UK LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
JAZ TOYS UK LTD
COMPANY INFORMATION
Directors
J A Zebersky
J A Taylor
(Appointed 11 May 2023)
Company number
08301967
Registered office
16A Crane Grove
Islington
London
N7 8LE
Auditor
BKL Audit LLP
Chartered Accountants
5 Fleet Place
London
EC4M 7RD
JAZ TOYS UK LTD
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 8
Statement of income and retained earnings
9
Statement of financial position
10
Notes to the financial statements
11 - 21
JAZ TOYS UK LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Fair review of the business and future developments
A summary of the results of the year's trading is given on page 9 of the financial statements.
The company is a distributor and wholesaler of a wide range of children's toys and accessories within the UK and Europe.
The company is a 100% subsidiary of Jaz Toys HK Limited, incorporated in Hong Kong.
Principal risks and uncertainties
Although the company is reliant on renewals of licences in order to be able to sell their products, the directors and management team have long standing relationships with the licensor companies and consistently aim to prolong and strengthen the relationships.
The company must also ensure it is fully compliant with both UK and EU legislation, as there is a legal and financial risk if toys that are sold in the UK or the EU are not UK and EU compatible.
The company is exposed to a number of financial risks from its operating activities. The directors are responsible for ensuring that the business risks are actively managed. The business does not trade financial instruments or use financial derivatives. The principal risks are:
Currency risk - Due to the global nature of our business, with sales and operations overseas, the business is exposed to fluctuations of sterling against our other trading currencies. The company generally does not attempt to match assets and liabilities by currency and does not use derivative contracts to manage foreign currency risks in a meaningful way.
Credit risk - The company manages its credit risk by ensuring that it only engages with counterparts that have high credit ratings. The group sets and actively monitors limits for its customers based on reference checks and payment history and further protection is provided by credit insurance on certain customers.
Liquidity (cash flow) risk - The company manages its cash flow to ensure it can meet its obligations and requirements. Excess funds are transferred to the group treasury management company to optimise liquidity and investment returns, without impacting the company’s overall liquidity position.
Price risk - Regulation and worldwide price transparency continue to create pressure on gross margins. The company closely monitors both gross margins and overheads with the objective of achieving adequate shareholder returns.
The company's approach to risk management aligns with that taken at group level.
Development and performance
Jaz Toys UK Ltd invests in its ongoing development through marketing spend, sales incentives and cost-cutting initiatives. The company, with its counterparts in the group more widely, continually explores opportunities to license newly developed toy lines in order to drive business growth and development with a focus on increasing sales and maintaining profit margins. In order to support its current and future progress, the company has invested in headcount and staff development. The company is part of a wider global organisation that remains alert to developments in the toy industry responding effectively to both risks and opportunities in order to support ongoing development and future business performance.
JAZ TOYS UK LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Key performance indicators
2023
2022
2021
Revenue
£87.85m
£77.30m
£41.15m
Gross profit percentage
42.82%
46.2%
48.4%
Operating profit
£15.71m
£14.37m
£7.20m
The gross profit margins have decreased compared to the prior year due to an amendment to the group transfer pricing agreement. Plans are in place to increase sales in the coming year by working extensively with existing customers whilst actively seeking to win new business and acquire new licences.
Statement by the directors in performance of their duties in accordance with s172(1) Companies Act 2006
The directors of the company, as those of all UK companies, must act in accordance with a set of general duties. These duties are detailed in section 172 of the UK Companies Act 2006 and include a duty to promote the success of the company. These duties can be summarised as follows:
'A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:
the likely consequences of any decision in the long term;
the interests of the company's employees;
the need to foster the company's business relationships with suppliers, customers and others;
the impact of the company's operations on the community and the environment; and
the desirability of the company maintaining a reputation for high standards of business conduct’.
The following paragraphs summarise how the directors fulfil their duties.
Promoting the success of the company
Jaz Toys UK Ltd (“the company”) is the UK component of the Jazwares global organisation, an international group of companies operating in the toys and games industry. The group is ultimately owned by Berkshire Hathaway Inc. As noted in the commitment to “giving back through play”, the global Jazwares organisation is committed to furthering the education and development of children through play in both local and global communities. The UK company shares this commitment as well as the values of the Jazwares global organisation. These values are:
Humility - We recognise the value in others and treat everyone with respect. Our strength lies in our people and talent.
Passion - Our conviction and enthusiasm show in our product, relationships, and commitment to our community.
Collaboration - We share the same vision worldwide, constantly striving to improve and innovate together.
These values form a key part of our culture and having regard to them ensures we, as directors, can continue to promote the success of the company.
Risk management
As the company continues to experience strong growth, our business and our risk environment also become more complex. It is therefore vital that we effectively identify, evaluate, manage, and mitigate the risks we face, and that we continue to evolve our approach to risk management including long-term decision making. Alongside the principal risks and uncertainties set out above, we have access to the resources of a large global organisation to ensure that we monitor and maintain an effective oversight of the risks we face including those arising from regulatory changes. This includes a network of external consultants, specialists and advisors accessible across the global group. Our focus on risk management ensures compliance with the company’s ongoing legal and regulatory requirements.
JAZ TOYS UK LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Our people
As found throughout the Jazwares organisation, the company believes that it should “put people first, always.” Whilst the number of employees operating within the UK company is relatively small for its revenue levels when compared with other industries, we believe our employees and the culture they operate in are critically important to the company’s success. To continue to compete and succeed in a highly competitive market, it is crucial that we continue to attract, retain and motivate employees. To support these objectives, the company strives to maintain its corporate culture by being “more than the toys we make” and we remain committed to “putting people first”. We offer competitive compensation and benefits, support the health and wellbeing of our employees, foster an inclusive, diverse and engaged workforce and constantly turn our focus to developing talent throughout the organisation.
Business relationships: Suppliers and customers
As a key requirement for building the company’s trade, the directors are aware of the need to foster strong relationships with suppliers, customers and other wider stakeholders in the business. The directors look to discharge these duties by engaging in regular dialogue with customers, suppliers and wider stakeholders. The company remains open to building and fostering new relationships with key stakeholders in the wider toy industry.
Community and environment
The company's aim is to ensure that the business is conducted in a socially beneficial and environmentally friendly manner. The company is party to the group’s “Jazwares Cares” charitable initiative that seeks to give back to communities through product donation, sponsorship, education-based programmes, and the giving of the time and talent of our people.
Maintaining a reputation for high standards of business conduct
As the directors of the company, our intention is to conduct our actions responsibly and to ensure that management operates the business in a responsible and accountable manner. We strongly believe that operating in line with the high standards of business conduct and good governance expected for a business such as ours will help the business to grow further over the coming years.
J A Taylor
Director
18 October 2024
JAZ TOYS UK LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
The drectors' review of the business performance and risk exposure is detailed in the Strategic Report.
Principal activities
The principal activity of the company is the distribution and wholesale of children's toys and accessories.
Branches
The company has one overseas branch, located in Paris, France.
Results and dividends
The results for the year are set out on page 9.
During the year the company did not declare a dividend (2022 - £3,500,000) to its parent company, Jaz Toys HK Limited.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
J A Zebersky
R A Albano
(Resigned 15 February 2023)
J J Daly Jr.
(Resigned 11 February 2023)
J A Taylor
(Appointed 11 May 2023)
Auditor
Wilson Wright LLP acted as auditor of the company up until 2 April 2024. On 2 April 2024, Wilson Wright LLP transferred its audit business to BKL Audit LLP. The members subsequently consented to the appointment of BKL Audit LLP as auditor to the company. The auditor BKL Audit LLP will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
Energy and carbon report
As the company has not consumed more than 40,000 kWh of energy in this reporting period, it qualifies as a low energy user under these regulations and is not required to report on its emissions, energy consumption or energy efficiency activities.
JAZ TOYS UK LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
J A Taylor
Director
18 October 2024
JAZ TOYS UK LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF JAZ TOYS UK LTD
- 6 -
Opinion
We have audited the financial statements of Jaz Toys UK Ltd (the 'company') for the year ended 31 December 2023 which comprise the statement of income and retained earnings, the statement of financial position 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).
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.
JAZ TOYS UK LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF JAZ TOYS UK LTD
- 7 -
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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to the failure to comply with tax regulations, EU safety legislation, anti-bribery and anti-corruption laws, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated management's incentives and opportunities for fraud manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to unrecorded liabilities. Audit procedures performed by the auditors included:
discussions with the directors, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud;
identifying and testing manual journal entries, in particular any journal entries posted with unclear rationale; and
assessing management's ability to apply cut-off fairly and correctly due to group reporting restrictions.
There are inherent limitations in the audit procedures described above, and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through 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.
JAZ TOYS UK LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF JAZ TOYS UK LTD
- 8 -
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
Aron Kleiman ACA (Senior Statutory Auditor)
For and on behalf of BKL Audit LLP
21 October 2024
Chartered Accountants and Statutory Auditor
5 Fleet Place
London
EC4M 7RD
JAZ TOYS UK LTD
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Revenue
3
87,847,682
77,298,111
Cost of sales
(50,228,380)
(41,562,903)
Gross profit
37,619,302
35,735,208
Distribution costs
(7,255,520)
(10,388,733)
Administrative expenses
(14,651,145)
(10,975,304)
Operating profit
4
15,712,637
14,371,171
Investment income
8
337,130
20,860
Finance costs
9
(63,297)
(296,114)
Profit before taxation
15,986,470
14,095,917
Tax on profit
10
(3,758,427)
(2,732,357)
Profit for the financial year
12,228,043
11,363,560
Retained earnings brought forward
19,216,083
11,352,523
Dividends
11
(3,500,000)
Retained earnings carried forward
31,444,126
19,216,083
The income statement has been prepared on the basis that all operations are continuing operations.
JAZ TOYS UK LTD
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Non-current assets
Intangible assets
12
706,258
Property, plant and equipment
13
69,567
83,552
Investments
14
21,433
21,433
797,258
104,985
Current assets
Inventories
16
7,193,390
5,335,749
Trade and other receivables
17
33,700,971
19,394,174
Cash and cash equivalents
474,960
13,302,501
41,369,321
38,032,424
Current liabilities
18
(10,722,353)
(18,921,226)
Net current assets
30,646,968
19,111,198
Net assets
31,444,226
19,216,183
Equity
Called up share capital
20
100
100
Retained earnings
31,444,126
19,216,083
Total equity
31,444,226
19,216,183
The financial statements were approved by the board of directors and authorised for issue on 18 October 2024 and are signed on its behalf by:
J A Taylor
Director
Company registration number 08301967 (England and Wales)
JAZ TOYS UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information
Jaz Toys UK Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 16A Crane Grove, Islington, London, N7 8LE.
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.
In accordance with FRS 102 Section 1.12, the company has taken advantage of the disclosure exemptions. The main exemption taken is the preparation of a cash flow statement and disclosure of key management personnel remuneration.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
The financial statements of the company are consolidated in the financial statements of Berkshire Hathaway Inc., the company's ultimate parent company. These consolidated financial statements are available from its registered office at 3555 Farnam Street, Omaha, NE 68131 and www.berkshirehathaway.com/2023ar/linksannual23.html.
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
Revenue represents sales of goods and commissions receivable excluding trade discounts and value added tax. Revenue is recognised when the goods are delivered or the service is performed to the extent that it is probable that economic benefits will flow into the company.
1.4
Intangible fixed assets other than goodwill
Intangible assets are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Licenses
33% Straight line
1.5
Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost net of depreciation and any impairment losses.
JAZ TOYS UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
Over the term of the lease
Fixtures, fittings & equipment
20% / 33.33% Straight line
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 the statement of income.
1.6
Non-current investments
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in the income statement.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.7
Impairment of non-current assets
At each reporting period end date, the company 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.
1.8
Inventories
Inventories comprise finished goods. Inventories are stated at the lower of cost and estimated selling price less costs to sell.
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 sell is recognised as an impairment loss in the income statement. Reversals of impairment losses are also recognised in the income statement.
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks and other short-term liquid investments with original maturities of three months or less.
1.10
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.
JAZ TOYS UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
Basic financial assets
Basic financial assets, which include trade and other receivables cash and bank balances and amounts owed by group companies, 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 the statement of income, 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 the statement of income.
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 the statement of income.
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.
Basic financial liabilities
Basic financial liabilities, including trade and other payables and loans from fellow group companies 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.
JAZ TOYS UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
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.
1.11
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.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
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.
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 income statement, 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 when the company has 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.
1.13
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense.
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.
JAZ TOYS UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to income 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 lease asset are consumed.
1.16
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the income statement for the year.
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.
The company does not have any key assumptions concerning the future, or other key sources of estimation uncertainty in the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
3
Revenue
An analysis of the company's revenue is as follows:
2023
2022
£
£
Revenue analysed by class of business
Sales
81,111,289
72,891,494
Commission receivable
6,736,393
4,406,617
87,847,682
77,298,111
2023
2022
£
£
Revenue analysed by geographical market
United Kingdom
74,523,574
66,844,126
Europe
8,583,426
6,829,490
Rest of the World
4,740,682
3,624,495
87,847,682
77,298,111
JAZ TOYS UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Revenue
(Continued)
- 16 -
2023
2022
£
£
Other revenue
Interest income
337,130
20,860
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
559,375
(738,507)
Amortisation of intangible assets
407,661
-
Operating lease charges
182,379
119,299
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
46,000
42,000
For other services
Taxation compliance services
7,350
5,000
All other non-audit services
18,000
17,000
25,350
22,000
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
59
49
JAZ TOYS UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
6
Employees
(Continued)
- 17 -
The comparative number has been adjusted to exclude those directors who are not employed under contracts of service.
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
5,297,798
3,978,149
Social security costs
797,661
426,443
Pension costs
177,166
103,995
6,272,625
4,508,587
7
Directors' remuneration
2023
2022
£
£
Remuneration
257,377
Pension contributions
15,910
-
273,287
Emoluments from this company for directors’ qualifying services are deemed to be incidental to their other operationally specific duties. No remuneration arrangements were adjusted when existing employees were appointed as directors.
All other required disclosures of amounts paid to or receivable by key management personnel or directors are deemed by the company to be exempt from disclosure.
8
Investment income
2023
2022
£
£
Interest income
Interest receivable from group undertakings
337,130
20,860
9
Finance costs
2023
2022
£
£
Interest payable to group undertakings
63,297
296,114
JAZ TOYS UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
3,675,059
2,726,632
Adjustments in respect of prior periods
83,368
5,725
Total current tax
3,758,427
2,732,357
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
15,986,470
14,095,917
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
3,760,105
2,678,224
Tax effect of expenses that are not deductible in determining taxable profit
38,550
53,760
Depreciation in excess of capital allowances
9,103
16,492
Under provided in prior years
83,368
5,725
Other timing differences
(132,699)
(21,844)
Taxation charge for the year
3,758,427
2,732,357
11
Dividends
2023
2022
£
£
Interim paid
3,500,000
JAZ TOYS UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
12
Intangible fixed assets
Licenses
£
Cost
At 1 January 2023
Additions
1,113,919
At 31 December 2023
1,113,919
Amortisation and impairment
At 1 January 2023
Amortisation charged for the year
407,661
At 31 December 2023
407,661
Carrying amount
At 31 December 2023
706,258
At 31 December 2022
13
Property, plant and equipment
Leasehold improvements
Fixtures, fittings & equipment
Total
£
£
£
Cost
At 1 January 2023
116,826
257,763
374,589
Additions
6,844
29,889
36,733
At 31 December 2023
123,670
287,652
411,322
Depreciation and impairment
At 1 January 2023
75,436
215,601
291,037
Depreciation charged in the year
26,404
24,314
50,718
At 31 December 2023
101,840
239,915
341,755
Carrying amount
At 31 December 2023
21,830
47,737
69,567
At 31 December 2022
41,390
42,162
83,552
14
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
15
21,433
21,433
JAZ TOYS UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
15
Subsidiaries
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Indirect
Jazwares Europe Management GmbH
Mina-Rees-Strasse 8, 64295 Darmstadt, Germany
Ordinary shares
100.00
-
Jazwares Europe GmbH & Co. KG
Mina-Rees-Strasse 8, 64295 Darmstadt, Germany
Ordinary shares
100.00
-
Jazwares GmbH
Mina-Rees-Strasse 8, 64295 Darmstadt, Germany
Ordinary shares
-
100.00
Jazwares Holland BV
Schiphol Boulevard 359, 1118BJ Schiphol, Netherlands
Ordinary shares
-
100.00
16
Inventories
2023
2022
£
£
Goods for resale
7,193,390
5,335,749
17
Trade and other receivables
2023
2022
£
£
Amounts falling due within one year:
Trade receivables
18,421,228
17,864,050
Corporation tax recoverable
124,941
Amounts owed by group undertakings
14,908,086
1,409,787
Other receivables
58,637
13,062
Prepayments and accrued income
188,079
107,275
33,700,971
19,394,174
Other receivables includes an amount of £5,770 (2022 - £6,062 ) which is due after more than one year.
18
Current liabilities
2023
2022
£
£
Trade payables
4,288,640
3,434,857
Amounts owed to group undertakings
681,386
8,266,816
Corporation tax
1,376,632
Other taxation and social security
5,039,537
5,002,226
Other payables
5,645
1,657
Accruals and deferred income
707,145
839,038
10,722,353
18,921,226
JAZ TOYS UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
177,166
103,995
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.
20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100
100
100
100
The shares have full voting, dividend and capital distribution rights.
21
Operating lease commitments
Lessee
At the reporting year 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
149,234
54,783
Between two and five years
63,218
212,452
54,783
22
Ultimate controlling party
Jaz Toys HK Limited, incorporated in Hong Kong, was the company's immediate parent company at 31 December 2023.
Berkshire Hathaway Inc., incorporated and listed in the US, was regarded as the company's ultimate parent company at 31 December 2023.
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