Company registration number 03459159 (England and Wales)
KPS DIGITAL LTD.
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
KPS DIGITAL LTD.
COMPANY INFORMATION
Directors
Mr T Hillman
Mr B Moffat
Mr L Musso
Company number
03459159
Registered office
1010 Eskdale Road
Winnersh Triangle
Wokingham
Berkshire
United Kingdom
RG41 5TS
Auditor
MHA
Building 4
Foundation Park
Roxborough Way
Maidenhead
SL6 3UD
KPS DIGITAL LTD.
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Statement of financial position
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 24
KPS DIGITAL LTD.
STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 1 -

The directors present the strategic report for the year ended 30 September 2024.

Strategy and business model

KPS Digital Ltd is a digital transformation company, based in London UK, specialising in the design, delivery, maintenance and support of digital customer experience platforms for both retailers and businesses that sell to other businesses.  While the majority of the solutions that KPS Digital Ltd currently provides are based on the SAP Commerce Cloud platform, the company continues to expand the number of services, solutions and platforms using other software solutions within the SAP CX landscape as well as those provided by other vendors such as Mirakl and Salesforce. 

 

The strategy of the business is as follows: 

 

In keeping with this strategy, the directors have expanded the UK senior leadership team to include additional sales and account management representation.

 

Business Review

 

During this year, the company has seen growth in both turnover and underlying profit, despite the challenging trading environment. Turnover in the year ended 30th September 2024 has increased to £23.4m from £22.5m in the previous financial year.  This is due to the acquisition of a number of new customers throughout the financial year.  The majority of this revenue has been generated through the recurring digital CX continuous improvement services provided to retailers and businesses that sell to other businesses.

 

During the financial year, the company incurred two large one-off, exceptional costs which impacted profit. The first was a large impairment cost of £583k incurred as a result of The Body Shop International Limited, one of KPS Digital’s customers, going into administration. The second was a cost of £236k incurred as a result of ending the lease of the KPS Digital Ltd London offices early. Since the Covid-19 pandemic, the company has further embraced remote working and therefore no longer needs the same office space. A new long-term lease was signed for a smaller office space in the same building which will result in a net saving of approximately £1m over the first 5 years.

 

Because of these one-off costs, profit before taxation (PBT) in this year marginally decreased to £3.94m compared to £4.07m in the previous financial year. However, excluding these one-off costs, the underlying PBT was £4.76m which was a notable increase in underlying profit margins.

Principal risks and uncertainties

The directors have identified the following principal risks and uncertainties affecting the company: 

KPS DIGITAL LTD.
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 2 -
Economic and market risk

Over the past year, the UK has seen the rate of inflation decrease close to the BOE’s target rate of 2%. However, interest rates remain high and are expected to slowly reduce over the next 12 months. While the economic outlook is now more favorable than 12 months ago, many companies remain cautious when committing to large-scale capital investments.

 

Additionally, the UK Government’s November 2024 budget levied tax rises on workers and businesses which has dented business and consumer confidence.

 

To mitigate these risks, the directors are investing further in sales, marketing and technical enablement in both existing services and new business lines such as Salesforce, native app development and other digital commerce platforms.

Market saturation

KPS Digital now has a significant market share within the UK SAP CX space and therefore the addressable market within this area is reducing. To counter this, the directors are looking to apply more focus to the SAP CX space within Northern Europe as well as expanding into new business lines such as Salesforce and other digital commerce platforms.

Outlook

The directors consider that, while market and economic pressures are challenging, the company is in a strong position to leverage its market strength, existing client-base, and reputation for quality and service to continue to grow market share of its existing services throughout Northern Europe and to grow revenues and profitability through additional complementary products, solutions and services such as Mirakl, Salesforce and other digital commerce platforms.

On behalf of the board

Mr B Moffat
Director
29 January 2025
KPS DIGITAL LTD.
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 3 -

The directors present their annual report and financial statements for the year ended 30 September 2024.

Principal activities

The principal activity of the company continued to be that of design, consultancy, implementation and support of Digital CX solutions for retailers and businesses that sell to other business, primarily using SAP CX, Salesforce and Mirakl platforms.

Results and dividends

The results for the year are set out on page 8.

Ordinary dividends were paid amounting to £2,500,000. The directors do not recommend payment of a further dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Mr T Hillman
Mr B Moffat
Mr L Musso
Auditor

A resolution to reappoint MHA as independent auditor will be proposed at the next Annual General Meeting.

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:

 

 

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.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

KPS DIGITAL LTD.
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 4 -
On behalf of the board
Mr B Moffat
Director
29 January 2025
KPS DIGITAL LTD.
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF KPS DIGITAL LTD.
- 5 -
Opinion

We have audited the financial statements of KPS Digital Ltd. (the 'company') for the year ended 30 September 2024 which comprise 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 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:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

KPS DIGITAL LTD.
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF KPS DIGITAL LTD.
- 6 -
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:

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:

 

Enquiry of management and those charged with governance around actual and potential litigation and claims:

 

Enquiry of entity staff in finance and compliance functions to identify any instances of non-compliance with laws and regulations:

 

Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias, and;

 

Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations,;

 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

KPS DIGITAL LTD.
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF KPS DIGITAL LTD.
- 7 -

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Jason Mitchell MBA BSc FCA (Senior Statutory Auditor)
for and on behalf of
MHA
Statutory Auditor
Maidenhead, United Kingdom
29 January 2025
MHA is the trading name of MacIntyre Hudson LLP, a limited liability partnership in England and Wales (registered number OC312313).
KPS DIGITAL LTD.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 8 -
2024
2023
Notes
£
£
Turnover
3
23,355,449
22,516,533
Cost of sales
(13,789,486)
(13,758,896)
Gross profit
9,565,963
8,757,637
Administrative expenses
(4,872,021)
(4,693,808)
Exceptional items
5
(819,093)
-
0
Operating profit
4
3,874,849
4,063,829
Interest receivable and similar income
9
63,591
22,694
Interest payable and similar expenses
10
-
0
(15,515)
Profit before taxation
3,938,440
4,071,008
Tax on profit
11
(1,003,324)
(832,314)
Profit and total comprehensive income for the year
2,935,116
3,238,694

The income statement has been prepared on the basis that all operations are continuing operations.

KPS DIGITAL LTD.
STATEMENT OF FINANCIAL POSITION
AS AT
30 SEPTEMBER 2024
30 September 2024
- 9 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
13
356,201
317,428
Current assets
Debtors
15
6,377,310
6,202,901
Cash at bank and in hand
1,872,523
1,517,741
8,249,833
7,720,642
Creditors: amounts falling due within one year
16
(2,391,842)
(2,207,123)
Net current assets
5,857,991
5,513,519
Total assets less current liabilities
6,214,192
5,830,947
Provisions for liabilities
Deferred tax liability
17
-
0
51,871
-
(51,871)
Net assets
6,214,192
5,779,076
Capital and reserves
Called up share capital
19
208
208
Share premium account
289,768
289,768
Capital redemption reserve
18
18
Profit and loss reserves
5,924,198
5,489,082
Total equity
6,214,192
5,779,076

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 29 January 2025 and are signed on its behalf by:
Mr B Moffat
Director
Company registration number 03459159 (England and Wales)
KPS DIGITAL LTD.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 10 -
Share capital
Share premium account
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 October 2022
208
289,768
18
3,650,388
3,940,382
Year ended 30 September 2023:
Profit and total comprehensive income
-
-
-
3,238,694
3,238,694
Dividends
12
-
-
-
(1,400,000)
(1,400,000)
Balance at 30 September 2023
208
289,768
18
5,489,082
5,779,076
Year ended 30 September 2024:
Profit and total comprehensive income
-
-
-
2,935,116
2,935,116
Dividends
12
-
-
-
(2,500,000)
(2,500,000)
Balance at 30 September 2024
208
289,768
18
5,924,198
6,214,192
KPS DIGITAL LTD.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 11 -
2024
2023
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
23
2,436,482
3,737,465
Income taxes paid
(483,630)
(1,439,807)
Net cash inflow from operating activities
1,952,852
2,297,658
Investing activities
Purchase of tangible fixed assets
(347,382)
(23,318)
Proceeds from disposal of tangible fixed assets
235,721
-
0
Loans made to other entities
(800,000)
(1,750,000)
Interest received
63,591
22,056
Net cash used in investing activities
(848,070)
(1,751,262)
Financing activities
Dividends paid
(750,000)
(100,000)
Net cash used in financing activities
(750,000)
(100,000)
Net increase in cash and cash equivalents
354,782
446,396
Cash and cash equivalents at beginning of year
1,517,741
1,071,345
Cash and cash equivalents at end of year
1,872,523
1,517,741
KPS DIGITAL LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 12 -
1
Accounting policies
Company information

KPS Digital Ltd. is a private company limited by shares incorporated in England and Wales. The registered office is 1010 Eskdale Road, Winnersh Triangle, Wokingham, Berkshire, United Kingdom, RG41 5TS.

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
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

 

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

Turnover from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied: the amount of revenue can be measured reliably, it is probable that the Company will receive the consideration due under the contract, the stage of completion of the contract at the end of the reporting period can be measured reliably and the costs incurred and the costs to complete the contract can be measured reliably.

1.4
Tangible fixed assets

Tangible fixed assets 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:

Short Leasehold
10% on cost
Improvements to property
10% on cost
Fixtures and fittings
20% on cost
Computers
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.

KPS DIGITAL LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
1
Accounting policies
(Continued)
- 13 -
1.5
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible 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.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

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.

Basic financial assets

Basic financial assets, which include debtors, cash and bank balances and amounts owed by group undertakings, 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.

KPS DIGITAL LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
1
Accounting policies
(Continued)
- 14 -
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.

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 creditors and amounts owed to group undertakings, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

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

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

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.

KPS DIGITAL LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
1
Accounting policies
(Continued)
- 15 -
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.

1.9
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. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the 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.

1.10
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 fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.11
Retirement benefits

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.

1.12
Leases

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

KPS DIGITAL LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
1
Accounting policies
(Continued)
- 16 -
1.13
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 in the period are included in profit or loss.

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.

 

Management are of the opinion that there are no critical judgements or key sources of estimation uncertainty when applying the Company's accounting policies, which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities as at the year end.

3
Turnover

The turnover and profit before taxation are attributable to the one principal activity of the Company.

 

2024
2023
£
£
Turnover analysed by geographical market
United Kingdom
19,693,497
19,956,432
Rest of Europe
3,661,952
2,560,101
23,355,449
22,516,533
4
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses
29,608
51,567
Depreciation of owned tangible fixed assets
76,041
105,886
Profit on disposal of tangible fixed assets
(3,153)
-
Operating lease charges
264,122
435,719
KPS DIGITAL LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 17 -
5
Exceptional item
2024
2023
£
£
Expenditure
Bad debts
583,372
-
Lease termination
235,721
-
819,093
-

During the financial year, the company incurred two large one-off, exceptional costs which impacted profit. The first was a large impairment cost of £583k incurred as a result of The Body Shop International Limited going into administration. The second was a cost of £236k incurred as a result of terminating the office lease early.

6
Auditor's remuneration
2024
2023
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
16,000
10,000
7
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2024
2023
Number
Number
Directors
2
3
Other Staff
84
78
Total
86
81

Their aggregate remuneration comprised:

2024
2023
£
£
Wages and salaries
7,556,403
6,422,240
Social security costs
930,578
793,799
Pension costs
190,539
237,541
8,677,520
7,453,580
KPS DIGITAL LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 18 -
8
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
818,270
674,167
Company pension contributions to defined contribution schemes
24,000
29,000
842,270
703,167

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2023 - 3).

Remuneration disclosed above include the following amounts paid to the highest paid director:
2024
2023
£
£
Remuneration for qualifying services
412,426
285,000
Company pension contributions to defined contribution schemes
12,000
12,000
9
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest receivable from group companies
26,756
22,056
Other interest income
36,835
638
Total income
63,591
22,694
10
Interest payable and similar expenses
2024
2023
£
£
Other finance costs:
Other interest
-
0
15,515
11
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
1,055,195
922,051
Adjustments in respect of prior periods
-
0
(86,693)
Total current tax
1,055,195
835,358
KPS DIGITAL LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
11
Taxation
2024
2023
£
£
(Continued)
- 19 -
Deferred tax
Origination and reversal of timing differences
(51,871)
(17,902)
Changes in tax rates
-
0
14,858
Total deferred tax
(51,871)
(3,044)
Total tax charge
1,003,324
832,314

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:

2024
2023
£
£
Profit before taxation
3,938,440
4,071,008
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 22.00%)
984,610
895,622
Tax effect of expenses that are not deductible in determining taxable profit
182
6,121
Change in unrecognised deferred tax assets
2,057
-
0
Effect of change in corporation tax rate
-
0
14,858
Depreciation on assets not qualifying for tax allowances
6,125
2,866
Adjustments in respect of prior period
-
0
(86,693)
Other permanent differences
(7,560)
(460)
Loss on disposal of non-qualifying assets
17,910
-
0
Taxation charge for the year
1,003,324
832,314
12
Dividends
2024
2023
2024
2023
Per share
Per share
Total
Total
£
£
£
£
Ordinary C
Final paid
250,000.00
140,000.00
2,500,000
1,400,000
KPS DIGITAL LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 20 -
13
Tangible fixed assets
Short Leasehold
Improvements to property
Fixtures and fittings
Computers
Total
£
£
£
£
£
Cost
At 1 October 2023
41,539
339,770
115,870
245,258
742,437
Additions
347,338
-
0
-
0
44
347,382
Disposals
(41,539)
(339,770)
(95,550)
-
0
(476,859)
At 30 September 2024
347,338
-
0
20,320
245,302
612,960
Depreciation and impairment
At 1 October 2023
16,034
140,378
84,588
184,009
425,009
Depreciation charged in the year
24,498
10,482
10,408
30,653
76,041
Eliminated in respect of disposals
(17,377)
(150,860)
(76,054)
-
0
(244,291)
At 30 September 2024
23,155
-
0
18,942
214,662
256,759
Carrying amount
At 30 September 2024
324,183
-
0
1,378
30,640
356,201
At 30 September 2023
25,505
199,392
31,282
61,249
317,428
14
Financial instruments
2024
2023
£
£
Carrying amount of financial assets
Financial assets measured at amortised cost
6,121,694
5,864,725
Cash
1,872,523
1,517,741
Carrying amount of financial liabilities
Financial liabilities measured at amortised cost
1,333,457
1,326,179

 

Financial assets measured at amortised cost comprise trade debtors, amounts owed by group undertakings, other debtors and accrued income.

 

Financial liabilities measured at amortised cost comprise trade creditors, accruals, other creditors and amounts owed to group undertakings.

KPS DIGITAL LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 21 -
15
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
3,497,746
3,534,417
Corporation tax recoverable
-
0
16,370
Amounts owed by group undertakings
331,355
-
0
Other debtors
800,669
1,861,827
Prepayments
255,616
321,806
Accrued income
1,491,924
468,481
6,377,310
6,202,901

Included within other debtors are loans to group undertakings of £800,000 (2023: £1,750,000), which are unsecured, repayable either by instalment or by full repayment at the borrower's discretion, bearing interest at 6.93% per annum (2023: between 5.06% to 6.34% per annum) and are due to mature by 31 March 2025.

16
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Trade creditors
627,553
838,591
Amounts owed to group undertakings
183,322
-
0
Corporation tax
555,195
-
0
Other taxation and social security
453,627
761,744
Deferred income
49,563
119,200
Other creditors
60,400
47,506
Accruals and deferred income
462,182
440,082
2,391,842
2,207,123
17
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Liabilities
Liabilities
2024
2023
Balances:
£
£
Accelerated capital allowances
32,019
61,447
Other temporary timing differences
(32,019)
(9,576)
-
51,871
KPS DIGITAL LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
17
Deferred taxation
(Continued)
- 22 -
2024
Movements in the year:
£
Liability at 1 October 2023
51,871
Credit to profit or loss
(51,871)
Liability at 30 September 2024
-

The deferred tax liability set out above in respect of accelerated capital allowances is expected to reverse in line with the depreciation of the underlying tangible fixed assets to which they relate, being between 3 and 10 years of the reporting date. Other timing differences are expected to reverse within 1 year of the reporting date.

 

Other temporary timing differences give rise to deferred tax assets which the company has elected to recognise up to the extent of its deferred tax liabilities.

18
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
190,539
237,541

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. Contributions totalling £40,249 (2023: £38,304) were payable to the fund at the balance sheet date.

19
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A of 1p each
19,095
19,095
191
191
Ordinary B of 1p each
1,650
1,650
17
17
Ordinary C of 1p each
10
10
-
-
Ordinary D of 1p each
10
10
-
-
Ordinary E of 1p each
10
10
-
-
20,775
20,775
208
208

All share classes have attached to them full dividend and capital distribution (including on a winding up) rights; they do not confer any rights of redemption. Ordinary A and Ordinary B shares has full voting rights. Ordinary C, Ordinary D and Ordinary E have no voting rights.

KPS DIGITAL LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 23 -
20
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:

2024
2023
£
£
Within one year
247,800
444,157
Between two and five years
826,000
112,273
1,073,800
556,430
21
Key management personnel
Remuneration of key management personnel

The remuneration of key management personnel is as follows.

2024
2023
£
£
Aggregate compensation
1,896,666
1,459,567
22
Ultimate controlling party

The Company's immediate and ultimate parent undertaking is KPS AG GmbH, a Company incorporated in Germany.

 

The Company is included in the consolidated financial statements that have been prepared by KPS AG GmbH. The consolidated financial statements for the group are available to the public and may be obtained from the head office of KPS AG GmbH; Beta-Straße 10H, 85774 Unterföhring, Munich Germany.

KPS DIGITAL LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2024
- 24 -
23
Cash generated from operations
2024
2023
£
£
Profit for the year after tax
2,935,116
3,238,694
Adjustments for:
Taxation charged
1,003,324
832,314
Finance costs
-
0
15,515
Investment income
(63,591)
(22,694)
Gain on disposal of tangible fixed assets
(3,153)
-
Depreciation and impairment of tangible fixed assets
76,041
105,886
Movements in working capital:
Increase in debtors
(1,140,779)
(322,257)
Decrease in creditors
(300,839)
(221,993)
(Decrease)/increase in deferred income
(69,637)
112,000
Cash generated from operations
2,436,482
3,737,465
24
Analysis of changes in net funds
1 October 2023
Cash flows
Other non-cash changes
30 September 2024
£
£
£
£
Cash at bank and in hand
1,517,741
354,782
-
1,872,523
Amounts owed by group undertakings
1,750,000
800,000
(1,750,000)
800,000
3,267,741
1,154,782
(1,750,000)
2,672,523
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