REGISTERED NUMBER: |
STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
FINANCIAL STATEMENTS FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
FOR |
CUBICO (UK) LIMITED |
REGISTERED NUMBER: |
STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
FINANCIAL STATEMENTS FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
FOR |
CUBICO (UK) LIMITED |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
CONTENTS OF THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
Page |
Company Information | 1 |
Strategic Report | 2 |
Report of the Directors | 7 |
Report of the Independent Auditors | 10 |
Income Statement | 14 |
Other Comprehensive Income | 15 |
Balance Sheet | 16 |
Statement of Changes in Equity | 17 |
Notes to the Financial Statements | 18 |
CUBICO (UK) LIMITED |
COMPANY INFORMATION |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
DIRECTORS: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Chartered Accountants |
and Statutory Auditors |
12 Market Street |
Hebden Bridge |
West Yorkshire |
HX7 6AD |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
The directors present their strategic report for the year ended 29th February 2024. |
PRINCIPAL ACTIVITIES |
During the year, the principal activities of the company included the sale of bathrooms products and tiles through our network of stores, as well as wholesale and online sales channels. |
INDUSTRY OVERVIEW |
The bathroom industry in the UK undoubtedly benefitted from the impact of the COVID-19 pandemic in 2020 and the associated actions taken by the UK Government to implement 'lockdowns', with the market seeing two consecutive years of uplift in spend due to increased spend on home improvements and renovations. As expected, in the 12-month period to 29th February 2024, there was a natural slowdown in customer spending and a normalisation of the bathroom market, as the pandemic's effects wore off. This, coupled with rising interest rates and pressure on customers personal finances, further added to the challenges faced by the company and the industry as a whole, as customers reduced discretionary spend on items which may be considered a non-essential or luxury expense for some consumers. |
Despite these obstacles, the company feels it has weathered the storm reasonably well and the board are broadly satisfied with the results and the year-on-year improvement.. |
REVIEW OF BUSINESS |
As of 29th February 2024, the net assets of the business amounted to £10,284,316 (2023: £10,805,515). |
The results for the Company show an operating profit of £1,021,398 for the period to 29 February 2024 and turnover of £103,497,256 for the same period. |
For operational reasons, in the previous accounting period the company extended its reporting period by 3 months, moving from 30th November 2022 to 28th February 2023. A comparison of like-for-like trading figures (March 2022 to February 2023) show an operating profit of £1,021,398 v an operating loss of £(1,560,056) in the 12 months to 28th February 2023 and turnover of £103,497,256 v turnover of £89,166,375 in the 12 months to February 2023 (an increase of 16%). |
In December 2021, the company moved to a purpose-built 330,000 sq. ft. facility at Calder Park in Wakefield, in which the Company invested £8.3m to ensure it becomes the state-of-the-art HQ and distribution centre needed to support further growth. Alongside its showrooms across the UK, it will mean the company's physical footprint exceeds 1 million sq. ft, making Easy Bathrooms the largest retailer with stores within the UK bathroom market. |
The company expects significant operational and financial efficiencies to result from the move to the new HQ in the mid to long-term, however, there have undoubtedly been some inefficiencies as we settled into the new facility, negatively impacting EBITDA. |
While we have made progress year-on-year, the operational usage of the facility is still under 60% and the company recognises that further growth and cost control is required to make the facility financially efficient. There have also been operational challenges, which the business is working hard to resolve, to ensure we meet our internal performance metrics and ensure we are delivering the best service to our customers. These challenges have resulted in increased costs, which we are trying to mitigate going forward. |
We remain committed to reinvesting, where appropriate, to cement our position as the one of the leading bathroom retailers in the UK and to ensure that we can bring revenues to appropriate levels to support the running costs of the new HQ. As of February 2024, the company operates 138 retail outlets, through which 87% of total revenues flowed during the period, with the remainder coming from business-to-business and online revenue streams. |
7 new stores were opened during the 12 months to 29th February 2024 (down from 35 in the prior reporting period), with total investment in stores opened during the period valued at £2.4m (£10.2m in prior reporting period). |
The company has taken a strategic approach by temporarily scaling back on new store openings to prioritise improving core operations and explore new revenue opportunities, such as additional online platforms and, more significantly, our new installation service, which was introduced in January 2024. |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
REVIEW OF BUSINESS (CONT..) |
Resources previously used for opening new stores have been redirected to a new refurbishment programme, to maintain the quality and appeal of existing stores and ensure that they continue to offer a fresh, modern buying experience with up-to-date product lines. |
The company is also investing further in its product portfolio to ensure we stay competitive and meet changing customer preferences, with the introduction of 1500 + new live SKUs during the reporting period. |
Additionally, there has been further investment in both technology and staff during the period. Continued investment has allowed the business to create 71 new job roles across the business in various geographical locations during the period (an uplift of 10%). |
KEY PERFORMANCE INDICATORS |
The company is focused on regular reviews of Key Performance Indicators (KPIs) and has robust reporting tools for all levels of staff. This allows every staff member to manage expectations and achieve targets. |
Progress is monitored by the board by reference to the following KPIs, among others: |
2024 | 2023 | Change |
(12 months | ) | (15 months | ) |
Turnover | £103.5m | £107.6m | £(4.1m | ) |
Gross Profit | £65.7m | £63.0m | £2.7m |
Gross Profit % | 63.5% | 58.6% | 4.9 |
Operating Profit / (Loss) | £1.0m | £(0.9m | ) | £1.9m |
Operating Profit / (Loss) % | 1.0% | (0.8% | ) | 1.8 |
EBITDA | £7.0m | £5.2m | £1.8m |
PRINCIPAL RISKS AND UNCERTAINTIES |
The management of the business and the nature of the group's growth strategy are subject to several risks. |
The directors ensure that a thorough risk management process is adopted which involves the formal review of all the risks identified below. Where possible, processes are in place to monitor and mitigate such risks. The directors have set out below the principal risks facing the business: |
Economic and market risk |
The immediate risk to the business is a fall in activity in the bathroom market. Where possible, the business will continue to increase its footprint across the UK to gain more market share, whilst keeping a close eye on the economic influences. The business is highly cash generative, given that most sales are paid for before despatch, which allows us time to react to changing market conditions by slowing down store openings or normalising the stock levels to compensate. |
Supply risk |
Given the ongoing uncertainty in the Ukraine and the Middle East the company continues to keep its supply chain under close review, ensuring additional lead times are factored in. Relationships have been developed with alternative providers, in case they are required, and regular dialogues are in place with current suppliers to track changes in market conditions. |
'Cost of living' crisis |
Since the war in Ukraine began, economic growth projections for Europe have been revised down and inflation estimates ratcheted up, with recent results in the UK falling short of expectations. The Bank of England has warned that the impact of the conflicts in both the Ukraine and the Middle East continue to cause economic uncertainty. Further base rate increases during the reporting period (from 4.00% to 5.25%) have resulted in increased pressure on UK borrowers. Specific sensitivity analysis has been performed to ensure the ongoing viability of the Company and contingency plans have been put in place should we need to react, including the slowing down of store openings or normalisation of stock levels. |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
PRINCIPAL RISKS AND UNCERTAINTIES (CONT..) |
Competition in the bathroom market |
The bathroom and tile markets are highly competitive, and the company keeps a close eye on actions of its competitors in both industries, ensuring we are keeping up to date and ahead of key product trends, that we are pricing competitively and that our overall offering, including our customer service levels, are superior to those of our competitors. |
Price risk |
The company currently purchases an element of its stock ranges in USD and EUR, both of which have been subject to fluctuations in recent years. The company has managed this risk through close monitoring of exchange rates, using forward contracts and careful negotiation with suppliers to limit the exposure. |
Credit risk |
The majority of revenue is through sales to the end consumer where goods are paid for prior to despatch. The company reduces its credit risk by actively monitoring credit accounts to ensure that debts do not become bad. This risk is also mitigated by the regular review of customer accounts to ensure that they do not exceed the agreed credit limits and terms. |
Liquidity risk |
The company mitigates liquidity risk by actively managing cash collection days and closely monitoring stock levels and turns on all SKUs. |
IT systems and infrastructure |
Our IT systems and infrastructure are fundamental to ensuring the continuity of trading across our stores and head office functions. If a major incident occurred affecting this infrastructure, it could have a detrimental impact on the businesses ability to operate effectively. To reduce this risk, and to reduce the impact of such an event if it were to happen, the company has invested significantly in developing robust recovery plans and systems, including a disaster recovery plan and use of leading cloud services. |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
SECTION 172(1) STATEMENT |
The Board of Directors of Cubico UK Limited consider, both individually and together, that they have acted in the way they consider would be most likely to promote the success of the company for the benefit of its members (having regard to the stakeholders and matters set out in s 172(1) (a)-(f) of the Companies Act 2006) in the decisions taken during the period ended 29th February 2024. |
Long-Term Decision Making |
A substantial portion of our turnover comes from customers purchasing domestic bathroom and related products. As such, a downturn in this sector could significantly impact turnover. To ensure long-term sustainability, the directors actively monitor market trends and economic conditions. Strategies to mitigate potential downturns include diversifying product offerings, exploring new customer segments and revenue streams, and investing in new product lines. The company is also focused on improving its financial position to navigate periods of economic uncertainty effectively. |
Interests of Employees |
The company recognises that its employees are fundamental to its success. We aim to be a responsible employer in our approach to the pay and benefits our staff receive. The directors engage with employees regularly through internal communications and feedback mechanisms to ensure that they remain informed about business developments. Training and development programs are provided to equip employees with the necessary skills to succeed in their roles. Additionally, the company takes proactive measures to support employee well-being, job security, and professional growth. |
The health, safety and well-being of our staff and customers is one of our primary considerations in the way we manage our business. The company has bought a significant part of managing Health and Safety in-house in 2022 and this team has expanded during the reporting period, with several new roles created to support. The team continue to introduce new safety measures and learning platforms to its stores and HQ, whilst ensuring that existing guidance is being followed. |
Relationships with Suppliers, Customers, and Other Stakeholders |
Maintaining strong relationships with suppliers and customers is critical to the company's continued success. The directors engage regularly with key suppliers to secure competitive pricing and ensure the stability of supply chains. We hold reviews with our major partners regularly throughout the year and take appropriate action, when necessary, to prevent involvement in modern slavery, corruption, bribery, and breaches of competition law. The company also works closely with customers to understand changing preferences, ensuring that its product range remains relevant and competitive. Furthermore, it prioritises excellent customer service and after-sales support to enhance customer loyalty and satisfaction. We monitor customer satisfaction through a combination of reviews, surveys and direct feedback, which allows us to address areas for improvement where necessary. |
Impact on the Community and the Environment |
The company is committed to minimising its environmental impact and operating in a socially responsible manner. It continues to explore eco-friendly plumbing options to meet consumer demand for sustainable products. Efforts are also made to source materials responsibly and implement waste reduction initiatives. Additionally, the company engages with local charitable organisations where appropriate. |
Through our initiatives, we have achieved a year-on-year reduction in our intensity rating (CO2 emissions reporting), particularly since settling into our new HQ. We remain committed to identifying further opportunities for improvement. |
Reputation and High Standards of Business Conduct |
As a board of directors, our intention is always to behave responsibly and to ensure that the business operates in a responsible manner, adhering to high standards of business conduct and good governance. We recognise that maintaining a high reputation is fundamental to our continuing ability to achieve sustainable profitable growth for the benefit of all our stakeholders in the future. |
Fairness between members of the company |
The directors acknowledge their responsibility to act fairly in the interests of all shareholders. Regular updates are provided to shareholders, ensuring transparency in decision-making and corporate strategy. The directors strive to balance short-term financial performance with long-term value creation, considering the interests of all stakeholders. |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
STRATEGIC REPORT |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
FUTURE DEVELOPMENTS |
Despite the continuing uncertainty and challenging economic and political environment, turnover has reached record levels. The Directors remain confident in the company's strategy and continue to explore opportunities for new store locations as part of our long-term plan to expand coverage across key areas of the UK. |
Turnover is expected to grow year-on-year as the stores gain traction and become more established. Additional new revenue streams are also being added to further diversify the company's offering. In the short-term, the opening of new stores will continue at current rates, while the company focuses on optimising operations at the new HQ and making sure we are driving operational efficiencies. The key focus is on warehousing and distribution functions to ensure a high level of customer service and further cement our position in the UK bathroom market. |
ON BEHALF OF THE BOARD: |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
The directors present their report with the financial statements of the company for the year ended 29th February 2024. |
DIVIDENDS |
An interim dividend of |
The total distribution of dividends for the year ended 29th February 2024 will be £ |
FUTURE DEVELOPMENTS |
The future developments of the company are set out in the Strategic Report in accordance with s414C(11) of the Companies Act 2006 as the directors consider this to be of strategic importance to the company. |
DIRECTORS |
The directors shown below have held office during the whole of the period from 1st March 2023 to the date of this report. |
DISABLED EMPLOYEES |
The company's policy is to give fair consideration to the employment of disabled persons having regard to their particular aptitude and ability. If an existing employee becomes disabled every effort is made to ensure continuity of employment and appropriate training is given. |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
STATEMENT OF CORPORATE GOVERNANCE ARRANGEMENTS |
The company has adopted the corporate governance principles for large private companies developed by James Wates (the "Wates Principles") as published by the Financial Reporting Council. These principles act as a framework to report the company's governance policies via six principles: |
Purpose and Leadership |
The board has developed an in-depth strategic plan to deliver sustainable growth in the business and to add value for the stakeholders and is ultimately responsible to ensure that it is delivered in line with company values. |
Board Composition |
The details of the board members can be found on page 1 of the financial statements. Our board is structured to reflect a diverse range of expertise and perspectives, enabling well-informed discussions on stakeholder interests. The board meets regularly and plays a key role in all strategic decisions. All shareholders either serve on the board or have representation, with the major stakeholder currently holding the position of Chairman. The board's composition and effectiveness are reviewed periodically, with ongoing succession planning to ensure strong leadership and continuity. |
Director Responsibilities |
Each board member has clearly defined responsibilities aligned with their skill set and is accountable for delivering the company's strategic objectives while ensuring compliance with legal and regulatory requirements. To support key decision-making, the directors receive regular financial information, supplemented by key performance indicators (KPIs) that are measured across the business. |
Opportunity and Risk |
A strategic plan has been developed and is regularly reviewed by the board to ensure alignment of stakeholders across the business with key targets and responsibilities. The strategic report outlines both risks and opportunities, providing a clear framework for informed decision-making. |
Remuneration |
As a responsible employer, we are committed to fair and competitive pay and benefits for our staff. This approach enables us to attract and retain high-quality talent across all business functions, including board and management levels. Our remuneration structure is performance-driven, considering both individual contributions and overall business success, and is reviewed at least annually. For more details on our commitment to pay equity, including our Gender Pay Report, please visit our website. |
Stakeholder Relationships and Engagement |
We recognise that effective stakeholder engagement is fundamental to long-term success, resilience, and sustainable growth. The board encourages open dialogue and maintains communication with its stakeholders through various methods, not limited to direct dialogue, regular meetings, newsletters, email updates and employee engagement meetings. Ongoing feedback enables the board to carefully consider the impact of its activities and decisions on current and future stakeholders, as well as the company's brand and reputation The board is committed to actively building and maintaining positive relationships with all relevant stakeholders. |
CARBON ENERGY REPORTING |
This section includes our mandatory reporting of energy and greenhouse gas emissions for the period 1st March 2023 to 29th February 2024, pursuant to the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, implementing the government's Streamlined Energy and Carbon Reporting (SECR) policy. |
Our methodology to calculate our greenhouse gas emissions is based on the 'Environmental Reporting Guidelines: Including streamlined energy and carbon reporting guidance (March 2019)' issued by DEFRA, using DEFRA's 2019 conversion factors. |
In some cases, consumption has been extrapolated from available data or direct comparison made to a comparable period. |
We report using a financial control approach to define our organisational boundary. We have reported all material emission sources required by the regulations for which we deem ourselves to be responsible and have maintained records of all source data and calculations. |
The table below includes total energy consumption and greenhouse gas emissions for the sources required by the regulations, along with our intensity ratio. |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
REPORT OF THE DIRECTORS |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
2024 | 2023 |
(12 months | ) | (15 Months | ) |
Total Energy Consumption - Used for Emissions | 5,835,667 | 7,950,930 |
Average per operational site | 43,388 | 65,235 |
Scope 1: Gas Combustion Emissions (tCO2e) | 2.5 | 1.0 |
Scope 1: Vehicle Fuel Combustion Emissions (tCO2e) | 343.3 | 687.0 |
Scope 3: Emissions from business travel in employee-owned vehicles where the company repaid mileage claims (tCO2e) |
4.6 |
0.0 |
Scope 2: Purchased Electricity Emissions (tCO2e) | 916.5 | 1,446.0 |
Total Gross Reported Emissions (tCO2e) | 1,266.7 | 2,133 |
Intensity Ratio: Turnover (tCO2e per £1 million) | 12.24 | 19.82 |
STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Strategic Report, the Report of the Directors 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), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: |
- | select suitable accounting policies and then apply them consistently; |
- | make judgements and accounting estimates that are reasonable and prudent; |
- | state whether applicable 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 AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
AUDITORS |
The auditors, Cresswells Accountants (UK) Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting. |
ON BEHALF OF THE BOARD: |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
CUBICO (UK) LIMITED |
Opinion |
We have audited the financial statements of Cubico (UK) Limited (the 'company') for the year ended 29th February 2024 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity and Notes to the Financial Statements, including a summary of 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 29th February 2024 and of its loss for the year then ended; |
- | have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and |
- | have been prepared in accordance with the requirements of the Companies Act 2006. |
Basis for opinion |
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the 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 directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon. |
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. |
In connection with our audit of the financial statements, 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 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 the audit: |
- | the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
CUBICO (UK) LIMITED |
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 Report of the Directors. |
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: |
- | adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or |
- | the financial statements are not in agreement with the accounting records and returns; or |
- | certain disclosures of directors' remuneration specified by law are not made; or |
- | we have not received all the information and explanations we require for our audit. |
Responsibilities of directors |
As explained more fully in the Statement of Directors' Responsibilities set out on page nine, 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 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. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
CUBICO (UK) LIMITED |
Auditors' responsibilities for the audit of the financial statements |
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors 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: |
Our approach to identifying and assessing the risks of material misstatements in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows: |
- | the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations. |
- | we identified the laws and regulations applicable to the company through discussions with the directors and other informed management which we considered may have a direct material effect on the financial statements tor the operations of the company and thereafter, the audit team remained alert to instances of non-compliance throughout the audit. |
We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by: |
- | making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud and; |
- | considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations. |
To address the risk of fraud through management bias and override of controls. we: |
- | performed analytical procedures to identify any unusual or unexpected relationships; |
- | tested journal entries to identify unusual transactions; |
- | assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and investigated the rationale behind significant or unusual transactions. |
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to: |
- | agreeing financial statement disclosures to underlying supporting documentation; |
- | enquiries of management as to actual and potential litigation and claims and reviewing correspondence with HMRC and the company's legal and other professional advisors. |
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. |
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion. |
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
CUBICO (UK) LIMITED |
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 a Report of the Auditors 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. |
for and on behalf of |
Chartered Accountants |
and Statutory Auditors |
12 Market Street |
Hebden Bridge |
West Yorkshire |
HX7 6AD |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
INCOME STATEMENT |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
Period |
1.12.21 |
Year ended | to |
29.2.24 | 28.2.23 |
Notes | £ | £ |
TURNOVER | 3 |
Cost of sales |
GROSS PROFIT |
Administrative expenses |
1,089,413 | 153,978 |
Other operating income |
Movement on provisions | (102,623 | ) | (1,012,000 | ) |
OPERATING PROFIT/(LOSS) | 5 | ( |
) |
Interest payable and similar expenses | 6 |
LOSS BEFORE TAXATION | ( |
) | ( |
) |
Tax on loss | 7 | ( |
) | ( |
) |
LOSS FOR THE FINANCIAL YEAR | ( |
) | ( |
) |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
OTHER COMPREHENSIVE INCOME |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
Period |
1.12.21 |
Year ended | to |
29.2.24 | 28.2.23 |
Notes | £ | £ |
LOSS FOR THE YEAR | ( |
) | ( |
) |
OTHER COMPREHENSIVE INCOME | - | - |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
( |
) |
( |
) |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
BALANCE SHEET |
29TH FEBRUARY 2024 |
2024 | 2023 |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Tangible assets | 9 |
CURRENT ASSETS |
Stocks | 10 |
Debtors | 11 |
Cash at bank and in hand |
CREDITORS |
Amounts falling due within one year | 12 |
NET CURRENT LIABILITIES | ( |
) | ( |
) |
TOTAL ASSETS LESS CURRENT LIABILITIES |
CREDITORS |
Amounts falling due after more than one year |
13 |
( |
) |
( |
) |
PROVISIONS FOR LIABILITIES | 17 | ( |
) | ( |
) |
NET ASSETS |
CAPITAL AND RESERVES |
Called up share capital | 18 |
Retained earnings | 19 |
SHAREHOLDERS' FUNDS |
The financial statements were approved by the Board of Directors and authorised for issue on |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
STATEMENT OF CHANGES IN EQUITY |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Balance at 1st December 2021 |
Changes in equity |
Dividends | - | ( |
) | ( |
) |
Total comprehensive income | - | ( |
) | ( |
) |
Balance at 28th February 2023 |
Changes in equity |
Dividends | - | ( |
) | ( |
) |
Total comprehensive income | - | ( |
) | ( |
) |
Balance at 29th February 2024 |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
NOTES TO THE FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
1. | STATUTORY INFORMATION |
Cubico (UK) Limited is a |
The functional and presentation currency of Cubico (UK) Limited is considered to be pound sterling (£) because that is the currency of the primary economic environment in with the company operates. the financial statements have been prepared using round pounds only. |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
Going concern |
The Board has full expectation that the company has adequate resources to continue in operational existence for the foreseeable future. |
The company's forecasts demonstrate that, barring any significant disruption, it will be able to operate within its current facilities and will therefore have sufficient liquidity to meet its liabilities as they fall due in the period to 28th February 2025. |
Furthermore, the company has stress-tested its forecasts to determine what scenario would result in headroom being insufficient and the Board is satisfied the likelihood of such a scenario occurring, which involves a significant reduction in the group's revenue and cash levels, is unlikely. |
Prior to the filing of the February 2024 accounts, the company experienced some significant disruption to supply due to the crisis in the Red Sea, which had a direct impact on revenues in the first half of the 2024/25 financial year. This resulted in the business breaching some covenants attached to our lending facilities with Lloyds Bank plc. These breaches have since been formally waived. Additionally, as the covenant calculations are based on Last Twelve Months (LTM) performance, we have worked with Lloyds to adjust future covenant targets through to May 2025 and the Company is confident it will meet these revised targets. Lending facilities due to expire before February 2025 have been formally extended to December 2025. |
Accordingly, the financial statements for the period ended 29th February 2024 have been prepared on the going concern basis. |
Financial Reporting Standard 102 - reduced disclosure exemptions |
The company has taken advantage of the following disclosure exemption in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland": |
• | the requirements of Section 7 Statement of Cash Flows. |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
2. | ACCOUNTING POLICIES - continued |
Significant judgements and estimates |
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported tor assets and liabilities as at the balance sheet date and the amounts reported for turnover and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates. |
(i) Useful economic lives of tangible assets |
The annual amortisation and depreciation charges for intangible and tangible fixed assets is sensitive to changes in the estimated useful lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. |
(ii) Stock provisions |
In determining the need for the impairment of stock the directors have made significant judgements as to the saleability of the stock that is being held in the company, together with the costs to complete and make that sale. |
(iii) Impairment of debtors |
The company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the age ink profile of debtors and historical experience. |
(iv) Provisions |
In determining the need for, and value of, provisions the directors have made significant judgements as to the likelihood that the company will be required to transfer economic benefits in order to settle the obligation and also with regards the estimation of any such obligation. The directors will then review any such provisions at each balance sheet date and determine whether the obligation still exists based on associated activity during the accounting period and also known events after the balance sheet date. |
Turnover |
Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. |
Turnover from the sale of goods is recognised when the risks and rewards of ownership of the goods has been transferred to the buyer. This is usually at the point that the customer has signed for the delivery of the goods. |
Tangible fixed assets |
Improvements to property | - |
Plant and machinery | - |
Display stock | - |
Fixed assets are initially recorded at cost. |
Stocks |
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell, and after making due allowance for obsolete and slow moving items. Cost is based on the cost of the purchase on a first in, first out basis. Costs include all costs incurred in bringing each product to its present location and condition. This includes the purchase cost of the products and import duties. |
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss. |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
2. | ACCOUNTING POLICIES - continued |
Financial instruments |
The Company only enters in basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties and loans to related parties. |
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised costs using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of cash or other consideration expected t be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment f a trade debt deferred beyond normal business terms or finance at a rate of interest that is not a market rate or in the case of an out-right short-term loan nor at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost. |
Financial assets that are measured at cost and amortised costs are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the statement of comprehensive income. |
For financial assets measured at amortised cost, the impairment loss is measured as the difference between as asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. |
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an assets carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the reporting date. |
Taxation |
Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. |
Current or deferred taxation assets and liabilities are not discounted. |
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. |
Deferred tax |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. |
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference. |
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
Research and development |
Expenditure on research and development is written off in the year in which it is incurred. |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
2. | ACCOUNTING POLICIES - continued |
Foreign currencies |
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result. |
Hire purchase and leasing commitments |
Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter. |
The interest element of these obligations is charged to profit or loss over the relevant period. The capital element of the future payments is treated as a liability. |
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease. |
Pension costs and other post-retirement benefits |
The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate. |
Provisions |
Provisions are recognised when the company has an obligation at the reporting date as a result of a past event; it is probable that the entity will be required to transfer economic benefits in order to settle the obligation; and where the obligation can be estimated reliably. Provisions are recognised as a liability in the Balance Sheet and the amount of the provision as an expense in the Income Statement. Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in the Income Statement unless the provision was originally recognised as part of the cost of an asset. |
3. | TURNOVER |
The turnover and profit before taxation are attributable to the one principal activity of the company and is wholly generated in the United Kingdom. |
4. | EMPLOYEES AND DIRECTORS |
Period |
1.12.21 |
Year ended | to |
29.2.24 | 28.2.23 |
£ | £ |
Wages and salaries |
Social security costs |
Other pension costs |
The average number of employees during the year was as follows: |
Period |
1.12.21 |
Year ended | to |
29.2.24 | 28.2.23 |
Directors | 5 | 5 |
Staff | 783 | 680 |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
4. | EMPLOYEES AND DIRECTORS - continued |
Period |
1.12.21 |
Year ended | to |
29.2.24 | 28.2.23 |
£ | £ |
Directors' remuneration |
Directors' pension contributions to money purchase schemes |
The number of directors to whom retirement benefits were accruing was as follows: |
Money purchase schemes |
Information regarding the highest paid director is as follows: |
Period |
1.12.21 |
Year ended | to |
29.2.24 | 28.2.23 |
£ | £ |
Emoluments etc |
Pension contributions to money purchase schemes |
5. | OPERATING PROFIT/(LOSS) |
The operating profit (2023 - operating loss) is stated after charging: |
Period |
1.12.21 |
Year ended | to |
29.2.24 | 28.2.23 |
£ | £ |
Other operating leases |
Depreciation - owned assets |
Depreciation - assets on hire purchase contracts |
Loss on disposal of fixed assets |
Auditors' remuneration |
6. | INTEREST PAYABLE AND SIMILAR EXPENSES |
Period |
1.12.21 |
Year ended | to |
29.2.24 | 28.2.23 |
£ | £ |
Other interest |
Interest on unsecured loans |
Interest on bank borrowings |
Interest on hire purchase agreements |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
7. | TAXATION |
Analysis of the tax credit |
The tax credit on the loss for the year was as follows: |
Period |
1.12.21 |
Year ended | to |
29.2.24 | 28.2.23 |
£ | £ |
Current tax: |
UK corporation tax | ( |
) | ( |
) |
Deferred tax |
Tax on loss | ( |
) | ( |
) |
UK corporation tax has been charged at 25% . |
Reconciliation of total tax credit included in profit and loss |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
Period |
1.12.21 |
Year ended | to |
29.2.24 | 28.2.23 |
£ | £ |
Loss before tax | ( |
) | ( |
) |
Loss multiplied by the standard rate of corporation tax in the UK of |
( |
) |
( |
) |
Effects of: |
Expenses not deductible for tax purposes |
Capital allowances in excess of depreciation | ( |
) | - |
Depreciation in excess of capital allowances | - |
Losses carried forward | 748,698 | 215,966 |
Total tax credit | (11,998 | ) | (19,491 | ) |
8. | DIVIDENDS |
Period |
1.12.21 |
Year ended | to |
29.2.24 | 28.2.23 |
£ | £ |
Ordinary shares of 1p each |
Interim |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
9. | TANGIBLE FIXED ASSETS |
Improvements |
to | Plant and | Display |
property | machinery | stock | Totals |
£ | £ | £ | £ |
COST |
At 1st March 2023 |
Additions |
Disposals | ( |
) | ( |
) |
At 29th February 2024 |
DEPRECIATION |
At 1st March 2023 |
Charge for year |
Eliminated on disposal | ( |
) | ( |
) |
At 29th February 2024 |
NET BOOK VALUE |
At 29th February 2024 |
At 28th February 2023 |
Fixed assets, included in the above, which are held under hire purchase contracts are as follows: |
Plant and |
machinery |
£ |
COST |
At 1st March 2023 |
and 29th February 2024 |
DEPRECIATION |
At 1st March 2023 |
Charge for year |
At 29th February 2024 |
NET BOOK VALUE |
At 29th February 2024 |
At 28th February 2023 |
10. | STOCKS |
2024 | 2023 |
£ | £ |
Stocks |
11. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2024 | 2023 |
£ | £ |
Trade debtors |
Amounts owed by group undertakings |
Other debtors |
Tax |
Prepayments and accrued income |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
12. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2024 | 2023 |
£ | £ |
Bank loans and overdrafts (see note 14) |
Hire purchase contracts (see note 15) |
Trade creditors |
Social security and other taxes |
VAT | 315,685 | 2,154,817 |
Other creditors |
Accrued expenses |
13. | CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |
2024 | 2023 |
£ | £ |
Bank loans (see note 14) |
Hire purchase contracts (see note 15) |
Unsecured loans |
4% unsecured loan notes | 4,000,000 | 4,000,000 |
Accruals and deferred income |
14. | LOANS |
An analysis of the maturity of loans is given below: |
2024 | 2023 |
£ | £ |
Amounts falling due within one year or on demand: |
Bank loans |
Amounts falling due between one and two years: |
Bank loans - 1-2 years |
Amounts falling due between two and five years: |
Bank loans - 2-5 years |
15. | LEASING AGREEMENTS |
Minimum lease payments fall due as follows: |
Hire purchase contracts |
2024 | 2023 |
£ | £ |
Net obligations repayable: |
Within one year |
Between one and five years |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
15. | LEASING AGREEMENTS - continued |
Non-cancellable | operating leases |
2024 | 2023 |
£ | £ |
Within one year |
Between one and five years |
In more than five years |
16. | SECURED DEBTS |
The following secured debts are included within creditors: |
2024 | 2023 |
£ | £ |
Bank loans |
Hire purchase contracts | 2,983,933 | 3,535,043 |
Bank loans are secured by way of a fixed and floating charge over all the property or undertaking of the company. |
Obligations under hire purchase are secured against the assets to which they relate. |
17. | PROVISIONS FOR LIABILITIES |
2024 | 2023 |
£ | £ |
Deferred tax |
Accelerated capital allowances | 1,406,448 | 1,406,448 |
Other provisions | 1,114,623 | 1,012,000 |
Deferred | Other |
tax | provisions |
£ | £ |
Balance at 1st March 2023 |
Provided during year |
Balance at 29th February 2024 |
18. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2024 | 2023 |
value: | £ | £ |
Ordinary | 1p | 100 | 100 |
CUBICO (UK) LIMITED (REGISTERED NUMBER: 08073879) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
FOR THE YEAR ENDED 29TH FEBRUARY 2024 |
19. | RESERVES |
Retained |
earnings |
£ |
At 1st March 2023 |
Deficit for the year | ( |
) |
Dividends | ( |
) |
At 29th February 2024 |
20. | ULTIMATE PARENT COMPANY |
Cubico Group Limited is regarded by the directors as being the company's ultimate parent company. |
21. | RELATED PARTY DISCLOSURES |
The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group. |
During the year, directors provided funds to the company by way of 4% unsecured loan notes and further unsecured loans. At 29th February 2024, the amounts owed to the directors by the company was £4,893,918 (2023: £4,700,000). During the year the interest charged on these loans amounted to £181,084 (2023: £21,250). |
During the year the company sold goods to directors or their close family at a rate lower than market value to an amount of £1,935 (2023: £5,742). |
22. | ULTIMATE CONTROLLING PARTY |
The ultimate controlling party is the director C A Waddington who owns 53.8% (2023: 53.8%) of the issued share capital of the parent company, Cubico Group Limited. |