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Registered number:
For the Year Ended
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Cosatto Limited
Company Information
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Cosatto Limited
Contents
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Cosatto Limited
Strategic report
For the Year Ended 31 August 2024
The Directors present the Strategic Report for the year ended 31 August 2024.
The Directors report a decrease in sales for the year of 4.2%, a slightly reduced Gross Profit %, but in mitigation of the resulting lower Gross Profits, a significant reduction in business expenses. Whilst not a return to profitability, these results are seen as a marked improvement on the prior year, despite a continued backdrop of cost-of-living pressures and increased competition in the business’s core markets.
From a geographical sales mix perspective, the Company’s main UK market saw a decline of 1.7%, with Europe and the Rest of the World dropping by 11.8%. The split of sales across the Company’s major sales channels and customer groups remained similar to the previous year. An ongoing review of all business overheads continued throughout the year, with a strategy of curtailing where appropriate. Importantly this was delivered without affecting ongoing necessary product evolution, customer serviceability, and maintenance / improvement of core business processes and systems. A return to profitability, coupled with an ability to operate within its available facilities remain the ongoing strategic focus of the Directors. Whilst a review of business expenses is a key element of this focus, the Director’s believe the ultimate route of success will be delivered by a growth in sales revenues. The company has continued to finance its operations through historical retained profits with the support of borrowings through its finance partners. A refinance of the business in early June 2025 has generated additional facilities and when coupled with the latest business forecasts, the Directors are confident the growth delivered since the August 24 year end will continue.
The Directors believe the key risks and uncertainties faced by the Company are generally macroeconomic in nature. Fluctuations in foreign exchange is a key determinant of product cost and is managed through foreign exchange hedging activities. Inflationary and lead time pressures posed by international supply chains are managed through strong supply chain relationships, whilst inflationary pressures within the Company’s key sales markets are managed through product range, price review and positioning strategies. The business continues to maintain excellent levels of product availability and margin consistency, despite the backdrop of a constantly changing commercial landscape.
The management’s objectives continue to be: - Retain sufficient liquid funds to enable it to meet its day-to-day obligations as they fall due whilst maximising returns on funds; - Minimise the company's exposure to fluctuating interest rates when seeking new borrowings; - Match the repayment schedule of any external borrowings with expected future cash flows expected to arise from the company's trading activities; - Minimise the company exposure to fluctuating exchange rates by entering into forward foreign exchange contracts; and - Continue to identify sales and marketing strategies that will enable sustainable growth in sales and ultimately profitability.
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Cosatto Limited
Strategic report (continued)
For the Year Ended 31 August 2024
Other key performance indicators measured by the company are as follows:
- Product Return Rates. - Employee Engagement Scores. - Customer Feedback Scores. - Social Media Following.
This report was approved by the board and signed on its behalf.
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Cosatto Limited
Directors' report
For the Year Ended 31 August 2024
The directors present their report and the financial statements for the year ended 31 August 2024.
The directors are responsible for preparing the strategic report, the directors' report and the financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the year, after taxation, amounted to £700thousand (2023 - loss £1,052 thousand).
Dividends were paid amounting to £120,000 (2023: £312,328). The directors do not recommend the payment of a final dividend (2023: £Nil).
The directors who served during the year were:
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Cosatto Limited
Directors' report (continued)
For the Year Ended 31 August 2024
A review of the Company's activities for the year ended 31 August 2024 and its future prospects is set out in the Strategic Report.
Going Concern
The Company has prepared monthly forecasts and projections for a period in excess of twelve months from the date of approval, and as at the year-end these projections indicate that the Company will be back on track to deliver a positive EBITDA and be cash generative once again for the next financial year. The forecasts have been created taking into consideration sensitivities to consider the current general economic conditions, the competitive nature of the industry, inflationary impacts, sales volume and unit price pressures, and taking into account the continuing necessary cost control measures which commenced during the second half of the current financial year. The Company finances its operations, largely, through retained profits with short term finance facilities in the form of loans secured on the assets of the Company. These are primarily used to support working capital requirements. With the losses sustained in the current and prior years, the ongoing support of loan facility providers is fundamental to the cash management of the business. The Company is pleased to report that continued facility provision has been obtained for the foreseeable future via a re-finance process which was completed in early June 2025. The directors are confident in delivering the new financial year forecast and returning the Company to a positive EBITDA, furthermore the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and that it is therefore appropriate to prepare the annual report and financial statements to 31 August 2024 on a going concern basis.
The auditors, Hurst Accountants Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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Cosatto Limited
Independent Auditors' Report to the Members of Cosatto Limited
We have audited the financial statements of Cosatto Limited (the 'Company') for the year ended 31 August 2024, which comprise the statement of comprehensive income, the statement of financial position, the statement of cash flows, the statement of changes in equity and the related notes, 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).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the Annual Report other than the financial statements and our auditors' 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.
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Cosatto Limited
Independent Auditors' Report to the Members of Cosatto Limited (continued)
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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.
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Cosatto Limited
Independent Auditors' Report to the Members of Cosatto Limited (continued)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Identifying and assessing potential risks related to irregularities In identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following: • The nature of the industry and sector in which the company operates; the control environment and business performance including key drivers for directors' remuneration, bonus levels and performance targets. • The outcome of enquiries of management, including whether management was aware of any instances of non- compliance with laws and regulations, and whether management had knowledge of any actual, suspected, or alleged fraud. • Supporting documentation relating to the Company's policies and procedures for: - Identifying, evaluating, and complying with laws and regulations - Detecting and responding to the risks of fraud • The internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations. • The outcome of discussions amongst the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud. • The legal and regulatory framework in which the Company operates, particularly those laws and regulations which have a direct effect on the financial statements, such as the Companies Act 2006, pensions and tax legislation, or which had a fundamental effect on the operations of the Company, including General Data Protection requirements, and Anti-bribery and Corruption. Audit response to risks identified Our procedures to respond to the risks identified included the following: • Reviewing the financial statements disclosures and testing to supporting documentation to assess compliance with the provisions of those relevant laws and regulations which have a direct effect on the financial statements. • Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud. • Evaluation and testing of the operating effectiveness of management’s controls designed to prevent and detect irregularities. • Enquiring of management about any actual and potential litigation and claims. • Performing analytical procedures to identify any unusual or unexpected relationships which may indicate risks of material misstatement due to fraud.
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Cosatto Limited
Independent Auditors' Report to the Members of Cosatto Limited (continued)
We have also considered the risk of fraud through management override of controls by: • Testing the appropriateness of journal entries and other adjustments. We have used data analytics software to identify accounting transactions which may pose a heightened risk of material misstatement, whether due to fraud or error. • Challenging assumptions made by management in their significant accounting estimates, and assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and • Evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. There are inherent limitations in the audit procedures described above, and the further removed non-compliance with laws and regulations are from the events and transactions reflected in the financial statements, the less likely we would become aware of them. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report.
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 auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditors
3 Stockport Exchange
Stockport
Cheshire
SK1 3GG
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Cosatto Limited
Statement of comprehensive income
For the Year Ended 31 August 2024
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Cosatto Limited
Registered number: 06529629
Statement of financial position
As at
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 14 to 32 form part of these financial statements.
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Cosatto Limited
Statement of changes in equity
For the Year Ended 31 August 2024
Statement of changes in equity
For the Year Ended 31 August 2023
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Cosatto Limited
Statement of cash flows
For the Year Ended 31 August 2024
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Cosatto Limited
Analysis of Net Debt
For the Year Ended 31 August 2024
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
Cosatto Limited is a private Company limited by members capital incorporated in England, number 06529629. The address of the registered office and principal place of business is Bentinck Mill, Bentinck Street, Farnworth, Bolton, BL4 7EP.
The nature of the Company's operation and its principal activity is that of development, marketing and distribution of children's nursery related products.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The financial statements have been prepared on a going concern basis. The following paragraphs set out the basis of which the directors have reached their conclusion.
At 31 August 2024 the Company had net current liabilities of £399k (2023 : net current assets of £172k) and made a loss after tax for the year of £700k (2023: £1,052k loss). The Company has prepared monthly forecasts and projections for a period in excess of twelve months from the date of approval, and as at the year-end these projections indicate that the Company will be back on track to deliver a positive EBITDA and be cash generative once again for the next financial year. The forecasts have been created taking into consideration sensitivities to consider the current general economic conditions, the competitive nature of the industry, inflationary impacts, sales volume and unit price pressures, and taking into account the continuing necessary cost control measures which commenced during the second half of the current financial year. The Company finances its operations, largely, through retained profits with short term finance facilities in the form of loans secured on the assets of the Company. These are primarily used to support working capital requirements. With the losses sustained in the current and prior years, the ongoing support of loan facility providers is fundamental to the cash management of the business. The Company is pleased to report that continued facility provision has been obtained for the foreseeable future via a re-finance process which was completed in early June 2025. The directors are confident in delivering the new financial year forecast and returning the Company to a positive EBITDA, furthermore the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and that it is therefore appropriate to prepare the annual report and financial statements to 31 August 2024 on a going concern basis.
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
2.Accounting policies (continued)
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, Goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the statement of comprehensive income over its useful economic life which is 10 years.
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
2.Accounting policies (continued)
At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Fair values are determined from market based evidence normally undertaken by professionally qualified valuers.
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
2.Accounting policies (continued)
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. Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
2.Accounting policies (continued)
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Company has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
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 trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
2.Accounting policies (continued)
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
The Company enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors and loans from banks and other third parties.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
2.Accounting policies (continued)
Warranty provision The Company offers customers purchasing goods a 4 year guarantee if they register the guarantee within 28 days of the purchase. The Company reviews its warranty provision on a regular basis. A warranty provision is made based on historical data regarding credit notes raised by the Company. At the year end, the warranty provision totalled £33,000 (2023: £32,000). Provision for impairment loss on trade debtors The Directors of the Company exercises significant judgement in providing for impairment loss on trade debtors. At the year end, the value of trade debtors totalled £748,000 (2023: £1,107,000). Provision for obsolete and slow moving stocks The Company reviews its stock to assess loss on account of obsolescence on a regular basis. In determining whether provision for obsolescence should be recorded in the profit or loss, the company makes judgements as to whether there is any observable data indicating that there is any future salability of the product and the estimated net realisable value for such product. Accordingly, provision for impairment is made where the net realisable value is less than the cost based on best estimates by the management. The provision for obsolescence of stock is based on the ageing and historical sales pattern. At the year end, the value of stock totalled £2,560,000: £2,479,000). Property Valuation The Directors of the Company exercise significant judgement in assessing that the property valuation has not changed from the date it was valued to the balance sheet date. The value of the property at the year end totalled £1,817,400 (2023: £1,043,700). Other estimates and judgements The Directors of the Company also exercise significant judgement in estimating the useful life of tangible and fixed assets. Should these estimates vary, the profit or loss and balance sheet of the following years could be impacted.
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
Analysis of turnover by country of destination:
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
11.Taxation (continued)
The company has unutilised tax losses of £1.4m available to offset against future taxable profits.
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
The surplus on revaluation of freehold property in the year arising of £795k has been credited to the profit and loss for the year. All other tangible assets are stated at historical cost less depreciation and impairments.
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
22.Deferred taxation (continued)
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Cosatto Limited
Notes to the financial statements
For the Year Ended 31 August 2024
Revaluation reserve
A revaluation reserve arose on a revaluation of a property in accordance with UK GAAP. There are non-distributable reserves of £1,407,000 (2023:£568,000) in respect of revaluations of land and buildings, net of depreciation recognised in the profit and loss account in excess of depreciation applicable under the historical cost convention and associated deferred tax liabilities. Profit and loss account The profit and loss account includes all current and prior period retained profits and losses.
The Company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £75,000 (2023: £90,000). Contributions totalling £12,000 (2023: £12,000) were payable to the fund at the reporting date.
The Company is controlled by A S Kluge, by way of his 100% interest in the voting share capital of the Company.
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