The directors present the strategic report for the year ended 31 December 2024.
The Group loss after taxation for the year was £1,107,000 (2023: £2,599,000 loss as restated). Group turnover was lower than previous year due to inflationary pressures in the economy which resulted in consumers have had less disposable income and creating an intense competitive environment in the market. The slow down in the housing market also impacted turnover, with the number of house sales decreasing and a reduction in the construction of new build properties. The directors have considered the financial position of the Group regarding group funding arrangements. They are satisfied that the Group is well placed to manage its financial position despite the current uncetain economic climate.
The principal risks and uncertainties facing the Group are as follows:
The availability of personal disposable income to spend on home improvements
Our customers encountering financial difficulties
Recessionary tendency towards cheaper own brand products
Geopolitical risks impacting the supply chain
Key areas of strategic development driving the performance of the Group include:
New product development in all product areas supported by targeted brand development
Targeted growth in selected customer channels with new business pipeline, expanding product categories
and offering upgrades
A focussed approach to meaningful distribution channels in the marketplace
Focus on promoting the wider Franke Kitchen range to customers
Key financial indicators include the monitoring of gross margin, profitability, return on assets, cash-flow and management of net working capital.
2024 2023
Gross Margin 33.7% 31.9% Gross profit / turnover
Return on capital (20.0)% (36.2)% Profit before tax / net assets
To achieve sustainable, long-term success the business requires the support of a wide range of stakeholders. When making business decisions the Director’s and management team consider how different stakeholders are impacted in both financial and non-financial ways. Below, we have summarised on our key stakeholders and how we ensure a good relationship is maintained with them.
Franke Group
As Franke UK is part of the larger Franke Kuchentechnik AG group, there is a responsibility to the parent, and ultimate controlling party. Although day to day management decisions are made at a local level, some strategic planning is coordinated with Head Office so that the whole group can benefit.
Employees
Happy and ambitious employees drive a successful business, so we take the thoughts and suggestions of our employees seriously. The company has adopted a model of hybrid working to allow employees utilise the benefits of collaboration both off line and online, providing them with flexibility. With staff spread out across the country, we have a monthly update call to provide updates on business performance and reflect on business activities. Throughout the year, events are hosted to provide an opportunity for employees to meet up and network. Online training is available to employees to enable them to enhance their skills as well as in person training sessions surrounding topics such as mental health.
Furthermore, we have enhanced our focus on Health and Safety in accordance with guidelines provided by group to ensure no working time is lost due to accidents.
Customers
We aim to put our customer’s and consumers needs at the centre of our activities. Our sales team work closely with customers listening to their views and needs to ensure that the most suitable products can be delivered to them. We understand that customers are currently facing unfavourable market conditions, hence, prioritise working closely with them to ensure their needs are met. Regular communications with our customers allows us to understand the market conditions they are facing, enabling supply chain to plan and get suitable levels of stock in. A dedicated internal consumer care and field service team mean that end consumers can have any issues with products resolved quickly to allow for a seamless customer experience.
Suppliers
Although most of our suppliers of goods are inter-group, we do have a number of third-party providers who we work just as closely with, feeding back what we have learnt from our customers to them, to ensure the full supply chain is working as effectively as possible. We have built good rapport with our suppliers to ensure the continuity of supply this includes ensuring we pay all dues on time. We aim to pay any supplier invoice as soon as it is due, to help build sustainable relationships. Franke Procurement is committed to and strongly encourages its preferred and appointed suppliers or service providers to ensure that environmental considerations and responsible sourcing do form an integral part of their daily business activities throughout their respective supply chain.
Environment
A sustainability committee is in place to discuss ways we can be more environmentally friendly at a local level. Globally, Franke has set the target to have net 0 emissions for Scope 1 and Scope 2 (our production) by 2030 and Scope 3 (supply chain) by 2040. Our vision at Franke is to become net CO2e neutral in production and across the entire Franke value chain by 2050. We are working with suppliers and customers in order to reduce the amount of plastic in our packaging and using materials that are recyclable where possible.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2024.
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £nil (2023: £nil). The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
As of 1 January 2025, the factoring arrangement between Franke UK Limited and Franke Finance has ceased and therefore, invoices raised after this date are recognised in the financial statements of the company. Trade debtors subject to factoring as at 31 December 2024 were £5,172,000.
On 30 June 2025, Franke UK Holdings Limited received full payment of £6,904,000 from Franke Finance. On the same day, Franke UK Holdings Limited paid a total of £6,550,000 to Franke Holding AG. Of this amount, £4,300,000 was not due for repayment until 2027. The remaining payment was against those loans due to be paid within one year.
Hart Shaw LLP were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
During 2024, the Franke UK Holding group, consisting of Carron Phoenix Limited and Franke UK Limited, consumed 205,000 m3 of natural gas (2023: 224,000 m3). Electricity usage totalled 911,000 kWh (2023: 962,000 kWh), with 80% of that from renewable sources (2023: 56%), whilst total diesel was 22,000 litres (2023: 21,000 litres). Total CO2 emissions were 458 tonnes (2023: 555 tonnes), meaning 83.3 kg of CO2 was produced for each thousand pound of revenue generated. To calculate our CO2 figure, we analysed invoices of usage throughout the year and looked at the fuel mix of our suppliers. The Franke UK group will look to use energy suppliers who have a more renewable fuel mix and continue to look for ways to reduce our carbon footprint.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Future performance plans have been prepared to 31 December 2025 and further consideration has been made for a period of at least 12 months from the approval of the financial statements. Based on the underlying assumptions of the plan and the pledged continued financial support from the wider Franke group, the directors are confident that the business will have sufficient working capital to continue to operate and meet liabilities when they fall due. On this basis the Directors have concluded that it is appropriate to prepare the financial statements on a going concern basis.
We have audited the financial statements of Franke UK Holding Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for 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 group's and parent 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
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
The information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
The strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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.
At the planning stage we identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience and through discussion with the directors and other management, as required by auditing standards. The potential effect of any laws and regulation on the financial statements can vary considerably. There are laws and regulations that directly affect the financial statements (e.g. the Companies Act) as well as many other operational laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements. Owing to the size, nature and complexity of the organisation and the applicable laws and regulations to which it must adhere, the risk of material misstatement was deemed to be low, therefore the procedures performed by the audit team were limited to:
Communicating identified laws and regulations at planning throughout the audit team to remain alert to any indications of non-compliance throughout the audit.
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as non-compliance with laws and regulations.
Reviewing minutes of meetings of those charged with governance.
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
We have assessed the overall susceptibility of the financial statements to material misstatement due to fraud.
Management override is inherently high risk on any audit. Management override, which may cause there to be a material misstatement within the financial statements, may present itself in a number of ways, for example:
Override of internal controls (e.g. segregation of duties)
Entering into transactions outside the normal course of business, especially with related parties
Fraudulent revenue recognition, including fictitious sales and sales being recorded in the wrong period
Presenting bias in accounting judgements and estimates that we considered to be key. The provisions detailed as key within note 2 of the financial statements are considered key.
In order to reduce the risk of material misstatement to an acceptable level, numerous audit procedures were performed including:
Enquiries of management as to whether they had any knowledge of any actual or suspected fraud
Review of material journal entries made throughout the year as well as those made to prepare the financial statements
Reviewing the underlying rationale behind transactions in order to assess whether they were outside the normal course of business
Reviewing the minutes of meetings held by management.
Increased substantive testing across all material income streams
Assessing whether management’s judgements and estimates indicated potential bias, particularly those that we considered key.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected material misstatements in the financial statements, even though we have performed our audit in accordance with auditing standards. Furthermore, as with all audits, there is a higher risk of irregularities (especially those relating to fraud) being undetected, as these may involve the override of internal controls, collusion, intentional omissions and misrepresentations etc. We are not responsible for preventing non-compliance or fraud and therefore cannot be expected to detect all instances of such. Our audit was not designed to identify misstatements or other irregularities that would not be considered to be material to the financial statements. The further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £421,000 (2023 - £152,000 loss). The total comprehensive income for the year was £537,000 loss (2023 - £183,000 loss).
Franke UK Holding Limited (“the company”) is a private limited company, domiciled and incorporated in Scotland. The registered office is West Carron Works, Stenhouse Road, Falkirk, FK2 8DR.
The group consists of Franke UK Holding Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £000.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income.
The consolidated financial statements incorporate those of Franke UK Holding Limited and all of its subsidiaries (i.e. entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 31 December 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Future performance plans have been prepared to 31 December 2025 and further consideration has been made for a period of at least 12 months from the approval of the financial statements. Based on the underlying assumptions of the plan and the pledged continued financial support from the wider Franke group, the directors are confident that the business will have sufficient working capital to continue to operate and meet liabilities when they fall due. On this basis the Directors have concluded that it is appropriate to prepare the financial statements on a going concern basis.
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from contracts for the provision of services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
The cost of providing benefits under defined benefit plans is determined separately for each plan using the projected unit credit method, and is based on actuarial advice.
The change in the net defined benefit liability arising from employee service during the year is recognised as an employee cost. The cost of plan introductions, benefit changes, settlements and curtailments are recognised as an expense in measuring profit or loss in the period in which they arise.
The net interest element is determined by multiplying the net defined benefit liability by the discount rate, taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. The net interest is recognised in profit or loss as other finance revenue or cost.
Remeasurement changes comprise actuarial gains and losses, the effect of the asset ceiling and the return on the net defined benefit liability excluding amounts included in net interest. These are recognised immediately in other comprehensive income in the period in which they occur and are not reclassified to profit and loss in subsequent periods.
The net defined benefit pension asset or liability in the balance sheet comprises the total for each plan of the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information, and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is limited to the amount that may be recovered either through reduced contributions or agreed refunds from the scheme.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The Directors make provisions for obsolescence, mark downs and shrinkage based on historical experiences and management estimates of future events. Actual outcomes could vary significantly from these estimates.
The warranty provision is a provision for the future expected cost of making good any faulty goods sold under warranty. Warranties can range from 2 to 50 years, depending on the type of product; therefore, there is uncertainty about the amount and timing of future cash outflows and actual outcomes could vary significantly from these estimates.
The following estimates also have an increased degree of estimation uncertainty, but are not expected to have a significant risk of causing a material adjustment.
Sales rebates are based on sales volumes, they are often growth related and can be product specific. Management often make judgements based on comparing sales data with customer contracts and use some historic experience to determine the levels of rebates to provide. Actual outcomes could vary significantly from these estimates.
The defined benefit pension liability has multiple actuarial assumptions, such as life expectancy, future returns on assets and future inflation rates; therefore, there is uncertainty about the amount and timing of future cash outflows, and actual outcomes could vary significantly from these estimates.
During the previous year, the business decided to stop using a second distribution warehouse. As a result, an onerous lease provision was included within the accounts. This included the remaining cost of the lease and other associated running costs. No such provision was required this year.
During the current year, it was identified that a specific customer had not qualified to be factored due to breaches of the factoring agreement in place. The customer officially entered administration in the current year but information was available at the prior year end to ascertain that the debt was not recoverable and therefore the directors have deemed a prior year adjustment to include a bad debt provision appropriate. As a result, the above bad debt provision has been included as an exceptional item in both years. Further information is detailed in note 31.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2023 - 2).
The UK corporation tax rate during the prior year was 23.5%. The rate of 19% was applicable to 31 March 2023, with 25% being applicable after this date.
The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
Land with a net book value of £101,000 is not depreciated.
Carron Phoenix Limited is loss making, the investment in this subsidiary is impaired to the net asset value of the subsidiary each year.
Details of the company's subsidiaries at 31 December 2024 are as follows:
Included in the above is a stock provision of £600,000 (2023: £661,000) for slow moving and obsolete stock.
Amounts owed by group undertakings of £6,904k are unsecured, an interest rate of 1.8% above the base rate applies and there are no fixed payment terms. The remainder bears no interest.
Trade debtors and prepayments have been reclassified for consistency with the current year presentation. The amounts reported in the 2023 financial statements were £nil and £622k respectively.
Amounts owed to group undertakings are unsecured, interest free and repayable within standard trading terms.
Included within amounts owed to group undertakings is a balance of £1,163k (2023 - £157k) in relation to factoring. This balance is subject to interest at a commercial rate.
A further factoring balance is included within amounts owed to group undertakings of £2,634k (2023 - £742k) relating to the prior year adjustment detailed within note 31. No interest is being charged on this balance.
The terms of borrowings from group undertakings are scheduled out in note 20.
Taxation and social security and accruals and deferred income have been reclassified for consistency with the current year presentation. The amounts reported in the 2023 financial statements were £263k and £2,401k respectively.
Loans from group undertakings are unsecured and bear interest at 5%.
£4,500,000 of the loans from group undertakings are repayable in full in December 2025.
£4,300,000 of the loans from group undertakings are repayable in full in November 2027.
Warranty provision
The warranty provision is a provision for the future expected cost of making good any faulty goods sold under warranty. Warranties can range from 2 to 50 years, depending on the type of product; therefore, there is uncertainty about the amount and timing of future cash outflows. The vast majority of the provided cash outflows are expected to occur over one year after the reporting date.
The provision has not been discounted because the effect of discounting is not material.
Onerous lease provision
During the previous year, the business decided to stop using a second distribution warehouse. As a result, an onerous lease provision was included within the accounts. This included the remaining cost of the lease and other associated running costs. No such provision was required this year.
The provision was not discounted because the effect of discounting was not material.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The accelerated capital allowances deferred tax asset set out above relates to the utilisation of capital allowances against future expected profits of the same period. The deferred tax asset will reverse in line with the depreciation of tax assets which are predominantly at 18% reducing balance under current legislation.
The tax losses deferred tax asset is expected to reverse within 2 to 5 years.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The company operates a defined benefit scheme for qualifying employees. The scheme is closed to new members.
The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out at 13 January 2025 by Barry Moore, Fellow of the Institute of Actuaries. The present value of the defined benefit obligation, the related current service cost and past service cost were measured using the projected unit credit method.
Assumed life expectations on retirement at age 65:
The amounts included in the balance sheet arising from the company's obligations in respect of defined benefit plans are as follows:
Amounts recognised in the profit and loss account
Amounts taken to other comprehensive income
Movements in the present value of defined benefit obligations
The defined benefit obligations arise from plans which are wholly or partly funded.
Movements in the fair value of plan assets
The actual return on plan assets was £178,000 (2023 - £306,000).
Fair value of plan assets at the reporting period end
The company has one class of ordinary shares which carry no right to fixed income.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
On 30 June 2025, Franke UK Holdings received full repayment of a loan of £6,904,000 from Franke Finance AG.
On the same day, Franke UK Holdings Limited paid a total of £6,550,000 to Franke Holding AG, of this amount, £4,300,000 was not due for repayment until 2027. The remaining payment was against those loans due to be paid within one year.
As of 1 January 2025, the factoring arrangement has ceased and therefore, invoices raised after this date are recognised in the financial statements of the group. Trade debtors subject to factoring as at 31 December 2024 were £5,172,000.
Post year end, the directors believe that a significant customer has experienced financial difficulties and as a result, all trading with this customer has been put on hold. All balances outstanding from this customer as at the year end have been paid in full. The directors are of the opinion that any unpaid balances from this customer are covered by insurance.
During the year the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
As a wholly owned member of a group, the company is exempt from the requirements of FRS 102.33 to disclose transactions with other members of the group.
The trade debts of the company are factored with another group company. During the current year, it was identified that a specific customer had not qualified to be factored due to breaches of the factoring agreement.
The customer officially entered administration in the current year but information was available at the prior year end to ascertain that the debt was not recoverable and therefore the directors have deemed a prior year adjustment to include a bad debt provision appropriate.
A corresponding tax adjustment has also been made.
Also included in the above are presentational adjustments within debtors and creditors.