Company registration number 11699257 (England and Wales)
SAPPHIRE 700 LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2023
SAPPHIRE 700 LIMITED
COMPANY INFORMATION
Director
Mr Ronnie Shemesh
Company number
11699257
Registered office
c/o Acuity Law Limited
3 Assembly Square
Britannia Quay
Cardiff
CF10 4PL
Auditor
Harris Bassett Limited
5 New Mill Court
Phoenix Way
Enterprise Park
Swansea
SA7 9FG
SAPPHIRE 700 LIMITED
CONTENTS
Page
Strategic report
1 - 2
Director's report
3
Director's responsibilities statement
4
Independent auditor's report
5 - 8
Group statement of comprehensive income
9
Group balance sheet
10
Company balance sheet
11
Group statement of changes in equity
12
Company statement of changes in equity
13
Group statement of cash flows
14
Notes to the financial statements
15 - 33
SAPPHIRE 700 LIMITED
STRATEGIC REPORT
FOR THE PERIOD ENDED 31 MARCH 2023
- 1 -

The director presents the strategic report for the period ended 31 March 2023.

Review of the business

ln December 2018, the group acquired the trade and assets of the businesses trading as Smallbone of Devizes, Mark Wilkinson Furniture and Brookmans (all luxury furniture manufacturers) from an administrator. In July 2019, it also acquired the trade and assets of McCarron & Co, another luxury furniture manufacturer, from its administrator. The acquired furniture brands, in particular Smallbone, are long established and recognised internationally. The directors and shareholders have ambitions to rejuvenate and grow the group's sales and reputation worldwide and, thereby, enhance the value of the brand names and trademarks acquired. To this end the shareholders have invested heavily to:

- Preserve brand value,

In late 2018 the directors and shareholders chose to honour customer legacy contracts on which deposits of £9.7 million (Including VAT) had been paid prior to the administrator's appointment ("Prior deposit contract"). Some of these contracts were dated 2015-2017 and with the onset of inflation during the C ovid-19 pandemic these contracts yielded negative margins. The contracts have been fulfilled which has resulted in large net losses showing in the group's results to date. In addition to the Brand Value preservation efforts, redundancy costs are shown in the accounts contributing to a negative Gross Profit. As I sign off this report, all of this burden has now been satisfied.

- Drive efficiencies,· and

By 31 March 2023, the group had invested over £1.3 million in plant, equipment and systems to improve productivity capacity and incurred some £1.2 million in redundancy costs to 'right size' the business operations. The Covid-19 pandemic had a massive negative impact on demand for the group's products, more especially because of the international nature of the group's business, so the efficiencies are only being felt as the world recovers from the pandemic mindset. In addition, Covid-19 led to serious supply chain issues and rapid material cost inflation.

- Position the business to maximise future growth.

In addition to multiplying the production capacity, the directors invested significant sums on establishing a 'luxury pavilion' in London's prime retail and residential location (197-205 Brompton Road, Knightsbridge, London SW3 1LB) to showcase the group's products including concession products. The pavilion was partially opened in 2021 but, due to a flood on the 4th of February 2021, significant damage was done to the fit out and costs. Continued and persistent flooding at the property continually caused damage. The group finally vacated the property as rates, rent and repair bills were never ending. As these were insured events there is a possibility for settlement with insurers. The unsatisfactory position is the subject of pre-litigation discussions between the group and the landlord (referred to in note 24 to the accounts), which the directors believe will lead to substantial compensation for reimbursement of remedial expenses, loss of trade and profits. In the meantime, the trading impact of not having a fully fitted, fully operative showroom has curtailed the group's growth ambitions since 2021. The directors are hopeful that the dispute will be settled shortly and have created a studio showroom next to the group's head office at 100 Brompton Road.

Principal risks and uncertainties

The directors consider that the principal risks and uncertainties faced by the group are in the following categories:

Economic risk

The risk of increased interest rates and/or inflation having an adverse impact on our markets.

Competitor risk

The directors of the group manage competition through close attention to customer service levels. Competitors would have to make substantial investment in marketing and brand building. The Brand is internationally recognized as Smallbone of Devizes. Along with this Brand are Mark Wilkinson Furniture, Brookman's, McCarron as sister brands.

SAPPHIRE 700 LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
- 2 -

Financial risk

Apart from some assets that are directly funded by leases and bank finance, the group has been fully funded by its shareholders and the charges over its assets are held by organisations tied to the shareholders. The lack of reliance on external finance is both an existing strength and a future opportunity to raise external funds as the business grows.

Brexit

The group trades on an international basis but with relatively small exposure at present to European markets, both in sales and purchases. Therefore, whilst the business faced some risk from the uncertainties that Brexit brought, the directors had plans to minimise the impact of any changes.

COVID-19 outbreak

Whilst the Covid-19 pandemic was still a drag on trading performance and increased risk exposures during the 2021 trading year, the world has gradually returned to pre-Covid trading levels across many sectors, including our industry. The director believes that the group will be better prepared for any new Covid-19 like pandemic and, hopefully, the governments of most of our main markets (the UK and USA) will have learnt lessons too, such that the disruption to normal business will be less than in the Covid-19 response.

Key performance indicators

The Company's key performance indicators are:

31 March 20 23 3 1 December 21

£ £

Turnover 21,838,797 19,464,299

EBITDA (18,235,580) (10,076,597)

Gross (loss)/profit (991,119) 3,176,396

Gross (loss)/profit percentage (4.5%) 16.3%

Outlook

As a result of right sizing the operations - reducing the energy footprint with a reduced number of UK buildings - overhead expenses relating to rates and energy have been reduced. The group has also dramatically improved its supply chain and ha s increased its international business with a large developer. International orders for large batches allow for increased economies of scale. I am happy to report a dramatic improvement in the group's performance since April 2023 and look forward to concluding and filing our 2024 accounts shortly after filing these accounts.

Whi lst the UK economic prospects currently look challenging, I am optimistic that prospects in the Ultra High Net Worth arena are exempt from the UK metrics as the group caters to international clients who have homes in London and Manhattan as well as vacation homes. The US market for luxury developments is growing at a record pace and we are confident that our Best of Class position in the development market will allow us to further capitalize on our near 50 year history as the "Best of Class" and Best British Brand in the bespoke kitchen and bath furniture for the development community.

The nature of the projects that we undertake, due to the timing of our delivery often being dictated by our customers' renovation works, means that there can be a very substantial lag between taking an order and delivering it (we only account for a sale on delivery). This means that our, currently healthy, forward order book gives us good visibility on our sales profile for many months ahead. The group is now geared for increased velocity of manufacture at lower fixed costs which should translate into improved EBITDA.

On behalf of the board

Mr Ronnie Shemesh
Director
1 December 2025
SAPPHIRE 700 LIMITED
DIRECTOR'S REPORT
FOR THE PERIOD ENDED 31 MARCH 2023
- 3 -

The director presents his annual report and financial statements for the period ended 31 March 2023.

Principal activities

The principal activity of the company and group continued to be that of design, manufacture and installation of bespoke fitted kitchens.

Results and dividends

The results for the period are set out on page 9.

No ordinary dividends were paid. The director does not recommend payment of a further dividend.

Director

The director who held office during the period and up to the date of signature of the financial statements was as follows:

Mr Ronnie Shemesh
Daniel Neugroschl
(Resigned 11 November 2022)
Jacky Mostovicz
(Appointed 23 October 2022 and resigned 29 November 2022)
Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

Going concern

The financial statements have been prepared on a going concern basis which assumes that the group will continue in operational existence for at least twelve months from the date of approval of the financial statements.

The group had net liabilities of £36,106,092 (2021: £11,217,264) for the financial period ended 31 March 2023. The group remains dependent on the continuing support of its stakeholders and shareholders to meet payments as they fall due.

Matters covered in the Strategic report

Included in the group's strategic report is a review of the business and a description of the principal risks and uncertainties facing the company.

Medium-sized companies exemption

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

On behalf of the board
Mr Ronnie Shemesh
Director
1 December 2025
SAPPHIRE 700 LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE PERIOD ENDED 31 MARCH 2023
- 4 -

The director is responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the director is required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and accounting estimates that are reasonable and prudent;

- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.

The director is 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. He is 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.

SAPPHIRE 700 LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SAPPHIRE 700 LIMITED
- 5 -

Qualified opinion on financial statements

We have audited the financial statements of Sapphire 700 Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 31 March 2023 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).

In our opinion, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, the financial statements:

- give a true and fair view of the state of the group's and the parent company's affairs as at 31 March 2023 and of the group's loss for the period 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 qualified opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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.

The evidence available to us was limited because we were not appointed as auditor of the group until after 30 November 2021 and the consolidated financial statements for the year ended 30 November 2021 had not been audited. In consequence, it was not possible for us to perform the auditing procedures necessary to obtain sufficient appropriate audit evidence as regards the opening balance sheet. Any adjustments to the balance sheet at 30 November 2021 would have a consequential effect on the result for the period ended 31 March 2023.

During the financial period ended 31 March 2023, we were unable to verify the closing balance of stock due to not being able to attend the year end stock count. As a result, we were unable to perform the auditing procedures necessary to obtain sufficient appropriate audit evidence as regards the stock balance of £1,110,999. Consequently, we were unable to determine whether any adjustment to this amount was necessary.

Material uncertainty relating to going concern

In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosures made in note 1 to the financial statements concerning the group's ability to continue as a going concern.

As at 31 March 2023, the group is managing cash to ensure the group can continue to trade. The group has received confirmation from Mr R Shemesh ("the shareholder") of his intention to provide financial support to the group for at least 12 months from the date of signing the financial statements for the period ended 31 March 2023, there is however no formal facility in place for the funding required.

Should the group not continue to receive financial support from its shareholder, further sources of funding would need to be sought to bridge the cashflow position. These conditions may indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the group was unable to continue as a going concern.

SAPPHIRE 700 LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SAPPHIRE 700 LIMITED
- 6 -

Other information

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

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

- T he information given in the strategic report and the director's r eport for the financial period for which the financial statements are prepared is consistent with the financial statements; and

- The strategic report and the director's report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identifie d material misstatements in the strategic report or the director's r eport.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

- adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

- the parent company 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 director

As explained more fully in the director's r esponsibilities s tatement, the director is 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 director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the director is responsible for assessing the parent 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 director either intends to liquidate the parent company or to cease operations, or has no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

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.

SAPPHIRE 700 LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SAPPHIRE 700 LIMITED
- 7 -

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

- we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006 and taxation legislation,

- we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management; and

- identified laws and regulations were communicated within the audit team regularly and the 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;

- 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;

- 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;

- enquiring of management as to actual and potential litigation and claims.

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.

Our audit testing typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected. 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 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.

Other matters which we are required to address

In the previous accounting period, the directors of the group took advantage of the exemption from preparing and delivering consolidated group accounts under section 400 of the Companies Act 2006. Consequently, the prior period group financial statements were not subject to an audit.

SAPPHIRE 700 LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SAPPHIRE 700 LIMITED
- 8 -

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.

Nicholas Bassett (Senior Statutory Auditor)
For and on behalf of Harris Bassett Limited, Statutory Auditor
Chartered Accountants
5 New Mill Court
Phoenix Way
Enterprise Park
Swansea
SA7 9FG
1 December 2025
SAPPHIRE 700 LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 MARCH 2023
- 9 -
Period
Year
ended
ended
31 March
30 November
2023
2021 UNAUDITED
Notes
£
£
Turnover
3
21,838,797
19,464,299
Cost of sales
(22,829,916)
(16,287,903)
Gross (loss)/profit
(991,119)
3,176,396
Administrative expenses
(23,331,263)
(14,804,080)
Other operating income
-
375,480
Operating loss
4
(24,322,382)
(11,252,204)
Interest receivable and similar income
7
11
2,934
Interest payable and similar expenses
8
(566,457)
(434,478)
Loss before taxation
(24,888,828)
(11,683,748)
Tax on loss
9
-
0
405,843
Loss for the financial period
(24,888,828)
(11,277,905)
Loss for the financial period is all attributable to the owners of the parent company.
Total comprehensive income for the period is all attributable to the owners of the parent company.
SAPPHIRE 700 LIMITED
GROUP BALANCE SHEET
AS AT 31 MARCH 2023
31 March 2023
- 10 -
31 March 2023
30 November 2021 UNAUDITED
Notes
£
£
£
£
Fixed assets
Goodwill
11
633,947
759,171
Other intangible assets
11
4,050,000
4,850,000
Total intangible assets
4,683,947
5,609,171
Tangible assets
12
340,299
5,557,870
5,024,246
11,167,041
Current assets
Stocks
15
1,110,999
6,181,678
Debtors
16
14,339,232
3,083,375
Cash at bank and in hand
1,245,461
487,335
16,695,692
9,752,388
Creditors: amounts falling due within one year
17
(57,397,277)
(29,587,465)
Net current liabilities
(40,701,585)
(19,835,077)
Total assets less current liabilities
(35,677,339)
(8,668,036)
Creditors: amounts falling due after more than one year
18
(301,232)
(2,489,228)
Provisions for liabilities
Provisions
21
127,521
60,000
(127,521)
(60,000)
Net liabilities
(36,106,092)
(11,217,264)
Capital and reserves
Called up share capital
23
13,689,243
13,689,243
Profit and loss reserves
(49,795,335)
(24,906,507)
Total equity
(36,106,092)
(11,217,264)

These financial statements have been prepared in accordance with the provisions relating to medium-sized groups.

The financial statements were approved by the board of directors and authorised for issue on 1 December 2025 and are signed on its behalf by:
01 December 2025
Mr Ronnie Shemesh
Director
Company registration number 11699257 (England and Wales)
SAPPHIRE 700 LIMITED
COMPANY BALANCE SHEET
AS AT 31 MARCH 2023
31 March 2023
- 11 -
31 March 2023
30 November 2021 UNAUDITED
Notes
£
£
£
£
Fixed assets
Investments
13
-
0
1
-
0
1
Current assets
Debtors
16
-
0
1
Creditors: amounts falling due within one year
17
(1)
(3)
Net current liabilities
(1)
(2)
Net liabilities
(1)
(1)
Capital and reserves
Called up share capital
23
13,689,243
13,689,243
Profit and loss reserves
(13,689,244)
(13,689,244)
Total equity
(1)
(1)

As permitted by s408 Companies Act 2006, the c ompany has not presented its own profit and loss account and related notes. The c ompany’s profit for the year was £0 (2021 UNAUDITED - £0 profit).

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The financial statements were approved by the board of directors and authorised for issue on 1 December 2025 and are signed on its behalf by:
01 December 2025
Mr Ronnie Shemesh
Director
Company registration number 11699257 (England and Wales)
SAPPHIRE 700 LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 MARCH 2023
- 12 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 December 2020
13,689,243
(13,628,602)
60,641
Period ended 30 November 2021:
Loss and total comprehensive income
-
(11,277,905)
(11,277,905)
Balance at 30 November 2021
13,689,243
(24,906,507)
(11,217,264)
Period ended 31 March 2023:
Loss and total comprehensive income
-
(24,888,828)
(24,888,828)
Balance at 31 March 2023
13,689,243
(49,795,335)
(36,106,092)
SAPPHIRE 700 LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 MARCH 2023
- 13 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 December 2020
13,689,243
(13,689,244)
(1)
Period ended 30 November 2021:
Profit and total comprehensive income for the period
-
-
-
0
Balance at 30 November 2021
13,689,243
(13,689,244)
(1)
Period ended 31 March 2023:
Profit and total comprehensive income
-
-
-
0
Balance at 31 March 2023
13,689,243
(13,689,244)
(1)
SAPPHIRE 700 LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 MARCH 2023
- 14 -
2023
2021 UNAUDITED
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
29
3,321,142
4,743,796
Interest paid
(566,457)
(434,478)
Income taxes refunded
405,843
-
0
Net cash inflow from operating activities
3,160,528
4,309,318
Investing activities
Purchase of tangible fixed assets
(83,794)
(1,989,718)
Proceeds from disposal of tangible fixed assets
236,115
-
Interest received
11
2,934
Net cash generated from/(used in) investing activities
152,332
(1,986,784)
Financing activities
Repayment of borrowings
1,495,737
(3,717,244)
Repayment of bank loans
(1,871,841)
(906,248)
Payment of finance leases obligations
(2,178,630)
1,460,526
Net cash used in financing activities
(2,554,734)
(3,162,966)
Net increase/(decrease) in cash and cash equivalents
758,126
(840,432)
Cash and cash equivalents at beginning of period
487,335
1,327,767
Cash and cash equivalents at end of period
1,245,461
487,335
SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 MARCH 2023
- 15 -
1
Accounting policies
Company information

Sapphire 700 Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is c/o Acuity Law Limited, 3 Assembly Square, Britannia Quay, Cardiff, CF10 4PL.

The group consists of Sapphire 700 Limited and all of its subsidiaries.

1.1
Reporting period

Th e end of the entity’s reporting period has change d in order to align the accounting reference date of all group entities and hence the annual financial statements presented here relate to a period longer than one ye ar. Comparative amounts presented in the financial statements (including the related notes) are not entirely comparable.

1.2
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary a mounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

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 financial instruments not measured at fair value; 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;

- Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;

- Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.

1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company Sapphire 700 Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

All financial statements are made up to 31 March 2023. 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 g roup.

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.

SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 16 -

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

1.4
Going concern

These financial statements are prepared on the going concern basis. The director has a reasonable expectation that the group will continue in operational existence for the foreseeable future. However, the director is aware of certain material uncertainties which may cause doubt on the group's ability to continue as a going concern.

As at 31 March 2023, the group has net current liabilities of £36,106,092 (2021: £11,217,264), continues to report losses and remains reliant on the long term support of its shareholder. The group's shareholder continues to demonstrate his commitment and support to the group. Further, the shareholder has confirmed it is his current intention to support the business further to enable the group to meet its financial commitments for a period of at least 12 months from the date of approval of these financial statements.

The directors have undertaken a review of the group's financial position and have a reasonable expectation that the group will be able to translate the currently healthy forward order book into improved EBITDA. Should the forecast level of sales and profitability not be achieved, the business might need to seek further funding in order to bridge the cashflow position. Should this funding not be available, this represents a material uncertainty which may cast significant doubt about the group's ability to continue as a going concern. However, after considering the above matters, and the expected continued support of the group's shareholder, the directors are satisfied that it is appropriate to continue to prepare the financial statements on a going concern basis. The financial statements therefore do not include the adjustments required should the group be unable to continue as a going concern.

1.5
Turnover

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

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

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.

Costs of long term contracts include all direct costs and attributable profits. Provision is made in full for any foreseeable losses. Long term contracts are assessed on a contract by contract basis and reflected in the Income Statement by recording turnover and related costs as contract activity progresses. No profit is recognised until the outcome of a long term contract can be assessed with reasonable certainty. Work in progress represents costs incurred net of amounts transferred to cost of sales, less foreseeable losses and applicable payments on account not matched with turnover.

SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 17 -
1.6
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is ten years.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

1.7
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Trademarks
10 years
1.8
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Long leasehold
20% on cost
Factory, plant & equipment
at varying rates on cost
Showroom displays
20% on cost
Computer equipment
33% on cost

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.

1.9
Fixed asset investments

I n the parent company financial statements, investments in subsidiaries 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.

SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 18 -
1.10
Impairment of fixed assets

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.

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

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

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

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

1.11
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition. Cost is based on the cost of purchase on a first in, first out basis.

Work in progress represents the costs incurred on kitchen projects that are still under production or installation as of the reporting date. Work in progress includes direct materials, direct labour and an allocation of overheads related to each project. Work in progress is measured at the lower of cost and net realisable value in accordance with FRS 102 Section 13 - Inventories.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.12
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 19 -
1.13
Financial instruments

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

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 m ethod 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.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the 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.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 20 -
Basic financial 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 paymen ts 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.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.14
Equity instruments

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.

1.15
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the 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

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.

SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 21 -
1.16
Provisions

Provisions are recognised when the group has a legal or constructive present obligation as a result of a past event, it is probable that the group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision i s measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

1.17
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

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

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

1.18
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.19
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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 lease d asset are consumed.

1.20
Government grants

Government grants are recognised at the fair value of the asset receive d 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.

1.21
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 22 -
1.22

Exceptional items

Exceptional items are transactions that fall within the ordinary activities of the group but are presented separately due to their size or incidence.

2
Judgements and key sources of estimation uncertainty

In the application of the group’s accounting policies, the director is 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.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Going concern

The directors have assessed the group's ability to continue as a going concern based on forecasts for the following twelve months and beyond and the continued support of the stakeholders and shareholders and are satisfied that it has the resources to continue its business for the foreseeable future. Therefore, the financial statements continue to be prepared on the going concern basis.

Assessing whether an agreement is a finance or operating lease

Management assess at the inception of the lease whether an arrangement is a finance or operating lease based on who bears substantially all risk and benefits incidental to the ownership of the leased items. Based on the management's assessment, the risk and rewards of owning the items leased by the group are retained by the lessor and therefore accounts for such lease as operating lease. Otherwise, the lease will be accounted for as finance lease.

SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 23 -
Key sources of estimation uncertainty

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.

Estimating useful lives of intangible and tangible fixed assets

The group estimates the useful lives of intangible fixed assets and tangible fixed assets based on the period over which the assets are expected to be available for use. The estimated useful lives are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the assets. In addition, estimation of the useful lives of tangible fixed assets is based on collective assessment of industry practice, internal technical evaluation and experience with similar assets. Actual results, however, may vary due to changes in estimates brought about by changes in factors mentioned above.

Estimating allowance for impairment losses on intangible and tangible assets

The group assesses impairment on intangible and tangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The factors that the group considers important which could trigger an impairment review include the following:

- significant underperformance relative to expected historical or projected future operating results;

- significant changes in the manner of use of the acquired assets or the strategy for overall business; and

- significant negative industry or economic trends.

In determining the present value of estimated future cash flows expected to be generated from the continued use of the assets, the group is required to make estimates and assumptions that can materially affect the financial statements. These assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss would be recognised whenever evidence exists that the carrying value is not recoverable. For purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.

An impairment loss is recognised and charged to profit or loss if the discounted expected future cash flows are less than the carrying amount. Fair value is estimated by discounting the expected future cash flows using a discount factor that reflects the risk-free rate of interest for a term consistent with the period of expected cash flows.

Construction contract revenue recognition

Recognised amounts of construction contract revenues and related work in progress reflect management's best estimate of each contract's outcome and stage of completion. This includes the assessment of the profitability of on-going construction contracts and the order backlog. For more complex contracts in particular, costs to complete and contract profitability are subject to estimation uncertainty.

Determining net realisable value of stocks

Management estimates the net realisable values of stocks, taking into account the most reliable evidence available at each reporting date. The future realisation of these stocks may be affected by market-driven changes that may reduce future selling prices.

Allowances for impairment of debtors

The group estimates the allowance for doubtful trade and intercompany debtors based assessment of specific accounts where the group has objective evidence comprising default in payment terms or significant financial difficulty that certain customers are unable to meet their financial obligations. In these cases, judgement used was based on the best available facts and circumstances including but not limited to, the length of the relationship.

SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
- 24 -
3
Turnover and other revenue

The turnover and loss before taxation are attributable to the one principal activity of the group.

2023
2021 UNAUDITED
£
£
Turnover analysed by geographical market
United Kingdom
15,908,076
19,524,299
United States of America
3,998,828
-
Rest of World
1,999,414
-
Warranty provision
(67,521)
(60,000)
21,838,797
19,464,299
2023
2021 UNAUDITED
£
£
Other revenue
Interest income
11
2,934
Grants received
-
375,480
4
Operating loss
2023
2021 UNAUDITED
£
£
Operating loss for the period is stated after charging/(crediting):
Exchange losses
96,328
231,891
Government grants
-
(375,480)
Fees payable to the group's auditor for the audit of the group's financial statements
7,000
-
Depreciation of owned tangible fixed assets
408,043
406,779
Depreciation of tangible fixed assets held under finance leases
915,064
-
Loss on disposal of tangible fixed assets
3,742,143
-
Amortisation of intangible assets
925,224
693,916
Operating lease charges
3,910,633
2,263,076
SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
- 25 -
5
Employees

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

Group
Company
2023
2021 UNAUDITED
2023
2021 UNAUDITED
Number
Number
Number
Number
37
22
-
-
92
98
-
-
12
10
-
-
6
6
-
-
25
39
-
-
Total
172
175
-
0
-
0

Their aggregate remuneration comprised:

Group
Company
2023
2021 UNAUDITED
2023
2021 UNAUDITED
£
£
£
£
Wages and salaries
8,459,298
6,634,695
-
0
-
0
Social security costs
811,035
789,983
-
-
Pension costs
535,423
69,575
-
0
-
0
9,805,756
7,494,253
-
0
-
0
6
Director's remuneration
2023
2021 UNAUDITED
£
£
Remuneration for qualifying services
183,879
141,021

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 0 (2021: 0).

7
Interest receivable and similar income
2023
2021 UNAUDITED
£
£
Interest income
Interest on bank deposits
11
2,934
SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
- 26 -
8
Interest payable and similar expenses
2023
2021 UNAUDITED
£
£
Other interest
566,457
434,478
9
Taxation
2023
2021 UNAUDITED
£
£
Current tax
UK corporation tax on profits for the current period
-
0
(405,843)

The actual charge/(credit) for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:

2023
2021 UNAUDITED
£
£
Loss before taxation
(24,888,828)
(11,683,748)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2021 UNAUDITED: 19.00%)
(4,728,877)
(2,219,912)
Tax effect of expenses that are not deductible in determining taxable profit
626,785
21,002
Unutilised tax losses carried forward
3,594,598
2,013,287
Permanent capital allowances in excess of depreciation
403,552
185,623
Research and development tax credit
-
0
(405,843)
Tax relief in respect of gift aid
103,942
-
Taxation charge/(credit)
-
(405,843)

A deferred tax asset of £9,322,630 (UNAUDITED 2021: £4,176,227) relating to losses has not been recognised due to uncertainty over the future recoverability of the asset.

10
Exceptional items

Net exceptional costs of £291,540 have been incurred following the flood at the nearly completed showroom in South Kensington and other costs following the reorganisation of the group.

These exceptional costs are disclosed separately to provide further understanding of the financial performance of the group.

SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
- 27 -
11
Intangible fixed assets
Group
Goodwill
Trademarks
Total
£
£
£
Cost
At 1 December 2021 and 31 March 2023
939,179
6,000,000
6,939,179
Amortisation and impairment
At 1 December 2021
180,008
1,150,000
1,330,008
Amortisation charged for the period
125,224
800,000
925,224
At 31 March 2023
305,232
1,950,000
2,255,232
Carrying amount
At 31 March 2023
633,947
4,050,000
4,683,947
At 30 November 2021
759,171
4,850,000
5,609,171
The company had no intangible fixed assets at 31 March 2023 or 30 November 2021.
12
Tangible fixed assets
Group
Long leasehold
Factory, plant & equipment
Showroom displays
Computer equipment
Total
£
£
£
£
£
Cost
At 1 December 2021
18,082
1,712,076
4,456,383
38,422
6,224,963
Additions
24,174
14,826
33,696
11,098
83,794
Disposals
-
0
(1,049,921)
(4,490,079)
(15,024)
(5,555,024)
At 31 March 2023
42,256
676,981
-
0
34,496
753,733
Depreciation and impairment
At 1 December 2021
3,696
444,707
203,764
14,926
667,093
Depreciation charged in the period
5,939
166,675
1,136,862
13,631
1,323,107
Eliminated in respect of disposals
-
0
(236,140)
(1,340,626)
-
0
(1,576,766)
At 31 March 2023
9,635
375,242
-
0
28,557
413,434
Carrying amount
At 31 March 2023
32,621
301,739
-
0
5,939
340,299
At 30 November 2021
14,386
1,267,369
4,252,619
23,496
5,557,870
The company had no tangible fixed assets at 31 March 2023 or 30 November 2021.

Assets held under hire purchase had a net book value of £152,059 as at 31 March 2023 (2021: £337,202).

SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
- 28 -
13
Fixed asset investments
Group
Company
2023
2021 UNAUDITED
2023
2021 UNAUDITED
Notes
£
£
£
£
Investments in subsidiaries
14
-
0
-
0
-
0
1
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 December 2021 and 31 March 2023
1
Impairment
At 1 December 2021
-
Impairment losses
1
At 31 March 2023
1
Carrying amount
At 31 March 2023
-
At 30 November 2021
1
14
Subsidiaries

Details of the company's subsidiaries at 31 March 2023 are as follows:

Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
Lux Group Holdings Ltd
The Hopton Workshop, Hopton Road, Devizes SN10 2EU
Manufacture of kitchen furniture
Ordinary
100.00
Last Layer Limited
The Hopton Workshop, Hopton Road, Devizes SN10 2EU
Manufacture of kitchen furniture
Ordinary
100.00
The ARX Group Limited
197-205 Brompton Road, Knightsbridge, London SW3 1LB
Retail sale in commercial art galleries
Ordinary
100.00

The ARX Group Limited was dissolved on 15 July 2025.

Last Layer Limited was dissolved on 30 January 2024.

Previous subsidiaries Sapphire Equipment Limited and SMWF Properties Limited were dissolved on 8 February 2022.

SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
- 29 -
15
Stocks
Group
Company
2023
2021 UNAUDITED
2023
2021 UNAUDITED
£
£
£
£
Raw materials and consumables
49,115
971,431
-
-
Work in progress
1,061,884
1,867,187
-
-
Finished goods and goods for resale
-
0
3,343,060
-
0
-
0
1,110,999
6,181,678
-
-

The net replacement cost of stocks is not expected to be materially different from that shown above.

16
Debtors
Group
Company
2023
2021 UNAUDITED
2023
2021 UNAUDITED
Amounts falling due within one year:
£
£
£
£
Trade debtors
629,026
208,629
-
0
-
0
Corporation tax recoverable
-
0
405,843
-
0
-
0
Amounts owed by group undertakings
12,443,036
-
-
-
Other debtors
1,217,870
1,796,486
-
0
1
Prepayments and accrued income
49,300
672,417
-
0
-
0
14,339,232
3,083,375
-
1

The debtors have been reviewed by the directors for indicators of impairment. An impairment allowance of £835,136 (UNAUDITED 2021: £570,132) was recognised against trade debtors.

Other debtors relate to a specific customer contract which was ongoing as at the end date of the period.

17
Creditors: amounts falling due within one year
Group
Company
2023
2021 UNAUDITED
2023
2021 UNAUDITED
Notes
£
£
£
£
Bank loans
19
367,868
956,311
-
0
-
0
Obligations under finance leases
20
678,613
1,952,645
-
0
-
0
Other borrowings
19
5,583,085
4,087,348
-
0
-
0
Trade creditors
6,333,749
3,756,752
-
0
-
0
Amounts owed to group undertakings
31,107,805
1,941,614
-
0
-
0
Other taxation and social security
2,976,126
3,274,941
-
-
Other creditors
-
0
9,731,104
1
3
Accruals and deferred income
10,350,031
3,886,750
-
0
-
0
57,397,277
29,587,465
1
3
SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
- 30 -
18
Creditors: amounts falling due after more than one year
Group
Company
2023
2021 UNAUDITED
2023
2021 UNAUDITED
Notes
£
£
£
£
Bank loans and overdrafts
19
61,876
1,345,274
-
0
-
0
Obligations under finance leases
20
239,356
1,143,954
-
0
-
0
301,232
2,489,228
-
-
19
Loans and overdrafts
Group
Company
2023
2021 UNAUDITED
2023
2021 UNAUDITED
£
£
£
£
Bank loans
429,744
2,301,585
-
0
-
0
Loans from related parties
5,583,085
4,087,348
-
0
-
0
6,012,829
6,388,933
-
-
Payable within one year
5,950,953
5,043,659
-
0
-
0
Payable after one year
61,876
1,345,274
-
0
-
0

The bank loans relate to a loan taken out under the UK Government’s CBILs scheme, repayable over 4 years at an interest rate of 2.5%, with the first 12 months interest-free.

The loans from related parties are interest free, unsecured and repayable on demand. The related undertakings will not seek repayments of amounts due to them from the group in such a manner as to jeopardise the ability of the group to continue to trade.

20
Finance lease obligations
Group
Company
2023
2021 UNAUDITED
2023
2021 UNAUDITED
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
678,613
1,952,645
-
0
-
0
In two to five years
239,356
1,143,954
-
0
-
0
917,969
3,096,599
-
-

Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. Finance leases are secured on the assets that have been financed.

SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
- 31 -
21
Provisions for liabilities
Group
Company
2023
2021 UNAUDITED
2023
2021 UNAUDITED
£
£
£
£
Provisions
127,521
60,000
-
-
Movements on provisions:
Provisions
Group
£
Additional provisions in the year
127,521

Goods (other than appliances and any other items not manufactured by the group) are covered by a 10 year warranty from the date of delivery.

22
Retirement benefit schemes
2023
2021 UNAUDITED
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
535,423
69,575

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.

23
Share capital
Group and company
2023
2021 UNAUDITED
2023
2021 UNAUDITED
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
13,689,243
13,689,243
13,689,243
13,689,243
SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
- 32 -
24
Operating lease commitments
Lessee

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:

Group
Company
2023
2021 UNAUDITED
2023
2021 UNAUDITED
£
£
£
£
Within one year
1,458,423
1,631,895
-
-
Between two and five years
7,873,449
5,886,294
-
-
In over five years
2,311,755
4,960,354
-
-
11,643,627
12,478,543
-
-
25
Contingent liabilities

At the reporting date, the group was subject to various legal claims. Based on legal advice, the director does not consider it probable that these claims will result in a material liability. Accordingly, no provision has been recognised.

The group is currently responding to multiple claims relating to alleged contractual disputes, service agreements and commercial matters. These claims are at various stages, with some subject to mediation while others have not yet progressed to formal legal proceedings. The group strongly refutes all claims. Given the uncertainty of the outcomes and potential financial impact, no provisions have been made.

On February 4th 2021 an accident by a tradesman working for the Landlord at South Kensington Estate caused a massive flooding into the nearly completed showroom. As a result, tens of thousands of gallons poured in to the premises causing significant damages to the premises and contents. Lux Group Holdings Limited has to date not received any remuneration from SKE or any insurance company and has borne all costs of flood mitigation and restoration. The parties remain in the midst of negotiations to settle the claim and management expects a successful outcome. There is no guarantee that the claim will be settled successfully via the current mediation process and litigation might ensue.

26
Events after the reporting date

Subsequent to the period end, the amount owed by group undertakings of £12,443,036 was assigned to Lux Group Holdings LLC and netted off against the creditor balance held within that company.

27
Related party transactions
Remuneration of key management personnel

During the period, key management personnel were paid £0 (UNAUDITED 2021: £0). These individuals were deemed key management personnel as a result of being senior decision makers within the organisation.

Transactions with related parties

The Company bought furniture products during the year from W J White Furniture Limited, a company in which R Shemesh is a director and shareholder, to the value of £3,888,792 (UNAUDITED 2021: £1,575,892). At 31 March 2023, the balance outstanding to W J White Furniture Limited from Lux Group Holdings was £949,050 (UNAUDITED 2021: £NIL).

SAPPHIRE 700 LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 MARCH 2023
27
Related party transactions
(Continued)
- 33 -

The following amounts were outstanding at the reporting end date:

Amounts due to related parties
2023
2021 UNAUDITED
£
£
Group
Owed to investors
23,381,088
4,087,348
28
Controlling party

The company's immediate and ultimate parent company is Sapphire Cabinetry (UK) LLC registered in the United States of America. The results are consolidated into the results of Sapphire Cabinetry (UK) LLC. As of the date of signing of these financial statements, the consolidated accounts of the parent company are not publicly available.

29
Cash generated from group operations
2023
2021 UNAUDITED
£
£
Loss after taxation
(24,888,828)
(11,277,905)
Adjustments for:
Taxation charged/(credited)
-
0
(405,843)
Finance costs
566,457
434,478
Investment income
(11)
(2,934)
Loss on disposal of tangible fixed assets
3,742,143
-
Amortisation and impairment of intangible assets
925,224
693,916
Depreciation and impairment of tangible fixed assets
1,323,107
406,779
Increase in provisions
67,521
60,000
Movements in working capital:
Decrease in stocks
5,070,679
1,758,424
(Increase)/decrease in debtors
(11,661,700)
9,167,641
Increase in creditors
28,176,550
3,909,240
Cash generated from operations
3,321,142
4,743,796
30
Analysis of changes in net debt - group
1 December 2021
Cash flows
31 March 2023
£
£
£
Cash at bank and in hand
487,335
758,126
1,245,461
Borrowings excluding overdrafts
(6,388,933)
376,104
(6,012,829)
Obligations under finance leases
(3,096,599)
2,178,630
(917,969)
(8,998,197)
3,312,860
(5,685,337)
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