The director presents the strategic report for the year ended 31 March 2024.

ln December 2018, the Group acquired the trade and assets of the luxury 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 made great progress with several high-profile international development projects under way in Manhattan and London. Equally the Group has streamlined its private client sales and is in a position to grow the Group's sales in a meaningful manner. The reputation of the Group worldwide as the premier Luxury Kitchen brand continues to be the primary goal as the Group approaches its 50th year as a highly sought after luxury brand. These efforts are part of the endeavour of enhancing the brand and 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 Covid-19, these contracts yielded massive negative margins. The contracts have been fulfilled which has resulted in large net losses showing in the Group's accounts to date. In addition to the Brand Value preservation efforts, redundancy costs incurred are shown in the accounts and resulted in a negative gross profit. As I sign off this report, the entirety of this burden has now been satisfied.

• Drive efficiencies,· and

By 31 March 2023, the Group had invested over £1.7 million in plant, equipment and ERP systems to improve its productivity capacity – quality systems and thus incurred some £1.5 million in redundancy costs to 'right size' the business operations. The Covid-19 pandemic had an impact on delivered results for the Group's products, more especially because of the international nature of the Group's business and the pausing of multiple projects. Covid-19 led to serious supply chain issues and rapid material cost inflation also affecting the Group.

• Position the business to maximize future growth.

In addition to improving the velocity of production, 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 and embark on a diversification of sales by way of concession offerings. The pavilion was partially opened in 2021 after a rather large capital spend and the delay and re-instatement costs due to water ingress interruptions.

Among the numerous water ingress interruptions, a rather serious flood occurred on the 4th of February 2021 and significant damage was done to the nearly completed fit out and the flooding resulted in delayed and increased losses. Due to the Landlord's lethargic and often myopic remedial actions and the unreasonable delays by the Landlord to reinstate the premises, additional damage and costs were incurred.

Recalcitrant actions by the Landlord – refusal to timely file insurance claims and negligent behaviour resulted in a disruption to the Lux business plan. The continued and persistent flooding at the property continually caused water damage and toxic mould began to permeate the space.

The Group vacated the property after the Landlord realised that 100% of the Victorian Era Cast Iron pipes would need to be replaced as the premises were not fit for occupation.

On the 16th of October 2023 the Landlord unlawfully terminated the lease. Shortly after termination, the Landlord began to effectuate the long delayed repairs and replacements to the corroded Victorian Era Cast Iron pipes that were part of the Landlord's retained assets.

Lux sent in a team of experts after the unlawful termination of the lease and witnessed the Landlord's full replacement of the cast iron pipes in advance of securing a new tenant. The evidence of the transgressions by the Landlord and the gross misrepresentation relating to the grant and the fitness for purposes is now in the High Courts in the United Kingdom.

The Group is confident that its various claims for breach of the Landlord covenants and the conversion of its chattels will be successful. The significant improvements made by Lux on behalf of the Landlord and the various insurance claims will result in a return of some, if not all, of the spending on the showroom.

The Group has written off the entire capital spend on the showroom as it has lost control of the assets that were converted by the Landlord. As noted above, Lux hopes to recover significant portions of its spending from insurance proceeds and from the Landlord.

• Litigation

As these were mostly insured events, there is a strong case against the various insurers and the Landlord and the residential tenants of the building who neglected their units for many years. Letters before claims have been sent to the Landlord and insurers and more are to follow as the litigation progresses.

The litigation is now in high court (a claim in excess of £100 million has been duly filed), which the directors believe will lead to very substantial compensation estimated to be North of £30 million as relates to reimbursement of remedial expenses, loss of trade and profits.

The trading impact of not having a fully fitted, fully operative fit for purposes showroom has curtailed the Group's growth ambitions since 2021 and has resulted in tens of millions of pounds of losses.

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

Economic risk

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

Competitor risk

The directors of the Group manage competition through close attention to customer service levels and an expensive Brand maintenance regimen. The Group has always had a Brand Moat as hundreds of millions have been spent over the course of 50 years to establish the brand as the ultimate in British Bespoke furniture. This Brand Moat prevents competitors from attacking the Brand at the high end as they would have to make substantial investment in marketing and brand building. The Brand is internationally recognized as Smallbone of Devizes and Smallbone. Along with this Brand are Mark Wilkinson Furniture, Brookman's and McCarron as sister brands.

Financial risk

The Group has been fully funded by its shareholders and cash flows from operations and the only 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. The shareholders have committed a healthy credit facility in the amount of £2.4 million and this has not been used as of yet, as the Group has positive cash flows.

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 faces some risk from the uncertainties that Brexit has bought, the directors have plans to negotiate the potential risks and continue to focus on the Uber Luxury sector which is international in scope.

Post Brexit the United Kingdom has signed an The U.S.-UK Economic Prosperity Deal (EPD) a general framework where UK-made wood products, including kitchen cabinets, face a 10% U.S. tariff. This is a preferential rate compared to the 25% applied to goods from most other countries, which was set to increase to 50% in January 2026 but has been delayed until at least January 2027.

The Group has been aggressive in right sizing the operations, reducing the energy footprint, and reducing the number of UK buildings and overhead expenses that relate to rates and energy. The Group has also improved its supply chain and has increased its international business with large developers.

International orders for large batch production allow for increased economies of scale. I am happy to report that a dramatic improvement in the Group's performance since April 2023 and a significant order book will result in significant bottom-line improvements.

The UK economic prospects for Ultra High Net Worth clients has been impacted but the same clients have homes all over the world, so these added sales have protected the brand. Lux is 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 capitalise 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' development and 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 years ahead. The Group is now geared for increased velocity of manufacture at lower fixed costs which should translate into improved EBITDA.

The Group's key performance indicators are:

On behalf of the board

The director presents his annual report and financial statements for the year ended 31 March 2024.

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

The results for the year are set out on page 11.

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

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

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.

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 £31,220,675 (2023: £36,106,093) for the financial period ended 31 March 2024. The Group, in 2024, was partially dependent on the continuing support of its stakeholders and shareholders to meet payments as they fall due.

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.

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

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.

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 year ended 31 March 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).

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 2024 and of the group's profit for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for 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 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 until after 31 March 2024 and we were consequently unable to attend the year end stock count at this date. As a result, we were unable to perform the auditing procedures necessary to obtain sufficient audit evidence as regards the stock balance of £1,675,533. Consequently we were unable to determine whether any adjustment to this amount was necessary.

Conclusions relating to going concern

In forming our opinion on the financial statements, 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 2024, 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 2024, 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. Our opinion is not modified in respect of this matter.

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

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The 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:

• The information given in the strategic report and the director's report for the financial year 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.

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 identified material misstatements in the strategic report or the director's report.

Apart from the matter described above, we have nothing else 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.

As explained more fully in the director's responsibilities statement, 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.

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.

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.

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.

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

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £0 (2023 - £0 profit).

These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

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.

The end of the entity's reporting period changed last year in order to align the accounting reference date of all the group entities. As a result, the comparative financial statements presented here relate to a period longer than one year. Comparative amounts presented in the financial statements (including the related notes) are not entirely comparable.

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

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

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

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.

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 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.

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

These financial statements are prepared on the going concern basis. The director has reasonable expectations that the group will continue in operational existence for the foreseeable future

As at 31 March 2024, the group has net current liabilities of £31,220,675 (2023: £36,106,092),and those liabilities are of a related nature due to prior year support, The group's shareholder continues to demonstrate his commitment and support to the group and there is an existing credit line in the amount of £2.4 million that is unused as of date of this report. By way of this credit facility 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 its order book and have a reasonable expectation that the group will be able to translate the currently healthy forward order book and positive cash flows into improved EBITDA. For the period as at 31 March 2024 £2,743,027 in free cash flow was generated from operations (note 27).

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. This funding is currently available, but this written commitment as filed in companies house 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 improved operational results and the backlog 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.

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.

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.

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:

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:

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.

In 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.

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.

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.

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.

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.

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.

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.

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 is 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.

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.

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 leased asset are consumed.

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.

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.

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.

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

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.

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.

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 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.

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.

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.

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.

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.

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

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 0 (2021: 0).

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

A deferred tax asset of £8,912,467 (2023: £9,322,630) relating to losses has not been recognised due to uncertainty over the future recoverability of the asset.

Assets held under hire purchase had a net book value of £166,805 as at 31 March 2024 (2023: £241,095).

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

The debtors have been reviewed by the directors for indicators of impairment. An impairment allowance of £5,128,307 (2023: £835,136) was recognised against trade debtors.

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.

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.

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. Furthermore, the Company undertakes remedial work once jobs are complete. Provisions have been provided for in these respects, alongside a provision for overdue rent in respect of the flooded showroom whilst litigation continues.

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.

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:

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.

During the period, key management personnel were paid £0 (2023: £0). These individuals were deemed key management personnel as a result of being senior decision makers within the organisation.

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 £2,540,818 (2023: £3,111,368). At 31 March 2024, the balance outstanding to W J White Furniture Limited from Lux Group Holdings was £893,668 (2023: £949,050).

The following amounts were outstanding at the reporting end date:

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.