Brand K Ltd - Limited company accounts 20.1

REGISTERED NUMBER: 11716789 (England and Wales)

for

Page

Company Information  

1

Group Strategic Report  

2

Report of the Directors  

6

Report of the Independent Auditors  

9

Consolidated Income Statement  

13

Consolidated Other Comprehensive Income  

14

Consolidated Balance Sheet  

15

Company Balance Sheet  

17

Consolidated Statement of Changes in Equity  

18

Company Statement of Changes in Equity  

19

Consolidated Cash Flow Statement  

20

Notes to the Consolidated Cash Flow Statement

21

Notes to the Consolidated Financial Statements

23

DIRECTORS:

A D Norford

E Usten

REGISTERED OFFICE:

Thistledown Barn

Holcot Lane

Sywell

Northampton

Northamptonshire

NN6 0BG

REGISTERED NUMBER:

11716789 (England and Wales)

AUDITORS:

Elsby & Company (Sywell) Ltd

Statutory Auditors

Thistledown Barn

Holcot Lane

Sywell

Northampton

Northamptonshire

NN6 0BG

The directors present their strategic report and the financial statements for the company and group for the year ended 28 February 2021.

The company was incorporated on 7 December 2018. Two subsidiaries (Kartell UK Ltd and The Shower Tray Company Ltd) were acquired on 31 May 2019 and their results are included from 7 December 2018 under the provisions of Merger Accounting. JT Holdings (UK) Ltd (group of companies) was acquired on 27 June 2019 and its results have been accounted for from that date.

REVIEW OF BUSINESS

The principal activity of the company is that of a holding company.

The Brand K Group is engaged in the supply of radiator and bathroom products to the heating and plumbing industry, and the manufacture of shower trays.

Group turnover in the period amounted to £70.7m (2020 £74.6m), with a profit before taxation of £3.5m (2020 Loss (£1.1m)). Net Assets of the group amounted to £2.5m (2020 Net Liabilities (£0.1m)) at the reporting date.

Profit before Taxation by the main trading divisions were as follows:

2021

Radiator and bathroom products  

£5.6m

Shower tray manufacture

£(1.5m)

The radiator and bathroom division improved its profit before tax during the period through growth in turnover and improved gross profit margins.

The shower tray businesses incurred losses, having been negatively affected by the Covid-19 pandemic, which caused a significant proportion of its customer base to close, and caused increases in manufacturing costs. Despite this, the division has recovered strongly since the year end.

The directors are pleased with the progress of the group which has continued after the year end, and intend to continue growing turnover through new opportunities.

COVID-19 UPDATE

During the year and since the balance sheet date, there has been significant macro economic uncertainty as a result of the Covid-19 pandemic, the scale and duration of which inherently remains uncertain. Although the group was forced to close down some of its operations for a short period, the group subsequently benefitted from an improvement in demand for home improvement products, and the group has traded positively since then. The directors are monitoring and reacting to the situation and have put in place safeguards to protect employees and to mitigate any developing risks.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors have developed strategies to achieve planned profitable growth and have funding arrangements in place to cover all foreseeable needs. The group is subject to the usual competitive risks, and achievement of sales targets and margins are key. More recently, Covid-19 and Brexit uncertainty have presented challenges.

Competitive risk

The group operates in a competitive industry where price is important. Conditions which can suddenly affect the buying price present a risk, such as exchange rates, as the group sources a significant amount of its supplies from overseas. To manage this risk, the group trades with its largest supplier in sterling, and it forward purchases foreign currency which allows it to withstand sudden changes. Additionally, the group is set up to supply small quantities with next day delivery, enabling customers to make smaller, more frequent orders, meaning that the group has an advantage in turbulent market conditions.

Covid-19

As described above, the unpredictable impact of the pandemic presents risks to the group, its workforce and its consumers, which is being managed by close monitoring and reacting to developments as they occur.

Brexit

Brexit has led to delays in shipping and higher shipping costs, and the situation remains unpredictable. The group carries comparatively high stock levels, which will enable it to avoid significant disruption. Any cost increases will apply to the whole industry and the directors believe the group is in a position to react quickly, to mitigate these risks.

Liquidity Risks

The group relies on bank lending facilities which require it to trade within certain financial criteria. Management closely manages the financial position of the group and reviews future cash flows on a regular basis, in order to meet the conditions. The directors are confident that the group has sufficient cash facilities to enable it to trade within its terms and to continue to meet its liabilities as they fall due.

Market Risks

Covid-19 and Brexit have created a position of uncertainty of how consumer markets will react in the future. The directors feel that the largest company's operational methods help to protect it against market risk, as it specialisms in the fast delivery of small stock quantities to its customers. The group has also taken various measures to reduce its cost base to minimise any risk.

Credit risks

The group's credit risk is primarily attributable to its trade debtors. The amounts presented in the balance sheet are net of allowances for doubtful debts, estimated by the management based on prior experience, the current economic environment or specific customer issues. The group has implemented policies that require appropriate credit checks on potential customers or review of existing customer credit history before a sale is made together with having in force a credit insurance policy.

SECTION 172(1) STATEMENT

A governance framework exists to ensure active business management and the reduction of risks within all risk groups. A number of policies are employed to manage key areas, including anti-bribery & corruption, competition law, trade sanctions, data protection, risk management, labour & human rights, diversity & inclusion, finance and marketing. The senior management team are responsible for ensuring an adequate system exists, along with the resources to ensure compliance with these policies. The Directors of the Group are responsible for the identification, evaluation, qualification, recording and reporting of the risks identified. The Group follows the principles and methodology as assessed by the Brand K Ltd group risk assessment, as well as identifying and responding to any further risks. Responsibility lies with the Managing Director to ensure that risk management is incorporated into relevant meetings with all key decision makers. Once identified, local risk owners are identified and assigned responsibility for mitigating ant risks identified. Review of any such risks is a continual process and are revisited to ensure continual compliance/avoidance of slippage.

DEVELOPMENT AND PERFORMANCE

The company's key performance indicators for the year were as follows:

2021

2020

Turnover

70,678,287

74,612,154

Gross profit margin

33.6%

32.8%

Net profit/(loss) before taxation

3,533,570

(1,131,224)

Net assets/(liabilities)

2,529,232

(103,350)

OTHER KEY PERFORMANCE INDICATORS

The Directors consider the following Key Performance Indicators when assessing the non-financial performance of the Group:

1

Staff Turnover/Retention %

2

Creation of employment opportunities

3

360 degree feedback on Line Managers

4

An open and honest environment that provides all employees with the opportunity to air their concerns

either

formally or informally in both open environment and privately

5

All colleagues are encouraged to challenge both Senior Management & Directors on all aspects of their

employment, and are encouraged to do so immediately.

The Directors note that from the introduction of such policies, staff retention/turnover continues to fall, whilst overall staff numbers continue to increase.

FUTURE DEVELOPMENTS

The company intends to continue consolidating, maintaining or improving its gross profit margins whilst continuing to improve its systems, controls and efficiencies. The company intends to grow turnover through new opportunities resulting from the expansion of the group.

FINANCIAL INSTRUMENTS

The Group's principal financial instruments are comprised of bank balances, invoice discounting, asset based lending, loans, forward exchange contracts for foreign currency, trade debtors and trade creditors. The main purpose of these instruments is to provide finance for the group's operations.

In respect of bank balances, loans, and asset based lending, the group manages its cashflow tightly, and monitors the relationship between these financial instruments, ensuring there are sufficient funds to meet amounts due, and that the company is operating within contractual limits.

Trade debtors and the invoice discounting facility are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers, together with insurance against bad debts.

Trade creditor risk is managed by close relationships with key suppliers and ensuring that sufficient funds are available to meet amounts due.

Forward exchange contracts are managed by ensuring that sufficient funds are available to meet commitments.

ON BEHALF OF THE BOARD:

A D Norford - Director

21 October 2021

The directors present their report with the financial statements of the company and the group for the year ended 28 February 2021.

DIVIDENDS

Dividends of £200,360 (2020- £239,290) have been paid in the year.

DIRECTORS

The directors shown below have held office during the whole of the period from 29 February 2020 to the date of this report.

A D Norford

E Usten

ENGAGEMENT WITH EMPLOYEES

The group recognises the benefits of keeping employees informed about the business, and does so through 'Town Hall' and individual shift briefings.

EMPLOYEES

The Groups success continues to heavily rely on the performance of its staff as it operates in a competitive environment for recruitment and retention. This is particularly prevalent in the Bedford location as numerous new warehouses and distribution centres have been recently built. To mitigate these issues, a very competitive and attractive remuneration package is provided.

It is the groups policy to treat all employees without discrimination and operates a strict equal opportunities which is actively monitored by the Group HR manager. Full consideration is provided to all applicants for employment, and where any individual requires additional resource or support to fulfil any task, this is made readily available should any individual require it.

DISABLED EMPLOYEES

The Group gives full consideration to applications for employment from disabled persons where the fulfilment of the tasks can be adequately fulfilled by a handicapped or disabled person. Where existing employees become disabled, it is the groups policy to provide continued employment. However, where required, further training and career development will be provided where any individual is unable to return to their existing role and an existing/future vacant role is available.

ENERGY AND CARBON REPORT

The table below illustrates the energy consumption and emissions for the current financial year, for Kartell UK Limited. The other companies in the group are exempt from reporting due to their individual company size.

Reported Energy and Emission

2021 Consumption (kWh)

Energy Consumption (kWh)

837,112

Emissions from combustion of fuels (tCO2 e)

68

Emissions from purchased electricity (tCO2 e)

110

Total gross tCO2 e based on above

178

Intensity ratio (kg CO2e per £1,000 turnover)

3.02

As an organisation the Group continues to assess measures whereby the overall operational carbon footprint can be reduced. Having previously upgraded all Warehouse lighting. Biomass boilers have now been installed into both Wigan & Bedford installations, whose impact is expected to dramatically reduce the need for fossil fuels. Such boilers will be fuelled through the controlled burning of waste pallet wood, whose own emissions will be released having been filtered through purpose-built flues.

DISCLOSURE IN THE STRATEGIC REPORT

The Directors have omitted certain items from the Directors Report as they are disclosed within the Strategic Report instead, in accordance with S414C(11) of the Companies Act 2006.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

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

-

select suitable accounting policies and then apply them consistently;

-

make judgements and accounting estimates that are reasonable and prudent;

-

state whether applicable accounting standards have been followed, subject to any material departures

disclosed and explained in the financial statements;

-

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the

company continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the  group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection  of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

AUDITORS

Appropriate arrangements have been put in place for the auditors,  Elsby & Company (Sywell) Ltd, to be reappointed as auditors in the absence of an Annual General Meeting.

ON BEHALF OF THE BOARD:

A D Norford - Director

21 October 2021

Opinion

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report.  We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.  We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

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

Other information

The directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.  We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

-

the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-

the Group Strategic Report and the Report of the Directors 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 its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors.

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

-

adequate accounting records have not been kept 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 directors

As explained more fully in the Statement of Directors' Responsibilities set out on page seven, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group's and 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 directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

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

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:

We considered the nature of the company's industry and its control environment, and discussed the Company's policies and procedures relating to fraud and compliance with laws and regulations.

We obtained an understanding of the legal and regulatory frameworks that the company operates in, and identified the key laws and regulations that:

-

had a direct effect on the determination of material amounts and disclosures in the financial statements; and

-

do not have a direct effect on the financial statements but compliance with which may be fundamental to the

company's ability to operate or to avoid a material penalty.

We discussed among the audit engagement team regarding the opportunities and incentives that may exist within the organisation for fraud and how and where fraud might occur in the financial statements.

In common with all audits under ISAs ( UK), we are also required to perform specific procedures to respond to the risk of management override. In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments; assessed whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluated the business rationale of any significant transactions that are unusual or outside the normal course of business.

In addition to the above, our procedures to respond to the risks identified included the following:

-

reviewing financial statement disclosures by testing to supporting documentation to assess compliance with

provisions of relevant laws and regulations described as having a direct effect on the financial statements;

-

performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of

material misstatement due to fraud;

-

enquiring of management concerning actual and potential litigation and claims, and instances of non-compliance

with laws and regulations.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditors responsibilities. This description forms part of our Auditors' Report.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Mr Carl Elsby (Senior Statutory Auditor)

for and on behalf of Elsby & Company (Sywell) Ltd

Statutory Auditors

Thistledown Barn

Holcot Lane

Sywell

Northampton

Northamptonshire

NN6 0BG

21 October 2021

TURNOVER

4

70,678,287

74,612,154

Cost of sales

46,938,466

50,171,526

GROSS PROFIT

23,739,821

24,440,628

Distribution costs

6,792,269

8,445,060

Administrative expenses

14,335,841

16,245,166

21,128,110

24,690,226

2,611,711

(249,598

)

Other operating income

5

1,748,075

32,996

OPERATING PROFIT/(LOSS)

7

4,359,786

(216,602

)

Cost of fundamental

reorganisation

9

-

234,635

4,359,786

(451,237

)

Interest receivable and similar income

10

6

1,202

4,359,792

(450,035

)

Interest payable and similar expenses

11

826,222

681,189

PROFIT/(LOSS) BEFORE TAXATION

3,533,570

(1,131,224

)

Tax on profit/(loss)

12

700,628

(209,106

)

PROFIT/(LOSS) FOR THE FINANCIAL

YEAR

2,832,942

(922,118

)

Profit/(loss) attributable to:

Owners of the parent

2,832,942

(922,118

)

PROFIT/(LOSS) FOR THE YEAR

2,832,942

(922,118

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME

FOR THE YEAR

2,832,942

(922,118

)

Total comprehensive income attributable to:

Owners of the parent

2,832,942

(922,118

)

FIXED ASSETS

Intangible assets

15

5,878,045

6,578,058

Tangible assets

16

4,561,326

4,068,579

Investments

17

-

-

10,439,371

10,646,637

CURRENT ASSETS

Stocks

18

14,408,214

13,167,919

Debtors

19

17,170,458

14,971,297

Cash at bank and in hand

343,107

122,787

31,921,779

28,262,003

CREDITORS

Amounts falling due within one year

20

38,642,739

38,621,407

NET CURRENT LIABILITIES

(6,720,960

)

(10,359,404

)

TOTAL ASSETS LESS CURRENT

LIABILITIES

3,718,411

287,233

CREDITORS

Amounts falling due after more than one

year

21

(524,261

)

(154,088

)

PROVISIONS FOR LIABILITIES

24

(664,918

)

(236,495

)

NET ASSETS/(LIABILITIES)

2,529,232

(103,350

)

CAPITAL AND RESERVES

Called up share capital

25

102

102

Revaluation reserve

26

51,357

64,197

Merger reserve

26

828,868

828,868

Fair value reserve

26

134,586

145,353

Retained earnings

26

1,514,319

(1,141,870

)

SHAREHOLDERS' FUNDS

2,529,232

(103,350

)

The financial statements were approved by the Board of Directors and authorised for issue on 21 October 2021 and were signed on its behalf by:

A D Norford - Director

FIXED ASSETS

Intangible assets

15

-

-

Tangible assets

16

-

-

Investments

17

5,827,310

5,827,310

5,827,310

5,827,310

CREDITORS

Amounts falling due within one year

20

5,681,959

5,825,687