ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
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Registered number:
FOR THE YEAR ENDED 31 MAY 2023
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OFFER WATERMAN FINE ART LIMITED
CONTENTS
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OFFER WATERMAN FINE ART LIMITED
COMPANY INFORMATION
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OFFER WATERMAN FINE ART LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2023
The Directors present their annual report and audited accounts of Offer Waterman Fine Art Limited for the year ended 31 May 2023.
Offer Waterman Fine Art Limited, henceforth referred to as the 'Company', is engaged in the retailing of fine art both here in the UK and abroad. There have been no changes in the Company's activities during the current financial reporting period. The Company is a fine art dealership based in Mayfair and deals extensively in Modern, Post War, and Contemporary Art in both the secondary and primary markets. Whilst the main focus of the Company is based on twentieth century international British Masters, the Company also acquires work in the Contemporary, Impressionist and Old Master fields. In addition to its programme of carefully curated exhibitions, the Company participates in a variety of international art fairs in the UK, Europe and USA and operates its own publishing wing; creating books and catalogues independently or in partnership with other publishers. The Company is also proud to support various museums, institutions and academic bodies for their exhibition programmes and to foster further learning. The Company strives to maintain a healthy and enriching working environment encouraging open and fluid dialogue. Consequently, employees continue to closely identify with the Company and as such put in a strong performance; something which the Board is pleased to report does not go unnoticed and who in turn reciprocate their ongoing appreciation and commitment to its’ employees.
The Company’s financial performance for the year and financial position as at 31 May 2023 are shown on pages 14 to 15 of these financial statements. The results for the year are reported on the basis that all operations undertaken during the year under review are continuing.
The financial performance and financial position of the Company is considered by the directors to be satisfactory given the general economic climate. Movements in turnover and gross profit cannot considered to be representative of a trend or a result of changes in the manner in which the Company operates. The fluctuating nature of stocks, both in availability and demand, as well as the changing requirements of clients makes it impossible to predict expected turnover and gross profit; however, taking into account actual market and economic activity during the reporting period, the directors are pleased with the reported results for the year. Looking ahead post 31 May 2023, the directors remain confident of continued positive financial performance, market growth and long term success as the Company continues to report strong profits. Competition in the art market has and continues to be intense. Given that a principal obstacle of any art dealer is the procurement of art for sale, whether be as agent or as principal, continued investment in the business has enabled the Company to build upon its proven track record of profitability and its ongoing success in identifying and following through to completion, trading opportunities at the upper echelon of the art market.
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OFFER WATERMAN FINE ART LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
The Company's principal financial instruments continue to comprise of bank balances, trade receivables and payables and credit facilities provided by financial institutions to the Company. The main purpose of these instruments is to raise funds and to finance the Company's operations. Due to the nature of the financial instruments used by the Company there is no exposure to price risk. Further details regarding the Company's principal risks and uncertainties during the year under review are noted below. The Company does not follow any specific code nor standard practice on the payment of trade payables. The Company's policy is to adhere to agreed terms and conditions and ensure timely payment in accordance with these terms for all suppliers.
The strategy of the directors for the future is to continue focus on:
∙Continued growth of the Company's online presence;
∙Development of new, and maintenance of existing, trading relationships;
∙Ensuring a consistent delivery of a high level of quality and added value to its customers and suppliers;
∙Building upon the Company's portfolio of art stocks and trades through an emphasis on the importance of comprehensive research of the market including trends and key events; and
∙Evaluation and targeting of works by artists that are either newly emerging onto the scene or re-emerging after a period of absence.
The directors have overall responsibility for the Company's systems of internal control and risk management and for reviewing their overall effectiveness; applying an adaptive approach with respect to internal control and operational risk management taking steps to embed changes as areas for improvement are brought to their attention.
The primary risk factors considered by the directors as being the most significant in respect of operational performance are noted below and are not ranked in any particular order: The art market and its attributable external environment is influenced, albeit not always in the short term, by the overall strength of the international economy and financial markets. Specific macroeconomic and geopolitical factors may yield a material impact on the ability to trade across international borders which could impact the willingness of the market's client base to engage with and buy from the Company. Additionally, profitability may be put at risk by any significant changes to tariffs or customs legislation. Changing trends such as artist popularity and collector preferences, which are immensely difficult to predict, will influence demand and competition, from both auctioneers and other art dealers, will impact the quantity and quality of consignments available to the market as a whole and overall margins generated on sale. Trade in the art market is not highly liquid with the valuation of artworks being inherently subjective and realisable values often varying over time. As a result, the value of artworks held in stocks by the Company is at risk. The failure to authenticate or validate the provenance of artwork acquired and subsequently sold may result in disputes with customers, litigation, financial penalties and, ultimately, adverse effects on the reputation of the Company. With the aim of mitigating the aforementioned risks, the Company has a knowledgeable team of employees who with the advice and guidance of relevant third party professionals, where considered relevant, keep abreast of any changes or developments. Through a developed understanding of the underlying changes and/or developments identified, Company management will adapt its business operations appropriately.
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OFFER WATERMAN FINE ART LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
The performance of the Company is highly dependant on its personnel. Therefore the Company's ongoing ability to attract, motivate and retain key personnel is imperative. The loss of key personnel could impact the Company's ability to operate effectively and/or result in a loss of knowledge and expertise. With the purpose of providing fulfilling careers for all employees through career progression opportunities and remuneration packages which will attract, motivate and retain personnel, the directors monitor remuneration levels and structure, performance and feedback of the Company's employees. The loss or damage of the Company's artworks may result in financial liabilities payable to customers and/or parties holding a part share or stock write offs. The majority of the risk is minimised by the Company through the implementation of insurance policies but there may be certain liabilities retained by the Company and/or not covered under the terms of the insurance policies in place. The activities of the Company are subject to laws and regulations, including, but not limited to, Customs handling of imports and exports, cultural property ownership legislation, anti money laundering compliance and the levy of local taxes. Non compliance may result in personal and/or corporate liability, financial penalties, litigation and trading restrictions. The Company’s credit risk is primarily attributable to its trade receivables which the Company manages through the assessment of the credit risk of current and potential customers and ongoing review and collection of outstanding receivables. Where applicable, the Company will not release items sold until full payment has been received. As of the balance sheet date, there were no actual or potentially significant concentrations of credit risk aware of by the directors of the Company. Liquidity risk is monitored on an ongoing basis as part of the Company's day to day control activities and periodic financial reviews and forecasts with action taken as considered necessary, including the acquisition of commercial credit and bank overdraft facilities as well as the retention of cash balances; thereby ensuring appropriate funding facilities are continually available within the Company. The Company enters into transactions that are denominated in currencies other than its functional currency, primarily the Euro and US Dollar, and is therefore exposed to movements in foreign currency exchange rates. Where exchange rates change between reporting periods, fluctuations in the reported results of the Company's operations may arise that are reflective of currency performance and not indicative of operating performance. The Company will therefore use currency specific bank facilities, where considered financially appropriate, to manage exposure to movements in foreign currency exchange rates. With the UK no longer party to the EU’s customs union and single market, the Company is now exposed to additional costs in respect of administrations and tariffs related to imports and exports. The Company works with its customers and suppliers to minimise these additional costs.
Given the straightforward and individual nature of the business, the directors consider turnover, gross and operating profit, net asset position and cash flow as the relevant financial key performance indicators sufficient to ensure an appropriate understanding to the true underlying financial performance and position of the Company.
Details of these financial key performance indicators for the current and preceding financial reporting periods can be found on pages 14 to 18 of these financial statements.
The directors do not consider, in the context of the art market, that there are any consistent non-financial key performance indicators which would assist in ensuring a sufficient understanding of the Company's underlying performance not already determinable from information available elsewhere.
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OFFER WATERMAN FINE ART LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
This report was approved by the board and signed on its behalf.
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OFFER WATERMAN FINE ART LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2023
The directors present their report and the financial statements for the year ended 31 May 2023.
The directors are responsible for preparing the strategic report, the directors' report and the financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £3,645,092 (2022 - £1,239,504).
Dividends paid by the Company for the year amounted to £2,505,000 (2022 - £nil).
The directors who served during the year were:
The directors are not expecting to make any significant changes in the nature of the business in the near future and will continue to explore opportunities, where they may present themselves, to grow organically.
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OFFER WATERMAN FINE ART LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
There have been no significant events affecting the Company since the year end.
The auditors, Nyman Libson Paul LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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OFFER WATERMAN FINE ART LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF OFFER WATERMAN FINE ART LIMITED
We have audited the financial statements of Offer Waterman Fine Art Limited (the 'Company') for the year ended 31 May 2023, which comprise the statement of comprehensive income, the balance sheet, the statement of cash flows, the statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditors' report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
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OFFER WATERMAN FINE ART LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF OFFER WATERMAN FINE ART LIMITED (CONTINUED)
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
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OFFER WATERMAN FINE ART LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF OFFER WATERMAN FINE ART LIMITED (CONTINUED)
We identify and assess the risks of material misstatement within the financial statements, whether due to fraud or error, by designing and performing audit procedures responsive to those risks and obtaining sufficient and appropriate evidence to provide a basis for our opinion. In identifying and assessing risks of material misstatement, we have considered the following:
∙the nature of the industry and sector in which the Company operates;
∙the control environment and business performance of the Company;
∙the organisational structure and management of the group of which the Company is an undertaking of;
∙we have not received all the information and explanations we require for our audit.
∙the Company's accountancy function and the use of third party service organisations as part of it;
∙results of our enquiries of management about their own identification and assessment of the risks of irregularities;
∙any matters we identified having obtained and reviewed the Company’s documentation of their policies and procedures relating to identifying, evaluating and complying with laws and regulations and detecting and responding to the risks of fraud;
∙whether the directors were aware of any instances of non-compliance or of actual, suspected or alleged fraud;
∙the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and those matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
Given the relatively simple business model of the Company with comparatively few unexpected fluctuations in the reported financial performance and position, such that any unexpected items would be specifically investigated as part of audit work; our assessment of the susceptibility of the Company's financial statements to material misstatement, including how fraud may transpire, is considered to be low.
We considered the opportunities and incentives that may exist within the Company for fraud and identified the greatest potential for fraud in the following areas:
∙recognition of commercial income; and
∙reporting of stocks.
As is common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override (i.e. posting of unusual journals and complex transactions).
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OFFER WATERMAN FINE ART LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF OFFER WATERMAN FINE ART LIMITED (CONTINUED)
We also obtained an understanding of the legal and regulatory frameworks that the Company operates in, focusing on those areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience and through discussion with the directors and other management (as required by auditing standards).
The potential effect of these laws and regulations on the financial statements varies considerably. Firstly, the Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation), distributable profits legislation and taxation legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items. Secondly, the Company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation.
The key laws and regulations we considered in this context included the Company’s ongoing compliance with the UK Companies Act and current UK employment and tax legislation and the following most likely to have such an effect given the nature of the Company's activities: anti-trust compliance, anti-bribery and corruption, data privacy, anti-money laundering, artist rights, title ownership and cross-border transactions and movement of goods.
We communicated those relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.
Auditing standards limit the required audit procedures to identify non-compliance with laws and regulations to enquiry of the directors and other management and inspection of regulatory and legal correspondence, if any. Therefore if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.
In addition, as with any audit, the risk of non-detection of a material misstatement resulting from fraud is greater than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance.
As a result of performing the above, we identified the recognition of commercial income and the risk of management override as key audit matters related to the potential risk of fraud. In response to those key audit matters, our procedures included:
In regards to the recognition of commercial income
∙testing whether amounts recognised were accurate and recorded in the correct period; and
∙assessing that the accounting entries have been recorded in accordance with Section 23 of FRS 102.
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OFFER WATERMAN FINE ART LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF OFFER WATERMAN FINE ART LIMITED (CONTINUED)
In regards to stocks
∙attend and review the annual year-end stock take;
∙obtain third party confirmation of stocks that were held on consignment and/or at external holding locations
∙testing whether amounts recognised were accurate and recorded in the correct period;
∙review post balance sheet date sales of stocks included in the balance sheet;
∙review of stock provisions and aged stock items; and
∙enquiring of informed management concerning significant events (i.e sales, purchases, caveat emptor, etc).
In regards to the risk of management override
∙testing the appropriateness and discussion with management of journal entries and other accounting adjustments;
∙assessment of the appropriateness of accounting policies used, the reasonableness of accounting estimates and judgments implemented and whether there is an indication of a potential bias; and
∙evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
In addition to the aforementioned, our procedures to respond to risks identified included the following:
∙evaluation of the overall presentation, structure and content of the financial statements and whether the financial statements represent the underlying transactions and events in a manner that achieves a presentation that is true and fair and in accordance with the provisions of relevant laws and regulations described as having a direct effect on the financial statements;
∙enquiry and review of service organisations utilised by the Company and material to its financial reporting;
∙enquiring of management concerning actual and potential litigation and claims;
∙performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
∙reading minutes of meetings of those charged with governance,
∙reviewing correspondence with HMRC; and
∙concluding on the appropriateness of the directors' application of the going concern basis of accounting in preparing the financial statements and, based on the evidence obtained, concluding whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern.
Our conclusions in regards to going concern are based on the evidence obtained up to the date of the audit report and may not account for all future events or conditions that may transpire as subsequent events may result in outcomes that are inconsistent with judgments that were reasonable at the time they were made.
Consequently, our conclusions are not a guarantee that the Company will continue in operation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report.
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OFFER WATERMAN FINE ART LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF OFFER WATERMAN FINE ART LIMITED (CONTINUED)
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditors
124 Finchley Road
NW3 5JS
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OFFER WATERMAN FINE ART LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2023
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OFFER WATERMAN FINE ART LIMITED
REGISTERED NUMBER: 03203503
BALANCE SHEET
AS AT 31 MAY 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 19 to 33 form part of these financial statements.
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OFFER WATERMAN FINE ART LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2023
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OFFER WATERMAN FINE ART LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MAY 2023
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OFFER WATERMAN FINE ART LIMITED
ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 MAY 2023
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OFFER WATERMAN FINE ART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
Offer Waterman Fine Art Limited (the "Company") is a private company limited by share capital, incorporated under the UK Companies Act 1985 and domiciled in England.
The address of the Company's registered office and principal place of business is 17 St. George Street, Mayfair, London, W1S 1FJ. The nature of the Company's operations and its principal activities are set in the strategic report on pages 2 to 5.
2. Accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all reporting periods presented, unless otherwise stated.
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in conformity with Financial Reporting Standard 102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company's accounting policies.
Details of those estimates and/or judgments made in applying the Company's accounting policies towards the preparation of these financial statements that may be considered as yielding a significant risk of a material adjustment being made to the carrying amounts of assets and/or liabilities reported in the balance sheet during the next financial reporting period are disclosed in note 3 to the financial statements.
The Company continues to be profitable and holding a stable net asset position. The directors are not aware of any factors that would result a change in the observed financial performance and position going forward.
In preparing these financial statements, taking into the financial performance and position of the Company up to the date these financial statements were approved; the directors are of the opinion that there is a reasonable expectation that the Company shall have adequate financial resources available at its disposal to continue in operational existence and, as a result of which, the Company is expected to remain a going concern.
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OFFER WATERMAN FINE ART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
2. Accounting policies (continued)
The directors accept that although there does exist an inherent material uncertainty, as is the case with all companies, that may cast doubt about the ability of the Company to continue as a going concern; the directors considers the uncertainty to be sufficiently insignificant such that the application of going concern basis in preparing the Company's financial statements remains appropriate. The directors have therefore continued to adopt the going concern basis in preparing the Company's financial statements and to not recognise any adjustments in the financial statements that would arise if the going concern basis were to become no longer appropriate.
Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the "functional currency").
The functional currency of the Company and the currency in which the financial statements are presented (the "presentational currency") is 'Pounds Sterling' (£) rounded to the nearest single unit of currency. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account as part of total comprehensive income.
All borrowing costs are recognised in profit or loss during the reporting period in which they are incurred.
Page 20
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OFFER WATERMAN FINE ART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
2. Accounting policies (continued)
The Company operates a defined contribution pension plan for its employees. A defined contribution pension plan is one under which the Company pays fixed contributions to a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts falling due but not paid as of the balance sheet date are carried forward as part of other creditors in the balance sheet. The assets of the pension plan are held separately from the Company in independently administered funds. Current taxation is calculated using tax rates and on the basis of tax laws enacted or substantively enacted at the balance sheet date in the UK where the Company operates and generates taxable income. The directors of the Company will periodically evaluate positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and will establish provisions, where appropriate, on the basis of amounts expected to be payable at the balance sheet date. Deferred taxation is recognised on temporary differences arising between the tax bases of assets and liabilities and their respective carrying amounts in the financial statements. Deferred taxation is calculated using tax rates and on the basis of tax laws enacted or substantively enacted at the balance sheet date and are expected to apply when the related deferred tax asset/liability is realised/settled. Deferred tax assets are recognised only to the extent that it is sufficiently probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the respective deferred tax assets and liabilities relate to current taxation levied by the same tax authority.
Tangible fixed assets are recognised under the cost model and stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended upon acquisition.
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OFFER WATERMAN FINE ART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
2. Accounting policies (continued)
Depreciation is provided on the following basis:
Depreciation of a tangible fixed asset commences once the asset is available for use.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss. Stocks that have been previously impaired are reviewed at each reporting date to assess whether there is any indication that the impairment losses recognised in prior financial reporting periods may no longer exist or may have decreased. The value of impairment reversed will be such that the resulting carrying amount is less than or equal to the value had no impairment been recognised in prior financial reporting periods. The Company may hold and sell stocks on behalf of third parties where the related risks and rewards of ownership are not held by the Company. Such stocks are not included in the Company's balance sheet. Certain stocks are held jointly with third parties. Such stocks are included in the balance sheet at the value of the Company's share. Where such jointly held stocks are sold by the Company, the Company reflects the sale in profit or loss as if the item sold was held 100% by the Company with a corresponding charge in cost of sales to reflect the share of turnover and stock value in respect of third party holdings.
Page 22
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OFFER WATERMAN FINE ART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
2. Accounting policies (continued)
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities; with said financial assets and liabilities classified in accordance with the substance of the underlying contractual obligations rather than its legal form.
Financial assets and liabilities are recognised in the balance sheet upon becoming party to the contractual provisions of the instrument. Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or the financial asset is transferred along with substantially all the risks and rewards of ownership of the asset to another party. Financial liabilities are derecognised only when the Company’s obligations are discharged, cancelled or expired. The measurement of specific financial assets, financial liabilities and equity is as outlined below: Debtors and creditors Debtors, excluding deferred taxation (see note 2.10), and creditors are initially measured at transaction price (i.e fair value) and subsequently held, at transaction price less provision for impairment of assets. Cash balances Cash balances are reported by the Company as being financial instruments classified as short term receivables and are represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours and subject to an insignificant risk of changes in value. Cash balances are held at floating interest rates linked to UK bank rates. Equity and dividends Ordinary share capital, shown in equity, is initially measured and subsequently held at its nominal value. Where the transaction price for issued shares exceeds their nominal value, the difference is shown under equity in a share premium account with any directly attributable transaction costs associated with the issuing of said shares deducted from a share premium account. Equity dividends are recognised in the reporting period upon approval by the Company's directors. In the opinion of the directors, the following judgments, estimates and/or assumptions made in applying the principal accounting policies, outlined in note 2 of these financial statements, towards the preparation of these financial statements may be considered as having a significant risk of causing a material adjustment to the carrying amount of assets and/or liabilities carried forward as at the balance sheet date where by which the actual future outcome observed may differ from that originally determined and reported. Depreciation of tangible fixed assets The useful lives of assets and residual values of tangible assets are estimated by the directors based on general consensus taking into account a number of factors such as technological innovation, product life cycles, maintenance programs and projected disposal values.
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OFFER WATERMAN FINE ART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
3.Judgments in applying accounting policies (continued)
When assessing stock impairment, the directors consider the nature and condition of stocks held; and taking into account current and expected market activity, the likelihood of future sale and whether the current carrying value exceeds the expected net sales value. Impairment of trade receivables When assessing the recoverable value of trade receivables, the directors consider a variety of factors including the ageing profile of the debt, historical and market experience with the customer and the quality of communications to date with the debtor. There exists a degree of estimation uncertainty when determining the aforementioned and whilst every attempt is made by the directors to ensure accuracy, there will always remain an inherent risk that the recognised estimated value at the balance sheet date does not match the final future realised value.
The whole of the turnover is attributable to to the sale of fine art and the recharge of restoration, framing and other costs in connection with fine art supplied during the year as disclosed in note 2.6 to the financial statements.
In the opinion of the directors, the disclosure of the geographical split of turnover would be seriously prejudicial to the commercial interests of the Company and, in accordance with the Companies Act 2006, have not disclosed the geographical split of turnover as part of these financial statements.
Page 24
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OFFER WATERMAN FINE ART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
Page 25
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OFFER WATERMAN FINE ART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
The directors, as reported in the directors' report, are recognised as being those individuals that make up the key management personnel of the Company and whom together hold joint responsibility for planning, directing and controlling the activities of the Company.
Remuneration payable to key management personnel during the reporting period were as disclosed in note 7 of the financial statements.
Page 26
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OFFER WATERMAN FINE ART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
Page 27
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OFFER WATERMAN FINE ART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
13.Taxation (continued)
Following 1 April 2023 the main rate of UK corporation tax increased from 19% to 25% for profits chargeable to corporation tax of £250,000 or more.
Where profits chargeable to corporation tax are £50,000 or less the rate remains unchanged at 19% with marginal relief available for where profits chargeable to corporation tax fall between the aforementioned thresholds of £50,000 and £250,000.
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OFFER WATERMAN FINE ART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
Page 29
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OFFER WATERMAN FINE ART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
Page 30
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OFFER WATERMAN FINE ART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
The Company held no financial instruments that would require specific disclosure under sections 11 or 12 of Financial Reporting Standard 102 and paragraph 36 of Schedule 1 to the Companies Act 2006.
The total interest income and expenditure in respect of financial assets and liabilities not held at fair value through profit or loss (i.e. re-measured to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date with any financial movement recognised immediately in profit or loss) is as disclosed in the statement of comprehensive income on page 14 of the financial statements.
Page 31
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OFFER WATERMAN FINE ART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
Profit and loss account
Specific movements during the financial reporting period are as disclosed in the statement of changes in equity on page 16 of the financial statements.
Page 32
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OFFER WATERMAN FINE ART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
The pension cost charge represents contributions payable by the Company towards defined benefit pension schemes and amounted to £9,463 (2022: £6,781) for the year ended 31 May 2023.
Employee and employer contributions totalling £455 (2022: £nil) were outstanding at the balance sheet date and are included in creditors falling due within one year.
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