Company registration number 00784246 (England and Wales)
DESIGNPLAN LIGHTING LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
DESIGNPLAN LIGHTING LTD
COMPANY INFORMATION
Directors
D Barnes (Managing Director)
L Marchant
P Muir
B Sonesson
S Tilling
M Wood
Company number
00784246
Registered office
16 Kimpton Park Way
Sutton
Surrey
SM3 9QS
Auditor
KPMG LLP
1 St Peter's Square
Manchester
M2 3AE
DESIGNPLAN LIGHTING LTD
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report to the members of Designplan Lighting Ltd
5 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 24
DESIGNPLAN LIGHTING LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The directors present the strategic report for the year ended 31 December 2022.
Fair review of the business
It was another very successful year, with further sales growth of over 25%, achieving £17,135,710 (2021: £13,656,095). We saw strong progress in our home markets of UK and Germany. We successfully delivered the second largest infrastructure project in the company’s history in HMP Fosse Way and have been shortlisted in the Sustainability & Environmental Excellence category for the 25th Rail Business Awards.
We successfully managed the high inflation environment that drove continued pressure on commodity prices globally through a strategy of continued proactivity in purchasing, pricing and driving operational efficiencies, to manage our exposure to materials, labour and service provider costs.
The result of these actions is that we have successfully converted the sales growth into a higher operating profit, achieving £1,220,231 profit before tax (2021: £539,185), as well as growth in our cash reserves.
The company looks ahead to 2023 with continued optimism as our strategy builds momentum. We continue to see strong growth in our order book and opportunity bank. Our product portfolio is also well suited to the impending fluorescent lighting ban that came into force from February 2023 through the updated Restriction of Hazardous Substance (RoHS) directive.
Going concern
Inflation has replaced the worldwide pandemic of Covid-19 as the dominating pressure on the macro economic environment.
Whilst the directors are unable to predict the future impact on the company’s operation, externally we operate in well funded sectors and internally the directors believe the Company is well placed to manage its business risks.
This confidence is evidenced by the Company’s out performing the economic growth of its home markets in both revenue and profit in 2021 and 2022, and carrying a stronger order book, larger opportunity bank and higher cash reserves. This provides further assurance that the company will continue in operational existence for the foreseeable future, and as a minimum for at least 12 months from the date of approval of these financial statements. Consequently, the directors continue to adopt the going concern basis of accounting in preparing the annual financial statements.
Research and development
During 2022 the company continued to develop new and second-generation light fittings in line with Section 18 of FRS102.
Existence of overseas branches
The company has a German branch, as defined in s.1046(3) of the Companies Act 2006. The results of the branch are consolidated with the results of the company and are not disclosed separately.
Principal risks and uncertainties
The high global inflation environment is the key threat to the short term performance of all businesses at this time. As stated, we are confident we are weathering that pressure successfully. In the longer term, there is a great deal of uncertainty as to the longevity or impact this will have. However, we are confident that our exposure is more spread than ever before in our 60 year history (both in terms of geographically and sectors funding) and our proposition is equally well aligned to the growing sustainability agenda.
Exchange rate risk
The main treasury risk arises from exchange rate fluctuation. The company manages the risk from exchange rates by trading with customers and suppliers in the same currencies where possible.
We also saw forex gains of £62,746 (2021: £33,862 loss) due to favourable Euro to Sterling movements in the last quarter to coincide with strong Germany sales.
DESIGNPLAN LIGHTING LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
Key performance indicators
In addition to turnover and profit, the following are further key performance indicators that considered important measures of performance:
Future developments
The strategic focus remains on increasing and driving market share in our home markets and priority sectors through targeted product development and service excellence.
The company will also continue to leverage the global presence of the Fagerhult Group to further penetrate international markets where our product portfolio is relevant.
L Marchant
Director
30 August 2023
DESIGNPLAN LIGHTING LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2022.
Principal activities
The principal activity of the company continued to be that of design, manufacture and sale of light fittings.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £300,000. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
D Barnes (Managing Director)
L Marchant
P Muir
B Sonesson
S Tilling
M Wood
Dr G Van Der Meer
(Resigned 1 September 2022)
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor 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 company’s auditor is aware of that information.
Information referred to in the Strategic Report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of principal risks and future developments.
Auditor
Pursuant to Section 487 of the Companies Act 2006, the auditor will be deemed to be reappointed and KPMG LLP will therefore continue in office.
On behalf of the board
L Marchant
Director
30 August 2023
DESIGNPLAN LIGHTING LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. 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 of the profit or loss of the company 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;
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 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.
DESIGNPLAN LIGHTING LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF DESIGNPLAN LIGHTING LTD
- 5 -
Opinion
We have audited the financial statements of Designplan Lighting Ltd (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity 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 the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its profit for the year then ended;
have been properly prepared in accordance with UK accounting standards, including FRS 102 ; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Company in accordance with, UK ethical requirements including the FRC Ethical Standard. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.
The directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or to cease its operations, and as they have concluded that the Company’s financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the financial statements (“the going concern period”).
In our evaluation of the directors’ conclusions, we considered the inherent risks to the Company’s business model and analysed how those risks might affect the Company’s financial resources or ability to continue operations over the going concern period.
Our conclusions based on this work:
we consider that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate;
we have not identified, and concur with the directors’ assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for the going concern period.
However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above conclusions are not a guarantee that the Company will continue in operation.
Strategic report and directors’ report
The directors are responsible for the strategic report and the directors’ report. Our opinion on the financial statements does not cover those reports and we do not express an audit opinion thereon.
Our responsibility is to read the strategic report and the directors’ report and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work:
we have not identified material misstatements in the strategic report and the directors’ report;
in our opinion the information given in those reports for the financial year is consistent with the financial statements; and
in our opinion those reports have been prepared in accordance with the Companies Act 2006.
DESIGNPLAN LIGHTING LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF DESIGNPLAN LIGHTING LTD
- 6 -
Matters on which we are required to report by exception
Under the Companies Act 2006 we are required to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the 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.
We have nothing to report in these respects.
Directors' responsibilities
As explained more fully in their statement set out on page 4, the directors are responsible for: the preparation of the financial statements and for being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the 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 they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities
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 our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC’s website at www.frc.org.uk/auditorsresponsibilities.
Fraud and breaches of laws and regulations - Ability to deter
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
Enquiring of directors and inspection of policy documentation as to the Company’s high-level policies and procedures to prevent and detect fraud, including the Company’s channel for “whistleblowing”, as well as whether they have knowledge of any actual, suspected or alleged fraud.
Reading Board minutes.
Considering remuneration incentive schemes and performance targets for management, directors and sales staff.
Using analytical procedures to identify any unusual or unexpected relationships.
We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the audit.
DESIGNPLAN LIGHTING LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF DESIGNPLAN LIGHTING LTD
- 7 -
As required by auditing standards, we perform procedures to address the risk of management override of controls and the risk of fraudulent revenue recognition, in particular:
We did not identify any additional fraud risks.
In determining the audit procedures, we took into account the results of our evaluation and assessing the design and implementation of some of the Company-wide fraud risk related management controls.
We also performed procedures including:
Identifying journal entries to test based on risk criteria and comparing the identified entries to supporting documentation. These included those posted to unusual accounts and unusual account combinations.
Testing a sample of revenue transaction in the cut off period and comparing to supporting documentation to assess revenue recognition in the correct period.
Identifying and responding to risks of material misstatement related to compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience and through discussion with the directors (as required by auditing standards), and discussed with the directors the policies and procedures regarding compliance with laws and regulations.
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit.
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, and 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. We identified the following areas as those most likely to have such an effect: health and safety, data protection laws, anti-bribery, employment law and regulatory capital and liquidity, recognising the nature of the Company’s activities. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors 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.
Context of the ability of the audit to detect fraud or breaches of law or regulation
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 with laws and regulations 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.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, 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 with all laws and regulations.
DESIGNPLAN LIGHTING LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF DESIGNPLAN LIGHTING LTD
- 8 -
The purpose of our audit work and to whom we owe our responsibilities
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.
Gill Hopwood-Bell
Senior Statutory Auditor
For and on behalf of KPMG LLP
30 August 2023
Chartered Accountants
Statutory Auditor
1 St Peter's Square
Manchester
M2 3AE
DESIGNPLAN LIGHTING LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
2022
2021
Notes
£
£
Turnover
3
17,135,710
13,656,095
Cost of sales
(8,971,439)
(6,979,481)
Gross profit
8,164,271
6,676,614
Distribution costs
(1,190,646)
(952,479)
Administrative expenses
(5,783,593)
(5,208,489)
Other operating income
17,513
22,839
Operating profit
4
1,207,545
538,485
Interest receivable and similar income
7
12,686
751
Interest payable and similar expenses
8
(51)
Profit before taxation
1,220,231
539,185
Tax on profit
9
(265,723)
(134,745)
Profit for the financial year
954,508
404,440
The profit and loss account has been prepared on the basis that all operations are continuing operations.
DESIGNPLAN LIGHTING LTD
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 10 -
2022
2021
Notes
£
£
£
£
Fixed assets
Intangible assets
11
185,709
304,847
Tangible assets
12
1,779,074
1,895,555
1,964,783
2,200,402
Current assets
Stocks
13
1,660,561
1,508,732
Debtors
14
2,351,788
2,382,260
Cash at bank and in hand
1,915,185
726,768
5,927,534
4,617,760
Creditors: amounts falling due within one year
15
(2,793,657)
(2,440,845)
Net current assets
3,133,877
2,176,915
Total assets less current liabilities
5,098,660
4,377,317
Provisions for liabilities
Provisions
16
513,387
474,101
Deferred tax liability
17
184,090
156,541
(697,477)
(630,642)
Net assets
4,401,183
3,746,675
Capital and reserves
Called up share capital
19
360,300
360,300
Capital redemption reserve
214,575
214,575
Profit and loss reserves
3,826,308
3,171,800
Total equity
4,401,183
3,746,675
The financial statements were approved by the board of directors and authorised for issue on 30 August 2023 and are signed on its behalf by:
L Marchant
Director
Company Registration No. 00784246
DESIGNPLAN LIGHTING LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 January 2021
360,300
214,575
3,567,360
4,142,235
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
-
404,440
404,440
Dividends
10
-
-
(800,000)
(800,000)
Balance at 31 December 2021
360,300
214,575
3,171,800
3,746,675
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
954,508
954,508
Dividends
10
-
-
(300,000)
(300,000)
Balance at 31 December 2022
360,300
214,575
3,826,308
4,401,183
DESIGNPLAN LIGHTING LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 12 -
1
Accounting policies
Company information
Designplan Lighting Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 16 Kimpton Park Way, Sutton, Surrey, SM3 9QS.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This 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:
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 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of AB Fagerhult. These consolidated financial statements are available from its registered office, AB Fagerhult, SE-566 80 Habo, Sweden.
1.2
Going concern
Inflation has replaced the worldwide pandemic of Covid-19 as the dominating pressure on the macro economic environment. true
Whilst the directors are unable to predict the future impact on the company’s operation, externally we operate in well funded sectors and internally the directors believe the Company is well placed to manage its business risks.
This confidence is evidenced by the Company’s out performing the economic growth of its home markets in both revenue and profit in 2021 and 2022, and carrying a stronger order book, larger opportunity bank and higher cash reserves. This provides further assurance that the company will continue in operational existence for the foreseeable future, and as a minimum for at least 12 months from the date of approval of these financial statements. Consequently, the directors continue to adopt the going concern basis of accounting in preparing the annual financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for sale of goods in the ordinary nature of the business. Turnover is shown net of VAT, and is recognised when goods are provided to customers upon dispatch.
DESIGNPLAN LIGHTING LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
Turnover from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the customer (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.
Turnover from bill-and-hold sales arises where delivery is delayed at the customer's request, but where the customer takes title and accepts billing. Turnover from bill-and-hold sales is recognised when the customer takes title, provided that it is probable that delivery will be made, the item is identified and ready for delivery to the customer at the time the sale is recognised, the customer specifically acknowledges the deferred delivery instructions and the usual payment terms apply. Turnover is not recognised when there is simply an intention to acquire or manufacture the goods in time for delivery.
1.4
Research and development expenditure
Expenditure on research activities is recognised in the profit and loss account as an expense as incurred. Expenditure on development activities may be capitalised if the product or process is technically and commercially feasible and the Company intends, and has the technical ability and sufficient resources, to complete development, future economic benefits are probable and if the Company can measure reliably the expenditure attributable to the intangible asset during its development. Development activities involve design for, construction or testing of the production of new or substantially improved products or processes. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in the profit and loss account as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and less accumulated impairment losses.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives from the point when the product is live or launched, on the following basis:
Development costs
20% straight line
1.6
Tangible fixed assets
Tangible fixed assets are measured at cost, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Long leasehold land and buildings
over the length of the lease
Plant, machinery and tools
3 to 20 years straight line
Computers, furniture and fittings
3 to 20 years straight line
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
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. Allowance has been made for obsolete or slow moving items.
DESIGNPLAN LIGHTING LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
1.8
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Company's cash management are included as a component of cash and cash equivalents.
1.9
Financial instruments
The company has elected to apply the recognition and measurement 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 company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other 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 financial asset is measure at the present value of the future receipts discounted at a market rate of interest.
Impairment of financial assets
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.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors and loans from fellow group 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
Taxation
The tax expense represents the sum of the tax currently payable or receivable and deferred tax.
DESIGNPLAN LIGHTING LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
Current tax
Current tax represents the amount of tax payable or receivable in respect of the taxable profit (or loss) for the current or past reporting periods. It is measured at the amount expected to be paid or recovered using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax is measured at the tax rate that is expected to apply to the reversal of the related difference, using tax rates enacted or substantively enacted at the balance sheet date.
1.11
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company 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.
Provisions are made for liabilities arising in respect of potential sales agency commissions under an EU Agency Directive and costs associated with honouring our product warranty agreements.
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leasing and hire purchase commitments
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 leases asset are consumed.
1.15
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
DESIGNPLAN LIGHTING LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 16 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Warranty provision
Warranty provisions are an extrapolation based on the cost of honouring past claims applied to recent trading levels, plus any specific liabilities that the company may be aware of.
Stock provision
Provisions are recognised when there is objective evidence of impairment or obsolescence of stock items. The provision is calculated based on the analysis of historic usage and expected future use of stock lines, and represents the expected write-down between the estimated net realisable value and the original cost. New realisable value represents the estimated selling price less estimated costs of completion.
3
Turnover
2022
2021
£
£
Turnover analysed by class of business
Sale of goods
17,135,710
13,656,095
2022
2021
£
£
Turnover analysed by geographical market
United Kingdom
11,163,200
9,731,513
Overseas sales
5,972,510
3,924,582
17,135,710
13,656,095
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(62,746)
33,862
Research and development costs
69,584
75,016
Fees payable to the company's auditor for the audit of the company's financial statements
87,000
28,750
Depreciation of owned tangible fixed assets
413,945
419,138
Amortisation of intangible assets
101,525
62,626
Operating lease charges
965,506
922,741
DESIGNPLAN LIGHTING LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 17 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Production staff
48
44
Sales
29
30
Administration
34
39
Total
111
113
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
4,835,153
4,584,113
Social security costs
471,698
403,832
Pension costs
125,257
113,322
5,432,108
5,101,267
6
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
520,443
467,836
Company pension contributions to defined contribution schemes
25,251
25,641
545,694
493,477
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2021 - 5).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
164,047
131,208
Company pension contributions to defined contribution schemes
8,086
6,090
DESIGNPLAN LIGHTING LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
7
Interest receivable and similar income
2022
2021
£
£
Interest income
Other interest income
12,686
751
8
Interest payable and similar expenses
2022
2021
£
£
Other interest
51
9
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
150,000
132,939
Adjustments in respect of prior periods
(14,826)
24,408
Total UK current tax
135,174
157,347
Foreign current tax on profits for the current period
103,000
Adjustments in foreign tax in respect of prior periods
(18,897)
Total current tax
238,174
138,450
Deferred tax
Origination and reversal of timing differences
6,693
(40,427)
Changes in tax rates
47,273
Adjustment in respect of prior periods
20,856
(10,551)
Total deferred tax
27,549
(3,705)
Total tax charge
265,723
134,745
DESIGNPLAN LIGHTING LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
9
Taxation
(Continued)
- 19 -
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit before taxation
1,220,231
539,185
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
231,844
102,445
Tax effect of expenses that are not deductible in determining taxable profit
5,284
3,442
Adjustments in respect of prior years
6,030
(5,040)
Effect of change in corporation tax rate
37,570
Amortisation on assets not qualifying for tax allowances
3,413
Research and development tax credit
(1,537)
(4,339)
Other permanent differences
667
Effect of overseas tax rates
37,840
Enhanced capital allowances
(17,838)
Other tax adjustments
687
Taxation charge for the year
265,723
134,745
The company has brought forward capital losses of £167,373 (2021 - £167,373) which are available to offset capital gains in the future.
The main rate of corporation tax is 19%. Following announcements made in the March 2021 Budget, the main rate of corporation tax is set to increase to 25% from 1 April 2023. This was enacted on 10 June 2021 and so was reflected in the deferred tax provision in the 2021 accounts.
10
Dividends
2022
2021
£
£
Interim paid
300,000
800,000
DESIGNPLAN LIGHTING LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
11
Intangible fixed assets
Development costs
£
Cost
At 1 January 2022
508,404
Additions
82,822
Disposals
(41,320)
Transfers
(59,115)
At 31 December 2022
490,791
Amortisation and impairment
At 1 January 2022
203,557
Amortisation charged for the year
101,525
At 31 December 2022
305,082
Carrying amount
At 31 December 2022
185,709
At 31 December 2021
304,847
12
Tangible fixed assets
Long leasehold land and buildings
Plant, machinery and tools
Computers, furniture and fittings
Total
£
£
£
£
Cost
At 1 January 2022
913,643
3,960,505
853,473
5,727,621
Additions
160,299
78,050
238,349
Transfers
59,115
59,115
At 31 December 2022
913,643
4,179,919
931,523
6,025,085
Depreciation and impairment
At 1 January 2022
385,583
2,784,263
662,220
3,832,066
Depreciation charged in the year
54,179
263,498
96,268
413,945
At 31 December 2022
439,762
3,047,761
758,488
4,246,011
Carrying amount
At 31 December 2022
473,881
1,132,158
173,035
1,779,074
At 31 December 2021
528,060
1,176,242
191,253
1,895,555
DESIGNPLAN LIGHTING LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
13
Stocks
2022
2021
£
£
Raw materials and consumables
1,145,239
1,176,692
Work in progress
299,191
194,890
Finished goods and goods for resale
216,131
137,150
1,660,561
1,508,732
During the year, an impairment loss on finished goods of £70,472 (2021 - £75,979) was recognised in cost of sales.
14
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
1,372,137
1,801,368
Corporation tax recoverable
52,655
33,534
Amounts owed by group undertakings
479,456
371,271
Other debtors
42,071
1,081
Prepayments and accrued income
405,469
175,006
2,351,788
2,382,260
Included within group debtors is £278,300 (2021 - £158,546) which relates to the company's share of the group cash pool. This is immediately withdrawable on demand. The balance relates to sales made by the company which are subject to normal trading terms.
15
Creditors: amounts falling due within one year
2022
2021
£
£
Payments received on account
24,141
51,217
Trade creditors
1,131,232
1,030,838
Amounts owed to group undertakings
112,357
35,487
Taxation and social security
248,666
218,797
Other creditors
25,882
24,581
Accruals and deferred income
1,251,379
1,079,925
2,793,657
2,440,845
DESIGNPLAN LIGHTING LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
16
Provisions for liabilities
2022
2021
£
£
Commercial agent indemnity provision
110,296
133,501
Warranty provision
403,091
340,600
513,387
474,101
Movements on provisions:
Commercial agent indemnity provision
Warranty provision
Total
£
£
£
At 1 January 2022
133,501
340,600
474,101
Additional provisions in the year
7,980
71,791
79,771
Utilisation of provision
(31,185)
(9,300)
(40,485)
At 31 December 2022
110,296
403,091
513,387
A provision is made of £110,296 (2021 - £133,501) at the rate of 0.5% of net invoiced sales generated by each agent, for amounts likely to be payable by the company to sales consultants operating in Europe on retirement or otherwise on the termination of the agency agreement, under the EU Agency Directive.
A provision has also been made of £403,091 (2021 - £340,600) for liabilities expected to arise in respect of costs for product warranties.
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
228,378
186,012
Other timing differences
(44,288)
(29,471)
184,090
156,541
DESIGNPLAN LIGHTING LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
17
Deferred taxation
(Continued)
- 23 -
2022
Movements in the year:
£
Liability at 1 January 2022
156,541
Charge to profit or loss
27,549
Liability at 31 December 2022
184,090
The amount of the deferred tax liability set out above which is expected to reverse within 12 months of the balance sheet date is £50,000 and relates to accelerated capital allowances that are expected to reverse within the same period.
18
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
125,257
113,322
The company operates a defined contribution scheme. The scheme is a funded defined contribution personal pension plan where the assets are held separately for individual members and are not available generally to all members.
19
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
of £1 each
360,300
360,300
360,300
360,300
20
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2022
2021
£
£
Within one year
1,046,727
1,008,687
Between two and five years
3,800,819
3,736,362
In over five years
5,923,650
6,823,445
10,771,196
11,568,494
The above commitments include annual rental payments of £900,000 for the period to July 2034 in respect of the property occupied by the company.
DESIGNPLAN LIGHTING LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 24 -
21
Capital commitments
Amounts contracted for but not provided in the financial statements:
2022
2021
£
£
Acquisition of tangible fixed assets
78,593
-
The above commitment relates to a machine received in May 2023 for which a deposit had been paid in 2022.
22
Ultimate controlling party
The company's immediate and ultimate parent company is AB Fagerhult, a company incorporated in Sweden.
The largest and smallest group preparing consolidated accounts that include the results of the company is AB Fagerhult. These accounts can be obtained from AB Fagerhult, SE-566 80 Habo, Sweden.
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