The directors of the group have elected not to include a copy of the profit and loss account within the financial statements.
For the financial year ended 30 June 2023 the group was entitled to exemption from audit under section 477 of the Companies Act 2006.
These financial statements have been prepared in accordance with the provisions applicable to groups and companies subject to the small companies regime.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £829,517 (2022 - £244,164 loss).
David Linley Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is The Courtyard, Shoreham Road, Upper Beeding, Steyning, West Sussex, BN44 3TN.
The group consists of David Linley Holdings Limited and all of its subsidiaries.
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 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of long leasehold properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The consolidated financial statements incorporate those of David Linley Holdings Limited and all of its subsidiaries (i.e. entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The financial statements of David Linley & Co Limited, a wholly owned subsidiary, have been prepared to 25 June 2023 to align with the retail calendar. This reporting date differs to that of David Linley Holdings Limited.
These financial statements are prepared on the going concern basis. The directors have considered the group's financial position and future prospects and expect that the group will continue in operational existence for the foreseeable future.
In forming their opinion, the directors have had regard for the profit and loss, cash flow and balance sheet in conjunction with prospect assessment, leading indicators, projections, indebtedness, macroeconomic factors, and shareholder support.
Overhang from both Brexit and the pandemic persists and though they have somewhat receded from public consciousness, there is an unwelcome permanence to their consequences. Geopolitical instability also endures and along with the macroeconomic headwinds, contribute to a quartet of challenging externalities confronting the business. The trading environment is more hostile than conducive generally and the luxury and homewares sectors have not been spared. Interest rates moved sharply upward during the financial year and have remained punishing. The treasury’s refusal to unwind the abolition of the UK’s VAT free shopping arrangements have made the UK a less compelling destination and impedes trade for global shoppers.
Against this backdrop, the demographics and affluence of our customer base has provided significant shielding. Those with higher disposable incomes are obviously less susceptible to the prevailing malaise; nonetheless restraint and delayed gratification have been evident hallmarks. Our products and services have significant utility and purpose, and often constitute investment rather than frippery, but they remain on the discretionary end of the purchase spectrum and are ultimately deferrable.
Exquisite product, a compelling offer, and intrinsically valuable services have been key to prevailing in the conditions. The increased propensity to shop online that was a feature of COVID has also persisted and our ecommerce business has capitalised on that enduring aspect. The window to the world that our on-line store provides is encouraging and underpinning the retail business with ever increasing significance.
As was the case in prior year, cost pressure throughout the supply chain has frustrated efforts to contain pricing across all channels. Overhead inflation remains similarly marked and the business has had to contend with widespread and corrosive expenditure challenges. The board perpetually presses for counter-accommodations to be made within the sourcing and operational infrastructure to minimise the implications for the business and its clients.
The group is approaching the end of its bank debt repayment obligations, and debt servicing funds will be redirected elsewhere to pare down non-bank debt and alleviate the interest burden.
As always, the board remains mindful of the ongoing support of shareholders in the event that conditions necessitate further support or reliance.
Having regard for all the forgoing, the directors consider that the group will have sufficient cash flow to meet its debts as they fall due for the foreseeable future.
Turnover is the amount derived from ordinary activities, and stated after trade discounts, other sales taxes and net of Value Added Tax.
Other income, including investment income, is recognised on an accruals basis.
Retail Sales
Turnover and cost of sales from the retail part of the business are recognised at the point of sale.
Bespoke Projects
The business offers a bespoke service in which furniture, upholstery, fitted cabinetry and kitchens are individually designed to meet a customer's own requirements.
For short bespoke projects, typically spanning four months from inception to delivery, revenue and costs of sales are only recognised once the project is complete. Prior to this, deferred income (payments on account deposits etc) and associated work-in-progress are held on the balance sheet.
For longer projects, revenue and associated costs of sales are recognised at key milestones.
Interior Design
The business is contracted by customers to undertake interior design of private and commercial properties on projects ranging from single rooms to entire residences.
For short interior design work, revenue and costs of sales are only recognised once the project is complete. Prior to this, deferred income (payments on account, deposits etc) and associated work-in-progress are held
on the balance sheet.
For longer projects, revenue and associated costs of sales are recognised at key milestones.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
The directors review other tangible fixed assets for impairment on an annual basis.
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
In the application of the group’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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The valuation of long leasehold property is based on a valuation report by Cushman & Wakefield in August 2020, prepared in accordance with the Practice Statements of the Royal Institution of Chartered Surveyors (RICS) Appraisal and Valuation Standards. The directors are of the opinion that the valuation within this report is appropriate at the balance sheet date.
Judgement is exercised when making provision for impairment of stock valuation at the balance sheet date. A line by line review of discontinued and damaged stock has been undertaken and a provision based on relevant information is made where relevant.
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.
As documented in the accounting policies, revenue and associated costs for longer term projects are recognised at key milestones. For ongoing projects at the year end, management exercises judgement to estimate the stage of completion for each to assess the milestones reached and therefore the level of revenue and associated costs to recognise in profit and loss. The assessments made carry an inherent element of estimation uncertainty however the company has relevant controls in place to mitigate this. The estimates impact accrued income, deferred income, work in progress and cost of sales accruals.
The average monthly number of persons (including directors) employed by the group and company during the year was:
As permitted by Section 408 of the Companies Act 2006, the Statement of Comprehensive Income of the parent company is not presented as part of these financial statements.
Details of the company's subsidiaries at 30 June 2023 are as follows:
The registered office address for each of the subsidiaries above is The Courtyard, Shoreham Road, Upper Beeding, Steyning, England, BN44 3TN
The long leasehold property was valued on a market value basis on 31 August 2020 by Cushman & Wakefield at £3,150,000 and revalued in the 30 June 2020 financial statements.
The valuation was carried out in accordance with the Practice Statements of the Royal Institution of
Chartered Surveyors' (RICS) Appraisal and Valuation Standards.
The directors are of the opinion that the valuation remains relevant at 30 June 2023.
The bank loan is secured by a fixed charge over property at 56/60 Pimlico Road, London in favour of CIMB Bank. A floating charge is also held over all assets of the company and undertakings both present and future.
Other loans repayable within one year attract interest of 8.0% (2022 - 8.0%).
The share premium reserve is a non-distributable reserve.
The fair value reserve represents the surplus created when Group assets are revalued. The transfer from the retained earnings reserve to the fair value reserve is in respect of deferred tax movement on leasehold property.
Retained earnings are earnings retained by the Group to be reinvested in its core business, or to pay debt.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:
The remuneration of key management personnel is as follows.
The Group has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose certain related party transactions with wholly owned subsidiaries within the group.
Transactions between group entities which have been eliminated on consolidation are not disclosed within the financial statements.
During the year a company under common control made loans to the Group and at the year end was owed £4,093,918 (2022 - £3,558,381). The year end loan is interest bearing at a rate of 8.0% (2022 - 8.0%) and repayable on demand.
During the year a liability of £540,222 (2022 - £Nil) owed to David Linley Holdings Limited from David Linley & Co Limited, was waived and recognised in profit and loss.
M Razak, who has a controlling interest in Overture Investments Limited, is regarded by the directors as the ultimate controlling party.