Company Registration No. 02826071 (England and Wales)
UTOPIA FURNITURE LTD.
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
UTOPIA FURNITURE LTD.
COMPANY INFORMATION
Directors
Mr D W Conn
Mr I W Hall
Company number
02826071
Registered office
Utopia House
Springvale Avenue
Springvale Business Park
Bilston
West Midlands
WV14 0QL
Auditor
Ormerod Rutter Limited
The Oakley
Kidderminster Road
Droitwich
Worcestershire
WR9 9AY
UTOPIA FURNITURE LTD.
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 27
UTOPIA FURNITURE LTD.
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 1 -
The directors present the strategic report for the year ended 31 December 2021.
Fair review of the business
The principal activity and strategic focus of the group remains the design and manufacture of bathroom furniture, a market where the group retains an excellent reputation for both the quality of its product and service delivery.
The company continues to review its product portfolio and develop new product ranges to suit the needs of the market and maintain its leading position in the marketplace. Focusing on customer relationships, the company’s strategic objective is to retain and grow business with existing customers and to develop new customer relationships and routes to market.
The year was challenging in terms of obtaining materials in a timely manner for our production due to supplier and logistical delays. In addition, input costs rose significantly during the year and still continue to rise. This unfortunately resulted in the requirement to increase our selling prices. To mitigate the potential ongoing impact of supplier performance, the company stock holdings were increased significantly.
Despite these challenges within the supply chain and the uncertain economic climate, the company managed to provide a healthy result for the year, with EBITDA far exceeding previous years. This was as a result of the strategic review undertaken in 2021 where the workforce and cost base was realigned to a more sustainable and flexible level.
Key performance indicators (KPIs)
The company utilises a range of different KPI's at an operational level which are used by the management team to monitor performance on a regular basis. The main KPI's are as follows:
31 Dec
31 Dec
2021
2020
£
£
Sales activity
13,814,077
11,289,138
EBITDA (before exceptionals)
1,371,234
185,297
Working capital (exclusive of amounts due to/from group undertakings)
857,453
565,447
Principal risks and uncertainties
The principal risk for the company relates to the difficult general economic conditions with high energy costs, inflation and a potential recession. Costs are continually monitored and, if possible, some element passed on to the customer when required.
The additional cash resources secured in 2019 will assist through difficult periods but operations are closely monitored to ensure we can respond to the market conditions whether they are positive or negative.
Mr D W Conn
Director
11 August 2022
UTOPIA FURNITURE LTD.
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2021.
Principal activities
The principal activity of the company continued to be that of design and manufacture of bathroom furniture. The business continues to have an excellent reputation for design, quality and service and supplies a significant number of bathroom outlets in the UK.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr D W Conn
Mr I W Hall
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £240,000. The directors do not recommend the payment of a final dividend.
Financial risk management objectives and policies
Liquidity risk
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
Foreign currency risk
The company’s principal foreign currency exposures arise from trading with overseas companies. Company policy permits but does not demand that these exposures may be hedged in order to fix the cost in sterling. This hedging activity involves the use of foreign exchange forward contracts.
Credit risk
Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
Research and development
The company routinely investigates new materials and production techniques in the development of new ranges of bathroom furniture.
Future developments
There are no significant anticipated future changes to the operations of the company.
Auditor
The auditors, Ormerod Rutter Limited, will be proposed for re-appointment in accordance with Section 487(2) of the Companies Act 2006.
UTOPIA FURNITURE LTD.
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 3 -
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.
Disclosure in the Strategic Report
A separate Strategic Report has been prepared in compliance with Companies Act 2006 and contains information about the company's operations and financial performance throughout the period, and an assessment of the principal risks and uncertainties to the company.
On behalf of the board
Mr D W Conn
Director
11 August 2022
UTOPIA FURNITURE LTD.
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 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;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the
;
-
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.
UTOPIA FURNITURE LTD.
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF UTOPIA FURNITURE LTD.
- 5 -
Opinion
We have audited the financial statements of Utopia Furniture Ltd. (the 'company') for the year ended 31 December 2021 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, 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 FRS 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 2021 and of its profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor's
responsibilities for the audit of the
financial statements
section of our report. We are independent of the
company
in accordance with the ethical requirements that are relevant to our audit of the
financial statements
in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the 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 auditor's 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.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the directors'
r
eport 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.
UTOPIA FURNITURE LTD.
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF UTOPIA FURNITURE LTD.
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, 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
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements
that are free from material misstatement, whether due to fraud or error. In preparing the
financial statements
, the
directors are
responsible for 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 the
directors
either
intend
to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's
report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with
ISAs (UK)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements
.
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
.
Based on our understanding of the company, we identified the principal risks of non-compliance with laws and regulations including those that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, and the extent to which non-compliance might have a material effect on the financial statements.
Audit procedures performed included discussions with management, review of board meeting minutes, testing of journals, designing and performing audit procedures and challenging assumptions and judgements made by management in relation to accounting estimates.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
UTOPIA FURNITURE LTD.
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF UTOPIA FURNITURE LTD.
- 7 -
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.
Colm McGrory FCA (Senior Statutory Auditor)
For and on behalf of Ormerod Rutter Limited
11 August 2022
Chartered Accountants
Statutory Auditor
The Oakley
Kidderminster Road
Droitwich
Worcestershire
WR9 9AY
UTOPIA FURNITURE LTD.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
- 8 -
2021
2020
Notes
£
£
Turnover
3
13,814,077
11,289,138
Cost of sales
(8,415,150)
(7,487,723)
Gross profit
5,398,927
3,801,415
Administrative expenses
(4,394,752)
(4,833,576)
Other operating income
138,209
930,171
Exceptional item
4
(153,868)
Operating profit/(loss)
5
1,142,384
(255,858)
Interest receivable and similar income
9
21
Interest payable and similar expenses
10
(20,303)
(23,943)
Profit/(loss) before taxation
1,122,081
(279,780)
Tax on profit/(loss)
11
(176,496)
97,567
Profit/(loss) for the financial year
945,585
(182,213)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
UTOPIA FURNITURE LTD.
BALANCE SHEET
AS AT
31 DECEMBER 2021
31 December 2021
- 9 -
2021
2020
Notes
£
£
£
£
Fixed assets
Tangible assets
13
1,255,050
977,739
Current assets
Stocks
14
1,319,491
1,188,270
Debtors
15
5,638,806
5,460,888
Cash at bank and in hand
451
243,150
6,958,748
6,892,308
Creditors: amounts falling due within one year
16
(2,463,470)
(2,742,349)
Net current assets
4,495,278
4,149,959
Total assets less current liabilities
5,750,328
5,127,698
Creditors: amounts falling due after more than one year
17
(21,226)
(104,181)
Net assets
5,729,102
5,023,517
Capital and reserves
Called up share capital
23
20,000
20,000
Capital redemption reserve
24
3,000
3,000
Profit and loss reserves
24
5,706,102
5,000,517
Total equity
5,729,102
5,023,517
The financial statements were approved by the board of directors and authorised for issue on 11 August 2022 and are signed on its behalf by:
Mr D W Conn
Director
Company Registration No. 02826071
UTOPIA FURNITURE LTD.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 10 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 January 2020
20,000
3,000
5,182,730
5,205,730
Year ended 31 December 2020:
Loss and total comprehensive income for the year
-
-
(182,213)
(182,213)
Balance at 31 December 2020
20,000
3,000
5,000,517
5,023,517
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
-
945,585
945,585
Dividends
12
-
-
(240,000)
(240,000)
Balance at 31 December 2021
20,000
3,000
5,706,102
5,729,102
UTOPIA FURNITURE LTD.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 11 -
2021
2020
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
30
663,501
(157,521)
Interest paid
(20,303)
(23,943)
Income taxes refunded/(paid)
121,207
Net cash inflow/(outflow) from operating activities
764,405
(181,464)
Investing activities
Purchase of tangible fixed assets
(506,161)
(12,074)
Interest received
21
Net cash used in investing activities
(506,140)
(12,074)
Financing activities
Payment of finance leases obligations
(205,981)
(133,259)
Dividends paid
(240,000)
Net cash used in financing activities
(445,981)
(133,259)
Net decrease in cash and cash equivalents
(187,716)
(326,797)
Cash and cash equivalents at beginning of year
(186,005)
140,792
Cash and cash equivalents at end of year
(373,721)
(186,005)
Relating to:
Cash at bank and in hand
451
243,150
Bank overdrafts included in creditors payable within one year
(374,172)
(429,155)
UTOPIA FURNITURE LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 12 -
1
Accounting policies
Company information
Utopia Furniture Ltd. is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
Utopia House, Springvale Avenue, Springvale Business Park, Bilston, West Midlands, United Kingdom, WV14 0QL.
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.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
These financial statements have been drawn up on the going concern basis. If the going concern basis were not appropriate, adjustments would have been made to reduce assets to recoverable amounts, to provide for any further liabilities that might arise, and to re-classify fixed assets as current assets and long term liabilities as current liabilities.
true
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business
, and
is shown net of VAT
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
(usually when goods are delivered to the customer)
, 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.
Renewable Heat Incentive (RHI) scheme income is recognised when
the amount of revenue can be measured reliably,
and
it is probable that the economic benefits associated with the transaction will flow to the entity
.
1.4
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Plant and equipment
20% on NBV
Fixtures and fittings
33% straight line
Computer Equipment
50% on NBV
Motor vehicles
25% on NBV
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 credited or charged to profit or loss
.
UTOPIA FURNITURE LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 13 -
1.5
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in
prior years. A reversal of an impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
Stocks
Stocks and work in progress are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.
Cost of stock is determined from the purchase price of raw materials.
Cost is calculated using the first-in, first-out (FIFO) method.
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.
1.7
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial instruments
The company 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 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.
UTOPIA FURNITURE LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 14 -
Basic financial assets
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.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in
profit
or
loss
, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
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.
UTOPIA FURNITURE LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 15 -
Basic financial 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
paymen
ts 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. A
m
ounts 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.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in
profit
or
loss
in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value th
r
ough profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current 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
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
UTOPIA FURNITURE LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 16 -
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.
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 when the
company
has 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.
1.11
Employee benefits
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair
value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease
s
asset are consumed.
1.14
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met
. Where a
grant does not specify performance conditions
it
is recognised in income when the proceeds are received or receivable
. A grant received before the recognition criteria are satisfied is recognised as a liability.
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.
UTOPIA FURNITURE LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 17 -
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.
Stock
The group consistently monitors and provides against stock where appropriate to ensure stock is held at the lower of cost and NRV. Provisions are applied on a consistent basis which is based on historical experience and expected use, specifically ageing of stock, quantity in hand, usage and changes in customer demand are considered and reflected within the provided amounts.
Depreciation
The annual depreciation charge for tangible fixed assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful lives and residual values are reassessed annually. They are amended when necessary, to reflect current estimates.
In the opinion of the directors there are no critical judgements or key sources of estimation uncertainty not addressed as part of the above accounting policies.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2021
2020
£
£
Turnover analysed by class of business
Sale of goods
13,814,077
11,289,138
2021
2020
£
£
Turnover analysed by geographical market
United Kingdom
13,488,667
11,031,800
Europe
325,410
257,338
13,814,077
11,289,138
UTOPIA FURNITURE LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
3
Turnover and other revenue
(Continued)
- 18 -
2021
2020
£
£
Other significant revenue
Interest income
-
21
Grants received
80,036
867,612
Government grants
Government grants include £80,036 (2020: £867,612) received under the government's Coronavirus Job Retention Scheme.
4
Exceptional items
2021
2020
£
£
Redundancy costs
-
181,147
Other costs associated with group restructuring
-
4,875
Intercompany loans written off
-
(32,154)
-
153,868
5
Operating profit/(loss)
2021
2020
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Government grants
(80,036)
(867,612)
Depreciation of owned tangible fixed assets
186,249
176,592
Depreciation of tangible fixed assets held under finance leases
42,601
110,695
Operating lease charges
581,373
552,453
6
Auditor's remuneration
2021
2020
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
18,750
17,850
For other services
Taxation compliance services
875
835
All other non-audit services
11,000
4,020
11,875
4,855
UTOPIA FURNITURE LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 19 -
7
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
Administration
43
53
Production
78
102
Total
121
155
Their aggregate remuneration comprised:
2021
2020
£
£
Wages and salaries
3,462,215
3,977,231
Social security costs
334,828
388,753
Pension costs
128,211
162,666
3,925,254
4,528,650
8
Directors' remuneration
2021
2020
£
£
Remuneration for qualifying services
2,657
2,619
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 0 (2020 - 0).
Key management personnel
During the year key management personnel (including directors) received gross wages of £244,382 (2020: £240,878) and employer pension contributions of £15,193 (2020: £16,834).
9
Interest receivable and similar income
2021
2020
£
£
Interest income
Other interest income
21
UTOPIA FURNITURE LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 20 -
10
Interest payable and similar expenses
2021
2020
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
11,199
10,029
Other finance costs:
Interest on finance leases and hire purchase contracts
9,104
13,914
20,303
23,943
11
Taxation
2021
2020
£
£
Current tax
Adjustments in respect of prior periods
(23,640)
(97,567)
Deferred tax
Origination and reversal of timing differences
200,136
Total tax charge/(credit)
176,496
(97,567)
The actual charge/(credit) for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
2021
2020
£
£
Profit/(loss) before taxation
1,122,081
(279,780)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
213,195
(53,158)
Tax effect of expenses that are not deductible in determining taxable profit
19,229
2,900
Tax effect of income not taxable in determining taxable profit
(9,912)
(6,109)
Unutilised tax losses carried forward
138,386
34,566
Adjustments in respect of prior years
(23,640)
(97,567)
Temporary differences re staff wage costs
(131)
(260)
Depreciation in excess of capital allowances
(82,681)
22,061
Research and development credit
(77,950)
Taxation charge/(credit) for the year
176,496
(97,567)
UTOPIA FURNITURE LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 21 -
12
Dividends
2021
2020
£
£
Interim paid
240,000
13
Tangible fixed assets
Plant and equipment
Fixtures and fittings
Computer Equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2021
6,756,300
897,376
563,078
99,141
8,315,895
Additions
249,099
10,868
246,194
506,161
Disposals
(3,396)
(3,396)
At 31 December 2021
7,002,003
908,244
809,272
99,141
8,818,660
Depreciation and impairment
At 1 January 2021
5,851,932
853,516
540,674
92,034
7,338,156
Depreciation charged in the year
183,855
27,966
15,252
1,777
228,850
Eliminated in respect of disposals
(3,396)
(3,396)
At 31 December 2021
6,032,391
881,482
555,926
93,811
7,563,610
Carrying amount
At 31 December 2021
969,612
26,762
253,346
5,330
1,255,050
At 31 December 2020
904,368
43,860
22,404
7,107
977,739
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2021
2020
£
£
Plant and equipment
170,405
442,779
Ownership of these assets transfer to the company on full repayment of the hire purchase loans. None of the hire purchase agreements contain clauses relating to contingent rent, renewal, escalation clauses, subleases, or restrictions imposed on use of the assets.
UTOPIA FURNITURE LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 22 -
14
Stocks
2021
2020
£
£
Raw materials and consumables
1,017,056
955,801
Work in progress
187,417
130,303
Finished goods and goods for resale
115,018
102,166
1,319,491
1,188,270
15
Debtors
2021
2020
Amounts falling due within one year:
£
£
Trade debtors
1,264,693
1,194,707
Corporation tax recoverable
97,567
Amounts owed by group undertakings
3,910,878
3,617,565
Other debtors
74,026
22,858
Prepayments and accrued income
221,046
159,892
5,470,643
5,092,589
Deferred tax asset (note 21)
168,163
368,299
5,638,806
5,460,888
16
Creditors: amounts falling due within one year
2021
2020
Notes
£
£
Bank loans and overdrafts
18
374,172
429,155
Obligations under finance leases
19
82,955
205,981
Trade creditors
1,194,608
1,119,888
Amounts owed to group undertakings
273,053
33,053
Taxation and social security
219,546
492,680
Other creditors
30,336
Accruals and deferred income
319,136
431,256
2,463,470
2,742,349
17
Creditors: amounts falling due after more than one year
2021
2020
Notes
£
£
Obligations under finance leases
19
21,226
104,181
UTOPIA FURNITURE LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 23 -
18
Loans and overdrafts
2021
2020
£
£
Bank overdrafts
374,172
429,155
Payable within one year
374,172
429,155
19
Finance lease obligations
2021
2020
Future minimum lease payments due under finance leases:
£
£
Within one year
82,955
205,981
In two to five years
21,226
104,181
104,181
310,162
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
Amounts due under hire purchase and finance lease contracts are secured over the assets to which they relate.
20
Secured debts
The following secured debts are included within creditors:
2021
2020
£
£
Hire purchase contracts
104,181
310,162
Bank overdrafts
374,172
429,155
478,353
739,317
Hire purchase contracts are secured against the assets to which they relate.
Included within bank overdrafts is £364,414 (2020: £429,155), relating to an invoice financing arrangement, secured by way of first fixed charge over specific trade debtor balances, and by way of a first floating charge over all of the company's present and future assets and undertaking. Interest charged on the secured liability is variable at 2.41% over the Bank of England's base rate.
UTOPIA FURNITURE LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 24 -
21
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2021
2020
Balances:
£
£
Accelerated capital allowances
33,506
63,000
Tax losses
132,358
303,000
Short term timing differences
2,299
2,299
168,163
368,299
2021
Movements in the year:
£
Asset at 1 January 2021
(368,299)
Charge to profit or loss
200,136
Asset at 31 December 2021
(168,163)
The deferred tax asset set out above is expected to reverse within 12 months and primarily relates to the utilisation of tax losses against future expected profits of the same period.
22
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
128,211
162,666
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
Accrued employer pension contributions as at the year end amounted to £19,221 (2020: £19,338).
23
Share capital
2021
2020
£
£
Ordinary share capital
Issued and fully paid
20,000 Ordinary A Shares of £1 each
20,000
20,000
UTOPIA FURNITURE LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 25 -
24
Reserves
Capital redemption reserve
The capital redemption reserve records the nominal value of shares repurchased by the company.
Profit and loss reserves
Profit and loss reserves represent the accumulated profits of the company, less accumulated losses and distributed profits.
25
Financial commitments, guarantees and contingent liabilities
The company is party to an unlimited multilateral guarantee with HSBC UK Bank plc along with with fellow group undertakings Utopia Capital Investments Limited, Utopia Group Limited, Barrhead Sanitary Ware Limited and Barrhead International Limited, secured by fixed and floating charges over all of the company's assets. The amount of potential exposure of the company under this arrangement at the year end was £nil (2020: £nil).
26
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:
2021
2020
£
£
Within one year
193,756
251,590
Between two and five years
76,616
141,828
In over five years
1,889
270,372
395,307
27
Capital commitments
Amounts contracted for but not provided in the financial statements:
2021
2020
£
£
Acquisition of tangible fixed assets
283,376
-
28
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
UTOPIA FURNITURE LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
28
Related party transactions
(Continued)
- 26 -
Entities under common control
During the year the company incurred rent and related expenses charged at less than market rate payable to entities under common control totalling £nil (2020 - £nil).
During the year the company incurred expenses on normal trading terms payable to entities under common control totalling £215,648 (2020 - £215,648).
During the year the company recharged expenses to entities under common control totalling £54,226 (2020 - £51,776).
Amounts owed to/by related parties
The following amounts were outstanding at the reporting end date:
Amount owed to
Amounts owed by
31 December
31 December
31 December
31 December
2021
2020
2021
2020
£
£
£
£
Entities under common control
41,153
42,831
29
Ultimate controlling party
On 22 December 2021, ownership of Utopia Furniture Limited was transferred from the previous parent undertaking, Utopia Group Limited, to the new parent undertaking, Utopia Capital Investments Group Limited.
As at 31 December 2021, the ultimate parent undertaking was Utopia Capital Investments Group Limited, a company registered in England and Wales.
UTOPIA FURNITURE LTD.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 27 -
30
Cash generated from/(absorbed by) operations
2021
2020
£
£
Profit/(loss) for the year after tax
945,585
(182,213)
Adjustments for:
Taxation charged/(credited)
176,496
(97,567)
Finance costs
20,303
23,943
Investment income
(21)
Depreciation and impairment of tangible fixed assets
228,850
287,287
Movements in working capital:
Increase in stocks
(131,221)
(58,960)
Increase in debtors
(475,642)
(430,152)
(Decrease)/increase in creditors
(100,870)
300,162
Cash generated from/(absorbed by) operations
663,501
(157,521)
31
Analysis of changes in net debt
1 January 2021
Cash flows
31 December 2021
£
£
£
Cash at bank and in hand
243,150
(242,699)
451
Bank overdrafts
(429,155)
54,983
(374,172)
(186,005)
(187,716)
(373,721)
Obligations under finance leases
(310,162)
205,981
(104,181)
(496,167)
18,265
(477,902)
2021-12-31
2021-01-01
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