FD London Limited
Registered number: 04761511
Annual Report
For the year ended 31 December 2020
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FD LONDON LIMITED
COMPANY INFORMATION
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A N Rosen
E J Torstensson
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Chartered Accountants
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Statutory Auditor
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FD LONDON LIMITED
CONTENTS
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Independent auditor's report
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Consolidated statement of comprehensive income
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Consolidated statement of financial position
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Company statement of financial position
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Consolidated statement of changes in equity
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Company statement of changes in equity
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Consolidated statement of cash flows
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Notes to the financial statements
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FD LONDON LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The directors present their group strategic report for the year ended 31 December 2020.
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The group's principal activity during the year continues to be that of the design and multi-channel sale of premium clothing. The group sells directly via its own retail stores and its own website, as well as indirectly via high-end apparel retailers and speciality stores worldwide.
The company's key financial and other performance indicators are outlined below:
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Net cash generated from operating activities
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Turnover has decreased from 2019 by 15.2%, due to reduced sales directly related to the COVID-19 pandemic.
Gross profit has decreased by 14.3%, due to reduced turnover related to COVID-19 pandemic.
Operating loss can be directly attributable to the COVID-19 pandemic. The company did well to recover from the pandemic, and the last six months of the year were profitable. However, the net result for the full year was an operating loss.
Net current assets have increased mostly due to an increase in the debtors falling due within one year.
Net cash generated from operating activities has decreased by 64.84% due to operating activities, that can be directly attributed to the operating loss within the year.
Dividends of $1,100,000 have been declared and paid (2019: declared and paid $1,359,000) as of 31 December 2020. As at 31 December 2020, there is an amount of $nil dividends to be paid (2019: $13,348 dividends relating to 2017).
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FD LONDON LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
Principal risks and uncertainties
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The group operates in a highly competitive market in which the price, quantity and brands are key factors. Competition in the global market remains strong and is a continuing risk to the group.
Notwithstanding the business risks noted above and the difficult economic outlook which continues to prevail the forecasts prepared by directors indicate that the group will continue to be cash and profit generative for the foreseeable future. The directors believe that this, combined with the group’s balance sheet position places the group in a strong position to continue trading successfully. Accordingly, the directors have prepared the financial statements on a going concern basis.
Financial risk management
The group's operations expose it to a variety of financial risks that include the effects of market risk (including currency risk and price risk), credit risk and liquidity risk. The group’s overall risk management strategy seeks to minimise adverse effects from the unpredictability of financial markets on the group’s financial performance. The group uses sound management principles to protect against certain financial risk exposure.
The directors are responsible for setting the objectives and underlying principles of financial risk management for the group. The senior management then establishes the detailed polices such as authority levels, oversight responsibilities, risk identification and measurement, exposure limits and hedging strategies.
Given the size of the group, the directors have not delegated the responsibility of monitoring financial risk management to a sub-committee of the board. The policies set by the board of directors are implemented by the group's finance department.
Currency risk
Currency risk arises when transactions are denominated in foreign currencies. To manage the currency risk, the directors periodically will authorise limited foreign currency planning to mitigate the relevant foreign exchange exposure.
Price risk
The group is exposed to commodity price risk for cotton as a result of its operations. However, given the size of the group’s operations, the cost of managing exposure to commodity price risk exceed any potential benefits. The directors will revisit the appropriateness of this policy should the group’s operations change in size of nature.
Liquidity risk
The liquidity risk is usually assessed by comparing liquid assets and short term liabilities. The group manages the liquidity risk by using cash flow forecasts and factoring engagements which enables the group to monitor its working capital and make remedial action when necessary.
Credit risk
Credit risk is the risk that a counterparty will default on its contractual obligations resulting in financial loss to the group. For trade receivables, the group and its factors perform ongoing credit valuations of its customers and the group maintains an allowance for doubtful accounts which, when realised, have been within the range of management’s expectations. Transfer of accounts receivables to the factor are accounted for as sales of financial assets, with the subject receivables derecognised upon transfer, in as much as control over such receivables is surrendered to the factor. For other financial assets, the company adopts the policy of dealing only with high credit quality counterparts.
Credit exposure to an individual counterparty is restricted by credit limits that are approved based on ongoing credit evaluation. The counterparty’s payment profile and credit exposure are continuously monitored by management.
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FD LONDON LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
Directors' section 172 statement
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The Directors of the company act, as we consider, in good faith that would be most likely to promote the success of the company for the benefit of its members as a whole. In doing so, we also have had regard to the following (amongst other matters):
Key decisions, principal risks and uncertainties facing FD London
Due to the nature of FD London’s group activities, we are exposed to a series of external risks that can affect the way we run our operations. The biggest risk that we have faced most recently, along with many other businesses is the risk of the global pandemic, Covid-19. It has affected all parts of our business from our retail stores and wholesales partner stores closing during lockdowns, staff and families of staff becoming ill with Covid-19, suppliers and business partners going into administration. The future post Covid-19 is uncertain, but the management team are discussing the risks at length and also seizing opportunities when we find them. Aside from Covid-19, other examples of the risks we face, include foreign exchange loss, Brexit and wholesale partners going into administration. As part of the planning and budget processes, the effects of these risks are reviewed regularly and extensively assessed and discussed amongst the Management team, along with all other key business decisions, both long-term and short-term. All facts and financials are presented to the Management team, and the internal and external impact of the decisions are discussed at length.
The interests of our employees
Our employees have a pivotal role within our company and are central to our success. We recruit diverse talent with lots of experience so that we can all learn from each other, making us a multi-dimensional, more well rounded company. We ensure that our employees feel heard by having small team check-ins every week and we encourage a team-player approach. It is vital for us to have motivated employees and to ensure that we are encouraging their personal and professional growth whilst maintaining shared values. We have frequent global company meetings, where all employees have the opportunity to voice their questions and concerns directly to the Board. The company culture is extremely important to us and our HR team is constantly developing different initiatives to maintain a close-knit culture, such as celebrating employees special birthdays or fun calendar events such as fancy dress for Halloween.
Developing our relationships with suppliers, customers and other key stakeholders
A priority for us is to nurture and enhance our relationships with customers in a way that is sustainable and future-proof. We aim to offer the best relationship experience, providing the highest level of excellence, professionalism and transparency when dealing with all of our stakeholders, which should in turn ensure that we are maintaining our reputation for our high standards of business conduct. We have regular check-ins with our key stakeholders. Our communications channels are varied, but frequent communication electronically or in person, ensures that we are always solidifying and building upon these relationships. All FD London’s group employees are encouraged to maintain their own relationships with suppliers and customers. Our operations team frequently visit the warehouses, meeting with the warehouse teams to review the processes in person. Our sales team invites our wholesale partners into our offices several times per year to review the collections in person so that they can touch, feel and discuss the pieces.
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FD LONDON LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
Directors' section 172 statement (continued)
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The impact of the company's operations on the community and the environment
All of FD London’s activities have been undertaken with particular care for the communities where we operate, ensuring that we meet the highest safety and quality standards with maximum respect for the environment. Our aim is to continue to become more and more sustainable in all parts of the supply chain, reducing the impact of our activities and products on the climate. Our sustainable denim collection which we introduced in 2019, continues to be popular. It uses recycled cotton and post- consumer plastic bottles. Within this collection, we use eco-friendly wash techniques like high efficiency lasering which reduces our water consumption and eliminates the use of toxic chemicals. Our other sustainable efforts include, our sustainable cashmere line which uses recycled cashmere, our Organic Pima cotton which does not use harmful pesticides and our “wash & go” silk, ethically harvesting the silk from silkworms that get to enjoy their full lifecycle, whilst still not compromising the integrity of the silk. We continue to build on these efforts with each season. We are very conscious not to let the effects of the pandemic negatively impact our sustainability efforts.
The impact of the company's operations on the community and the environment (continued)
We are constantly evolving and updating our approach to managing climate change. By Winter 2021, FRAME’s denim pocket linings will contain 30% recycled polyester, which equals to about 1 recycled water bottle per jean. We have also partnered with thredUP, to reduce our impact on the Earth. You can return an old piece of FRAME clothing so that someone else can enjoy the item and in return, earn yourself a FRAME gift card.
The need to act fairly between employees and stakeholders of the company
FD London’s group ensures that it behaves and conducts itself in an ethical way to with all of its team members and staff, ultimately adhering to the Worker Rights and Employment Rights Act, maintaining the highest level of professionalism and standards within the business.
We have several policies and Acts that we also adhere to, including Anti-Slavery and Human Trafficking policy, Modern slavery act, Anti bribery and corruption policy, Anti-harassment and bullying policy, Data protection policy, and Equal opportunities policy. We hold no prejudices or discriminate on the grounds of gender, ethnic origin, beliefs, religion, age, disability, political affiliation, sexual orientation, nationality, citizenship, civil status, socio-economic status or any other individual differences.
Financial key performance indicators
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Given the straightforward nature of the business, the directors are of the opinion that the KPIs for understanding of the development, performance or position of the business are the net sales, gross profit and net income.
The withdrawal of the United Kingdom from the European Union
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New trading arrangements between the United Kingdom and the European Union took effect on 31 December 2020. In general, tariffs and quotas on trade have not been introduced, although administrative complications and regulatory restrictions have reduced the freedom of cross-border trade. The company is carefully monitoring the practical application of the new trading arrangements by regulatory authorities, to better understand what the eventual impact on its business will be. The process of determining these effects is ongoing, and has also been delayed by the suspension of certain sectors of economic activity in response to the COVID-19 pandemic.
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FD LONDON LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
Economic impact of the COVID-19 pandemic
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The COVID-19 pandemic continues to affect the UK and global economies adversely. At the time of signing this report there are indications from the government that social restrictions which have suppressed economic activity during 2020 and 2021 are likely to be lifted in the foreseeable future. If this does happen the directors expect to see the UK and global economies return to growth in due course, but it is not possible to predict how quickly and to what degree this may happen. The priorities of the directors remain to comply with all regulatory requirements to the fullest extent possible, and to maintain the safety and well-being of the group and company's personnel.
This report was approved by the board
and signed on its behalf.
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FD LONDON LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
The directors present their report and the audited consolidated financial statements for the year ended 31 December 2020.
The loss for the year, after taxation and minority interests, amounted to $
4,136,211
(2019:
profit
of
$
4,426,780
)
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Dividends of $1,100,000 have been declared and paid (2019: declared and paid $1,359,000) as of 31 December 2020. As at 31 December 2020, there is an amount of $nil dividends to be paid (2019: $13,348 dividends relating to 2017).
The directors who served during the year and up to the date of this report were:
Directors' responsibilities statement
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The directors are responsible for preparing the group strategic report, the directors' report and the consolidated
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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period.
In preparing these financial statements, the directors are required to:
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select suitable accounting policies for the group's financial statements and then apply them consistently;
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make judgements and accounting estimates that are reasonable and prudent;
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state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
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prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group 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 the group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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FD LONDON LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
The financial statements have been prepared on a going concern basis. In making this assessment the directors have considered the continued trading activity of the group. They have also taken into consideration the positive cash balances and net assets, the forecasts for the business and the ability of the directors to manage their working capital requirements and meet their debts as they fall due.
Despite the loss during the year of 2020, which can be directly attributed to Covid-19, the company was only loss making during the first six months of 2020, the last six months of the year were profitable and cash generative. Having welcomed a new CEO in March 2020, the company strategically looked at ways they could save on costs, not just for the near future whilst the world was still facing lockdowns, but thinking ahead for the long term too. Reducing inventory levels, adjusting headcount across departments, negotiating with suppliers all better positioned the company to be more agile in case of ever facing a pandemic situation again. With more people spending time at home, the pandemic also allowed them to seize an opportunity in sales too, offering more casual/ lounge wear than previously. As well as relaunching the Menswear line. The back end of 2020 and start of 2021 has allowed for further opportunities to look at new standalone retail spaces. With all types of businesses suffering from the effects of Covid-19, partnering with the retail landlords and agreeing different rent agreements than what were previously possible, has allowed the company to consider spaces that were at one time unaffordable.
As the world continues to open up again in 2021, the company is very positive about the future and continues to push for growth and to seize global opportunities-focusing on their fastest growing regions of China and the UK.
The current market in which the group operates is likely to remain competitive. However demand for the group’s products is expected to remain high due to our on-going investment in new product development and strategic brand marketing activity.
Greenhouse gas emissions, energy consumption and energy efficiency action
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The group has not disclosed information in respect of greenhouse gas emissions, energy consumption and energy efficiency action as its energy consumption in the United Kingdom for the year is 40,000kWh or lower.
Qualifying third party indemnity provisions
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The company has indemnified the directors and offices in respect of proceedings which may be brought by third parties and such indemnification was in place throughout the year, which is a qualifying third party indemnity of the purposes of the Companies Act 2006. Neither the company's indemnity nor insurance provides cover in the event that a director or officer is proved to have acted fraudulently or dishonestly.
Matters covered in the strategic report
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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 uncertainties.
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FD LONDON LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
Provision of information to auditor
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Each of the persons who are
directors at the time when this directors' report is approved has confirmed that:
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so far as the director is aware, there is no relevant audit information of which the company and the group's auditor is unaware; and
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the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the company and the group's auditor is aware of that information.
Post balance sheet events
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In February 2021, Frame LA Brands LLC entered into a third PPP Loan for approximately $650,000. The loan bears interest at a fixed rate of 1%. The loan is not collateralized and requires repayment within two years from loan origination unless some or all is determined to meet certain provisions of the CARES Act to be forgiven.
The auditor,
Mazars LLP
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section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf by:
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FD LONDON LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FD LONDON LIMITED
Opinion
We have audited the financial statements of FD London Limited (the ‘company’) for the year ended 31 December 2020 which comprise the group Income statement, the group and company Statement of financial positions, the group Consolidated 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:
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give a true and fair view of the state of the company’s affairs as at 31 December 2020 and of the group's
loss for the year then ended;
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have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
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have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the 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.
Emphasis of matter - Impact of the outbreak of COVID-19 on the financial statements
In forming our opinion on the group financial statements, which is not modified, we draw your attention to the directors' view on the impact of the COVID-19 as disclosed on page 5, and the consideration in the going concern basis of preparation on page 24.
Since the balance sheet date the global pandemic from the outbreak of COVID-19 has continued to spread globally. The potential impact of COVID-19 became significant and is causing widespread disruption to normal patterns of business activity across the world, including the UK and the US.
The full impact following the emergence of the COVID-19 is still unknown. It is therefore not currently possible to evaluate all the potential implications to the company's trade. customers, suppliers and the wider economy.
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.
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FD LONDON LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FD LONDON LIMITED
Other information
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.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the 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 there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
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the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
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the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
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adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
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the financial statements are not in agreement with the accounting records and returns; or
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certain disclosures of directors' remuneration specified by law are not made; or
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we have not received all the information and explanations we require for our audit.
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the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies’ exemption in preparing the Directors' Report and from the requirement to prepare a Strategic Report.
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FD LONDON LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FD LONDON LIMITED
Responsibilities of Directors
As explained more fully in the Directors' Responsibilities Statement set out on page 6, 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 either the directors 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. Based on our understanding of the Company and its industry, we identified that the principal risks of non-compliance with laws and regulations related to the UK tax legislation, pensions legislation, employment regulation and health and safety regulation, anti-bribery, corruption and fraud, money laundering, non-compliance with implementation of government support schemes relating to COVID-19, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements, such as the Companies Act 2006.
We evaluated the directors' and management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting manual journal entries to manipulate financial performance, management bias through judgements and assumptions in significant accounting estimates and significant one-off or unusual transactions.
Our audit procedures were designed to respond to those identified risks, including non-compliance with laws and regulations (irregularities) and fraud that are material to the financial statements. Our audit procedures included but were not limited to:
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discussing with the directors and management their policies and procedures regarding compliance with laws and regulations;
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communicating identified laws and regulations throughout our engagement team and remaining alert to any indications of non-compliance throughout our audit; and
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considering the risk of acts by the company which were contrary to applicable laws and regulations, including fraud.
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FD LONDON LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FD LONDON LIMITED
Our audit procedures in relation to fraud included but were not limited to:
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making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;
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gaining an understanding of the internal controls established to mitigate risks related to fraud;
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discussing amongst the engagement team the risks of fraud; and
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addressing the risks of fraud through management override of controls by performing journal entry testing.
There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of the audit report
This report is made solely to the company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in 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.
Yuvan Deena (Senior statutory auditor)
for and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
Tower Bridge House
St Katharine's Way
London
E1W 1DD
27 September 2021
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FD LONDON LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
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Interest receivable and similar income
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Interest payable and similar charges
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(Loss)/profit before taxation
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(Loss)/profit for the financial year
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Other comprehensive income
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Total comprehensive (loss)/income for the year
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(Loss)/profit for the year attributable to:
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Non-controlling interests
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Owners of the parent company
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The consolidated statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
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The notes on pages 23 to 47 form part of these financial statements.
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FD LONDON LIMITED
REGISTERED NUMBER:
04761511
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2020
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Debtors: amounts falling due after more than one year
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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FD LONDON LIMITED
REGISTERED NUMBER:
04761511
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(CONTINUED)
AS AT
31 DECEMBER 2020
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Equity attributable to owners of the parent company
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Non-controlling interests
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by
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The notes on pages 23 to 47 form part of these financial statements.
- 15 -
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FD LONDON LIMITED
REGISTERED NUMBER:
04761511
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2020
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Debtors: amounts falling due after more than one year
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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- 16 -
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FD LONDON LIMITED
REGISTERED NUMBER:
04761511
COMPANY STATEMENT OF FINANCIAL POSITION
(CONTINUED)
AS AT
31 DECEMBER 2020
The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements. The profit after tax of the parent company for the year was $1,072,832 (2019: profit of $1,271,732).
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 23 to 47 form part of these financial statements.
- 17 -
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2020
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Equity attributable to owners of parent company
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Non-controlling interests
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Comprehensive loss for the year
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Currency translation differences
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Total comprehensive loss for the year
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Dividends: Equity capital
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The notes on pages 23 to 47 form part of these financial statements.
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- 18 -
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2019
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Equity attributable to owners of parent company
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Non-controlling interests
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Comprehensive income for the year
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Currency translation differences
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Total comprehensive income for the year
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Dividends: Equity capital
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The notes on pages 23 to 47 form part of these financial statements.
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- 19 -
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FD LONDON LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 DECEMBER 2020
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Dividends: Equity capital
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Comprehensive income for the year
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Total comprehensive income for the year
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Contributions by and distributions to owners
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Dividends: Equity capital
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The notes on pages 23 to 47 form part of these financial statements.
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- 20 -
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FD LONDON LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
Cash flows from operating activities
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(Loss)/profit for the financial year
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Amortisation of intangible assets
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Depreciation of tangible fixed assets
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Decrease/(increase) in stocks
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Decrease in amounts owed by related parties
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Decrease in amounts owed to related parties
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of intangible assets
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Purchase of tangible fixed assets
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Net cash used in investing activities
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Cash flows from financing activities
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Non-equity dividends paid
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Net cash generated from/(used in) financing activities
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Net increase/(decrease) in cash and cash equivalents
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Cash and cash equivalents at beginning of year
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Cash and cash equivalents at the end of year
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Cash and cash equivalents at the end of year comprise:
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The notes on pages 23 to 47 form part of these financial statements.
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- 21 -
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FD LONDON LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2020
The notes on pages 23 to 47 form part of these financial statements.
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- 22 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
FD London Limited is a private company, limited by shares, registered in England & Wales. The registered office is 1-4 King Street, London, England, WC2E 8HH (registered number 04761511).
The group's principal activity during the year was the design and multi-channel sale of premium clothing. The group sells directly via its own retail stores and its own website, as well as indirectly via high-end apparel retailers and specialty stores worldwide.
2.
Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in
the UK and the Republic of Ireland and the Companies Act 2006
.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires group management to exercise judgement in applying the group's accounting policies (see note 3).
The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The financial statements have been presented in US$ as this is the currency of the primary economic environment in which the group operates.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the company and its subsidiaries (the "group”) as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their values at the acquisition date. The results of acquired operations are included in the consolidated statements of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
- 23 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
The financial statements have been prepared on a going concern basis. In making this assessment the directors have considered the continued trading activity of the group. They have also taken into consideration the positive cash balances and net assets, the forecasts for the business and the ability of the directors to manage their working capital requirements and meet their debts as they fall due.
Despite the loss during the year of 2020, which can be directly attributed to Covid-19, the company was only loss making during the first six months of 2020, the last six months of the year were profitable and cash generative. Having welcomed a new CEO in March 2020, the company strategically looked at ways they could save on costs, not just for the near future whilst the world was still facing lockdowns, but thinking ahead for the long term too. Reducing inventory levels, adjusting headcount across departments, negotiating with suppliers all better positioned the company to be more agile in case of ever facing a pandemic situation again. With more people spending time at home, the pandemic also allowed them to seize an opportunity in sales too, offering more casual/ lounge wear than previously. As well as relaunching the Menswear line. The back end of 2020 and start of 2021 has allowed for further opportunities to look at new standalone retail spaces. With all types of businesses suffering from the effects of Covid-19, partnering with the retail landlords and agreeing different rent agreements than what were previously possible, has allowed the company to consider spaces that were at one time unaffordable.
As the world continues to open up again in 2021, the company is very positive about the future and continues to push for growth and to seize global opportunities-focusing on their fastest growing regions of China and the UK.
Turnover from product and online sales are generally recognised at the time the product is shipped, provided that persuasive evidence of an arrangement exists, title and risk of loss has transferred to the customer, the sales price is fixed or determinable, and collection of the related receivable is reasonably assured. Revenues are recorded net of estimated returns, allowances and discounts based upon historical experience at the time revenue is recognised. Revenues from retail sales are recognised when the merchandise is sold to customers.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
- 24 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
The group adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the group. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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Long-term leasehold properties
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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Impairment of fixed assets and goodwill
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Assets that are subject to depreciation or amortisation are assessed at each reporting date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each reporting date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.
Investments in subsidiaries are measured at cost less accumulated impairment.
- 25 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first outbasis. Work in progress and finished goods include labour and attributable overheads.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
Trade and other debtors are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method, less impairment losses for bad and doubtful debts except where the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less impairment losses for bad and doubtful debts.
Transfers of trade debtors to the factor are accounted for as sales of financial assets, with the subject trade debtors derecognised upon transfer, in as much as control over such trade debtors is surrendered to the factor. Due provision is made for any recourse obligations.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the consolidated statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the group's cash management.
The group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties and loans to related parties.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in the case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.
- 26 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
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Financial instruments (continued)
|
Financial assets that are measured at cost and amortised are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the consolidated statement of comprehensive income.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the group would receive for the asset if it were to be sold at the reporting date.
Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position when there is an 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.
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
- 27 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The group's functional and presentation currency is US$ given that the significant activities of the group are undertaken by the group company's subsidiary entity in the US. The company's functional currency is £ sterling and presentational currency is US$.
The year end US dollar exchange rate used was US$1.36630 (2019: $1.32570) and the average US$ rate applied was US$1,28210 (2019: $1.27914).
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in the consolidated statement of comprehensive income within 'administrative expenses'.
On consolidation, the results of overseas operations are translated into Dollars at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.
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Interest payable and similar charges
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Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
- 28 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders. Dividends on shares recognised as liabilities are recognised as expenses and classified within interest payable.
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the lease term.
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Defined contribution pension plan
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The group operates a defined contribution plan for its employees. A defined contribution plan is a post-employment benefit plan under which the group pays fixed contributions into a separate entity. Once the contributions have been paid the group has no further payment obligations.
The contributions are recognised as an expense in the consolidated statement of comprehensive income when they fall due. Amounts not paid are shown in accruals as a liability in the statement of financial position. The assets of the plan are held separately from the group in independently administered funds.
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Interest receivable and similar income
|
Interest income is recognised in profit or loss using the effective interest method.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
- 29 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
2.
Accounting policies (continued)
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Current and deferred taxation
|
The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company and the group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the statement of financial position date, except that:
∙
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
∙
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
∙
Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
- 30 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Judgements in applying accounting policies and key sources of estimation uncertainty
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Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The group makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. The estimates and assumptions that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Stock provision
Stock is reviewed annually with reference to current and new products along with recent sales history of the related products. Stock held for more than 1 year is provided for.
Determining useful economic lives of tangible fixed assets
The group depreciates tangible fixed assets over their estimates useful lives. The estimation of the useful lives of assets is based on historic performance as well as expectation about future use and therefore requires estimates and assumptions to be applied by management. The actual lives of these assets can vary depending on variety of factors, including technological innovation, product life cycles and maintenance programmes.
When determining the residual value management aim to assess the amount that the group would currently obtain for the disposal of the asset, if it were already of the condition expected at the end of its useful life. Where possible this is done with reference to external market prices.
Recoverability of debtors
The group establishes a provision for debtors that are estimated not to be recoverable. When assessing recoverability the directors have considered factors such as the aging of the debtors, past experience of recoverability, and the credit profile of individual or groups of customers.
- 31 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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An analysis of turnover by class of business is as follows:
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Design and wholesale distribution of clothing
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Analysis of turnover by country of destination:
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The operating (loss)/profit is stated after charging/(crediting):
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Depreciation of tangible fixed assets
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Amortisation of intangible assets
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Other operating lease rentals
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Defined contribution pension cost
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- 32 -
|
FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
|
Fees payable to the Group's auditor for the audit of the Group's annual financial statements
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Fees payable to the Group's auditor in respect of:
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Taxation compliance services
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Staff costs were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the year was as follows:
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- 33 -
|
FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
|
There were no directors who were a member of a money purchase pension scheme during the year (2019: none).
During the year the highest paid director received $1,856,154 (2019: $1,898,354).
During the year no retirement benefits (2019: $nil) were accruing to the directors.
Key management
Key management of the group are considered to be the directors of the company.
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Interest receivable and similar income
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Other interest receivable
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Interest payable and similar charges
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- 34 -
|
FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Adjustments in respect of previous periods
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Foreign tax on income for the year
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Origination and reversal of timing differences
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Taxation on (loss)/profit on ordinary activities
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Factors affecting tax charge for the year
|
|
The tax assessed for the year is higher than
(2019: lower than)
the standard rate of corporation tax in the UK of
19%
(2019:
19
%)
. The differences are explained below:
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(Loss)/profit on ordinary activities before tax
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(Loss)/profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2019: 19%)
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Expenses not deductible for tax purposes
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Effects of different foreign tax rates
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Adjust closing deferred tax to average rate of 19%
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Overseas exempt distributions
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Adjustments to tax charge in respect of previous periods - deferred tax
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Current tax (prior period) exchange difference arising on movement between opening and closing spot rates
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Total tax charge for the year
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- 35 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
11.
Tax on (loss)/profit (continued)
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Factors that may affect future tax charges
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The UK Government announced in the 2021 budget that from 1 April 2023, the rate of corporation tax in the United Kingdom will increase from 19% to 25%. Companies with profits of £50,000 or less will continue to be taxed at 19%, which is a new small profits rate. Where taxable profits are between £50,000 and £250,000, the higher 25% rate will apply but with a marginal relief applying as profits increase.
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Amount of dividend liable to be paid as at 31 December
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- 36 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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The Company does not have any intangible assets.
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- 37 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Long-term leasehold properties
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The Company does not have any tangible assets.
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- 38 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Investments in subsidiary companies
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- 39 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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The following were subsidiary undertakings of the company:
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Paracorp Incorporated 2140 S. Dupont Highway, Camden, Delaware, 19934, United States of America
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3578 Hayden Avenue, Culver City, California, 90232, United States of America
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Design and wholesale distribution of clothing primarily to apparel retails and specialty shops
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3578 Hayden Avenue, Culver City, California, 90232, United States of America
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Operates retail stores for Frame LA Brands LLC in the United States of America
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1-4 King Street, London, England, WC2E 8HH
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Provides advertising, fashion marketing, sales agents, public relations and administrative services to Frame LA Brands LLC
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3578 Hayden Avenue, Culver City, California, 90232, United States of America
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Provides production services to Frame LA Brands LLC
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1501 McGill College Avenue, 26th Floor, Montreal Quebec H3A 3N9, Canada
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Wholesaler of apparel, accessories and lifestyle products
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* These subsidiaries are held indirectly
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- 40 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Raw materials and consumables
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Work in progress (goods to be sold)
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Finished goods and goods for resale
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There is a stock provision of $116,684 (2019: $49,000).
The difference between purchase price or production cost of stocks and their replacement cost is not material.
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Due after more than one year
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Deferred tax asset (note 23)
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Amounts owed by related parties
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Prepayments and accrued income
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- 41 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
17.
Debtors (continued)
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Amounts owed by related parties are unsecured, interest free and payable on demand.
At 31 December 2020 management have recorded an allowance for doubtful debts of $84,061 (2019: $68,603).
The group's trading subsidiary Frame LA Brands LLC has agreements with a factor, see Note 21. The net amount due from factor amounted to $12,125,854 (2019: $nil) is included in the trade debtors amount this year.
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Creditors: Amounts falling due within one year
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Amounts owed to related parties
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Other taxation and social security
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Accruals and deferred income
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Amounts owed to related parties are unsecured, interest free and repayable on demand.
The group's trading subsidiary Frame LA Brands LLC has agreements with a factor, see Note 21. At 31 December 2020 the net amount due to the factor included in trade creditors is $nil (2019: $4,285,272), see note 17.
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Creditors: Amounts falling due after more than one year
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Amounts owed to related parties
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- 42 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Analysis of the maturity of loans is given below:
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Amounts falling due within one year
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Amounts falling due 1-2 years
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Total loan includes $22,679,560 (2019:$nil) outstanding under the line of credit. The line of credit is secured by substantially all of Frame LA Brands LLC’s assets and is guaranteed by two of it’s wholly owned subsidiaries (Denim Lab LLC and Denim Hub LLC) and it’s parent entity (Saturday Brand USA Inc.). The line of credit bears interest at the U.S. prime rate or LIBOR +2.50% rate and outstanding principal and interest on the line of credit is payable on demand.
The above loan also includes $3,259,963 (2019: $nil) granted to Frame LA Brands LLC under the Paycheck Protection Program (‘PPP Loan’) under the Coronavirus Aid, Relief and Economic Security Act (CARES Act). The PPP Loan bears interest at 1% with no payments due for the first ten months. The loan is subject to partial or full forgiveness if Frame LA Brands LLC uses all proceeds for eligible purposes, maintains certain employment levels and maintains certain compensation levels in accordance with and subject to the CARES Act.
Monthly payments of principal and interest of approximately $362,000 begin in August 2021 and continue through maturity in April 2022, if not forgiven.
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- 43 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
The group's trading subsidiary Frame LA Brands LLC sells a portion of its trade debtors to a factor under a continuing contract, cancellable upon written notice. In cases where the factor approves the credit, the account is sold without recourse and the factor assumes all credit risk.
The trading subsidiary may request advances on net sales factored at any point in time prior to their maturity date. In addition to advancing against its receivables, the trading subsidiary can borrow up to 60% of its eligible inventory at any given time, subject to the factor's discretion, with set maximums determined by the factor. These advances are secured by the trading subsidiary's accounts receivable, inventory, and intangible assets. The factor charges interest on advances at the bank's LIBOR rate plus a negotiated rate.
The trading subsidiary entered into a borrowing agreement with its factor in March 2017 and was used to pay off the existing revolving line of credit and term loan with a different lender.
At 31 December 2020 the net amount due to the factor is included in trade debtors. At 31 December 2019 the net amount due to the factor was included in trade creditors.
At 31 December 2020, the factor had two (2019: three) standby letters in credit in the aggregate amount of approximately $732,000 (2019: $1,138,000) as security deposits for two of the Company's retail store leases.
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Financial assets that are debt instruments
measured at amortised cost
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Financial liabilities measured at amortised
cost
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Financial assets that are debt instruments measured at amortised cost comprise of trade debtors, amounts owed by related parties and cash and cash equivalents.
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Financial liabilities measured at amortised cost comprise of other loans, trade creditors and amounts owed to related parties.
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- 44 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Charged to profit or loss
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Charged to profit or loss
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Tax losses carried forward
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- 45 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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Allotted, called up and fully paid
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1,081 (2019: 1,081) Ordinary shares of £1 each
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The company has one class of ordinary share. The share carries a voting right but no right to fixed income.
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Non-controlling interests
Non-controlling interests are the proportionate minority interests in the equity of subsidiaries and are recognised at their carrying amount.
Foreign exchange reserve
The foreign currency translation reserve represents the effect of changes in exchange rates arising from the translating the financial statements of subsidiary undertakings into the group’s presentation currency.
Profit and loss account
The profit and loss account represents the cumulative profit and loss reserves of the group and company.
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Commitments under operating leases
|
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At 31 December 2020 the group and the company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Later than 1 year and not later than 5 years
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- 46 -
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FD LONDON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
|
Related party transactions
|
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The group have common ownership and directors with a wider group of companies that provide advertising, fashion marketing, sales agents, public relations and administrative services to them. There were no management fees (2019: $nil), advertising, fashion marketing, sales agent or public relations expenses (2019: $nil) for the year ended 31 December 2020 as these services are now provided by FD Europe Limited.
At 31 December 2020, amounts due from related parties amounted to $248,774 (2019: $295,332). The amount due is unsecured, non-interest bearing and due on demand.
At 31 December 2020, amounts due to related parties amounted to $17,340 (2019: $37,140).
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Post balance sheet events
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In February 2021, Frame LA Brands LLC entered into a third PPP Loan for approximately $650,000. The loan bears interest at a fixed rate of 1%. The loan is not collateralized and requires repayment within two years from loan origination unless some or all is determined to meet certain provisions of the CARES Act to be forgiven.
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Ultimate parent undertaking and controlling party
|
Saturday Brand Holdings Limited, a company registered in England and Wales is the largest shareholder of the company. However, there is no immediate or ultimate parent company, neither is there an ultimate controlling party.
- 47 -
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