Company Registration No. 05822214 (England and Wales)
HMY UK INNOVATION IN RETAIL LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
HMY UK INNOVATION IN RETAIL LTD
COMPANY INFORMATION
Directors
W Ceglia
S A Geekie
A M Mostrup
(Appointed 21 January 2021)
Secretary
C Monguilod Pola
Company number
05822214
Registered office
Unit 13
Hobson Industrial Estate
Burnopfield
Newcastle Upon Tyne
NE16 6EA
Auditor
RMT Accountants & Business Advisors Ltd
Gosforth Park Avenue
Newcastle upon Tyne
NE12 8EG
HMY UK INNOVATION IN RETAIL LTD
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 24
HMY UK INNOVATION IN RETAIL 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 of the company is the manufacture, supply and installation of bespoke shelving systems.
Turnover for the company has increased during the year by 56% to £16.5M, however, Gross Profit was in line
with expectations and similar to 2020 at 32.2%. 2021 has been a remarkable year for HMY and we are
pleased to have been able to support our customer’s store refit activities as well as meeting their capital
expenditure needs in full.
Market
Despite the worldwide Covid-19 pandemic, many of our customers have decided to continue with their
capital expenditure programs, which has allowed us to increase our sales over budget. One of the Covid-19
aftermaths has been an increase in raw materials and logistic costs but non the less our customers have still
experienced great value services delivered consistently and in a timely fashion.
We were pleased to be able to support our suppliers and are grateful to all of those who continued to provide
us with the products and services to meet our operational needs, whilst working through their own
challenges.
Principal risks and uncertainties
Last year one of the principal company's principal financial concerns was about cash equivalents. This year we have capitalized on our company´s parent loans, giving us the financial stability, we needed to improve our solvency in the UK.
Interest rate risk
After capitalizing on our company´s parent loans, we do not face any interest rate risk.
Price risk
The company is exposed to commodity price risk, because of its operations, attributable to fluctuations in the
price of steel. The exposure is mitigated by the trading strategy (purchase finished goods to sell as part of
restructuring plans) and local sourcing of steel at forwarding price rates.
Credit risk
The company has implemented policies that require appropriate credit checks on potential customers before
sales are made. Where debt finance is utilized, this is subject to approval by the directors.
Liquidity risk
The company's cash position has improved over the year. The directors do not consider that the company is
exposed to any liquidity risk.
Foreign currency risk
The company is exposed to foreign currency exchange rate fluctuations between sterling, Euro, and US Dollar.
The Euro and US Dollar exchange rate risk is partially mitigated using natural hedging.
Development and performance
The market outlook for certain retail customers remains in a good shape, as business opportunities within the
industry are incoming. The directors are optimistic about the long-term prospects for the growth of the
group.
HMY UK INNOVATION IN RETAIL LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 2 -
Key performance indicators
The directors consider that the key performance indicators used to monitor the performance of the businessare Earnings Before Interest, Tax, Depreciation, Amortisation, Foreign exchange gains/losses, and Stock
obsolescence ('EBITDA') and Return on Capital Employed ('ROCE') to be the key measures of the company's
performance.
The director
s
consider the
company
's results to be satisfactory in the light of current trading conditions.
Going Concern
Company´s loan capitalization and the operating results in 2021, enable the company´s directors to assure there is no Going Concern risk in the coming year. The directors have prepared cash flow forecasts based upon data available up to the date of signing the accounts. Cash flow forecasts show that the company does not expect to require any funding in the following twelve months.
S A Geekie
Director
06 April 2022
HMY UK INNOVATION IN RETAIL LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 3 -
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 the manufacture, supply and installation of bespoke shelving systems.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
W Ceglia
J A Gutierrez Gomez
(Resigned 21 January 2021)
S A Geekie
A M Mostrup
(Appointed 21 January 2021)
Auditor
RMT Accountants & Business Advisors Ltd were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of
the exposure of the company to price risk, credit risk and liquidity risk.
HMY UK INNOVATION IN RETAIL LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 4 -
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.
On behalf of the board
S A Geekie
Director
06 April 2022
HMY UK INNOVATION IN RETAIL LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF HMY UK INNOVATION IN RETAIL LTD
- 5 -
Opinion
We have audited the financial statements of HMY UK Innovation in Retail Ltd (the 'company') for the year ended 31 December 2021 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including 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.
HMY UK INNOVATION IN RETAIL LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF HMY UK INNOVATION IN RETAIL 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
.
HMY UK INNOVATION IN RETAIL LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF HMY UK INNOVATION IN RETAIL LTD
- 7 -
Capability of the audit in detecting irregularities, including fraud
Discussions with and enquiries of management and those charged with governance were held with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.
The following laws and regulations were identified as being of significance to the entity:
-
Those laws and regulations considered to have a direct effect on the financial statements including UK financial reporting standards, Company Law, Tax and Pensions legislation, and distributable profits legislation.
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: inquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; review of board minutes; testing the appropriateness of journal entries; and the performance of analytical review to identify unexpected movements in account balances which may be indicative of fraud.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity's controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
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.
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member for our audit work, for this report, or for the opinions we have formed.
Paul Gainford (Senior Statutory Auditor)
for and on behalf of RMT Accountants & Business Advisors Ltd
Statutory Auditor
Gosforth Park Avenue
Newcastle upon Tyne
NE12 8EG
Date: 06 April 2022
HMY UK INNOVATION IN RETAIL LTD
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 8 -
2021
2020
Notes
£'000
£'000
Turnover
3
16,508
10,558
Cost of sales
(11,185)
(7,007)
Gross profit
5,323
3,551
Administrative expenses
(4,207)
(4,145)
Other operating income
173
409
Operating profit/(loss)
4
1,289
(185)
Interest receivable and similar income
7
1
Interest payable and similar expenses
8
(63)
(280)
Other gains and losses
9
12,215
(376)
Profit/(loss) before taxation
13,441
(840)
Tax on profit/(loss)
10
Profit/(loss) for the financial year
13,441
(840)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
HMY UK INNOVATION IN RETAIL LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
- 9 -
2021
2020
£'000
£'000
Profit/(loss) for the year
13,441
(840)
Other comprehensive income
-
-
Total comprehensive income for the year
13,441
(840)
HMY UK INNOVATION IN RETAIL LTD
BALANCE SHEET
AS AT
31 DECEMBER 2021
31 December 2021
- 10 -
2021
2020
Notes
£'000
£'000
£'000
£'000
Fixed assets
Intangible assets
11
3
12
Tangible assets
12
1,195
1,867
1,198
1,879
Current assets
Stocks
13
1,160
847
Debtors
14
1,476
1,207
Cash at bank and in hand
4,016
2,001
6,652
4,055
Creditors: amounts falling due within one year
15
(4,336)
(10,699)
Net current assets/(liabilities)
2,316
(6,644)
Total assets less current liabilities
3,514
(4,765)
Creditors: amounts falling due after more than one year
16
(5,162)
Net assets/(liabilities)
3,514
(9,927)
Capital and reserves
Called up share capital
19
3,000
3,000
Profit and loss reserves
514
(12,927)
Total equity
3,514
(9,927)
The financial statements were approved by the board of directors and authorised for issue on
06 April 2022
06 April 2022
and are signed on its behalf by:
S A Geekie
Director
Company Registration No. 05822214
HMY UK INNOVATION IN RETAIL LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 11 -
Share capital
Profit and loss reserves
Total
£'000
£'000
£'000
Balance at 1 January 2020
3,000
(12,087)
(9,087)
Year ended 31 December 2020:
Loss and total comprehensive income for the year
-
(840)
(840)
Balance at 31 December 2020
3,000
(12,927)
(9,927)
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
13,441
13,441
Balance at 31 December 2021
3,000
514
3,514
HMY UK INNOVATION IN RETAIL LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 12 -
1
Accounting policies
Company information
HMY UK Innovation in Retail Ltd is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
Unit 13, Hobson Industrial Estate, Burnopfield, Newcastle Upon Tyne, NE16 6EA.
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
£'000.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares
publicly available consolidated financial statements
, including this company,
which are
intended to give a true and fair view of the assets, liabilities,
financial position and profit or loss
of the group
.
T
he company has
therefore
taken advantage of
e
xemptions from the following disclosure requirements:
-
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
-
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’
:
Interest
income/expense and net gains/losses for each category of financial instrument;
basis
of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income
;
-
Section 33 ‘Related Party Disclosures’
:
Compensation for key management personnel
.
The financial statements of the company are consolidated in the financial statements of
Financiere HMY S.A.S
. These consolidated financial statements are available from its registered office
, Financiere HMY S.A.S., 50 Route d'Auxerre, 89470, Monéteau, France.
1.2
Going concern
The director's have adopted the going concern basis in preparing these financial statements after a detailed review of the company's position. The discharge of the intercompany loan during the year
and the operating results
for
2021,
together with cash flow forecasts based upon data available up to the date of signing the accounts support the basis. Cash flow forecasts prepared show that the company does not expect to require any funding in order to meet its obligations as they fall due for a period of not less than 12 months from the data on which the financial statements are approved by the directors.
HMY UK INNOVATION IN RETAIL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 13 -
1.3
Turnover
Turnover is
measured at the fair value of the consideration received or receivable and represents the amount receivable for the goods supplied or services rendered, net of returns, discounts and rebates allowed by the Company and value added taxes. The company recognises revenue upon delivery of goods and services. Sales are normally made with a credit term of 30 days net monthly. The element of financing is deemed immaterial and is disregarded in the measurement of revenue.
The company also recognises revenue on bill and hold sales, when the buyer takes title, provided:
-
it is probable that delivery will be made;
-
the item is on hand, identified and ready for delivery to the buyer at the time the sale is recognised;
-
the buyer specifically acknowledges the deferred delivery instructions; and
-
the usual payment terms apply.
Revenue is not recognised when there is simply an intention to acquire or manufacture the goods in time for delivery.
1.4
Intangible fixed assets other than goodwill
Computer software is stated at cost less accumulated amortisation and accumulated impairment losses. Software is amortised over its estimated useful life of three years on a straight line basis.
Capitalised research and development costs are stated at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
IT licences
3 years
Development costs
3 years
1.5
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:
Freehold land and buildings
20 to 36 years
Plant, machinery, fixtures, fittings and equipment
3 to 15 Years
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
.
1.6
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
and intangible 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).
HMY UK INNOVATION IN RETAIL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 14 -
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost
is determined based on the standard cost method. Cost
comprises
of
direct materials
, including taxes, duties, transport and handling directly attributable to bringing the stock to its present location and condition.
The cost of manufactured finished goods and work in progress includes design costs, raw materials,
direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
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.
Basic financial assets
Basic financial assets, which include
debtors, loans to fellow group companies
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.
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.
HMY UK INNOVATION IN RETAIL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 15 -
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including
creditors and
loans from
fellow group companies 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.9
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.
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.
HMY UK INNOVATION IN RETAIL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 16 -
1.10
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or
fixed assets
.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received
, if considered material to the financial statements.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.12
Leases
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.
1.13
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.
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant
effect on amounts recognised in the financial statements.
Assessing indicators of impairment
In assessing whether there have been any indicators of impairment to assets, the directors have considered both external and internal source of information such as market conditions, counterparty credit ratings and experience of recoverability. There have been no indicators of impairments identified during the financial year.
HMY UK INNOVATION IN RETAIL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
2
Judgements and key sources of estimation uncertainty
(Continued)
- 17 -
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.
Determining residual values and useful economic lives of tangible and intangible fixed assets
The company depreciates tangible and intangible assets over their estimated useful lives. The estimation of the useful lives of assets is based on historic performance as well as the expectations about future use and therefore requires estimates and assumptions to be applied by management. The actual lives of these assets can vary depending on a variety of factors, including technological innovation, product life cycles and maintenance programmes. The carrying amount of tangible fixed assets at the reporting date was £1,195,199 (2020 - £1,867,490) and the carrying amount of intangible assets at the reporting date was £3,320 (2020 - £11,972).
Recoverability of trade debtors
The company establishes a provision for trade debtors that are estimated to not be recoverable. When assessing recoverability the directors consider factors such as the aging of trade debts, past experience of recoverability, and the credit profile of individual or groups of customers. The carrying value of this provision at year end was £343,514 (2020 - £366,146).
Obsolete stock provision
The company designs, manufactures and sells shelving solutions which is subject to changing consumer demands. As a result it is necessary to consider the recoverability of the cost of stocks and the associated provision required.
When calculating the stock provision, management considers the nature and condition of the stock, as well as applying assumptions around anticipated saleability of finished goods and future usage of raw materials.
3
Turnover and other revenue
2021
2020
£'000
£'000
Turnover analysed by class of business
Sale of goods
10,940
7,261
Provision of services
5,568
3,297
16,508
10,558
2021
2020
£'000
£'000
Turnover analysed by geographical market
United Kingdom
15,066
9,822
Europe
1,442
736
16,508
10,558
HMY UK INNOVATION IN RETAIL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
3
Turnover and other revenue
(Continued)
- 18 -
2021
2020
£'000
£'000
Other significant revenue
Interest income
-
1
Grants received
12
409
Grant income includes amounts of £12,352 (2020 - £409,235) receivable in relation to the coronavirus job retention scheme.
4
Operating profit/(loss)
2021
2020
Operating profit/(loss) for the year is stated after charging:
£'000
£'000
Fees payable to the company's auditor for the audit of the company's financial statements
16
16
Depreciation of owned tangible fixed assets
224
300
Loss on disposal of tangible fixed assets
10
44
Amortisation of intangible assets
9
16
(Profit)/loss on disposal of intangible assets
80
Operating lease charges
54
95
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
Plant and production staff
18
15
Administration
46
53
Total
64
68
Their aggregate remuneration comprised:
2021
2020
£'000
£'000
Wages and salaries
2,487
2,392
Social security costs
245
260
Pension costs
135
134
2,867
2,786
HMY UK INNOVATION IN RETAIL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 19 -
6
Directors' remuneration
2021
2020
£'000
£'000
Remuneration for qualifying services
266
231
Company pension contributions to defined contribution schemes
28
33
294
264
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2020 - 1).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2021
2020
£'000
£'000
Remuneration for qualifying services
266
231
Company pension contributions to defined contribution schemes
28
33
7
Interest receivable and similar income
2021
2020
£'000
£'000
Interest income
Interest on bank deposits
1
8
Interest payable and similar expenses
2021
2020
£'000
£'000
Interest payable to group undertakings
60
277
Interest on finance leases and hire purchase contracts
3
3
63
280
9
Other gains and losses
2021
2020
£'000
£'000
Amounts written off parent company loan
11,492
-
Parent company loan accrued interest written off
387
-
Other gains and losses on foreign exchange
336
(376)
12,215
(376)
HMY UK INNOVATION IN RETAIL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
9
Other gains and losses
(Continued)
- 20 -
During the year HMY S.A.S forgave historic debts due from HMY UK, as part of a process of consolidation HMY UK's equity.
10
Taxation
The actual charge 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
£'000
£'000
Profit/(loss) before taxation
13,441
(840)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
2,554
(160)
Tax effect of expenses that are not deductible in determining taxable profit
(1)
Tax effect of income not taxable in determining taxable profit
(173)
Tax effect of utilisation of tax losses not previously recognised
(311)
Adjustments in respect of prior years
(8)
Permanent capital allowances in excess of depreciation
(52)
Other permanent differences
37
Movement in deferred tax not provided
297
Parent company loan write off
(2,183)
Taxation charge for the year
-
-
Deferred tax not provided relates primarily to trading losses of approximately £14.6m to be carried forward against future profits. The deferred tax asset balance has not been recognised in the financial statements as recoverability in the foreseeable future remains uncertain.
As announced in the budget on 3 March 2021, the corporation tax rate remains at 19% from 1 April 2021 until 1 April 2023 when it will increase to 25%. Whilst this change was not substantively enacted at the balance sheet date, were the deferred tax position to be recalculated at 25%, the unrecognised deferred tax asset would be £3.6m.
There are no other factors expected to materially affect the tax (credit)/charge in future.
HMY UK INNOVATION IN RETAIL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 21 -
11
Intangible fixed assets
IT licences
Development costs
Total
£'000
£'000
£'000
Cost
At 1 January 2021
796
52
848
Disposals
(9)
(9)
At 31 December 2021
787
52
839
Amortisation and impairment
At 1 January 2021
784
52
836
Amortisation charged for the year
9
9
Disposals
(9)
(9)
At 31 December 2021
784
52
836
Carrying amount
At 31 December 2021
3
3
At 31 December 2020
12
12
12
Tangible fixed assets
Freehold land and buildings
Plant, machinery, fixtures, fittings and equipment
Total
£'000
£'000
£'000
Cost
At 1 January 2021
1,791
4,629
6,420
Additions
32
32
Disposals
(1,410)
(1,410)
At 31 December 2021
1,791
3,251
5,042
Depreciation and impairment
At 1 January 2021
855
3,698
4,553
Depreciation charged in the year
59
165
224
Eliminated in respect of disposals
(930)
(930)
At 31 December 2021
914
2,933
3,847
Carrying amount
At 31 December 2021
877
318
1,195
At 31 December 2020
936
931
1,867
HMY UK INNOVATION IN RETAIL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 22 -
13
Stocks
2021
2020
£'000
£'000
Raw materials and consumables
77
126
Finished goods and goods for resale
1,083
721
1,160
847
14
Debtors
2021
2020
Amounts falling due within one year:
£'000
£'000
Trade debtors
1,077
886
Amounts owed by group undertakings
58
132
Other debtors
81
88
Prepayments and accrued income
260
101
1,476
1,207
15
Creditors: amounts falling due within one year
2021
2020
£'000
£'000
Trade creditors
1,872
1,907
Amounts owed to group undertakings
994
7,283
Taxation and social security
639
483
Accruals and deferred income
831
1,026
4,336
10,699
Amounts owed to group undertakings include a loan which is unsecured, repayable on demand and bears interest at 1.18%. Accruals include £nil (2020 - £484k) in relation to group undertakings.
16
Creditors: amounts falling due after more than one year
2021
2020
Notes
£'000
£'000
Other borrowings
17
5,162
The amount owed to group undertakings, over one year old, is secured by a fixed and floating charge over the assets of HMY Innovation in Retail UK Limited and is repayable on demand. Interest charged on the loan is 2.75% above 6 months GBP LIBOR.
HMY UK INNOVATION IN RETAIL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 23 -
17
Loans and overdrafts
2021
2020
£'000
£'000
Loans from group undertakings
5,162
Payable after one year
5,162
18
Retirement benefit schemes
2021
2020
Defined contribution schemes
£'000
£'000
Charge to profit or loss in respect of defined contribution schemes
135
134
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.
Included within creditors is a balance of £18,564 outstanding at the reporting date.
19
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£'000
£'000
Issued and fully paid
Ordinary shares of £1 each
3,000,000
3,000,000
3,000
3,000
20
Financial commitments, guarantees and contingent liabilities
The company has a class guarantee with HSBC of £72,000, dated 4 August 2006 and in favour of HMRC.
21
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
£'000
£'000
Within one year
73
96
Between two and five years
52
130
125
226
HMY UK INNOVATION IN RETAIL LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 24 -
22
Ultimate controlling party
The company's immediate parent undertaking is HMY S.A.S. The ultimate parent undertaking and controlling party is LBO France Gestion, a company incorporated in France, which is the parent company of the largest and smallest group to prepare consolidated financial statements.
2021-12-31
2021-01-01
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