Company Registration No. 06973805 (England and Wales)
LSE RETAIL GROUP LIMITED
ANNUAL REPORT AND
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
LSE RETAIL GROUP LIMITED
COMPANY INFORMATION
Directors
B C Dixon
D J R Gutfreund
G J Payton
I M Todd
N Jeffrey
S D Haughton
P A Bates
C A Hulme
(Appointed 1 February 2020)
Company number
06973805
Registered office
Unit L1
Lyntown Trading Estate
Eccles
Manchester
M30 9QG
Auditor
UHY Hacker Young Manchester LLP
St James Building
79 Oxford Street
Manchester
M1 6HT
Business address
Unit L1
Lyntown Trading Estate
Eccles
Manchester
M30 9QG
Bankers
HSBC Bank PLC
4 Hardman Square
Spinningfields
Manchester
M3 3EB
LSE RETAIL GROUP LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 5
Statement of comprehensive income
6
Balance sheet
7
Statement of changes in equity
8
Notes to the financial statements
9 - 21
LSE RETAIL GROUP LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
The directors present the
strategic report
true
and financial statements for the year ended 31 December 2019.
Review of the Business
Trading has continued to be tough in 2019, in line with other UK retailers, due to uncertain trading environment from Brexit and lower consumer confidence. Despite another year of revenue growth (to £23.7m) the volatility of the US$ rate has increased input prices. Had the $ rate been maintained throughout the year at opening rates of 1.34 rather than dropping down to 1.21 at times, our costs would have been £0.7m lower – an additional 3% on our gross margin.
Operating profit before exceptional items and US$ fluctuations would have been £1.6m, 12% on prior year.
During 2019, we continued to invest in the infrastructure and operations of the business in order to support the anticipated continued top line growth. The completion of the restructure of our teams at Head Office lead to exceptional costs of £0.1m. We have also incurred £0.6m of systems development costs, including new websites.
Our balance sheet continues to be strong, even after the £1m dividend paid, with net current assets of £4.5m and cash reserves of £1m.
Principal Risks and Uncertainties
Due to the international nature of the business, we are at risk from adverse currency movements that are beyond our control. We do, however, mitigate this risk where possible through the hedging of appropriate currencies.
Maintaining tight financial controls and retaining visibility of sales margins by sales channel, by customer and by product range is a challenge. The company has successfully managed this risk to date and is in good shape to do so in the future.
Cashflow planning and cash management is an area that the Company considers vital and we continually review our current and future cash position. At year end, we had a very strong cash balance.
Key Performance Indicators
The business has a suite of key performance indicators that monitor trends on the key aspects of the business namely, sales, margins, operational efficiencies and working capital levels.
We closely monitor the breakdown of sales revenue (and sales margins) by customer channels, by individual customers and by product ranges.
We continually monitor our stock levels and our stock profile. We measure our ‘stock days’ performance by individual product to ensure that slower moving items are visible and we take appropriate action to manage those products. Stock days at the end of December 2019 were 209 days compared with 196 days at the end of 2018.
We continually monitor our trade debtors and ‘debtor day’ levels. Debtor day levels at the end of December 2019 were 29
days compared with 53 days at the end of 2018.
Future Developments
Against the continued background of uncertainty arising from Brexit, the company is well placed to maintain the current level of financial performance and to continue to develop selected market places.
D J R Gutfreund
Director
26 February 2020
- 1 -
LSE RETAIL GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
The directors present their annual report and financial statements for the year ended 31 December 2019.
Principal activities
The principal activity of the company continued to be that of
the retailing of electric light fittings and bulbs.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
B C Dixon
D J R Gutfreund
G J Payton
I M Todd
I L Thomas
(Resigned 28 February 2019)
N Jeffrey
S D Haughton
P A Bates
C A Hulme
(Appointed 1 February 2020)
Results and dividends
The results for the year are set out on page 6.
Ordinary dividends were paid amounting to £1,000,000
. The directors do not recommend payment of a further dividend.
Auditor
In accordance with the company's articles, a resolution proposing that
UHY Hacker Young Manchester LLP
be reappointed as auditor of the company 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;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
-
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.
- 2 -
LSE RETAIL GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
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.
Going concern
The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis in preparing the annual financial statements.
Further details regarding the adoption of the going concern basis are disclosed in Note 1.2 of the accounting policies
Financial instruments
The company has a normal level of exposure to price, credit, liquidity and cash flow risks arising from its trading activities.
On behalf of the board
D J R Gutfreund
Director
26 February 2020
- 3 -
LSE RETAIL GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LSE RETAIL GROUP LIMITED
Opinion
- 4 -
We have audited the financial statements of LSE Retail Group Limited (the 'company') for the year ended 31 December 2019 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 December 2019 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
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
-
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue
.
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. 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 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 our audit
:
LSE RETAIL GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LSE RETAIL GROUP LIMITED
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 directors' 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.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s 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.
Paul Daly BEng FCA (Senior Statutory Auditor)
for and on behalf of UHY Hacker Young Manchester LLP
26 February 2020
Chartered Accountants
Statutory Auditor
St James Building
79 Oxford Street
Manchester
M1 6HT
- 5 -
LSE RETAIL GROUP LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
2019
2018
Notes
£
£
Turnover
3
23,678,704
20,603,349
Cost of sales
(12,718,718)
(9,233,673)
Gross profit
10,959,986
11,369,676
Distribution costs
(4,523,403)
(4,533,517)
Administrative expenses
(5,574,989)
(5,418,957)
Profit before restructuring and development costs
861,594
1,417,202
Restructuring costs
4
(115,338)
(311,037)
Development costs
4
(659,176)
-
Operating profit
5
87,080
1,106,165
Interest receivable and similar income
8
2,220
2,925
Interest payable and similar expenses
9
(34,137)
(14,000)
Profit before taxation
55,163
1,095,090
Tax on profit
10
645,733
(213,551)
Profit for the financial year
700,896
881,539
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
- 6 -
LSE RETAIL GROUP LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2019
31 December 2019
2019
2018
Notes
£
£
£
£
Fixed assets
Intangible assets
12
-
173,891
Tangible assets
13
133,596
213,280
133,596
387,171
Current assets
Stocks
14
7,287,300
4,972,000
Debtors
15
1,472,218
1,210,803
Cash at bank and in hand
983,325
2,853,876
9,742,843
9,036,679
Creditors: amounts falling due within one year
16
(5,145,816)
(4,289,732)
Net current assets
4,597,027
4,746,947
Total assets less current liabilities
4,730,623
5,134,118
Provisions for liabilities
19
-
(21,016)
Net assets
4,730,623
5,113,102
Capital and reserves
Called up share capital
21
100
100
Hedging reserve
22
(83,375)
-
Profit and loss reserves
23
4,813,898
5,113,002
Total equity
4,730,623
5,113,102
The financial statements were approved by the board of directors and authorised for issue on 26 February 2020 and are signed on its behalf by:
D J R Gutfreund
Director
Company Registration No. 06973805
- 7 -
LSE RETAIL GROUP LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
Share capital
Hedging reserve
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2018
100
(94,128)
6,231,463
6,137,435
Period ended 31 December 2018:
Profit and total comprehensive income for the year
-
-
881,539
881,539
Dividends
11
-
-
(2,000,000)
(2,000,000)
Other
-
94,128
-
94,128
Balance at 31 December 2018
100
-
5,113,002
5,113,102
Period ended 31 December 2019:
Profit and total comprehensive income for the year
-
-
700,896
700,896
Dividends
11
-
-
(1,000,000)
(1,000,000)
Other
-
(83,375)
-
(83,375)
Balance at 31 December 2019
100
(83,375)
4,813,898
4,730,623
- 8 -
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
Company information
LSE Retail Group Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Unit L1, Lyntown Trading Estate, Eccles, Manchester, M30 9QG.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include certain items at fair value, and in accordance with FRS 102 issued by the Financial Reporting Council.
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;
true
-
true
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
;
-
true
Section 33 ‘Related Party Disclosures’
:
Compensation for key management personnel
.
The financial statements of the company are consolidated in the financial statements of
LSE Group Holdings Limited
. These consolidated financial statements are available from its registered office
, Unit L1, Lyntown Trading Estate, Eccles, Manchester, M30 9QG.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover
is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales related taxes.
Turnover from the sale of goods is recognised when the goods have been dispatched to the customer.
- 9 -
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
1.4
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses
.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Software
33.3% straight line
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:
Fixtures, fittings & equipment
25% straight line
Computer equipment
25% straight line
Motor vehicles
50% straight line
Website development
33.3% straight line
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
- 10 -
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). Where it is not possible to estimate the recoverable amount of an individual asset, the company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.
1.7
Stocks
Stocks
are stated at the lower of cost and net realisable value
after making allowance for obsolete and slow moving stock lines. Stock cost comprises the finished goods purchase price and element of carriage and duty attributable to each item of stock 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
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
1.9
Financial assets
- 11 -
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 assets are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets are classified into specified categories. The classification depends on the nature and purpose of the financial assets and is determined at the time of recognition.
Loans and receivables
Trade debtors
, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at cost, less any impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
1.10
Financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from
fellow group companies and preference shares that are classified as debt, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade creditors are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
Other financial liabilities
- 12 -
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value though profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.11
Derivatives
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.
Hedge accounting
The company designates certain hedging instruments, which include derivatives, as cash flow hedges. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.
At the inception of the hedge relationship, the relationship between the hedging instrument and the hedged item is documented, along with the risk management objectives and strategy underlying the utilisation of hedging transactions. At the inception of the hedge and on an ongoing basis the effectiveness with which the hedging instrument offsets changes in cash flows of the hedged item is assessed, to ensure the instrument remains highly effective and thus satisfies the criteria to apply hedge accounting under FSR102.
The effective portion of changes in the fair value of derivatives that are designated as cash flow hedges is recognised in other comprehensive income, with the gain or loss on the ineffective portion being recognised immediately through the profit and loss account.
Amounts previously recognised in other comprehensive income are reclassified to the profit and loss account in the period when the hedged item is recognise in the profit and loss account.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
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.
1.13
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.
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.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
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.
1.16
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.
- 13 -
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
2
Critical accounting estimates and judgements
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.
Slow moving and obsolete stock provision
The demand for the company’s products can be strongly influenced by fashion trends and/or technical innovations. In addition, there is a risk that overall consumer demand could fall as a result of changes in the economic environment arising from Brexit.
Against this background, the Directors have reviewed the profile of the stockholding at year-end on a product by product basis and made an assessment of the provision required in respect of slow moving and obsolete products. The Directors have taken a prudent view and have made additional provisions where necessary. The Directors have concluded that stock is being properly valued at the lower of cost and net realisable value (see Note 1.7 for the definition of ‘net realisable value’).
3
Turnover
An analysis of the company's turnover is as follows:
2019
2018
£
£
Turnover
Sale of goods
23,678,704
20,603,349
Turnover analysed by geographical market
2019
2018
£
£
United Kingdom
23,254,010
20,341,875
Europe
424,694
261,474
23,678,704
20,603,349
4
Restructuring and development costs
During 2018, the company restructured a component of its UK operations, incurring redundancy, contract termination and stock write down costs of £311,037
.
During 2019, there were further redundancy costs of £115,338, systems development costs, including new websites of £562,849 and costs relating to professional tax advice of £96,327
.
- 14 -
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
5
Operating profit
2019
2018
£
£
Operating profit for the year is stated after charging:
Fees payable to the company's auditors for the audit of the company's financial statements
15,800
15,000
Depreciation of owned tangible fixed assets
99,704
206,545
Amortisation of intangible assets
173,891
157,663
Operating lease charges
408,561
229,325
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2019
2018
Number
Number
Distribution
31
28
Sales
30
35
Administration
27
35
88
98
Their aggregate remuneration comprised:
2019
2018
£
£
Wages and salaries
3,395,365
3,796,009
Social security costs
280,667
310,266
Pension costs
68,700
111,384
3,744,732
4,217,659
- 15 -
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
7
Directors' remuneration
Directors' remuneration also represents the remuneration of key management personnel.
2019
2018
£
£
Remuneration for qualifying services
631,689
686,680
Company pension contributions to defined contribution schemes
13,507
68,931
645,196
755,611
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 6 (2018 - 7
).
Remuneration disclosed above include the following amounts paid to the highest paid director:
Remuneration for qualifying services
119,092
109,460
Company pension contributions to defined contribution schemes
3,081
22,872
8
Interest receivable and similar income
2019
2018
£
£
Interest income
Interest on bank deposits
2,220
2,925
9
Interest payable and similar expenses
2019
2018
£
£
Other interest on financial liabilities
34,137
14,000
10
Taxation
2019
2018
£
£
Current tax
UK corporation tax on profits for the current period
(239,409)
234,584
Adjustments in respect of prior periods
(385,308)
1,385
Total current tax
(624,717)
235,969
Deferred tax
Origination and reversal of timing differences
(21,016)
(22,418)
Total tax (credit)/charge
(645,733)
213,551
- 16 -
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
10
Taxation
(Continued)
The actual (credit)/charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2019
2018
£
£
Profit before taxation
55,163
1,095,090
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%)
10,481
208,067
Tax effect of expenses that are not deductible in determining taxable profit
2,993
2,824
Other non-reversing timing differences
1,037
-
Other permanent differences
641
-
Adjust deferred tax to average rate 19%
2,918
2,660
Additional deduction for R&D expenditure
(340,519)
-
Adjustments to tax charge in respect of previous periods
(390,679)
-
Surrender of tax losses for R&D tax credit refund
66,858
-
Fixed asset differences
537
-
Taxation (credit)/charge for the year
(645,733)
213,551
11
Dividends
2019
2018
£
£
Final paid
1,000,000
2,000,000
12
Intangible fixed assets
Software
£
Cost
At 1 January 2019 and 31 December 2019
454,501
Amortisation and impairment
At 1 January 2019
280,610
Amortisation charged for the year
173,891
At 31 December 2019
454,501
Carrying amount
At 31 December 2019
-
At 31 December 2018
173,891
- 17 -
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
13
Tangible fixed assets
Fixtures, fittings & equipment
Computer equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2019
851,329
265,106
13,950
1,130,385
Additions
22,102
-
-
22,102
Disposals
-
-
(13,950)
(13,950)
At 31 December 2019
873,431
265,106
-
1,138,537
Depreciation and impairment
At 1 January 2019
747,641
158,420
11,044
917,105
Depreciation charged in the year
85,023
13,857
824
99,704
Eliminated in respect of disposals
-
-
(11,868)
(11,868)
At 31 December 2019
832,664
172,277
-
1,004,941
Carrying amount
At 31 December 2019
40,767
92,829
-
133,596
At 31 December 2018
103,688
106,686
2,906
213,280
14
Stocks
2019
2018
£
£
Finished goods and goods for resale
7,287,300
4,972,000
15
Debtors
2019
2018
Amounts falling due within one year:
£
£
Trade debtors
554,935
937,138
Corporation tax recoverable
623,470
20,090
Amounts owed by group undertakings
5,054
4,911
Other debtors
6,616
16,507
Prepayments and accrued income
282,143
232,157
1,472,218
1,210,803
- 18 -
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
16
Creditors: amounts falling due within one year
2019
2018
Notes
£
£
Other borrowings
17
100,000
100,000
Trade creditors
2,403,709
1,100,041
Amounts owed to group undertakings
1,329,506
687,477
Taxation and social security
603,839
107,909
Derivative financial instruments
83,375
-
Other creditors
40,896
75,649
Accruals and deferred income
584,491
2,218,656
5,145,816
4,289,732
17
Loans and overdrafts
2019
2018
£
£
Other loans
100,000
100,000
Payable within one year
100,000
100,000
Other loans comprise £100,000 (2018 : £100,000
) due to D J R Gutfreund, director and controlling party.
This loan does not attract interest, has no fixed repayment term and is secured by way of a first legal mortgage and a fixed charge over certain current and future assets.
18
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2019
2018
Balances:
£
£
Accelerated capital allowances
-
21,016
2019
Movements in the year:
£
Liability at 1 January 2019
21,016
Credit to profit and loss
(21,016)
Liability at 31 December 2019
-
- 19 -
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
19
Provisions for liabilities
2019
2018
Notes
£
£
Deferred tax liabilities
18
-
21,016
-
21,016
20
Retirement benefit schemes
2019
2018
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
68,700
111,384
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the schemes are held separately from those of the company in independently administered funds.
21
Share capital
2019
2018
£
£
Ordinary share capital
Issued and fully paid
80 A Ordinary shares of £1 each
80
80
20 B Ordinary shares of £1 each
20
20
100
100
22
Hedging reserve
2019
2018
£
£
At the beginning of the year
-
(94,128)
Other transfers
(83,375)
94,128
At the end of the year
(83,375)
-
During 2019 the company entered into cash flow hedges to mitigate foreign exchange risk on firm commitments payable in US Dollars, by committing to buy US Dollars over the period 13 September 2019 to 15 April 2020 at a range of pre-determined exchange rates.
At December 2019, the fair value of hedging instrument was a liability of £83,375.
- 20 -
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
23
Profit and loss reserves
2019
2018
£
£
At the beginning of the year
5,113,002
6,231,463
Profit for the year
700,896
881,539
Dividends declared and paid in the year
(1,000,000)
(2,000,000)
At the end of the year
4,813,898
5,113,002
24
Operating lease commitments
Total commitments under operating leases amounted to £742,140
.
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:
2019
2018
£
£
Within one year
312,669
283,190
Between two and five years
429,471
627,128
742,140
910,318
25
Ultimate controlling party
The immediate and ultimate parent company is
LSE Group Holdings Limited
, a company registered in England and Wales.
The ultimate controlling party is
D J R Gutfreund
, by virtue of his shareholding in the immediate and ultimate parent company.
- 21 -
2019-12-31
2019-01-01
false
CCH Software
CCH Accounts Production 2019.301
B C Dixon
B C Dixon
D J R Gutfreund
G J Payton
I M Todd
I L Thomas
N Jeffrey
S D Haughton
P A Bates
06973805
2019-01-01
2019-12-31
06973805
bus:Director2
2019-01-01
2019-12-31
06973805
bus:Director3
2019-01-01
2019-12-31
06973805
bus:Director4
2019-01-01
2019-12-31
06973805
bus:Director5
2019-01-01
2019-12-31
06973805
bus:Director7
2019-01-01
2019-12-31
06973805
bus:Director8
2019-01-01
2019-12-31
06973805
bus:Director9
2019-01-01
2019-12-31
06973805
bus:Director10
2019-01-01
2019-12-31
06973805
bus:Director6
2019-01-01
2019-12-31
06973805
bus:Director1
2019-01-01
2019-12-31
06973805
bus:Director10
2019-12-31
06973805
bus:RegisteredOffice
2019-01-01
2019-12-31
06973805
bus:Agent1
2019-01-01
2019-12-31
06973805
bus:Director6
2019-12-31
06973805
2018-01-01
2018-12-31
06973805
2019-12-31
06973805
countries:UnitedKingdom
2019-01-01
2019-12-31
06973805
countries:UnitedKingdom
2018-01-01
2018-12-31
06973805
countries:RestEuropeOutsideUK
2019-01-01
2019-12-31
06973805
countries:RestEuropeOutsideUK
2018-01-01
2018-12-31
06973805
1
2019-01-01
2019-12-31
06973805
1
2018-01-01
2018-12-31
06973805
2
2019-01-01
2019-12-31
06973805
core:OtherResidualIntangibleAssets
2018-12-31
06973805
core:ComputerSoftware
2018-12-31
06973805
2018-12-31
06973805
core:FurnitureFittings
2019-12-31
06973805
core:ComputerEquipment
2019-12-31
06973805
core:FurnitureFittings
2018-12-31
06973805
core:ComputerEquipment
2018-12-31
06973805
core:MotorVehicles
2018-12-31
06973805
core:CurrentFinancialInstruments
core:WithinOneYear
2019-12-31
06973805
core:CurrentFinancialInstruments
core:WithinOneYear
2018-12-31
06973805
core:CurrentFinancialInstruments
2019-12-31
06973805
core:CurrentFinancialInstruments
2018-12-31
06973805
core:ShareCapital
2019-12-31
06973805
core:ShareCapital
2018-12-31
06973805
core:HedgingReserve
2019-12-31
06973805
core:RetainedEarningsAccumulatedLosses
2019-12-31
06973805
core:RetainedEarningsAccumulatedLosses
2018-12-31
06973805
core:ShareCapital
2017-12-31
06973805
core:HedgingReserve
2017-12-31
06973805
core:RetainedEarningsAccumulatedLosses
2017-12-31
06973805
2017-12-31
06973805
core:CapitalRedemptionReserve
core:RestatedAmount
2017-12-31
06973805
core:ShareCapitalOrdinaryShares
2019-12-31
06973805
core:ShareCapitalOrdinaryShares
2018-12-31
06973805
core:HedgingReserve
core:RestatedAmount
2017-12-31
06973805
core:RetainedEarningsAccumulatedLosses
2018-12-31
06973805
core:RetainedEarningsAccumulatedLosses
2018-01-01
2018-12-31
06973805
core:RetainedEarningsAccumulatedLosses
2019-01-01
2019-12-31
06973805
core:HedgingReserve
2018-01-01
2018-12-31
06973805
core:HedgingReserve
2019-01-01
2019-12-31
06973805
core:IntangibleAssetsOtherThanGoodwill
2019-01-01
2019-12-31
06973805
core:ComputerSoftware
2019-01-01
2019-12-31
06973805
core:FurnitureFittings
2019-01-01
2019-12-31
06973805
core:ComputerEquipment
2019-01-01
2019-12-31
06973805
core:MotorVehicles
2019-01-01
2019-12-31
06973805
core:OtherPropertyPlantEquipment
2019-01-01
2019-12-31
06973805
1
2019-01-01
2019-12-31
06973805
3
2019-01-01
2019-12-31
06973805
bus:Director3
2018-01-01
2018-12-31
06973805
core:UKTax
2019-01-01
2019-12-31
06973805
core:UKTax
2018-01-01
2018-12-31
06973805
4
2019-01-01
2019-12-31
06973805
5
2019-01-01
2019-12-31
06973805
6
2019-01-01
2019-12-31
06973805
core:ComputerSoftware
2019-12-31
06973805
core:ComputerSoftware
2018-12-31
06973805
core:FurnitureFittings
2018-12-31
06973805
core:ComputerEquipment
2018-12-31
06973805
core:MotorVehicles
2018-12-31
06973805
2018-12-31
06973805
core:Secured
2019-12-31
06973805
core:Secured
2018-12-31
06973805
bus:OrdinaryShareClass1
2019-01-01
2019-12-31
06973805
bus:OrdinaryShareClass2
2019-01-01
2019-12-31
06973805
bus:OrdinaryShareClass1
2019-12-31
06973805
bus:OrdinaryShareClass2
2019-12-31
06973805
bus:OrdinaryShareClass1
2018-01-01
2018-12-31
06973805
bus:OrdinaryShareClass2
2018-01-01
2018-12-31
06973805
core:WithinOneYear
2019-12-31
06973805
core:WithinOneYear
2018-12-31
06973805
core:BetweenTwoFiveYears
2019-12-31
06973805
core:BetweenTwoFiveYears
2018-12-31
06973805
bus:PrivateLimitedCompanyLtd
2019-01-01
2019-12-31
06973805
bus:FRS102
2019-01-01
2019-12-31
06973805
bus:Audited
2019-01-01
2019-12-31
06973805
bus:FullAccounts
2019-01-01
2019-12-31
xbrli:pure
xbrli:shares
iso4217:GBP