Company Registration No. 06973805 (England and Wales)
LSE RETAIL GROUP LIMITED
ANNUAL REPORT AND
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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 2020
- 1 -
The directors present the strategic report and financial statements for the year ended 31 December 2020.
Review of the Business
2020 has been a strong year for the business, building on the investment in systems, infrastructure, operations and
brand recognition undertaken in prior years.
We have seen an outstanding demand for our offering from consumers with top line growth of 27% to £30m, in
recognition of the strength of our range and the customer-centric proposition, and accelerated channel shift from
marketplaces to our own web-stores.
Demand has now outstripped capacity in the business, and we will be moving into new premises in 2021 to satisfy
t
his. We incurred £248,000 of exceptional costs relating to this move in 2020.
Our balance sheet continues to be strong, even after the £4m dividend paid, with net current assets of £3.5m and
cash reserves of £3.2m.
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 2020 were 170 days compared with 209 days at the end of 2019.
We continually monitor our trade debtors and ‘debtor day’ levels. Debtor day levels at the end of December 2020 were 25
days compared with 29 days at the end of 2019.
Future Developments
Against the continued background of uncertainty arising from Covid-19, 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
17 February 2021
LSE RETAIL GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2020.
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
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.
£4m interim ordinary dividends were paid. The directors do not recommend payment of a final 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.
LSE RETAIL GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 3 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Going concern
The Directors have reviewed the position of the Company and, in particular, have considered the potential implications of the COVID-19 pandemic. Whilst the eventual financial impact of the pandemic on both the Company and the Parent Company, along with that on the overall global economy, remains uncertain, the Directors are confident the company will be able to remain operational throughout the pandemic.
The directors have put in place all such measures as are considered appropriate to retain customer loyalty and is well positioned to support its customers in any subsequent recovery from the COVID-19 pandemic.
With the significant cash resources of the Group, the Directors have a reasonable expectation that the Company will have adequate resources to continue in operational existence for the foreseeable future.
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
17 February 2021
LSE RETAIL GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LSE RETAIL GROUP LIMITED
- 4 -
Opinion
We have audited the financial statements of LSE Retail Group Limited (the 'company') for the year ended 31 December 2020 which comprise 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 2020 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.
LSE RETAIL GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LSE RETAIL GROUP LIMITED
- 5 -
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.
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
.
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 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
17 February 2021
Chartered Accountants
Statutory Auditor
St James Building
79 Oxford Street
Manchester
M1 6HT
LSE RETAIL GROUP LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
- 6 -
2020
2019
Notes
£
£
Turnover
3
30,148,678
23,678,704
Cost of sales
(13,941,268)
(12,718,718)
Gross profit
16,207,410
10,959,986
Distribution costs
(6,270,404)
(4,523,403)
Administrative expenses
(6,068,680)
(5,574,989)
Profit before restructuring and development costs
3,868,326
861,594
Restructuring costs
4
(282,743)
(115,338)
Development costs
4
(247,848)
(659,176)
Operating profit
5
3,337,735
87,080
Interest receivable and similar income
8
5,159
2,220
Interest payable and similar expenses
9
(63,288)
(34,137)
Profit before taxation
3,279,606
55,163
Tax on profit
10
(365,629)
645,733
Profit for the financial year
2,913,977
700,896
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
LSE RETAIL GROUP LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2020
31 December 2020
- 7 -
2020
2019
Notes
£
£
£
£
Fixed assets
Tangible assets
13
80,119
133,596
Current assets
Stocks
14
6,478,728
7,287,300
Debtors
15
1,344,334
1,472,218
Cash at bank and in hand
3,214,113
983,325
11,037,175
9,742,843
Creditors: amounts falling due within one year
16
(7,508,752)
(5,145,816)
Net current assets
3,528,423
4,597,027
Total assets less current liabilities
3,608,542
4,730,623
Capital and reserves
Called up share capital
19
100
100
Hedging reserve
20
(119,433)
(83,375)
Profit and loss reserves
21
3,727,875
4,813,898
Total equity
3,608,542
4,730,623
The financial statements were approved by the board of directors and authorised for issue on 17 February 2021 and are signed on its behalf by:
D J R Gutfreund
Director
Company Registration No. 06973805
LSE RETAIL GROUP LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
- 8 -
Share capital
Hedging reserve
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2019
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
Period ended 31 December 2020:
Profit and total comprehensive income for the year
-
-
2,913,977
2,913,977
Dividends
11
-
-
(4,000,000)
(4,000,000)
Other
-
(36,058)
-
(36,058)
Balance at 31 December 2020
100
(119,433)
3,727,875
3,608,542
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
- 9 -
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;
-
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
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
Since the year end, uncertainty due to the recent Coronavirus (COVID-19) outbreak has been considered as part of the Company’s adoption of the going concern basis. To date, the company has not experienced any significant impact on its financial performance and, whilst the health of staff remains the highest priority, the Company has remained operational throughout the pandemic.
true
The Directors have reviewed the position of the Company and, in particular, have considered the potential implications of the COVID-19 pandemic. Whilst the eventual financial impact of the pandemic on both the Company and the Parent Company, along with that on the overall global economy, remains uncertain, the Directors are confident the company will be able to remain operational throughout the pandemic.
The directors have put in place all such measures as are considered appropriate to retain customer loyalty and is well positioned to support its customers in any subsequent recovery from the COVID-19 pandemic.
With the significant cash resources of the Group, the Directors have a reasonable expectation that the Company will have adequate resources to continue in operational existence for the foreseeable future.
The Company therefore continues to adopt the going concern basis in preparing these financial statements.
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 10 -
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.
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
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). 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.
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 11 -
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.
1.9
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 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.
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 12 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from
fellow group companies and preference shares that are classified as debt, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade creditors are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value th
r
ough profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.10
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.
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 13 -
1.11
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.
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.
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 14 -
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
in the period
are included in profit or loss.
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 Covid-19.
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’).
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 15 -
3
Turnover
An analysis of the company's turnover is as follows:
2020
2019
£
£
Turnover
Sale of goods
30,148,678
23,678,704
Turnover analysed by geographical market
2020
2019
£
£
United Kingdom
29,507,845
23,254,010
Europe
640,833
424,694
30,148,678
23,678,704
4
Restructuring and development costs
During 2020, there were Covid-19 expenses of £58,723, redundancy costs of £21,957, EMI costs of £162,821, warehouse development costs of £247,848 and costs relating to professional tax advice of £39,242.
During 2019, there were redundancy costs of £115,338, systems development costs, including new websites of £562,849 and costs relating to professional tax advice of £96,327.
5
Operating profit
2020
2019
£
£
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
16,200
15,800
Depreciation of owned tangible fixed assets
79,968
99,704
Amortisation of intangible assets
173,891
Operating lease charges
538,571
408,561
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 16 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2020
2019
Number
Number
Distribution
35
31
Sales
28
30
Administration
34
27
97
88
Their aggregate remuneration comprised:
2020
2019
£
£
Wages and salaries
3,141,970
3,395,365
Social security costs
295,094
280,667
Pension costs
68,833
68,700
3,505,897
3,744,732
7
Directors' remuneration
Directors' remuneration also represents the remuneration of key management personnel.
2020
2019
£
£
Remuneration for qualifying services
772,171
631,689
Company pension contributions to defined contribution schemes
16,259
13,507
788,430
645,196
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 7 (2019 - 6).
Remuneration disclosed above include the following amounts paid to the highest paid director:
Remuneration for qualifying services
156,148
119,092
Company pension contributions to defined contribution schemes
2,871
3,081
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 17 -
8
Interest receivable and similar income
2020
2019
£
£
Interest income
Interest on bank deposits
5,159
2,220
9
Interest payable and similar expenses
2020
2019
£
£
Other interest on financial liabilities
63,288
34,137
10
Taxation
2020
2019
£
£
Current tax
UK corporation tax on profits for the current period
349,700
(239,409)
Adjustments in respect of prior periods
15,929
(385,308)
Total current tax
365,629
(624,717)
Deferred tax
Origination and reversal of timing differences
(21,016)
Total tax charge/(credit)
365,629
(645,733)
The actual charge/(credit) 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:
2020
2019
£
£
Profit before taxation
3,279,606
55,163
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2019: 19.00%)
623,125
10,481
Tax effect of expenses that are not deductible in determining taxable profit
2,758
2,993
Other non-reversing timing differences
2,614
1,037
Other permanent differences
641
Adjust deferred tax to average rate 19%
2,918
Additional deduction for R&D expenditure
(272,737)
(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
9,869
537
Taxation charge/(credit) for the year
365,629
(645,733)
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 18 -
11
Dividends
2020
2019
£
£
Interim paid
4,000,000
1,000,000
12
Intangible fixed assets
Software
£
Cost
At 1 January 2020 and 31 December 2020
454,501
Amortisation and impairment
At 1 January 2020 and 31 December 2020
454,501
Carrying amount
At 31 December 2020
At 31 December 2019
13
Tangible fixed assets
Fixtures, fittings & equipment
Computer equipment
Total
£
£
£
Cost
At 1 January 2020
873,431
265,106
1,138,537
Additions
26,491
26,491
At 31 December 2020
899,922
265,106
1,165,028
Depreciation and impairment
At 1 January 2020
832,664
172,277
1,004,941
Depreciation charged in the year
50,008
29,960
79,968
At 31 December 2020
882,672
202,237
1,084,909
Carrying amount
At 31 December 2020
17,250
62,869
80,119
At 31 December 2019
40,767
92,829
133,596
14
Stocks
2020
2019
£
£
Finished goods and goods for resale
6,478,728
7,287,300
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 19 -
15
Debtors
2020
2019
Amounts falling due within one year:
£
£
Trade debtors
979,435
554,935
Corporation tax recoverable
623,470
Amounts owed by group undertakings
5,054
5,054
Other debtors
6,562
6,616
Prepayments and accrued income
353,283
282,143
1,344,334
1,472,218
16
Creditors: amounts falling due within one year
2020
2019
Notes
£
£
Other borrowings
17
100,000
100,000
Trade creditors
2,560,625
2,403,709
Amounts owed to group undertakings
1,578,414
1,329,506
Corporation tax
349,700
Other taxation and social security
1,334,724
603,839
Derivative financial instruments
119,433
83,375
Other creditors
55,520
40,896
Accruals and deferred income
1,410,336
584,491
7,508,752
5,145,816
17
Loans and overdrafts
2020
2019
£
£
Other loans
100,000
100,000
Payable within one year
100,000
100,000
Other loans comprise £100,000 (2019 : £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.
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 20 -
18
Retirement benefit schemes
2020
2019
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
68,833
68,700
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.
19
Share capital
2020
2019
£
£
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
20
Hedging reserve
2020
2019
£
£
At the beginning of the year
(83,375)
Other transfers
(36,058)
(83,375)
At the end of the year
(119,433)
(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.
During 2020 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 10 June 2020 to 31 December 2021 at a range of pre-determined exchange rates.
At December 2020, the fair value of hedging instruments was a liability of £119,433.
LSE RETAIL GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 21 -
21
Profit and loss reserves
2020
2019
£
£
At the beginning of the year
4,813,898
5,113,002
Profit for the year
2,913,977
700,896
Dividends declared and paid in the year
(4,000,000)
(1,000,000)
At the end of the year
3,727,875
4,813,898
22
Operating lease commitments
Total commitments under operating leases amounted to £470,128.
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:
2020
2019
£
£
Within one year
298,835
312,669
Between two and five years
171,293
429,471
470,128
742,140
23
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.
24
Related party transactions
Transactions with related parties
The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.
2020-12-31
2020-01-01
false
CCH Software
CCH Accounts Production 2021.100
B C Dixon
B C Dixon
D J R Gutfreund
G J Payton
I M Todd
S D Haughton
N Jeffrey
S D Haughton
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