Company Registration No. 07155146 (England and Wales)
CHI CHI COLLECTION LIMITED
ANNUAL REPORT AND
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
28 FEBRUARY 2022
CHI CHI COLLECTION LIMITED
COMPANY INFORMATION
Directors
D Najar
J W Najar
Company number
07155146
Registered office
Unit 5 Redburn Industrial Estate
Woodall Road
Enfield
EN3 4LE
Auditor
Cheesmans
4 Aztec Row
Berners Road
London
N1 0PW
Bankers
Barclays Bank PLC
One Churchill Place
London
E14 5HP
CHI CHI COLLECTION LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9 - 10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 26
CHI CHI COLLECTION LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 1 -
The directors present the strategic report for the year ended 28 February 2022.
Fair Review of the Business
Chi Chi is a designer and retailer of women’s and children’s fashion and bridal clothing and accessories. They are sold exclusively under the Chi Chi brand in the UK and overseas. Established in the UK in 2013, Chi Chi is known for its Occasionwear and Dresses but has expanded its product range to include Knitwear, Outerwear etc. which has led to an increase in returning customers.
The year ended 28 February 2022 saw a bounceback following the impact of the Covid-19 global pandemic.
The previous year was severely impacted as Governments around the world put measures in place to slow down the rates of infection and, although there were still restrictions in place during the course of the year ended 28 February 2022, in particular due to the Omicron strain over the Christmas period, they were not as prevalent as they were in the year prior. There was an appetite for our product, greater than we had seen in prior years.
Sales for the year ended 28 February 2022 totalled £18.3m (year ended 28 February 2021: £7.3m).
We have grown sales organically via our website and our concession partner websites as well as adding three new concession partners to the portfolio. In the current year we have negotiated and agreed to open sites with a partner in the Middle East with ongoing negotiations for further expansion increasing our worldwide exposure. Following a strategic review of our business, we have taken the opportunity to exit those concession partners that were marginal, or loss making contributors to us.
The company’s EBITDA before exceptional items for the year ended 28 February 2022 was £736k (year ended 28 February 2021: £1,641k loss).
We have continued to focus on controlling our costs and have been implementing initiatives which will drive down costs in a number of areas. We have invested in our marketing, ensuring we are represented across social media channels. We have also expanded our warehouse capacity and implemented a new warehouse management system to further improve stock management and support our growth plans both within the UK and Internationally.
Principal Risks and Uncertainties
The company’s principal non-financial risk is considered to be the global economic environment in which it operates. All risks are reviewed and managed through performance and risk management processes and by ensuring that the business is agile to ensure opportunities are maximised and risks minimised.
Liquidity Risk
The company manages its cash requirements ensuring sufficient liquid resources to meet the operating needs of its business.
Credit Risk
Aside from sales via our website which is business to consumer, we do also trade via concession and wholesale partners. We mitigate any risk of bad debt from these partners by placing credit insurance against them.
CHI CHI COLLECTION LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 2 -
Key Performance Indicators
The Directors and senior management of the Company monitor a range of key performance indicators and include;
On behalf of the Board of Directors
J W Najar
Director
27 October 2022
CHI CHI COLLECTION LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 3 -
The directors present their annual report and financial statements for the year ended 28 February 2022.
Principal activities
The principal activity of the company continued to be that of a
wholesale and online retailer of clothing.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
D Najar
J W Najar
Auditor
The auditor, Cheesmans, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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.
CHI CHI COLLECTION LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 4 -
On behalf of the Board
J W Najar
Director
27 October 2022
CHI CHI COLLECTION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CHI CHI COLLECTION LIMITED
- 5 -
Opinion
We have audited the financial statements of Chi Chi Collection Limited (the 'company') for the year ended 28 February 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 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 28 February 2022 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.
We draw attention to note 1.2 of the financial statements, which describes the basis by which the financial statements are prepared on a going concern basis. Our opinion is not modified in this respect.
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.
CHI CHI COLLECTION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CHI CHI COLLECTION LIMITED
- 6 -
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.
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 or the directors'
r
eport
. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements
that are free from material misstatement, whether due to fraud or error. In preparing the
financial statements
, the
directors are
responsible for assessing the company
'
s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have
no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's
report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with
ISAs (UK)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements
.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below
.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Based on our understanding of the Company and industry, we identified that the principal risks of non-compliance with laws and regulations related to the Employment Law, Health & Safety Law and UK tax legislation, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journals to increase revenue or reduce expenditure, management bias in accounting estimates and estimates and cash sales not being reported correctly. Audit procedures performed by the engagement team included:
Audit response to risks identified
CHI CHI COLLECTION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CHI CHI COLLECTION LIMITED
- 7 -
-
Challenging the assumptions and judgements made by management in their significant accounting estimates, in particular those that involve the assessment of future events, which are inherently uncertain – the key estimates determined in this respect are those relating to the value of accrued costs, those relating to provisions and those relating to stock; and
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also the risk of not detecting misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations or through collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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.
Carol Cheesman (Senior Statutory Auditor)
For and on behalf of Cheesmans
27 October 2022
Chartered Accountants
Statutory Auditor
4 Aztec Row
Berners Road
London
N1 0PW
CHI CHI COLLECTION LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 8 -
2022
2021
Notes
£
£
Turnover
3
18,285,775
7,251,902
Cost of sales
(11,297,786)
(5,666,445)
Gross profit
6,987,989
1,585,457
Administrative expenses
(6,615,860)
(4,049,996)
Other operating income
117,124
583,333
Operating profit/(loss)
4
489,253
(1,881,206)
Interest receivable and similar income
7
3,822
1,451
Interest payable and similar expenses
8
(63,471)
(143,716)
Profit/(loss) before taxation
429,604
(2,023,471)
Tax on profit/(loss)
9
15,218
319,956
Profit/(loss) for the financial year
444,822
(1,703,515)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
CHI CHI COLLECTION LIMITED
BALANCE SHEET
AS AT
28 FEBRUARY 2022
28 February 2022
- 9 -
2022
2021
Notes
£
£
£
£
Fixed assets
Intangible assets
10
368,060
490,687
Tangible assets
11
281,148
254,688
649,208
745,375
Current assets
Stocks
12
3,813,547
2,309,854
Debtors
13
2,352,302
2,176,323
Cash at bank and in hand
464,085
594,338
6,629,934
5,080,515
Creditors: amounts falling due within one year
14
(7,401,289)
(6,292,883)
Net current liabilities
(771,355)
(1,212,368)
Total assets less current liabilities
(122,147)
(466,993)
Creditors: amounts falling due after more than one year
15
(333,333)
(433,333)
Net liabilities
(455,480)
(900,326)
Capital and reserves
Called up share capital
18
124
100
Profit and loss reserves
(455,604)
(900,426)
Total equity
(455,480)
(900,326)
CHI CHI COLLECTION LIMITED
BALANCE SHEET (CONTINUED)
AS AT
28 FEBRUARY 2022
28 February 2022
- 10 -
The financial statements were approved by the Board of Directors and authorised for issue on 27 October 2022 and are signed on its behalf by:
J W Najar
Director
Company Registration No. 07155146
CHI CHI COLLECTION LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 11 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 29 February 2020
100
803,089
803,189
Year ended 28 February 2021:
Loss and total comprehensive income for the year
-
(1,703,515)
(1,703,515)
Balance at 28 February 2021
100
(900,426)
(900,326)
Year ended 28 February 2022:
Profit and total comprehensive income for the year
-
444,822
444,822
Issue of share capital
18
24
-
24
Balance at 28 February 2022
124
(455,604)
(455,480)
CHI CHI COLLECTION LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 12 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
23
495,217
(163,115)
Interest paid
(63,471)
(143,716)
Income taxes paid
(1)
(117,409)
Net cash inflow/(outflow) from operating activities
431,745
(424,240)
Investing activities
Purchase of intangible assets
(26,721)
(122,740)
Purchase of tangible fixed assets
(124,387)
(35,931)
Receipts arising from loans made
(348,070)
Interest received
3,822
1,451
Net cash used in investing activities
(495,356)
(157,220)
Financing activities
Proceeds from issue of shares
24
Proceeds of new bank loans
500,000
Repayment of bank loans
(66,667)
Net cash (used in)/generated from financing activities
(66,643)
500,000
Net decrease in cash and cash equivalents
(130,254)
(81,460)
Cash and cash equivalents at beginning of year
594,338
675,798
Cash and cash equivalents at end of year
464,084
594,338
Relating to:
Cash at bank and in hand
464,085
594,338
Bank overdrafts included in creditors payable within one year
(1)
CHI CHI COLLECTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 13 -
1
Accounting policies
Company information
Chi Chi Collection Limited is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
Unit 5 Redburn Industrial Estate, Woodall Road, Enfield, EN3 4LE.
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 the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The financial statements are drawn up to within one week of
28
February
in each year (20
2
2
2
7
February
: 20
2
1
2
8
February).
1.2
Going concern
These financial statements are prepared on the going concern basis. The directors have a reasonable expectation that the company will continue in operational existence for the foreseeable future. Subsequent to the year end the company has continued to be profitable and is expected to return to a position of positive Net Assets during 2023/24.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
(usually on dispatch of the goods)
, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date
where
it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the
fair
value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
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
5 / 2 years Straight Line
CHI CHI COLLECTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
1
Accounting policies
(Continued)
- 14 -
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:
Leasehold land and buildings
Over length of lease
Plant and equipment
10 / 2 years Straight Line
Fixtures and fittings
5 years Straight Line
Computers
3 years 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.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in
prior years. A reversal of an impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
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.
CHI CHI COLLECTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
1
Accounting policies
(Continued)
- 15 -
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 instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include
debtors
and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in
profit
or
loss
, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
CHI CHI COLLECTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
1
Accounting policies
(Continued)
- 16 -
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including
creditors
, 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
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
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.
CHI CHI COLLECTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
1
Accounting policies
(Continued)
- 17 -
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.
1.12
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
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.
1.15
Government grants
Government grants
relate to COVID-19 related assistance from the Government and
are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met
. Where a
grant does not specify performance conditions
it
is recognised in income when the proceeds are received or receivable
. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.16
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.
CHI CHI COLLECTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 18 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant
effect on amounts recognised in the financial statements.
Grants
As a result of Covid-19 pandemic, the Company utilised the available Government assistance to enable the Company to support and retain its workforce through the period of Government imposed restrictions. The Government Grants in this regard have being recognised through the profit and loss account on an accruals basis.
Bad and doubtful debts
The recoverability of the trade debtors is considered by the directors and where this is considered an issue, due to the ageing of the debt, relevant provisions are accordingly made and are regularly assessed as new information becomes available.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are
as follows.
Credit Note Provisions
At the balance sheet date, the directors assessed the potential future economic outflows, in relation to items returned subsequent to the year end. In quantifying the provision the estimated economic outflow was calculated utilising the knowledge of prior returns and applying a percentage to the potential liability reflecting the best estimate of the likelihood of a settlement being required. The estimate will be continually assessed as and when new information becomes available to the directors.
3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by geographical market
United Kingdom
12,068,612
5,025,568
Rest of the World
6,217,163
2,226,334
18,285,775
7,251,902
CHI CHI COLLECTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
3
Turnover and other revenue
(Continued)
- 19 -
2022
2021
£
£
Other revenue
Interest income
3,822
1,451
Grants received
117,124
583,333
4
Operating profit/(loss)
2022
2021
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
56,621
(100,656)
Government grants
(117,124)
(583,333)
Fees payable to the company's auditor for the audit of the company's financial statements
21,020
18,000
Depreciation of owned tangible fixed assets
97,675
103,752
Loss on disposal of tangible fixed assets
252
Amortisation of intangible assets
149,348
136,005
Operating lease charges
168,640
167,639
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Directors
2
2
Warehouse
23
19
Administration
45
42
Total
70
63
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
2,166,316
1,441,556
Social security costs
195,979
111,600
Pension costs
47,672
34,628
2,409,967
1,587,784
CHI CHI COLLECTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 20 -
6
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
81,333
72,000
Company pension contributions to defined contribution schemes
2,440
2,160
83,773
74,160
7
Interest receivable and similar income
2022
2021
£
£
Interest income
Other interest income
3,822
1,451
8
Interest payable and similar expenses
2022
2021
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
13,686
12,910
Interest on invoice finance arrangements
16,833
11,876
30,519
24,786
Other finance costs:
Other interest
32,952
118,930
63,471
143,716
9
Taxation
2022
2021
£
£
Current tax
Adjustments in respect of prior periods
(15,218)
(319,956)
CHI CHI COLLECTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
9
Taxation
(Continued)
- 21 -
The actual credit for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit/(loss) before taxation
429,604
(2,023,471)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
81,625
(384,459)
Tax effect of expenses that are not deductible in determining taxable profit
3,228
53,632
Tax effect of utilisation of tax losses not previously recognised
(95,256)
164,113
Unutilised tax losses carried forward
172,287
Permanent capital allowances in excess of depreciation
10,403
(5,573)
Under/(over) provided in prior years
(15,218)
(319,956)
Taxation credit for the year
(15,218)
(319,956)
10
Intangible fixed assets
Software
£
Cost
At 1 March 2021
737,201
Additions
26,721
At 28 February 2022
763,922
Amortisation and impairment
At 1 March 2021
246,514
Amortisation charged for the year
149,348
At 28 February 2022
395,862
Carrying amount
At 28 February 2022
368,060
At 28 February 2021
490,687
CHI CHI COLLECTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 22 -
11
Tangible fixed assets
Leasehold land and buildings
Plant and equipment
Fixtures and fittings
Computers
Total
£
£
£
£
£
Cost
At 1 March 2021
197,880
19,120
268,733
97,001
582,734
Additions
33,548
57,458
33,381
124,387
Disposals
(1,701)
(1,701)
At 28 February 2022
231,428
19,120
326,191
128,681
705,420
Depreciation and impairment
At 1 March 2021
79,780
10,502
174,048
63,716
328,046
Depreciation charged in the year
19,984
3,531
50,334
23,826
97,675
Eliminated in respect of disposals
(1,449)
(1,449)
At 28 February 2022
99,764
14,033
224,382
86,093
424,272
Carrying amount
At 28 February 2022
131,664
5,087
101,809
42,588
281,148
At 28 February 2021
118,100
8,618
94,685
33,285
254,688
12
Stocks
2022
2021
£
£
Finished goods and goods for resale
3,813,547
2,309,854
13
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
1,034,246
633,615
Corporation tax recoverable
372,233
308,892
Other debtors
474,689
914,930
Prepayments and accrued income
350,294
190,946
2,231,462
2,048,383
CHI CHI COLLECTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
13
Debtors
(Continued)
- 23 -
2022
2021
Amounts falling due after more than one year:
£
£
Other debtors
120,840
127,940
Total debtors
2,352,302
2,176,323
14
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Bank loans and overdrafts
16
100,001
66,667
Trade creditors
4,327,450
4,026,679
Corporation tax
48,122
Other taxation and social security
123,777
235,249
Other creditors
2,337,833
1,715,449
Accruals and deferred income
464,106
248,839
7,401,289
6,292,883
T
he Company
received
a Coronavirus Business Interruption Loan from Barclays Bank PLC of £500,000
in the prior year
. This loan is secured by way of a fixed and floating charge over all the property or undertaking of the company and the interest rate is set at 3% above the Bank of England Base Rate. The loan will be fully repaid by 5 June 2026.
15
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Bank loans and overdrafts
16
333,333
433,333
T
he Company
received
a Coronavirus Business Interruption Loan from Barclays Bank PLC of £500,000
in the prior year
. This loan is secured by way of a fixed and floating charge over all the property or undertaking of the company and the interest rate is set at 3% above the Bank of England Base Rate. The loan will be fully repaid by 5 June 2026.
CHI CHI COLLECTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 24 -
16
Loans and overdrafts
2022
2021
£
£
Bank loans
433,333
500,000
Bank overdrafts
1
433,334
500,000
Payable within one year
100,001
66,667
Payable after one year
333,333
433,333
17
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
47,672
34,628
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
The pension cost charge represents contributions payable by the company to the fund and amounted to £
47,672
(202
1
: £34,6
28
). Contributions totaling £
13
,
998
(202
1
: £
7,370
) were payable to the fund at the reporting date and are included in creditors.
18
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
-
100
-
100
A Ordinary Shares of 50p each
102
-
51
-
B Ordinary Shares of 50p each
48
-
24
-
C Ordinary Shares of £1 each
24
-
24
-
D Ordinary Shares of £1 each
1
-
1
-
E Ordinary Shares of £1 each
12
-
12
-
F Ordinary Shares of £1 each
12
-
12
-
199
100
124
100
On 21 July 2021 the 100 Ordinary Shares of £1.00 each were re-designated as 51 A Ordinary Shares of £1.00 each, 24 B Ordinary Shares of £1.00 each, 24 C Ordinary Shares of £1.00 each and 1 D Ordinary share of £1.00 each.
Also on 21 July 2021 the company issued 12 E Ordinary Shares of £1.00 each and 12 F Ordinary Shares of £1.00 each.
Subsequently on 8 February 2022 the 51 A Ordinary Shares of £1.00 each were subdivided into 102 A Ordinary Shares of £0.50 each.
CHI CHI COLLECTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 25 -
19
Financial commitments, guarantees and contingent liabilities
There
is a fixed and floating charge
with Marketfinance Limited
under the terms of which amounts due to
Marketfinance Limited
are secured on the assets of the company
for an invoice discount facility
.
At the year end there is £
169
,
299
(202
1
: £402,702) owed at the year end under this facility. This is disclosed in other creditors.
20
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2022
2021
£
£
Within one year
159,951
159,951
Between two and five years
639,804
639,804
In over five years
9,641
169,592
809,396
969,347
21
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Purchases
Purchases
2022
2021
£
£
Entities with control, joint control or significant influence over the company
6,170,023
2,063,976
Loan
2022
2021
£
£
Entities with control, joint control or significant influence over the company
60,217
(397,774)
2022
2021
Amounts due to related parties
£
£
Entities with control, joint control or significant influence over the company
4,416,291
3,383,560
22
Directors' transactions
Description
% Rate
Opening balance
Amounts advanced
Interest charged
Amounts repaid
Closing balance
CHI CHI COLLECTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
22
Directors' transactions
(Continued)
- 26 -
£
£
£
£
£
D Najar -
2.00
-
220,336
1,911
(46,331)
175,916
J W Najar -
2.00
-
220,336
1,911
(46,331)
175,916
-
440,672
3,822
(92,662)
351,832
23
Cash generated from/(absorbed by) operations
2022
2021
£
£
Profit/(loss) for the year after tax
444,822
(1,703,515)
Adjustments for:
Taxation credited
(15,218)
(319,956)
Finance costs
63,471
143,716
Investment income
(3,822)
(1,451)
Loss on disposal of tangible fixed assets
252
Amortisation and impairment of intangible assets
149,348
136,005
Depreciation and impairment of tangible fixed assets
97,675
103,752
Movements in working capital:
(Increase)/decrease in stocks
(1,503,693)
846,427
Decrease in debtors
235,432
636,186
Increase/(decrease) in creditors
1,026,950
(4,279)
Cash generated from/(absorbed by) operations
495,217
(163,115)
24
Analysis of changes in net funds
1 March 2021
Cash flows
28 February 2022
£
£
£
Cash at bank and in hand
594,338
(130,253)
464,085
Bank overdrafts
(1)
(1)
594,338
(130,254)
464,084
Borrowings excluding overdrafts
(500,000)
66,667
(433,333)
94,338
(63,587)
30,751
2022-02-28
2021-03-01
false
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