Company Registration No. 07499836 (England and Wales)
SKINNYDIP LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 DECEMBER 2019
SKINNYDIP LIMITED
COMPANY INFORMATION
Directors
L Blitz
R Gold
J Gold
Secretary
N Blitz
Company number
07499836
Registered office
30 City Road
London
EC1Y 2AB
Auditor
Arram Berlyn Gardner LLP
30 City Road
London
EC1Y 2AB
SKINNYDIP LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 6
Statement of comprehensive income
7
Statement of financial position
8
Statement of changes in equity
9
Notes to the financial statements
10 - 24
SKINNYDIP LIMITED
STRATEGIC REPORT
FOR THE PERIOD ENDED 28 DECEMBER 2019
- 1 -
The directors present the strategic report for the period ended 28 December 2019.
Fair review of the business
Skinnydip was born in 2011 to satisfy the demand for fashion led designed phone cases. The brand has since expanded to include clothing, jewelry, beauty and technology driven by a desire to be innovative, unique, imaginative, ethical and on-trend.
Sales are delivered through four channels; owned physical stores, concessions, wholesale and on-line.
Products are designed and sourced by teams at our London HQ and delivered to customers around the world.
Development and performance
Turnover increased by 10.8% compared to the prior year. This was principally driven by online sales improving by 37% year on year. This was particularly pleasing given that this growth was achieved on last years like for like improvement of
25
%. However gross margins reduced by 5% compared to 2018, as part of a plan to convert slower selling stock to cash. Other Sales channels were broadly level compared to the prior year.
In the autumn of 2019, following a business review, several loss making stores were closed, a leased warehouse was given notice to close in early 2020 and central service headcount reduced by one third.
This resulted in reducing administration costs by £337,627 (5%).
Additionally the business refinanced its working capital facilities in November 2019 from Barclays to HSBC, securing a more fit for purpose solution.
Therefore despite the overall increase in the net loss before taxation the refinancing and restructuring provides the foundation for the business to return to profitability and growth during 2020.
SKINNYDIP LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 28 DECEMBER 2019
- 2 -
Principal risks and uncertainties
|
|
|
|
|
|
The retail landscape continues to undergo significant structural change
|
Reduced sales, lost customers, loss making stores
.
|
Multi-Channel approach cushions and spreads risk
.
|
|
|
|
Hardware or software failure could disable the website
|
Lost sales, customers and reputational damage
.
|
Test reliability of 3
rd
party system robustness and competency
.
|
Competition offers similar products
|
Lower sales and stock overhang
.
|
Review competitor pricing and product. Design new on trend product.
|
|
Reduced profits, reputational damage
.
|
Continual monitoring and development of robust internal controls
.
|
|
|
|
Margin protection and growth
|
|
Collaborate with supply chain to maximise quality and minimize cost. Tender contracts to suppliers. Moderate buy quantities with aim to sell out pre discount. Regular monitoring of gross margin.
|
Foreign Exchange exposure
|
|
Develop and implement a hedging strategy
.
|
Import/Export Duty and Taxes increase
|
|
Close relationships with supply chain and flexible transport routes
.
|
|
Working Capital restriction
.
|
Appropriate short and medium term cash forecasting and maintaining strong banking relationships
.
|
Further developments
Despite the impact of covid-19 on the economy in 2020, the business has taken the opportunities to leverage its partnerships with blue chip high street and pureplay online retailers to make significant strides forward. Consequently, the directors remain confident about the future of the business notwithstanding the current headwinds.
J Gold
Director
14 December 2020
SKINNYDIP LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 28 DECEMBER 2019
- 3 -
The directors present their annual report and financial statements for the period ended 28 December 2019.
Principal activities
The principal activity of the company continued to be that of wholesalers and retailers of fashion accessories.
Directors
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
L Blitz
R Gold
J Gold
Results and dividends
The results for the period are set out on page 7.
Ordinary dividends were paid amounting to £150,000. The directors do not recommend payment of a final dividend.
Disabled persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employee involvement
The company's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the company's performance.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.
Auditor
Arram Berlyn Gardner LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
SKINNYDIP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 28 DECEMBER 2019
- 4 -
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
J Gold
Director
14 December 2020
SKINNYDIP LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF SKINNYDIP LIMITED
- 5 -
Opinion
We have audited the financial statements of Skinnydip Limited (the 'company') for the period ended 28 December 2019 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 28 December 2019 and of its loss for the period then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor's
responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
-
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue
.
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the directors' r
eport for the financial period 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.
SKINNYDIP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF SKINNYDIP LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of directors' remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s report.
This report is made solely to the company's member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's member those matters we are required to state to 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 member for our audit work, for this report, or for the opinions we have formed.
John Donohoe FCA (Senior Statutory Auditor)
for and on behalf of Arram Berlyn Gardner LLP
16 December 2020
Chartered Accountants
Statutory Auditor
30 City Road
London
EC1Y 2AB
SKINNYDIP LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 28 DECEMBER 2019
- 7 -
Period
Year
ended
ended
28 December
31 December
2019
2018
Notes
£
£
Turnover
3
16,529,524
14,912,797
Cost of sales
(11,241,872)
(9,333,412)
Gross profit
5,287,652
5,579,385
Administrative expenses
(6,271,028)
(6,608,655)
Other operating income
157,970
236,695
Operating loss
4
(825,406)
(792,575)
Interest receivable and similar income
8
410
-
Interest payable and similar expenses
9
(121,421)
-
Loss before taxation
(946,417)
(792,575)
Tax on loss
10
(9,450)
52,353
Loss for the financial period
(955,867)
(740,222)
The income statement has been prepared on the basis that all operations are continuing operations.
SKINNYDIP LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
28 DECEMBER 2019
28 December 2019
- 8 -
2019
2018
Notes
£
£
£
£
Fixed assets
Tangible assets
12
561,648
604,398
Current assets
Stocks
13
1,236,850
981,298
Debtors
14
4,288,775
3,613,275
Cash at bank and in hand
1,040,419
1,384,556
6,566,044
5,979,129
Creditors: amounts falling due within one year
15
(5,811,246)
(4,604,704)
Net current assets
754,798
1,374,425
Total assets less current liabilities
1,316,446
1,978,823
Creditors: amounts falling due after more than one year
16
(450,000)
-
Provisions for liabilities
18
(84,556)
(91,066)
Net assets
781,890
1,887,757
Capital and reserves
Called up share capital
20
99
99
Profit and loss reserves
21
781,791
1,887,658
Total equity
781,890
1,887,757
The financial statements were approved by the board of directors and authorised for issue on 14 December 2020 and are signed on its behalf by:
R Gold
J Gold
Director
Director
Company Registration No. 07499836
SKINNYDIP LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 28 DECEMBER 2019
- 9 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2018
99
2,837,880
2,837,979
Period ended 31 December 2018:
Loss and total comprehensive income for the period
-
(740,222)
(740,222)
Dividends
11
-
(210,000)
(210,000)
Balance at 31 December 2018
99
1,887,658
1,887,757
Period ended 28 December 2019:
Loss and total comprehensive income for the period
-
(955,867)
(955,867)
Dividends
11
-
(150,000)
(150,000)
Balance at 28 December 2019
99
781,791
781,890
SKINNYDIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 28 DECEMBER 2019
- 10 -
1
Accounting policies
Company information
Skinnydip Limited is a
private
company
limited by shares
incorporated
in England and Wales.
The registered office is
30 City Road, London, EC1Y 2AB. The principal place of business is 1 Whittlebury Mews, Primrose Hill, London, NW1 8JB.
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. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares
publicly available consolidated financial statements
, including this company,
which are
intended to give a true and fair view of the assets, liabilities,
financial position and profit or loss
of the group
.
T
he company has
therefore
taken advantage of
e
xemptions from the following disclosure requirements:
-
Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
-
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’
:
Carrying amounts, 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
Skinnydip Group Limited
.
These consolidated financial statements are available from
Companies House, Crown Way, Cardiff, CF14 3UZ.
SKINNYDIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 DECEMBER 2019
1
Accounting policies
(Continued)
- 11 -
1.2
Going concern
Skinnydip Limited is part of a group of companies where Skinnydip Group Limited is the largest and smallest group for which consolidated financial statements are prepared. The going concern assessment has been conducted on the group (headed up by Skinnydip Group Limited) as a whole.
true
The company made a loss after tax of £
95
5,867
(2018: £740,222) for the period ended 28 December 2019 and at that date had net assets of £
78
1,890
(2018: £1,887,757).
The directors have reviewed the 2020 management accounts and have prepared financial forecasts for 2020 and 2021. Based on the forecasting exercise, the group
expects
to be profitable in 2020.
The company have negotiated and signed off on new financing arrangements in 2019 including new banking facilities and a company loan which provides adequate working capital.
The directors have no reason to believe that such support will not continue for a period of at least 12 months from the date of approval of these financial statements.
Taking these factors into account, the directors conclude that it is reasonable to adopt the going concern basis in preparing the financial statements.
1.3
Reporting period
The company has changed its financial year-end from 31 December to 28 December in order to bring its year-end in line with the company's trading week. The financial statements are therefore for the period ended 28 December 2019.
1.4
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.
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.
Wholesale
and online
sales are recognised when goods are
delivered to customers.
In store products
and concessions
are recognised when control of the good
s
are
transferred to the customer, generally upon pickup at
the
store.
Royalty income is recognised when the amount of revenue can be measured reliably.
SKINNYDIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 DECEMBER 2019
1
Accounting policies
(Continued)
- 12 -
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:
Plant and machinery
20% on reducing balance method
Fixtures, fittings & equipment
20% on reducing balance method
Motor vehicles
20% on reducing balance method
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 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.
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 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
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.
Cost of finished goods is determined on
weighted average cost method.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.8
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand
and bank overdrafts.
Bank overdrafts
are shown within borrowings in current liabilities
when they arise.
SKINNYDIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 DECEMBER 2019
1
Accounting policies
(Continued)
- 13 -
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position 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.
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.
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.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors and loans from
fellow group companies
are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future receipts 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
SKINNYDIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 DECEMBER 2019
1
Accounting policies
(Continued)
- 14 -
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 income statement 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 income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.12
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.
SKINNYDIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 DECEMBER 2019
1
Accounting policies
(Continued)
- 15 -
1.15
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the income statement for the period.
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:
Impairment of debtors
The company makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the current credit rating of the debtor, the ageing profile of debtors and historical experience.
Stock
The company supplies fashions accessories which is subject to changing consumer demands. As a result it is necessary to consider the recoverability of the cost of stock and the associated provision required. When calculating the stock provision, management considers the nature and condition of the stock, as well as applying assumptions around anticipated saleability of finished goods.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2019
2018
£
£
Turnover analysed by class of business
Wholesale sales
4,373,576
4,237,644
Store sales
3,602,121
3,752,132
Web sales
4,901,451
3,575,681
Other income
3,652,376
3,347,340
16,529,524
14,912,797
SKINNYDIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 DECEMBER 2019
3
Turnover and other revenue
(Continued)
- 16 -
2019
2018
£
£
Other significant revenue
Interest income
410
-
Royalty income
157,970
236,695
2019
2018
£
£
Turnover analysed by geographical market
UK
14,050,095
12,826,068
Rest of the world
826,476
1,639,573
EU
1,652,953
447,156
16,529,524
14,912,797
4
Operating loss
2019
2018
Operating loss for the period is stated after charging:
£
£
Exchange losses
6,616
287,795
Depreciation of owned tangible fixed assets
130,689
110,473
Exchange differences recognised in profit or loss during the period, except for those arising on financial instruments measured at fair value through profit or loss, amounted to
£6,616 loss (2018 - £287,795 loss).
5
Auditor's remuneration
2019
2018
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
27,500
37,000
For other services
All other non-audit services
13,720
8,167
SKINNYDIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 DECEMBER 2019
- 17 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the period was:
2019
2018
Number
Number
Directors
3
3
Head office
60
41
Warehouse, stores, concessions and other
205
218
268
262
Their aggregate remuneration comprised:
2019
2018
£
£
Wages and salaries
3,433,363
3,571,356
Social security costs
234,498
244,796
Pension costs
46,603
62,987
3,714,464
3,879,139
7
Directors' remuneration
2019
2018
£
£
Remuneration for qualifying services
66,768
71,855
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2018 - 3).
8
Interest receivable and similar income
2019
2018
£
£
Interest income
Other interest income
410
-
9
Interest payable and similar expenses
2019
2018
£
£
Interest on bank overdrafts and loans
121,112
-
Other interest
309
-
121,421
-
SKINNYDIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 DECEMBER 2019
- 18 -
10
Taxation
2019
2018
£
£
Current tax
UK corporation tax on profits for the current period
-
(143,419)
Adjustments in respect of prior periods
15,960
-
Total current tax
15,960
(143,419)
Deferred tax
Origination and reversal of timing differences
(6,510)
91,066
Total tax charge/(credit)
9,450
(52,353)
The actual charge/(credit) for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:
2019
2018
£
£
Loss before taxation
(946,417)
(792,575)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%)
(179,819)
(150,589)
Tax effect of expenses that are not deductible in determining taxable profit
6,682
10,088
Unutilised tax losses carried forward
150,999
-
Adjustments in respect of prior years
15,960
-
Group relief
15,628
-
Tax at marginal rate
-
(3,586)
Depreciation in excess of capital allowances / (capital allowances in excess of depreciation)
6,510
(17,613)
Deferred tax
(6,510)
91,066
Group relief
-
18,281
Taxation charge/(credit) for the period
9,450
(52,353)
SKINNYDIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 DECEMBER 2019
- 19 -
11
Dividends
2019
2018
£
£
Interim paid
150,000
210,000
12
Tangible fixed assets
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2019
7,070
811,697
20,194
838,961
Additions
-
87,939
-
87,939
At 28 December 2019
7,070
899,636
20,194
926,900
Depreciation and impairment
At 1 January 2019
5,776
224,740
4,047
234,563
Depreciation charged in the period
905
126,506
3,278
130,689
At 28 December 2019
6,681
351,246
7,325
365,252
Carrying amount
At 28 December 2019
389
548,390
12,869
561,648
At 31 December 2018
1,294
586,957
16,147
604,398
13
Stocks
2019
2018
£
£
Finished goods and goods for resale
1,236,850
981,298
14
Debtors
2019
2018
Amounts falling due within one year:
£
£
Trade debtors
1,639,893
1,205,471
Corporation tax recoverable
147,314
143,419
Amounts owed by group undertakings
1,109,885
1,012,273
Other debtors
362,746
253,833
Prepayments and accrued income
1,028,937
998,279
4,288,775
3,613,275
SKINNYDIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 DECEMBER 2019
14
Debtors
(Continued)
- 20 -
Trade debtors disclosed above are measured at amortised cost. Trade debtors are stated after provisions for impairment of £
55,223
(201
8
: £
31,064
).
Included within amounts
owed by
group undertakings are
loan
balances that are unsecured, interest free, have no fixed date of repayment and repayable on demand.
Included within
other debtors
are
amounts due from related parties totalling £
2
62,196 (2018: £90,018)
that are unsecured, interest free, have no fixed date of repayment and repayable on demand.
15
Creditors: amounts falling due within one year
2019
2018
Notes
£
£
Bank loans and overdrafts
17
1,293,375
2,267,505
Trade creditors
1,596,569
1,404,598
Corporation tax
-
186,127
Other taxation and social security
523,064
305,802
Other creditors
1,783,433
252,000
Accruals and deferred income
614,805
188,672
5,811,246
4,604,704
Included in bank loans and overdrafts is an overdraft facility totalling £151,030 (2018: £2,267,505). The interest is charged at a rate of 3.15% above the bank's reference rate. The bank overdraft is secured by a debenture by virtue of a fixed and floating charge over the company and its assets.
Included in bank loans and overdrafts is
a trade
finance facility totalling £257,238
(2018: Nil)
. The loan is based on a discount margin of 1.70% and is subject to service charge
s
and arrangement fees. This facility is secured against the
goods supplied to
the company.
Included in bank loans and overdrafts is
a trade
finance facility totalling £497,290
(2018: Nil)
. The loan is based on a commission of 1% to 1.5% subject to a minimum of £150 and interest costs of 3.5% above
the finance provider's
Cost of Money. This facility is secured
against the goods supplied to the company.
Included in bank loans and overdrafts is an invoice finance facility totalling £382,
816
(2018: Nil).
The loan includes arrangement fees and interest costs of 2% above
the
base rate.
This facility is secured against the trade debtors it relates to.
Fixed and floating charges also exist over the company and its assets in relation to the above facilities.
Included in other creditors is an unsecured loan totalling £500,000
(2018: Nil)
from a related party. Interest rate charged is based on the related party’s cost of borrowing. The loan is repayable on demand.
Included in other creditors is an unsecured loan totalling £1,000,000
(2018: Nil)
from a related party. Interest rate charged is based on the related party’s cost of borrowing. The loan is repayable by quarterly instalments and will be fully repaid by 30 June 2021.
SKINNYDIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 DECEMBER 2019
- 21 -
16
Creditors: amounts falling due after more than one year
2019
2018
£
£
Other creditors
450,000
-
Included in
other creditors
is an unsecured loan totalling £
450,000
(2018: Nil)
from a related party. Interest rate charged is based on the related party’s cost of borrowing. The loan is repayable by quarterly instalments and will be fully repaid by 30 June 2021.
17
Loans and overdrafts
2019
2018
£
£
Bank overdrafts
1,293,375
2,267,505
Payable within one year
1,293,375
2,267,505
Included in bank loans and overdrafts is an overdraft facility totalling £151,030 (2018: £2,267,505). The interest is charged at a rate of 3.15% above the bank's reference rate. The bank overdraft is secured by a debenture by virtue of a fixed and floating charge over the company and its assets.
Included in bank loans and overdrafts is
a trade
finance facility totalling £257,238
(2018: Nil)
. The loan is based on a discount margin of 1.70% and is subject to service charge
s
and arrangement fees. This facility is secured against the
goods supplied to the company.
Included in bank loans and overdrafts is
a trade
finance facility totalling £497,290
(2018: Nil)
. The loan is based on a commission of 1% to 1.5% subject to a minimum of £150 and interest costs of 3.5% above
the finance provider's
Cost of Money. This facility is secured
against the goods supplied to the company.
Included in bank loans and overdrafts is an invoice finance facility totalling £382,
816
(2018: Nil).
The loan includes arrangement fees and interest costs of 2% above
the
base rate.
This facility is secured against
the trade debtors it relates to.
Fixed and floating charges also exist over the company and its assets in relation to the above facilities.
18
Provisions for liabilities
2019
2018
Notes
£
£
Deferred tax liabilities
19
84,556
91,066
SKINNYDIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 DECEMBER 2019
- 22 -
19
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2019
2018
Balances:
£
£
Accelerated capital allowances
84,556
91,066
2019
Movements in the period:
£
Liability at 1 January 2019
91,066
Credit to profit or loss
(6,510)
Liability at 28 December 2019
84,556
The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
20
Share capital
2019
2018
£
£
Ordinary share capital
Issued and fully paid
99 Ordinary shares of £1 each
99
99
There is a single class of Ordinary shares. There are no restrictions on the distribution of dividends and repayment of capital.
SKINNYDIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 DECEMBER 2019
- 23 -
21
Reserves
Profit and loss reserves
Retained earnings represents accumulated comprehensive income for the year and prior periods less dividends paid.
22
Operating lease commitments
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2019
2018
£
£
Within one year
400,250
660,708
Between two and five years
293,208
640,080
693,458
1,300,788
Operating lease payments represents rent payable by the company for shop premises and the company’s head office. The leases are negotiated for a period ranging from 6 months to 5 years generally from the date of access to the shop. Some of the leases also include obligations to pay turnover geared rental, service charge and insurance.
23
Related party transactions
Transactions with related parties
During the period the company entered into the following transactions with related parties:
Sales
Purchases
2019
2018
2019
2018
£
£
£
£
Other related parties
49,580
229,894
73,725
122,261
The following amounts were outstanding at the reporting end date:
2019
2018
Amounts due to related parties
£
£
Key management personnel
266,388
229,186
Other related parties
1,950,000
-
The following amounts were outstanding at the reporting end date:
2019
2018
Amounts due from related parties
£
£
Other related parties
262,196
90,018
SKINNYDIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 28 DECEMBER 2019
23
Related party transactions
(Continued)
- 24 -
The company has taken advantage of the exemption available in FRS 102 "Related party disclosures" whereby it has not disclosed transactions with the ultimate parent company or any wholly owned subsidiary undertaking of the group.
24
Ultimate controlling party
The ultimate parent company is Skinnydip Group Limited, a company incorporated in England and Wales, by virtue of its 100% shareholding.
The smallest and largest group for which consolidated financial statements are prepared is Skinnydip Group Limited. Copies of these group financial statements are available from Companies House, Crown Way, Cardiff, CF14 3UZ.
2019-12-28
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