Company Registration No. 06473372 (England and Wales)
SWAN PRODUCTS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
SWAN PRODUCTS LIMITED
COMPANY INFORMATION
Directors
Mr R K Wileman
Mr P Simpson
Secretary
K & S Secretaries Limited
Company number
06473372
Registered office
C/o Knights Professional Services Limited
The Brampton
Newcastle under Lyme
ST5 0QW
Auditor
DJH Accountants Limited
Porthill Lodge
High Street
Wolstanton
Newcastle under Lyme
Staffordshire
ST5 0EZ
SWAN PRODUCTS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 6
Profit and loss account
7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 23
SWAN PRODUCTS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2020
- 1 -
Fair review of the business
The directors present the strategic report for the year ended 30 June 2020.
Principal risks and Uncertainties
Business strategy
The company now owns the brand name 'Swan', having previously operated under licence, which adds to the stability of the brand and presents the opportunity to develop the brand internationally.
The company maintains on-going strategies for growth and continues to make significant investment in our brand/products and infrastructure to deliver these strategies, whilst maintaining the heritage of the brand.
At every annual general meeting and operating board meeting, strategic issues including risks and opportunities are discussed. A comprehensive review of the company's performance against previous strategic targets also takes place in these meetings and by each department manager on a regular basis.
Communication of this information is relayed to all relevant stakeholders, investors, colleagues, suppliers and customers where appropriate.
Trading environment
Our financial statements show that we are continuing to progress towards the delivery of our strategic priorities as well as continuing to trade strongly in what continues to be a challenging consumer environment. Further new product launches have increased the range of products and services offered to ensure we continue to appeal to a diverse demographic of customers.
COVID-19 affected the last quarter trading to June 2020.
Due to the continued investment into our Business to Consumer operation along with significant investment into our digital marketing team, Swan brand awareness increased during the recent global pandemic, and we noted a considerable change in our sales mix, as consumers buying habits switched to online routes to market compared to previous traditional high street retail sales channels.
The company has embedded disciplines to maintain management of working capital and cash generation and has strong management of key relationships with banks and credit insurers.
The company operates a continuous review and challenge of its cost base in all areas. Through strong and long standing relationships with many suppliers the company is in a position to consider the key costs of the business in the short, medium and where appropriate long term and act accordingly.
Strong global sourcing capabilities with established buying operations in Asia continue to be leveraged to control the cost of goods and thereby benefit customers.
The safety and quality of the product is of paramount importance to the company. Third party pre-shipment inspection of imports ensures the reputation of the brand is maintained.
SWAN PRODUCTS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2020
- 2 -
With
a majority
of products imported, the volatility of the global economy exposes the company to both currency fluctuations, particularly the US Dollar and changes in freight costs.
In response to this risk the company uses forward booking of currencies to hedge against future currency rates.
In a highly competitive trading environment it is essential for the company to analyse the activity of its competitors and provide dynamic pricing structures to satisfy its customers.
Development, performance and position
Sales and operational profit
Turnover has increased by 37.23% to £18.8m (FY19: £13.7m). The gross profit % increased to 18.87% (FY19: 18.71%) due to efficiency gains.
Administrative expenses increased by 25.18% to £2.3m (FY19: £1.8m), with operating profit increasing by 77.90% to £1.377m (FY19: £774k).
Interest Payable
Interest payable has fallen to £211k (FY19: £294.2k).
Profit before tax
Profit before tax for the year was £1.165m (FY19: £480k).
Taxation
Taxation attributable to the PBT was £141.5k (FY19: £11.5k), representing an estimated effective tax rate of 12.14% (FY19: 2.39%).
Balance Sheet
Net assets as at 30 June 2020 were £2.6m (FY19: £1.7m).
The value of closing stock as at 30 June 2020 was £1.9m (FY19: £3.7m).
Debtors as at 30 June 2020 increased by £1.8m to £16.1m (FY19: £14.3m).
Creditors as at 30 June 2020 decreased by £1.13m to £19.88m (FY19: £21.01m).
Mr R K Wileman
Director
24 May 2021
Date
SWAN PRODUCTS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2020
- 3 -
The directors present their annual report and financial statements for the year ended 30 June 2020.
Principal activities
The principal activity of the company
continued to be
that of research
,
design, sourcing, distribution, import and sale of electrical and houseware products.
Results and dividends
The results for the year are set out on page 7.
An interim Ordinary dividend was paid amounting to £150,294
. 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:
Mr R K Wileman
Mr P Simpson
Auditor
In accordance with the company's articles, a resolution proposing that DJH Accountants Limited be reappointed as auditor of the company will be put at a General Meeting.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
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.
SWAN PRODUCTS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2020
- 4 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr R K Wileman
Director
SWAN PRODUCTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SWAN PRODUCTS LIMITED
- 5 -
Opinion
We have audited the financial statements of Swan Products Limited
(the 'company')
for the year ended 30 June 2020 which comprise
the Profit And Loss Account, 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 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 30 June 2020 and of its profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
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 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. 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 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.
SWAN PRODUCTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SWAN PRODUCTS 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' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s report.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Porthill Lodge
High Street
Paul David Hulme FCCA
Wolstanton
(Senior Statutory Auditor)
Newcastle under Lyme
for and on behalf of
Staffordshire
DJH ACCOUNTANTS LIMITED
ST5 0EZ
Chartered Certified Accountants
24 May 2021
Statutory Auditor
SWAN PRODUCTS LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 2020
- 7 -
2020
2019
Notes
£
£
Turnover
3
18,777,705
13,682,927
Cost of sales
(15,232,685)
(11,122,658)
Gross profit
3,545,020
2,560,269
Administrative expenses
(2,294,732)
(1,833,164)
Other operating income
126,616
46,856
Operating profit
4
1,376,904
773,961
Interest payable and similar expenses
7
(211,075)
(294,248)
Profit before taxation
1,165,829
479,713
Tax on profit
8
(141,608)
(11,511)
Profit for the financial year
1,024,221
468,202
The profit and loss account has been prepared on the basis that all operations are continuing operations.
SWAN PRODUCTS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
- 8 -
2020
2019
£
£
Profit for the year
1,024,221
468,202
Other comprehensive income
-
-
Total comprehensive income for the year
1,024,221
468,202
SWAN PRODUCTS LIMITED
BALANCE SHEET
AS AT 30 JUNE 2020
30 June 2020
- 9 -
2020
2019
Notes
£
£
£
£
Fixed assets
Intangible assets
10
5,000,000
5,000,000
Tangible assets
11
7,589
10,119
5,007,589
5,010,119
Current assets
Stocks
12
1,926,009
3,671,921
Debtors
13
16,156,808
14,267,725
Cash at bank and in hand
14,211
608,405
18,097,028
18,548,051
Creditors: amounts falling due within one year
14
(19,888,552)
(21,016,032)
Net current liabilities
(1,791,524)
(2,467,981)
Total assets less current liabilities
3,216,065
2,542,138
Creditors: amounts falling due after more than one year
15
(600,000)
(800,000)
Net assets
2,616,065
1,742,138
Capital and reserves
Called up share capital
100
100
Profit and loss reserves
2,615,965
1,742,038
Total equity
2,616,065
1,742,138
The financial statements were approved by the board of directors and authorised for issue on 24 May 2021 and are signed on its behalf by:
Mr R K Wileman
Director
Company Registration No. 06473372
SWAN PRODUCTS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
- 10 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 July 2018
100
1,400,258
1,400,358
Year ended 30 June 2019:
Profit and total comprehensive income for the year
-
468,202
468,202
Dividends
9
-
(126,422)
(126,422)
Balance at 30 June 2019
100
1,742,038
1,742,138
Year ended 30 June 2020:
Profit and total comprehensive income for the year
-
1,024,221
1,024,221
Dividends
9
-
(150,294)
(150,294)
Balance at 30 June 2020
100
2,615,965
2,616,065
SWAN PRODUCTS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
- 11 -
2020
2019
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
21
1,974,694
433,492
Interest paid
(211,075)
(294,248)
Income taxes paid
(76)
(73,674)
Net cash inflow from operating activities
1,763,543
65,570
Investing activities
Proceeds from other investments and loans
(41,200)
-
Net cash used in investing activities
(41,200)
Financing activities
Proceeds of new bank loans
909,735
800,000
Repayment of bank loans
(1,109,735)
(400,000)
Dividends paid
(150,294)
(126,422)
Net cash (used in)/generated from financing activities
(350,294)
273,578
Net increase in cash and cash equivalents
1,372,049
339,148
Cash and cash equivalents at beginning of year
(2,438,672)
(2,777,820)
Cash and cash equivalents at end of year
(1,066,623)
(2,438,672)
Relating to:
Cash at bank and in hand
14,211
608,405
Bank overdrafts included in creditors payable within one year
(1,080,834)
(3,047,077)
SWAN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
- 12 -
1
Accounting policies
Company information
Swan Products Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
C/o Knights Professional Services Limited, The Brampton, Newcastle under Lyme, ST5 0QW.
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.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is 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.
Royalty revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on an agreed % basis of landed cost value).
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:
Brand
Over 10 years on cost
SWAN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2020
1
Accounting policies
(Continued)
- 13 -
Where the directors consider the carrying amount of an intangible fixed asset is equal to it's recoverable amount, no amortisation is charge
d
.
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:
Motor vehicles
25% per annum of net book value
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.
SWAN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2020
1
Accounting policies
(Continued)
- 14 -
1.8
Cash at bank and in hand
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 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.
SWAN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2020
1
Accounting policies
(Continued)
- 15 -
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans
and amounts due to related parties,
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 tax currently payable.
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.
SWAN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2020
1
Accounting policies
(Continued)
- 16 -
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.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.12
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
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation
in the period
are included in profit or loss.
2
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.
SWAN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2020
- 17 -
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2020
2019
£
£
Turnover analysed by class of business
Sale of electrical and houseware products
18,777,705
13,682,926
2020
2019
£
£
Other significant revenue
Royalty income
126,616
46,856
2020
2019
£
£
Turnover analysed by geographical market
United Kingdom
18,310,598
13,198,544
European Union
252,745
266,569
Rest of the world
214,362
217,813
18,777,705
13,682,926
4
Operating profit
2020
2019
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
7,900
7,700
Depreciation of owned tangible fixed assets
2,530
3,373
5
Auditor's remuneration
2020
2019
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
7,900
7,700
SWAN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2020
- 18 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2020
2019
Number
Number
Sales and administration
23
21
Their aggregate remuneration comprised:
2020
2019
£
£
Wages and salaries
699,764
456,285
Employment costs
38,296
32,550
Pension costs
79,568
18,283
817,628
507,118
7
Interest payable and similar expenses
2020
2019
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
211,075
294,248
8
Taxation
2020
2019
£
£
Current tax
UK corporation tax on profits for the current period
141,608
11,511
SWAN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2020
8
Taxation
(Continued)
- 19 -
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2020
2019
£
£
Profit before taxation
1,165,829
479,713
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2019: 19.00%)
221,508
91,145
Tax effect of expenses that are not deductible in determining taxable profit
1,314
1,523
Depreciation
481
641
Capital allowances
(470)
(573)
R&D relief
(43,225)
(43,225)
Intangible asset tax relief
(38,000)
(38,000)
Taxation charge for the year
141,608
11,511
9
Dividends
2020
2019
£
£
Interim paid
150,294
126,422
10
Intangible fixed assets
Brand
£
Cost
At 1 July 2019 and 30 June 2020
5,000,000
Amortisation and impairment
At 1 July 2019 and 30 June 2020
Carrying amount
At 30 June 2020
5,000,000
At 30 June 2019
5,000,000
No amortisation has been provided during the year as, a V
a
luation
by BDO LLP
indicates the value of the brand is not lower than the carrying value
. Therefore in the
opinion of the directors the carrying amount of the asset is equal to its recoverable amount.
An annual impairment review is carried out at each balance sheet date.
SWAN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2020
- 20 -
11
Tangible fixed assets
Motor vehicles
£
Cost
At 1 July 2019 and 30 June 2020
17,989
Depreciation and impairment
At 1 July 2019
7,870
Depreciation charged in the year
2,530
At 30 June 2020
10,400
Carrying amount
At 30 June 2020
7,589
At 30 June 2019
10,119
12
Stocks
2020
2019
£
£
Goods for resale
1,926,009
3,671,921
13
Debtors
2020
2019
Amounts falling due within one year:
£
£
Trade debtors
15,881,014
14,157,960
Other debtors
223,956
76,228
Prepayments and accrued income
51,838
33,537
16,156,808
14,267,725
SWAN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2020
- 21 -
14
Creditors: amounts falling due within one year
2020
2019
Notes
£
£
Bank loans and overdrafts
16
1,480,834
3,447,077
Trade creditors
15,805,431
15,984,120
Corporation tax
148,250
6,718
Other taxation and social security
903,606
231,366
Other creditors
100
100
Accruals and deferred income
1,550,331
1,346,651
19,888,552
21,016,032
Included within bank loans and overdrafts are amounts of £158,859 (2019 - £949,918) in respect of invoice discounting facilities. These amounts are secured by a fixed charge on all purchased debts.
The bank overdraft is secured.
15
Creditors: amounts falling due after more than one year
2020
2019
Notes
£
£
Bank loans
16
600,000
800,000
16
Loans and overdrafts
2020
2019
£
£
Bank loans
1,000,000
1,200,000
Bank overdrafts and invoice discounting
1,080,834
3,047,077
2,080,834
4,247,077
Payable within one year
1,480,834
3,447,077
Payable after one year
600,000
800,000
Long term debt is in the form of two bank loans which are secured by a fixed charge over the assets of the company. There is a loan guarantee in place with connected companies in relation to these loans.
The bank loan is a quarterly repayment (capital and interest) instrument, maturing in June 2022.
SWAN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2020
- 22 -
17
Retirement benefit schemes
2020
2019
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
79,568
18,283
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.
18
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2020
2019
£
£
Remuneration
86,346
28,128
19
Directors' transactions
Interest free loans have been granted by the company to its directors as follows:
Description
% Rate
Opening balance
Amounts advanced
Closing balance
£
£
£
Directors loan account
-
939
20,600
21,539
Directors loan account
-
938
20,600
21,538
1,877
41,200
43,077
The directors have provided personal guarantee
s
of £
250,000 in respect of the company's bank loans.
20
Ultimate controlling party
The ultimate controlling party is Mr R K Wileman by virtue of his majority shareholding in the company.
SWAN PRODUCTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2020
- 23 -
21
Cash generated from operations
2020
2019
£
£
Profit for the year after tax
1,024,221
468,202
Adjustments for:
Taxation charged
141,608
11,511
Finance costs
211,075
294,248
Depreciation and impairment of tangible fixed assets
2,530
3,373
Movements in working capital:
Decrease in stocks
1,745,912
1,242,315
Increase in debtors
(1,847,883)
(1,373,046)
Increase/(decrease) in creditors
697,231
(213,111)
Cash generated from operations
1,974,694
433,492
22
Analysis of changes in net debt
1 July 2019
Cash flows
30 June 2020
£
£
£
Cash at bank and in hand
608,405
(594,194)
14,211
Bank overdrafts
(3,047,077)
1,966,243
(1,080,834)
(2,438,672)
1,372,049
(1,066,623)
Borrowings excluding overdrafts
(1,200,000)
200,000
(1,000,000)
(3,638,672)
1,572,049
(2,066,623)
2020-06-30
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