Registered number:
FOR THE YEAR ENDED 31 AUGUST 2020
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DAVID HOWARD (UK) LIMITED
COMPANY INFORMATION
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DAVID HOWARD (UK) LIMITED
CONTENTS
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DAVID HOWARD (UK) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 AUGUST 2020
The directors have pleasure in presenting their Strategic Report for the year ended 31 August 2020.
The COVID-19 pandemic has severely affected our business. Our UK Retail customers stores have been forced to close resulting in two of our major customers going into administration. Debenhams in March 2020 and Arcadia Group in November 2020. Our turnover has reduced by 44% as we trade with those customers who have online retail or through international markets. We have made significant decisions to restructure our business. We have changed our business model to move away from long term contracts which require UK stock holding to free on board basis (FOB orders) only, significantly reducing our working capital requirements. We have also reduced our costs with the closure of our Hong Kong office and redundancies in the UK.
Post balance sheet to support our working capital during the COVID-19 pandemic we have received government backed support through CBILS loans of £350,000 and the CJRS grants of £461,125 for the furlough of staff. This combined with the support of Lloyds bank has provided the working capital facilities to support and grow our business. Although we anticipate 2021 to be a challenging trading year given the continued uncertainty in the UK economy from the pandemic, we are confident that we have re-positioned our business to cope with these challenges. In February 2021 the brands of the Arcadia Group that we trade with have been sold. Asos have acquired Topman and Boohoo have acquired Burtons. Alongside our existing customers we are confident in our forecasts that we can return to profit in 2022.
The directors regularly review the financial requirements of the company and the risks associated therewith. Company operations are primarily financed from a debt factoring arrangement. The company does not use complicated financial instruments nor does it use derivative financial instruments for trading purposes.
The main financial risks arising from the company's activities are external finance, credit risk, interest rate risk, foreign exchange risk and liquidity risk. These are monitored by the board of directors and were not considered to be significant at the balance sheet date. The CBILS loans of £350,000 received post balance sheet and the support of our bankers have mitigated the external finance risk. The company's policy in respect of credit risk is to require appropriate credit checks on potential customers before sales are made. For foreign exchange risk, payments in HK$ and US$ are managed by holding bank accounts in these relevant currencies and by buying currency using forward contracts.
The key performance indicators presented below detail the performance of the company in the year to 31st August 2020.
EBIT is a key indicator of financial performance to our stakeholders. EBIT is calculated from Profit before interest and taxation are deducted. EBIT in 2020 is (£990,445) and in 2019 was £801,403. EBIT in 2020 has been severely affected by the pandemic and includes a bad debt write off of £1,398,907. Debtor days are a key indicator of our liquidity. Debtor days are calculated by dividing Trade Debtors by Turnover then multiply by the number of days passed in our financial year. Our debtor days at days at 31st August 2020 are 54 days, decreasing from 31st August 2019 62 days due to the changing mix of our customers.
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DAVID HOWARD (UK) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2020
This report was approved by the board
and signed on its behalf.
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DAVID HOWARD (UK) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 AUGUST 2020
The directors present their report and the financial statements for the year ended 31 August 2020.
The directors are responsible for preparing the Strategic Report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the company's financial statements and then apply them consistently;
∙
make judgments and accounting estimates that are reasonable and prudent;
∙
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and to 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.
The loss for the year, after taxation, amounted to £
837,710
(2019 -
profit
£
629,013
)
.
The directors paid an interim dividend of £291,477 (2019 - £94,453).
The directors do not recommend the payment of a final dividend.
The directors who served during the year were:
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DAVID HOWARD (UK) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2020
Post year end the company received CBILS loans totalling £350,000 which are due for repayment from March 2022.
The directors have considered the impact of COVID-19 on the Company’s future performance and details can be found in note 2.3.
The auditors, MHA MacIntyre Hudson, will be proposed for reappointment in accordance with
section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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DAVID HOWARD (UK) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DAVID HOWARD (UK) LIMITED
We have audited the financial statements of David Howard (UK) Limited (the 'company') for the year ended 31 August 2020, which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity
and the related notes, 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 Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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 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.
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DAVID HOWARD (UK) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DAVID HOWARD (UK) LIMITED (CONTINUED)
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 Auditors' 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.
In our opinion, based on the work undertaken in the course of the audit:
∙
the information given in the Strategic Report and the Directors' Report 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.
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
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DAVID HOWARD (UK) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF DAVID HOWARD (UK) LIMITED (CONTINUED)
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 Auditors' 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:
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our Auditors' 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 Auditors' 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.
for and on behalf of
Chartered Accountants
2 London Wall Place
EC2Y 5AU
26 May 2021
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DAVID HOWARD (UK) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 AUGUST 2020
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DAVID HOWARD (UK) LIMITED
REGISTERED NUMBER:
01368929
BALANCE SHEET
AS AT
31 AUGUST 2020
The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
The notes on pages 11 to 26 form part of these financial statements.
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DAVID HOWARD (UK) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 AUGUST 2020
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DAVID HOWARD (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2020
The entity is a private limited liability company, limited by shares and incorporated in England. The registered office is 17-19 Baldock Street, Ware, Hertfordshire, SG12 9DH.
2.
Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in
the UK and the Republic of Ireland and the Companies Act 2006
.
The financial statements are prepared in £ sterling, the functional currency, rounded to the nearest £1.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙
the requirements of Section 7 Statement of Cash Flows;
∙
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙
the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙
the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙
the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of the parent company, David Howard (UK) Holdco Limited as at 31 August 2020 and these financial statements may be obtained from Companies House.
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DAVID HOWARD (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2020
2.
Accounting policies (continued)
Following the COVID-19 pandemic, the directors have considered the annual budget, future cash flow forecasts and forward order book in forming their assessment of the going concern assumption. We have significantly reduced our overheads such that the required turnover to cover our costs is much lower. On an annualised basis we believe that the company should be able to exceed the required turnover. We have a secured over draft facility with Lloyds Bank which combined with the receipt of £350,000 CBILS loans provides headroom in our external finance requirements.
In response to the COVID-19 pandemic, the directors have performed a robust analysis of forecast future cash flows taking into account the potential impact on the business of possible future scenarios arising from the impact of COVID-19. This analysis also considers the effectiveness of available measures to assist in mitigating the impact. Going forward we will operate with new orders handed over at source destination on a free on board basis (FOB orders), so that we will not add to stock held in the UK. This will be from a mix of UK customers with stores and on-line retail and will significantly reduce our working capital requirements. Based on these assessments and having regard to the resources available to the entity, the directors are satisfied that the going concern basis is appropriate for the preparation of these financial statements.
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DAVID HOWARD (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2020
2.
Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Statement of Comprehensive Income.
The company is party to a finance agreement whereby the company receives advance financing in
respect of the company's trade debtor and amounts recoverable on contract. Gross debtors less provisions are included within current assets. Finance received in respect of these debts is recognised in creditors. Interest and charges in respect of providing finance are recognised in the Statement of Comprehensive Income.
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DAVID HOWARD (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2020
2.
Accounting policies (continued)
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DAVID HOWARD (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2020
2.
Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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DAVID HOWARD (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2020
2.
Accounting policies (continued)
Assets held by the company under leases that transfer to the company substantially all the risks and rewards of ownership are classified as finance leases. Assets held under finance leases are recognised as assets of the company at their fair value at inception of the lease, with the corresponding liability included in creditors as a finance lease obligation.
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DAVID HOWARD (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2020
2.
Accounting policies (continued)
Provisions are charged as an expense to the Statement of Comprehensive Income in the year that the company becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
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DAVID HOWARD (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2020
The whole of the turnover is attributable to the principal activity of the company.
Analysis of turnover by country of destination:
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DAVID HOWARD (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2020
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DAVID HOWARD (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2020
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DAVID HOWARD (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2020
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DAVID HOWARD (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2020
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DAVID HOWARD (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2020
The company is party to a debt factoring agreement with Lloyds Bank Plc ("Lloyds").
Under this factoring agreement the risks of unpaid debts remain with the company and therefore all trade debts are included in debtors, net of provisions for bad and doubtful debts.
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DAVID HOWARD (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2020
The company is party to an omnibus guarantee and set off agremeent in respect of a loan facility of its parent company, David Howard (UK) Holdco Limited, which is held with Lloyds Bank Plc. Under this agreement, the parent company's loan is secured by way of a fixed and floating charge over the assets of the company.
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DAVID HOWARD (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2020
Share premium account
Profit and loss account
The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge in the year represents contributions payable by the company to the fund and amounted to £51,784 (2019 - £48,994). Contributions totalling £6,738 (2019 - £8,054) were payable to the fund at the balance sheet date.
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DAVID HOWARD (UK) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2020
The immediate and ultimate parent company is David Howard (UK) Holdco Limited due to the ownership of 100% of the company's share capital.
The largest and smallest group in which the results of the company are included are the consolidated financial statements of David Howard (UK) Holdco Limited. These are available to the public and may be obtained from Companies House.
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