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COMPANY REGISTRATION NUMBER: 01517140
A.W. (EUROPE) LIMITED
FINANCIAL STATEMENTS
31 December 2022
A.W. (EUROPE) LIMITED
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2022
CONTENTS
PAGE
Officers and professional advisers
1
Strategic report
2
Directors' report
6
Independent auditor's report to the members
9
Statement of comprehensive income
13
Statement of financial position
14
Statement of changes in equity
16
Notes to the financial statements
17
A.W. (EUROPE) LIMITED
OFFICERS AND PROFESSIONAL ADVISERS
THE BOARD OF DIRECTORS
S J Kaye
G Pugh
E L J Deporte
M G Van Waeyenberge
REGISTERED OFFICE
F Mill
2nd Floor East
Dean Clough Mills
Halifax
West Yorkshire
HX3 5AX
AUDITOR
Spenser Wilson Ltd
Chartered accountants & statutory auditor
Equitable House
55 Pellon Lane
Halifax
West Yorkshire
HX1 5SP
BANKERS
National Westminster Bank Plc
PO Box 51, 7 Hustlergate
Bradford
West Yorkshire
BD1 1PP
KBC Bank N.V.
5th Floor
111 Old Broard Street
London
EC2N 1BR
A.W. (EUROPE) LIMITED
STRATEGIC REPORT
YEAR ENDED 31 DECEMBER 2022
PRINCIPAL ACTIVITY AND BUSINESS REVIEW
The company is a wholly-owned subsidiary of Associated Weavers International N.V. and operates as the group's UK sales office. The company's principal activity is the commercialisation of broadloom tufted carpet and rugs. Since 1 April 2019 the company has also started trading in Luxury Vinyl Tiles. The directors are not aware, at the date of the report, of any likely major changes in the company's activities in the next year. As shown in the company's profit and loss account, the company's sales turnover has remained at £58m, with a profit before taxation for the year of £121,325 (2021: loss of 370,924). The balance sheet of the financial statements shows that, aS result of profit for the year and the actuarial loss reported in the statement of comprehensive income, the company's net assets at the year-end has moved from a surplus of £322,266 to a surplus of £58,591. In the current year there was a recognisable surplus of £635,000 (2021 - surplus of £1,002,000) related to the pension scheme. In 2022, A.W. (Europe) Ltd continued to build on the brands with some strong additions to the Invictus brand, we also had a successful launch of the new brands GAIA into the UK market. Consumer confidence was low during the year with spiralling inflation, and several price increases were implemented throughout the year because of increased costs relating to energy, raw material, and delivery costs, this has led to higher levels of turnover but reduced volumes. LVT (Luxury Vinyl Tiles) continued to grow and carried on gaining momentum, taking market share from market leading competition, the turnover increased 193% in 2022 against 2021, due to a strong marketing campaign and increased presence at point of sale in the market.
KEY PERFORMANCE INDICATORS
The following KPIs are relevant when assessing performance: 2022 2021 Turnover £58 million £58 million Gross profit margin 13.3% 9.9% Debtor days 44 days 57 days Regardless the influence of the higher costs and inflation the company has shown a like for like turnover figure but a significant rise in gross margin to 13% (2021 - 9.9%). Despite a deteriorating economic environment, the debtor days were reduced from 2021 and are under control through the follow up of its credit management team. The directors are satisfied with the above KPIs given the difficult market conditions faced by the company. FUTURE DEVELOPMENTS In 2023, A.W. (Europe) Ltd will present a number of new ranges of broadloom tufted carpet to our customers and will continue to build on the existing brands. We will continue to look for sustainable raw materials to produce quality products for our customers and will launch a new recycled Polyester collection later 2023. The SEDNA collection that is made using the polyamide yarn ECONYL will become Co2 neutral in 2023. With the addition of a new warehouse in Northampton, A.W. (Europe) Ltd will be able to significantly improve the delivery service to their cut length customers in the Autumn of 2023 and look at recovering their lost market share in these sectors as a result of Brexit and the loss of their logistics partner Rhys Davies when the company went out of business. More point of sale will be placed in the market as the Luxury Vinyl Tiles gain further momentum and we will strengthen our product offering to our customers in the summer period with an updated collection.
PRINCIPAL RISKS AND UNCERTAINTIES
Competitive pressure in the UK is a continuing risk for the company, which could result in decreasing profit margins and losing sales to its competitors. There still is additional uncertainty in the market from the impact of Brexit. The company manages this risk by providing added value services to its customers, superior product development and by maintaining strong relationships with customers. A.W. (Europe) Ltd is part of a large European based group with customers all over the world. More than 50% of the turnover is made outside of the UK which results in a spread of the risk. Since the UK is the largest market, and therefore most important, the AW group will keep investing in A.W. (Europe) Ltd . The group has a very strong net cash position to maintain business all over the world and to keep developing new products and marketing campaigns to meet the changing needs of the customer.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The company's activities expose it to a number of financial risks including credit risk, cash flow risk and liquidity risk. There is no use of financial derivatives. Cash flow risk The company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The foreign currency exchange risk is carried by the Parent company. There are no interest rate swap contracts. Credit risk The company's principal financial assets are bank balances and cash and trade and other receivables. The company's credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. The company is using credit insurance to ensure the credit management. Credit management will continue to monitor and follow up of the overdue invoices and screening of new customers. The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. The company has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers. Liquidity risk In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the company sells trade debts to a debt factor under a recourse financing arrangement (note 3). Further details regarding liquidity risk can be found in the statement of accounting policies in the notes to the financial statements. GOING CONCERN In assessing the appropriateness of the application of the going concern basis, the directors have considered the uncertainties around the general economic environment, the current and future trading performance of the company and the available cash. In addition the ultimate parent company has indicated its commitment to provide financial support to this company if required. The directors have a reasonable expectation that the company and the group of which this is a part have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.
This report was approved by the board of directors on 29 September 2023 and signed on behalf of the board by:
G Pugh
Director
Registered office:
F Mill
2nd Floor East
Dean Clough Mills
Halifax
West Yorkshire
HX3 5AX
A.W. (EUROPE) LIMITED
DIRECTORS' REPORT
YEAR ENDED 31 DECEMBER 2022
The directors present their report and the financial statements of the company for the year ended 31 December 2022 .
DIRECTORS
The directors who served the company during the year were as follows:
S L Lewyckyj
S J Kaye
G Pugh
E L J Deporte
M G Van Waeyenberge
DIVIDENDS
The directors do not recommend the payment of a dividend.
QUALIFYING INDEMNITY PROVISION
The Company has made qualifying third party indemnity provisions for the benefit of its directors which were made during the year and remain in force at the date of this report.
DISCLOSURE OF INFORMATION IN THE STRATEGIC REPORT
In accordance with section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 the company has chosen to set out in the company's strategic report information required by schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008.
DIRECTORS' RESPONSIBILITIES STATEMENT
The directors are responsible for preparing the strategic report, 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 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 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 judgments 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. AUDITOR
Each of the persons who is a director at the date of approval of this report confirms that:
- so far as they are aware, there is no relevant audit information of which the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information.
This report was approved by the board of directors on 29 September 2023 and signed on behalf of the board by:
G Pugh
Director
Registered office:
F Mill
2nd Floor East
Dean Clough Mills
Halifax
West Yorkshire
HX3 5AX
A.W. (EUROPE) LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF A.W. (EUROPE) LIMITED
YEAR ENDED 31 DECEMBER 2022
OPINION
We have audited the financial statements of A.W. (Europe) Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, statement of financial position, 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In our opinion the financial statements: - give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; - have been prepared in accordance with the requirements of the Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
OTHER INFORMATION
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 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.
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 identified material misstatements in the directors' report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: - adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or - the financial statements are not in agreement with the accounting records and returns; or - certain disclosures of directors' remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit; or - the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemptions in preparing the directors' report and from the requirement to prepare a strategic report.
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. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows: " The engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations. " We identified the laws and regulations applicable to the company through discussions with the directors. " We focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company. " We assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and " identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit. We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by: " making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; " considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations. To address the risk of fraud through management bias and override of controls, we: " performed analytical procedures to identify any unusual or unexpected relationships; " tested journal entries to identify unusual transactions; " tested whether judgements and assumptions made in determining the accounting estimates were indicative or potential bias. " investigated the rationale behind significant or unusual transactions. In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to: " agreeing financial statement disclosures to underlying supporting documentation; " enquiring of management as to actual and potential litigation and claims; There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion. 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 auditor's report. 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 auditor’s report. USE OF OUR 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.
SALLY SHACKLOCK FCA
(Senior Statutory Auditor)
For and on behalf of
Spenser Wilson Ltd
Chartered accountants & statutory auditor
Equitable House
55 Pellon Lane
Halifax
West Yorkshire
HX1 5SP
30 September 2023
A.W. (EUROPE) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 DECEMBER 2022
2022
2021
Note
£
£
TURNOVER
4
57,928,592
57,858,045
Cost of sales
50,249,921
52,138,279
---------------
---------------
GROSS PROFIT
7,678,671
5,719,766
Administrative expenses
7,575,346
6,163,577
Other operating income
5
63,885
-------------
-------------
OPERATING PROFIT/(LOSS)
6
103,325
( 379,926)
Other interest receivable and similar income
10
18,000
9,002
-------------
-------------
PROFIT/(LOSS) BEFORE TAXATION
121,325
( 370,924)
Tax on profit/(loss)
11
----------
----------
PROFIT/(LOSS) FOR THE FINANCIAL YEAR
121,325
( 370,924)
----------
----------
Remeasurement of net defined benefit liability
( 385,000)
358,000
----------
----------
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
( 263,675)
( 12,924)
----------
----------
All the activities of the company are from continuing operations.
A.W. (EUROPE) LIMITED
STATEMENT OF FINANCIAL POSITION
31 December 2022
2022
2021
Note
£
£
£
£
FIXED ASSETS
Intangible assets
12
124,034
168,571
Tangible assets
13
2,854,086
240,282
-------------
----------
2,978,120
408,853
CURRENT ASSETS
Stocks
14
2,645,988
1,376,166
Debtors
15
8,799,087
11,131,703
Cash at bank and in hand
53,303
40,756
---------------
---------------
11,498,378
12,548,625
CREDITORS: amounts falling due within one year
16
15,052,907
13,637,212
---------------
---------------
NET CURRENT LIABILITIES
3,554,529
1,088,587
-------------
-------------
TOTAL ASSETS LESS CURRENT LIABILITIES
( 576,409)
( 679,734)
----------
----------
NET LIABILITIES EXCLUDING DEFINED BENEFIT PENSION PLAN ASSET
(576,409)
(679,734)
Defined benefit pension plan asset
19
635,000
1,002,000
----------
-------------
NET ASSETS INCLUDING DEFINED BENEFIT PENSION PLAN ASSET
58,591
322,266
----------
-------------
A.W. (EUROPE) LIMITED
STATEMENT OF FINANCIAL POSITION (continued)
31 December 2022
2022
2021
Note
£
£
£
£
CAPITAL AND RESERVES
Called up share capital
21
1,000,000
1,000,000
Profit and loss account
23
( 941,409)
( 677,734)
-------------
-------------
SHAREHOLDERS FUNDS
58,591
322,266
-------------
-------------
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the medium companies regime.
These financial statements were approved by the board of directors and authorised for issue on 29 September 2023 , and are signed on behalf of the board by:
G Pugh
Director
Company registration number: 01517140
A.W. (EUROPE) LIMITED
STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2022
Called up share capital
Profit and loss account
Total
£
£
£
AT 1 JANUARY 2021
1,000,000
( 664,810)
335,190
Loss for the year
( 370,924)
( 370,924)
Other comprehensive income for the year:
Remeasurement of net defined benefit liability
358,000
358,000
-------------
----------
----------
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
( 12,924)
( 12,924)
AT 31 DECEMBER 2021
1,000,000
( 677,734)
322,266
Profit for the year
121,325
121,325
Other comprehensive income for the year:
Remeasurement of net defined benefit liability
( 385,000)
( 385,000)
-------------
----------
----------
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
( 263,675)
( 263,675)
-------------
----------
----------
AT 31 DECEMBER 2022
1,000,000
( 941,409)
58,591
-------------
----------
----------
A.W. (EUROPE) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2022
1. GENERAL INFORMATION
The company is a private company limited by shares, registered in England and Wales. The address of the registered office is F Mill, 2nd Floor East, Dean Clough Mills, Halifax, West Yorkshire, HX3 5AX.
2. STATEMENT OF COMPLIANCE
These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.
3. ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared under the historical cost convention, modified to include certain items at fair value, and in accordance with Financial Reporting Standard 102 (FRS 102) issued by the Financial Reporting Council. The functional currency of A.W. (Europe) Limited is considered to be pounds sterling because that is the currency of the primary economic environment in which the Company operates. Foreign operations are included in accordance with the policies set out below.
Going concern
In assessing the appropriateness of the application of the going concern basis, the directors have considered the uncertainties around the general economic environment, the current and future trading performance of the company and the available cash. In addition the ultimate parent company has indicated its commitment to provide financial support to this company if required. The directors have a reasonable expectation that the company and the group of which this is a part have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements.
Disclosure exemptions
The entity satisfies the criteria of being a qualifying entity as defined in FRS 102. Its financial statements are consolidated into the financial statements of Belgotex International N.V. which can be obtained from Belgotex International N.V., Groene Dreef, 5, 9770 Kruishoutem, Belgium. As such, advantage has been taken of the following disclosure exemptions available under paragraph 1.12 of FRS 102: (a) Disclosures in respect of each class of share capital have not been presented. (b) No cash flow statement has been presented for the company.(c) Disclosures in respect of financial instruments have not been presented.(d) No disclosure has been given for the aggregate remuneration of key management personnel.
Pattern books and new product promotional videos
The cost of providing pattern books is classified as a prepayment and is written off over the life of the related carpets sales estimated to be 24 months.
The cost of producing a promotional video is classified as a prepayment and is written off over a 4 year period.
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome. The key assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are assumption that sales related to each pattern book are for 24 months. The total amount of pattern books prepaid is £1,661,790 (2021 - £1,238,528). Amortisation of pattern books of £1,185,281 (2021 - - £1,169,444) is included in the income statement The assumption is that promotional videos are for four years. The total amount of promotional video costs prepaid is £78,473 (2021 - £149,994) Amortisation of promotional videos of £71,521 (2021 - £69,636)is included in the income statement.
Revenue recognition
Turnover is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of discounts and Value Added Tax. Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on despatch of the goods); the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably.
Debt factoring arrangements
Trade debts sold to a debt factor under a recourse financing arrangement are recorded within trade debtors with the balance due to the factor shown within creditors. Payments in transit to the debt factoring company are recognised as a reduction in the amounts owed to the debt factoring company equivalent to the proportion factored, with the remaining proportion recognised as amounts owed by the debt factoring company/business under the terms of the agreement.
Foreign currencies
Foreign currency transactions are initially recorded in the functional currency, by applying the spot exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date, with any gains or losses being taken to the profit and loss account.
Operating leases
Lease payments are recognised as an expense over the lease term on a straight-line basis. The aggregate benefit of lease incentives is recognised as a reduction to expense over the lease term, on a straight-line basis.
Intangible assets
Intangible assets are initially recorded at cost, and are subsequently stated at cost less any accumulated amortisation and impairment losses. Any intangible assets carried at revalued amounts, are recorded at the fair value at the date of revaluation, as determined by reference to an active market, less any subsequent accumulated amortisation and subsequent accumulated impairment losses. Intangible assets acquired as part of a business combination are only recognised separately from goodwill when they arise from contractual or other legal rights, are separable, the expected future economic benefits are probable and the cost or value can be measured reliably.
Amortisation
Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful life of that asset as follows:
Software/Website
-
25%/33.33% Straight line
If there is an indication that there has been a significant change in amortisation rate, useful life or residual value of an intangible asset, the amortisation is revised prospectively to reflect the new estimates.
Tangible assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Alterations to leasehold property
-
15% straight line
Fixtures and fittings
-
15% straight line
Motor vehicles
-
20% straight line
Equipment
-
25% straight line
Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs.
Stocks
Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the stock to its present location and condition.
Government grants
Government grants are recognised at the fair value of the asset received or receivable. Grants are not recognised until there is reasonable assurance that the company will comply with the conditions attaching to them and the grants will be received. Government grants are recognised using the accrual model and the performance model. Under the accrual model, government grants relating to revenue are recognised on a systematic basis over the periods in which the company recognises the related costs for which the grant is intended to compensate. Grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs are recognised in income in the period in which it becomes receivable. Grants receivable relating to Covid-19 are accounted for under the accrual method and recognised immediately as income in the Statement of Income and Retained Earnings. Where applied for and received these grants include payments under the Coronavirus Job Retention Scheme (furlough payments), Small Business Grant and interest paid by the Government during the first 12 months of Bounce Bank Loans. Grants relating to assets are recognised in income on a systematic basis over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred income and not deducted from the carrying amount of the asset.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of the provision as an expense. Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in profit or loss unless the provision was originally recognised as part of the cost of an asset. When a provision is measured at the present value of the amount expected to be required to settle the obligation, the unwinding of the discount is recognised as a finance cost in profit or loss in the period it arises.
Financial instruments
The company only has financial assets and financial liabilities of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value with the exception of bank loans which are subsequently measured at amortised cost using the effective interest method.
Defined benefit plans
For defined benefit schemes the amounts charged to operating profit are the costs arising from employee services rendered during the period and the cost of plan introductions, benefit changes, settlements and curtailments. They are included as part of staff costs. The net interest cost on the net defined benefit liability is charged to profit or loss and included within finance costs. Remeasurement comprising actuarial gains and losses and the return on scheme assets (excluding amounts included in net interest on the net defined benefit liability) are recognised immediately in other comprehensive income. The retirement benefit asset or liability recognised in the balance sheet represents the surplus or deficit in defined benefit scheme. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the scheme or reduction in future contribution in scheme. The minimum funding requirement under IFRIC 14 'The limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction' has also been considered. The defined benefit scheme is funded, with the assets of the scheme held separately from those of the company, in separate trustee administered funds. Pension scheme assets are measured at fair value and liabilities are measured on an actuarial basis using the projected unit method and discounted at a rate equivalent to the current rate of return on a high quality corporate bond of equivalent currency and term to the scheme liabilities. The actuarial valuations are obtained at least triennially and are updated at each balance sheet date. The resulting defined benefit asset or liability, net of the related deferred tax, is presented separately after other net assets on the face of the balance sheet. Further details of the company's pension arrangements are set out in note 19.
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund. When contributions are not expected to be settled wholly within 12 months of the end of the reporting date in which the employees render the related service, the liability is measured on a discounted present value basis. The unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
4. TURNOVER
Turnover arises from:
2022
2021
£
£
Sale of goods
57,928,592
57,858,045
---------------
---------------
The whole of the turnover is attributable to the principal activity of the company wholly undertaken in the United Kingdom.
5. OTHER OPERATING INCOME
2022
2021
£
£
Government grant income
63,885
----
---------
6. OPERATING PROFIT/(LOSS)
Operating profit or loss is stated after charging/crediting:
2022
2021
£
£
Amortisation of intangible assets
101,706
102,289
Depreciation of tangible assets
68,580
58,596
Gains on disposal of tangible assets
( 912)
Impairment of trade debtors
37,414
568
Operating lease rentals
272,929
221,342
Foreign exchange differences
( 13,801)
( 6,105)
Amortisation of pattern books
1,185,281
1,169,445
Amortisation of promotional videos
71,521
69,636
-------------
-------------
7. AUDITOR'S REMUNERATION
2022
2021
£
£
Fees payable for the audit of the financial statements
9,000
9,000
-------
-------
Fees payable to the company's auditor and its associates for other services:
Taxation advisory services
1,800
1,600
Other non-audit services
5,200
4,800
-------
-------
7,000
6,400
-------
-------
8. STAFF COSTS
The average number of persons employed by the company during the year, including the directors, amounted to:
2022
2021
No.
No.
Administrative staff
23
20
Sales and marketing
28
24
----
----
51
44
----
----
The aggregate payroll costs incurred during the year, relating to the above, were:
2022
2021
£
£
Wages and salaries
2,376,850
2,042,897
Other pension costs
220,619
112,346
-------------
-------------
2,597,469
2,155,243
-------------
-------------
9. DIRECTORS' REMUNERATION
The directors' aggregate remuneration in respect of qualifying services was:
2022
2021
£
£
Remuneration
318,658
465,166
Company contributions to defined contribution pension plans
23,631
22,941
----------
----------
342,289
488,107
----------
----------
The number of directors who accrued benefits under company pension plans was as follows:
2022
2021
No.
No.
Defined contribution plans
3
3
----
----
Remuneration of the highest paid director in respect of qualifying services:
2022
2021
£
£
Aggregate remuneration
127,159
169,895
Company contributions to defined contribution pension plans
7,740
7,514
----------
----------
134,899
177,409
----------
----------
Two of the directors who served during the year were remunerated through other group companies. It is not practicable to ascertain what proportion of this remuneration related to this company. As of the end of 2022, an accrual of £23,951 (2021 - £29,840) was set up as a bonus for financial year 2022 for the directors.
10. OTHER INTEREST RECEIVABLE AND SIMILAR INCOME
2022
2021
£
£
Interest on cash and cash equivalents
2,002
Net finance income in respect of defined benefit pension plans
18,000
7,000
---------
-------
18,000
9,002
---------
-------
11. TAX ON PROFIT/(LOSS)
Reconciliation of tax income
The tax assessed on the profit/(loss) on ordinary activities for the year is lower than (2021: higher than) the standard rate of corporation tax in the UK of 19 % (2021: 19 %).
2022
2021
£
£
Profit/(loss) on ordinary activities before taxation
121,325
( 370,924)
----------
----------
Profit/(loss) on ordinary activities by rate of tax
23,052
( 70,476)
Effect of expenses not deductible for tax purposes
19,807
4,287
Effect of capital allowances and depreciation
( 488,899)
18,873
Unused tax losses
446,040
47,316
----------
----------
Tax on profit/(loss)
----------
----------
Factors that may affect future tax income
The Finance Act 2021, included provisions to increase the main rate of corporation tax to 25% for companies with profits of £250,000 or over, profits up to £50,000 will continue at 19% and profits between these two figures will be subject to a tapered rate with effect from 1 April 2023. Deferred tax has therefore been calculated using a tax rate of 25% at 31 December 2022, being the enacted future corporate tax rate at the balance sheet date.
A deferred tax liability of £nil (2021: £nil) has been recognised at 31 December 2022 in respect of timing differences based on future profit forecasts of the business. The company also has corporation tax losses to carry forward of £3,825,812 (2021 - £1,500,782) to use against future profits.
12. INTANGIBLE ASSETS
Website and software
£
Cost
At 1 January 2022
412,081
Additions
57,169
----------
At 31 December 2022
469,250
----------
Amortisation
At 1 January 2022
243,510
Charge for the year
101,706
----------
At 31 December 2022
345,216
----------
Carrying amount
At 31 December 2022
124,034
----------
At 31 December 2021
168,571
----------
13. TANGIBLE ASSETS
Alterations to leasehold property
Plant and machinery
Fixtures and fittings
Motor vehicles
Equipment
Total
£
£
£
£
£
£
Cost
At 1 Jan 2022
265,715
330,704
13,945
87,630
697,994
Additions
239,941
2,350,924
7,456
84,062
2,682,383
Disposals
( 11,984)
( 11,984)
----------
-------------
----------
---------
----------
-------------
At 31 Dec 2022
505,656
2,350,924
338,160
13,945
159,708
3,368,393
----------
-------------
----------
---------
----------
-------------
Depreciation
At 1 Jan 2022
98,668
314,338
12,086
32,620
457,712
Charge for the year
39,945
9,244
1,859
17,532
68,580
Disposals
( 11,985)
( 11,985)
----------
-------------
----------
---------
----------
-------------
At 31 Dec 2022
138,613
323,582
13,945
38,167
514,307
----------
-------------
----------
---------
----------
-------------
Carrying amount
At 31 Dec 2022
367,043
2,350,924
14,578
121,541
2,854,086
----------
-------------
----------
---------
----------
-------------
At 31 Dec 2021
167,047
16,366
1,859
55,010
240,282
----------
-------------
----------
---------
----------
-------------
14. STOCKS
2022
2021
£
£
Raw materials and consumables
2,645,988
1,376,166
-------------
-------------
15. DEBTORS
2022
2021
£
£
Trade debtors
6,936,840
9,154,228
Prepayments and accrued income
1,838,738
1,484,622
Other debtors
23,509
492,853
-------------
---------------
8,799,087
11,131,703
-------------
---------------
Prepayments and accrued income - pattern books
20222021
££
Net prepayments at 1 January1,238,5241,350,854
Additions1,608,5441,057,114
Amortisation(1,185,281)(1,169,444)
--------------------------
Net prepayments at 31 December1,661,7871,238,524
--------------------------
New product promotion
20222020
££
Net prepayment at 1 January149,994208,320
Additions11,310
Amortisation(71,521)(69,636)
--------------------
Net prepayment at 31 December78,473149,994
--------------------
16. CREDITORS: amounts falling due within one year
2022
2021
£
£
Trade creditors
1,729,658
2,056,857
Amounts owed to group undertakings
6,028,762
9,826,996
Accruals and deferred income
11,086
16,011
Social security and other taxes
668,893
1,530,613
Amounts owed to recourse debt factor
6,446,275
Import duty
21,951
45,315
Other creditors
146,282
161,420
---------------
---------------
15,052,907
13,637,212
---------------
---------------
The company has granted a floating charge over its assets to secure the amounts owed to the debt factoring company.
17. PROVISIONS
Deferred tax (note 18)
£
At 1 January 2022
Additions
634,758
Covered by tax losses
( 634,758)
----------
At 31 December 2022
----------
18. DEFERRED TAX
The deferred tax account consists of the tax effect of timing differences in respect of:
2022
2021
£
£
Accelerated capital allowances
538,797
42,556
Pension plan obligations
120,650
190,380
Deferred tax - covered by losses
(659,447)
(232,936)
----------
----------
----------
----------
19. EMPLOYEE BENEFITS
Defined contribution plans
The amount recognised in profit or loss as an expense in relation to defined contribution plans was £ 220,619 (2021: £ 112,346 ).
The company operates defined contribution retirement benefit schemes for all qualifying employees. The assets of the schemes are held separately from those of the company .
Defined benefit plans
The company operates a funded defined benefit scheme; the A.W. (Europe) Limited Pension Scheme (the "Scheme"). The scheme was closed to benefits accrual with effect from 1 March 2003. Pension benefits for deferred members are based on the member's final pensionable salary and service at the date accrual ceased (or date of leaving if earlier). A triennial valuation of the scheme has been carried out as at 31 December 2019, following which, a new Schedule of Contributions has been agreed. The company had previously been making deficit contributions of £96,000 per year however as the scheme was in a surplus as at 31 December 2019, no further deficit contributions were to be made from 31 March 2021 onwards. The company made no deficit contributions during the year. (31 December 2021 - £16,000)..
The statement of financial position net defined benefit asset is determined as follows:
2022
2021
£
£
Present value of defined benefit obligations
( 3,395,000)
( 4,992,000)
Fair value of plan assets
4,030,000
5,994,000
-------------
-------------
635,000
1,002,000
----------
-------------
Changes in the present value of the defined benefit obligations are as follows:
2022
£
At 1 January 2022
4,992,000
Interest expense
88,000
Benefits paid
(208,000)
Remeasurements:
Actuarial gains and losses
( 1,477,000)
-------------
At 31 December 2022
3,395,000
-------------
Changes in the fair value of plan assets are as follows:
2022
£
At 1 January 2022
5,994,000
Interest income
106,000
Benefits paid
( 208,000)
Remeasurements:
Return on plan assets, excluding amount included in interest income
( 1,862,000)
-------------
At 31 December 2022
4,030,000
-------------
The total costs for the year in relation to defined benefit plans are as follows:
2022
2021
£
£
Recognised in profit or loss:
Net interest income
( 18,000)
7,000
---------
-------
Recognised in other comprehensive income:
Remeasurement of the liability:
Actuarial gains and losses
( 1,477,000)
271,000
Return on plan assets, excluding amounts included in net interest
1,862,000
87,000
-------------
----------
385,000
358,000
-------------
----------
The fair value of the major categories of plan assets are as follows:
2022
2021
£
£
Equity instruments
2,156,000
Cash and cash equivalents
56,000
17,000
Bonds
2,191,000
1,132,000
Gilts
1,094,000
1,824,000
Annuities
689,000
865,000
-------------
-------------
4,030,000
5,994,000
-------------
-------------
The return on plan assets are as follows:
2022
2021
£
£
Return on assets of benefit plan
( 175,600)
161,000
----------
----------
The principal actuarial assumptions as at the statement of financial position date were:
2022
2021
%
%
Discount rate
4.80
1.80
Inflation assumption
2.40
2.90
Mortality rates:
Current pensioners at 65 - male
21.80
21.70
Current pensioners at 65 - female
24.10
24.10
Future pensioners at 65 - male
22.70
22.70
Future pensioners at 65 - female
25.30
25.20
-------
-------
Demographic assumptions
2022 2021
£ £
Mortality (Pre retirement)
Mortality (Post retirement)
20. GOVERNMENT GRANTS
The amounts recognised in the financial statements for government grants are as follows:
2022
2021
£
£
Recognised in other operating income:
Government grants recognised directly in income
63,885
----
---------
21. CALLED UP SHARE CAPITAL
Issued, called up and fully paid
2022
2021
No.
£
No.
£
Ordinary shares of £ 1 each
1,000,000
1,000,000
1,000,000
1,000,000
-------------
-------------
-------------
-------------
22. ULTIMATE PARENT COMPANY
The company is a subsidiary undertaking of Associated Weavers International N.V., which is incorporated in Belgium.
The largest and smallest group of which A.W. (Europe) Limited is a member and for which group financial statements are drawn up is that headed by Belgotex International N.V., incorporated in Belgium whose principal place of business is at Groene Dreef 5, 9770 Kruishoutem, Belgium. The consolidated financial statements of this group are available to the public and may be obtained from Belgotex International N.V., Groene Dreef, 5, 9770 Kruishoutem, Belgium.
23. RESERVES
Profit and loss account - This reserve records retained earnings and accumulated losses.
24. OPERATING LEASES
The total future minimum lease payments under non-cancellable operating leases are as follows:
2022
2021
£
£
Not later than 1 year
1,134,033
339,457
Later than 1 year and not later than 5 years
609,792
839,826
Later than 5 years
864,944
1,053,949
-------------
-------------
2,608,769
2,233,232
-------------
-------------
25. RELATED PARTY TRANSACTIONS
Substantially all of the goods sold by the company during the year were purchased from a fellow subsidiary undertaking, Associated Weavers Europe N.V. The company is a wholly-owned subsidiary of Associated Weavers International, N.V., and has therefore taken advantage of the exemption from the disclosure requirements of Section 33 of FRS 102. There are no loans to directors There were no other related party transactions.