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Registered number: 04794322










AVALON FASHIONS LIMITED










ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 AUGUST 2022

 
AVALON FASHIONS LIMITED
 
 
COMPANY INFORMATION


Directors
M Odabash 
S Ahmad 




Registered number
04794322



Registered office
22 Bruton Street

London

W1J 6QE




Independent auditors
Simmons Gainsford LLP
Chartered Accountants & Statutory Auditors

14th Floor

33 Cavendish Square

London

W1G 0PW





 
AVALON FASHIONS LIMITED
 

CONTENTS



Page
Strategic report
 
 
1
Directors' report
 
 
2 - 3
Independent auditors' report
 
 
4 - 7
Profit and loss account
 
 
8
Balance sheet
 
 
9
Statement of changes in equity
 
 
10
Notes to the financial statements
 
 
11 - 25


 
AVALON FASHIONS LIMITED
 
 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 AUGUST 2022

Introduction
 
The directors present their strategic report for the year ended 31 August 2022.

Business review
 
There have been no major changes in the Company’s core activities in the year under review. Our sales have increased this year after lockdown due to customers spending more on holidays and travel. Sales forecast for 2023 will be lower due to the impact of energy crisis as well as Ukraine war. 

Principal risks and uncertainties
 
The principal risk facing the Company is its ability to continue designing and selling women's holiday wear which for customers remain attractive and affordable. The perfomance of economy in general will also remain a risk. 
Liquidity Risk
The Company has a strong operating cash inflow and manages its cash requirements in order to maximise interest income and minimise interest expense, whilst ensuring the Company has sufficient liquid resources to meet the operating needs of the business.
Credit Risk
Trade debtors are reviewed on a regular basis and provision is made for doubtful debts when necessary.
Foreign Exchange Risk
The Company operates across the world and is exposed to movements in foreign currencies affecting the financial result and the value of Company equity. Foreign exchange risk arises because the amount of local currency paid or received for transactions denominated in foreign currencies may vary due to changes in exchange rates (transaction exposures). Foreign exchange risks arise primarily on transactions that are denominated in USD and EUR. In managing its exposure regarding the fluctuation in foreign currency exchange rates, the Company maintains USD and Euro bank accounts to offset the receipts and payments as far as possible and to minimise the exchange impact.

Financial key performance indicators
 
The key financial performance indicators of the Company are turnover, gross profit and operating profit. A brief analysis of these is shown below:
                                                                       
2022                    2021            Variance
Turnover                                                     £11,362,362         £10,428,855            9%
Gross Profit                                                  £5,014,014           £5,051,951           -1% 
Operating profit                                               £350,479              £333,916             5%


This report was approved by the board on 27 October 2023 and signed on its behalf.


................................................
S Ahmad
Director

Page 1

 
AVALON FASHIONS LIMITED
 
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 AUGUST 2022

The directors present their report and the financial statements for the year ended 31 August 2022.

Principal activity

The principal activity of the company continued to be that of the design, manufacture and distribution of beachwear. 

Directors

The directors who served during the year were:

M Odabash 
S Ahmad 

Directors' responsibilities statement

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 2006They 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.

Results and dividends

The profit for the year, after taxation, amounted to £317,231 (2021 - £315,887).

No dividends were paid during the year (2021: Nil). The directors do not recommend payment of a final dividend (2021: £Nil).

Future developments

The directors have indicated that the company will continue to trade in beachwear.

Page 2

 
AVALON FASHIONS LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2022

Matters covered in the Strategic report

Principal risks and uncertainties, business review and financial key performance indicators  are covered in the Strategic Report.

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Going concern

During the year, the COVID-19 virus continued to be categorised as a global pandemic and the UK Government maintained restrictions on certain activities and behaviours in an effort to prevent the virus' spread and limit its longer term impact.
Whilst the restrictions have caused a drop in the sales, the Company is now making a recovery and the directors do not consider that the circumstances have caused any material change to the Company's ability to trade, nor affect its status as a Going Concern.

Auditors

The auditorsSimmons Gainsford LLPwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board on 27 October 2023 and signed on its behalf.
 





................................................
S Ahmad
Director

Page 3

 
AVALON FASHIONS LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AVALON FASHIONS LIMITED
 

Opinion


We have audited the financial statements of Avalon Fashions Limited (the 'Company') for the year ended 31 August 2022, which comprise the Profit and loss account, the Balance sheet, the Statement of changes in equity and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the Company's affairs as at 31 August 2022 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


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 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.


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.


Page 4

 
AVALON FASHIONS LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AVALON FASHIONS LIMITED (CONTINUED)


Other information


The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual ReportOur opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.


We have nothing to report in this regard.


Opinion 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 Strategic report or 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.


Responsibilities of directors
 

As explained more fully in the Directors' responsibilities statement set out on page 2, 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.


Page 5

 
AVALON FASHIONS LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AVALON FASHIONS LIMITED (CONTINUED)


Auditors' 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 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.


Extent to which the audit was considered capable of detecting irregularities, including fraud
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.

Based on our understanding of the Company and industry, we identified and assessed the risks of material misstatements, including fraud and non-compliance with laws and regulations that could be expected to have a material impact on the financial statements. We also enquired of management and those charged with governance about their own identification and assessment of the risks of irregularities. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.
We obtained an understanding of the legal and regulatory frameworks that the Company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. These included but were not limited to, UK Companies Act, UK financial reporting standards, and taxation legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the Company's ability to operate or to avoid a material penalty.
As a result of performing the above, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in relation to revenue recognition. We also evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls).
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised: enquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; testing the appropriateness of entries in the nominal ledger, including journal entries; reviewing transactions around the end of the reporting period; and the performance of analytical procedures to identify unexpected movements in account balances which may be indicative of fraud.
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).

 

Page 6

 
AVALON FASHIONS LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF AVALON FASHIONS LIMITED (CONTINUED)



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.


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 2006Our 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.





Abdultaiyab Pisavadi BSc FCA (Senior statutory auditor)
  
for and on behalf of
Simmons Gainsford LLP
 
Chartered Accountants
Statutory Auditors
  
14th Floor
33 Cavendish Square
London
W1G 0PW

27 October 2023
Page 7

 
AVALON FASHIONS LIMITED
 
 
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 AUGUST 2022

2022
2021
Note
£
£

  

Turnover
 4 
11,362,362
10,428,855

Cost of sales
  
(6,348,348)
(5,376,904)

Gross profit
  
5,014,014
5,051,951

Distribution costs
  
(2,299,118)
(2,262,549)

Administrative expenses
  
(2,364,417)
(2,469,223)

Other operating income
 5 
-
13,737

Operating profit
 6 
350,479
333,916

Interest receivable and similar income
 10 
37,546
38,318

Interest payable and similar expenses
 11 
-
(626)

Profit before tax
  
388,025
371,608

Tax on profit
 12 
(70,794)
(55,721)

Profit for the financial year
  
317,231
315,887

There are no items of other comprehensive income for 2022 or 2021 other than the profit for the yearAs a result, no separate Statement of comprehensive income has been presented.

The notes on pages 11 to 25 form part of these financial statements.

Page 8

 
AVALON FASHIONS LIMITED
REGISTERED NUMBER: 04794322

BALANCE SHEET
AS AT 31 AUGUST 2022

2022
2021
Note
£
£

Fixed assets
  

Tangible assets
 13 
56,055
42,710

Investments
 14 
200
200

  
56,255
42,910

Current assets
  

Stocks
 15 
1,122,297
646,551

Debtors: amounts falling due within one year
 16 
2,716,740
3,205,276

Cash at bank and in hand
 17 
4,186,828
4,215,344

  
8,025,865
8,067,171

Creditors: amounts falling due within one year
 18 
(2,796,932)
(3,142,124)

Net current assets
  
 
 
5,228,933
 
 
4,925,047

Total assets less current liabilities
  
5,285,188
4,967,957

  

Net assets
  
5,285,188
4,967,957


Capital and reserves
  

Called up share capital 
 19 
128
128

Share premium account
 20 
299,972
299,972

Profit and loss account
 20 
4,985,088
4,667,857

  
5,285,188
4,967,957


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 27 October 2023.




................................................
S Ahmad
Director

The notes on pages 11 to 25 form part of these financial statements.

Page 9

 
AVALON FASHIONS LIMITED
 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2022


Called up share capital
Share premium account
Profit and loss account
Total equity

£
£
£
£


At 1 September 2020
128
299,972
4,351,970
4,652,070


Comprehensive income for the year

Profit for the year
-
-
315,887
315,887



At 1 September 2021
128
299,972
4,667,857
4,967,957


Comprehensive income for the year

Profit for the year
-
-
317,231
317,231


At 31 August 2022
128
299,972
4,985,088
5,285,188


The notes on pages 11 to 25 form part of these financial statements.

Page 10

 
AVALON FASHIONS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022

1.


General information

The company is a private company limited by share capital, incorporated in England and Wales. The address of the registered office is 22 Bruton Street, London W1J 6QE.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

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 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).

These financial statements are separate financial statements. The company is exempt under section 400 of the Companies Act 2006 from the requirement to prepare and deliver consolidated financial statements as it and its subsidiary undertakings are included in the group financial statements of its parent company Mo Freedom Limited, a company incorporated in the England and Wales.
The Company is taking advantage of the exemption to prepare a Statement of Cash Flows or net debt reconciliation as it is a qualifying entity under FRS 102, whose financial statements are included within the consolidated financial statements of the parent entity of the Group, Mo Freedom Limited. Copies of these financial statements may be obtained from Companies House.

The following principal accounting policies have been applied:

  
2.2

Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Therefore, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Page 11

 
AVALON FASHIONS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022

2.Accounting policies (continued)

  
2.3

Turnover

Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, net of discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:
Sale of goods
Turnover from the sale of goods is recognised when all of the following conditions are satisfied:
 
the Company has transferred the significant risks and rewards of ownership to the buyer;
the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of turnover can be measured reliably;
it is probable that the Company will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services
 
Turnover from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
 
the amount of turnover can be measured reliably;
it is probable that the Company will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.

 
2.4

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Page 12

 
AVALON FASHIONS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022

2.Accounting policies (continued)


2.4
Tangible fixed assets (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:

Leasehold improvements
-
10% straight line
Plant and machinery
-
20%-33% straight line
Fixtures and fittings
-
20%-33% straight line

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 profit or loss.

 
2.5

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

 
2.6

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a weighted average basis. Work in progress and finished goods include labour and attributable overheads.

At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

 
2.7

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

 
2.8

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

 
2.9

Financial instruments

The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the Company's Balance sheet when the Company becomes party to the contractual provisions of the instrument.

Page 13

 
AVALON FASHIONS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022

2.Accounting policies (continued)


2.9
Financial instruments (continued)

Basic financial assets

Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.

Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.

Financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.

Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.

Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.

Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.

Derecognition of financial instruments

Derecognition of financial assets

Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.

Derecognition of financial liabilities

Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.

Page 14

 
AVALON FASHIONS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022

2.Accounting policies (continued)

 
2.10

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 
2.11

Government grants

Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Profit and loss account in the same period as the related expenditure.

 
2.12

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is GBP. Monetary amounts in these financial statements are rounded to the nearest £.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.

Foreign exchange gains and losses are presented in the profit or loss.

 
2.13

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

Page 15

 
AVALON FASHIONS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022

2.Accounting policies (continued)

 
2.14

Operating leases: the Company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

 
2.15

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the Company in independently administered funds.

 
2.16

Interest income

Interest income is recognised in profit or loss using the effective interest method.

 
2.17

Taxation

Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.

 
2.18

Provisions for liabilities

Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss 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.

Page 16

 
AVALON FASHIONS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022

3.


Judgments in applying accounting policies and key sources of estimation uncertainty

In application of the group’s accounting policies, which are described in note 2, the directors are required  to make judgements that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts 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. The nature of estimation and judgement means that actual result may differ and may result in a material adjustment to carrying amount of the asset or liability affected in future periods.
Stock provision
In line with other retailers stock is physically counted at each location at the year end. The provision for old stock is based on prior years’ experience of saleability and profitability of old stock. A loss provision of 65% has been made for the current year stock, 80% for prior year stock and 85% for stock older than two years. These provisions are consistent with prior years.


4.


Turnover

An analysis of turnover by class of business is as follows:


2022
2021
£
£

Beachwear, swimwear and accessories
10,622,905
9,684,626

Management charges
739,457
744,229

11,362,362
10,428,855


Analysis of turnover by country of destination:

2022
2021
£
£

United Kingdom
8,163,211
7,540,424

Rest of the world
3,199,151
2,888,431

11,362,362
10,428,855



5.


Other operating income

2022
2021
£
£

Furlough income received
-
13,737


Page 17

 
AVALON FASHIONS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022

6.


Operating profit

The operating profit is stated after charging:

2022
2021
£
£

Exchange (gains)/losses
(349,438)
236,097

Other operating lease rentals
184,454
112,653


7.


Auditors' remuneration

During the year, the Company obtained the following services from the Company's auditors:


2022
2021
£
£

Fees payable to the Company's auditors for the audit of the Company's financial statements
17,500
17,500


8.


Employees

Staff costs, including directors' remuneration, were as follows:


2022
2021
£
£

Wages and salaries
1,161,158
1,035,217

Social security costs
131,195
114,264

Cost of defined contribution scheme
33,554
52,765

1,325,907
1,202,246


The average monthly number of employees, including the directors, during the year was as follows:


        2022
        2021
            No.
            No.







Directors
2
2



Production
7
5



Administration
22
22

31
29

Page 18

 
AVALON FASHIONS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022

9.


Directors' remuneration

2022
2021
£
£

Directors' emoluments
178,184
168,000

Company contributions to defined contribution pension schemes
294
-

178,478
168,000


During the year retirement benefits were accruing to 1 director (2021 - NIL) in respect of defined contribution pension schemes.


10.


Interest receivable

2022
2021
£
£


Interest receivable from group companies
37,350
37,919

Other interest receivable
196
399

37,546
38,318


11.


Interest payable and similar expenses

2022
2021
£
£


Other loan interest payable
-
150

Other interest payable
-
476

-
626


12.


Taxation


2022
2021
£
£

Corporation tax


Current tax on profits for the year
70,794
55,721


Total current tax
70,794
55,721
Page 19

 
AVALON FASHIONS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
 
12.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is lower than (2021 - lower than) the standard rate of corporation tax in the UK of 19% (2021 - 19%). The differences are explained below:

2022
2021
£
£


Profit on ordinary activities before tax
388,025
371,608


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)
73,725
70,606

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
463
226

Capital allowances for year in excess of depreciation
(3,394)
(252)

Group relief
-
(14,859)

Total tax charge for the year
70,794
55,721

Factors that may affect future tax charges
The Finance Act 2021, which received Royal Assent in June 2021, will result in the applicable rate being
held at 19% until April 2023, increasing to 25% from 1 April 2023 for companies with profits over £250,000.

Page 20

 
AVALON FASHIONS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022

13.


Tangible fixed assets





Leasehold improvements
Plant and machinery
Fixtures and fittings
Total

£
£
£
£



Cost or valuation


At 1 September 2021
46,130
48,576
140,978
235,684


Additions
3,270
8,679
17,288
29,237


Disposals
-
-
(24,000)
(24,000)



At 31 August 2022

49,400
57,255
134,266
240,921



Depreciation


At 1 September 2021
19,930
45,007
128,037
192,974


Charge for the year on owned assets
4,777
1,709
9,406
15,892


Disposals
-
-
(24,000)
(24,000)



At 31 August 2022

24,707
46,716
113,443
184,866



Net book value



At 31 August 2022
24,693
10,539
20,823
56,055



At 31 August 2021
26,200
3,569
12,941
42,710




The net book value of land and buildings may be further analysed as follows:


2022
2021
£
£

Short leasehold
24,693
26,200

24,693
26,200


Page 21

 
AVALON FASHIONS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022

14.


Fixed asset investments





Investments in subsidiary companies

£



Cost or valuation


At 1 September 2021
200



At 31 August 2022
200





Subsidiary undertakings


The following were subsidiary undertakings of the Company:

Name

Registered office

Principal activity

Class of shares

Holding

Avalon Fashions II Limited
14th Floor 33 Cavendish Square, London, United Kingdom, W1G 0PW
Retailer of designer swimwear and beachwear
Ordinary
100%
Avalon Fashions LLC
19 Franklin Street, Tenafly, NJ 07670, USA
Commercial apparel designers.
Ordinary
100%


15.


Stocks

2022
2021
£
£

Raw materials and consumables
591,889
408,147

Finished goods and goods for resale
530,408
238,404

1,122,297
646,551


There is no material difference between the replacement cost of stocks and the amounts stated above. The provision reducing the carrying value of stocks to net realisable value above as at 31 August 2022 amounted to £762,047 (2021 : £549,619).

Page 22

 
AVALON FASHIONS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022

16.


Debtors

2022
2021
£
£


Trade debtors
1,162,923
819,856

Amounts owed by group undertakings
1,281,364
2,316,950

Other debtors
211,969
11,141

Prepayments and accrued income
60,484
57,329

2,716,740
3,205,276



17.


Cash and cash equivalents

2022
2021
£
£

Cash at bank and in hand
4,186,828
4,215,344



18.


Creditors: Amounts falling due within one year

2022
2021
£
£

Trade creditors
854,477
807,959

Corporation tax
127,215
30,269

Other taxation and social security
41,085
44,717

Other creditors
3,384
3,938

Accruals and deferred income
1,770,771
2,255,241

2,796,932
3,142,124



19.


Share capital

2022
2021
£
£
Allotted, called up and fully paid



127 (2021 - 127) Ordinary shares of £1.00 each
127
127
1 (2021 - 1) DJ share of £1.00
1
1

128

128


Page 23

 
AVALON FASHIONS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022

20.


Reserves

Share premium account

This reserve records the amount above the nominal value received for shares issued, less transaction costs.

Profit and loss account

The profit and loss reserve represents the distributable profit for the Company.


21.


Pension commitments

The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the company in an independently administrated fund. The pension cost charge represents contributions payable by the Company to the fund an amounted to £33,554 (2021: £52,765).
Contributions totaling £5,712 (2021: £4,988) were payable to the fund at the balance sheet date and are included in creditors. 


22.


Commitments under operating leases

At 31 August 2022 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2022
2021
£
£


Not later than 1 year
133,702
93,738

Later than 1 year and not later than 5 years
343,692
34,639

477,394
128,377


23.


Related party transactions

During the year, the Company was charged management fees of £493,401 (2021: £273,120) by MO Freedom Limited, the parent company. The Company charged MO Freedom Limited interest of £4,035 (2021: £4,035). 
At the year end, the Company owed funds of £160,368 (2021: £156,333) to the parent company.
The Company has taken the exemption not to disclose transactions with fully owned subsidiaries.
All directors of the Company are considered to be key management personnel.

Page 24

 
AVALON FASHIONS LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022

24.


Controlling party

The parent company is MO Freedom Limited. The ultimate controlling party throughout this and the previous period was the sole director of the parent company.
The accounts of the company are consolidated within the accounts of MO Freedom Limited and a copy of the consolidated accounts can be obtained from the company's registered office at 22 Bruton Street, London, W1J 6QE.

 
Page 25