DEEPSLEEP BEDS UK LTD |
Strategic Report |
|
Business review |
The company's principle activity continued to be that of manufacturing and wholesale of bedding products. The company is favourably placed in a very competitive market. It continues to manufacture & supply high quality goods to its customer based throughout the UK. The company is continually improving its products to increase market share. Turnover for the 12 month period to 31 December 2022 was similar the previous year. The company continues to maintain its current market share and gross margin increased during the year. |
|
Principle risk and uncertainties |
The directors of the business recognise the commercial environment is expected to be challenging with profitability being affected by competition, inflationary pressures, the cost of living crises and the impact of the interest rate rises on consumer spending. The company is exposed to the usual commercial and supply chain risk associated with its operations. The company has policies in place to manage these risk as follows: Commercial risk- Actively investing in technology and purchasing process to make economies and retain price competitiveness and quality product offerings against other retailers. Supply chain risk- The company has exclusive agreements in place to protect future supplies. Financial risk-The company has no current borrowings from the bank and therefore it's not exposed to the price risk of any financial instruments. |
Key Performance indicators |
The key performance indicators on which the company basis its financial evaluations are: Turnover, gross profits, employment cost and net profits. During the year the company has maintained its turnover, its gross margin increased from 29% to 33%, as a result of increase in selling prices to cover higher purchase cost, which had been absorbed by the company in the previous year. The employment cost increased by 5.68% compared to the year before and the net profits before tax, fell from £1,109,048 to £576,207, which was due to an increase in overhead costs and the withdrawl of government support schemes that were provided in 2021. |
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This report was approved by the board on 20 February 2024 and signed on its behalf. |
Mohammed Tariq Raouf |
Director |
|
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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. |
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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. |
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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 contained within the annual report. 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. 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. |
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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. |
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Matters on which we are required to report by exception |
DEEPSLEEP BEDS UK LTD |
Statement of Cash Flows |
for the year ended 31 December 2022 |
|
Notes |
|
2022 |
|
2021 |
£ |
£ |
Operating activities |
Profit for the financial year |
473,443 |
|
869,273 |
|
Adjustments for: |
Loss on sale of fixed assets |
41,638 |
|
8,885 |
Interest payable |
2,034 |
|
10,549 |
Tax on profit on ordinary activities |
102,764 |
|
239,775 |
Depreciation |
179,025 |
|
213,008 |
(Increase)/decrease in stocks |
(152,350) |
|
201,570 |
Increase in debtors |
(1,405,879) |
|
(1,710,929) |
Increase in creditors |
1,590,961 |
|
1,759,636 |
|
|
|
831,636 |
|
1,591,767 |
|
Interest paid |
|
|
- |
|
(5,110) |
Interest element of finance lease payments |
(2,034) |
|
(5,439) |
Corporation tax paid |
(212,183) |
|
(138,015) |
|
Cash generated by operating activities |
617,419 |
|
1,443,203 |
|
|
|
|
|
|
Investing activities |
Payments to acquire tangible fixed assets |
(238,882) |
|
(27,844) |
Proceeds from sale of tangible fixed assets |
10,196 |
|
22,328 |
|
Cash used in investing activities |
(228,686) |
|
(5,516) |
|
|
|
|
|
|
Financing activities |
Equity dividends paid |
(14,500) |
|
(645,000) |
Capital element of finance lease payments |
(43,842) |
|
(291,748) |
|
Cash used in financing activities |
(58,342) |
|
(936,748) |
|
|
|
|
|
|
Net cash generated |
Cash generated by operating activities |
617,419 |
|
1,443,203 |
Cash used in investing activities |
(228,686) |
|
(5,516) |
Cash used in financing activities |
(58,342) |
|
(936,748) |
|
Net cash generated |
330,391 |
|
500,939 |
|
Cash and cash equivalents at 1 January |
1,508,697 |
|
1,007,758 |
Cash and cash equivalents at 31 December |
1,839,088 |
|
1,508,697 |
|
|
|
|
|
|
Cash and cash equivalents comprise: |
Cash at bank |
1,839,088 |
|
1,508,697 |
|
|
|
|
|
|
|
|
|
Stocks |
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Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first in first out method. The carrying amount of stock sold is recognised as an expense in the period in which the related revenue is recognised. |
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Debtors |
|
Short term debtors are measured at transaction price (which is usually the invoice price), less any impairment losses for bad and doubtful debts. Loans and other financial assets are initially recognised at transaction price including any transaction costs and subsequently measured at amortised cost determined using the effective interest method, less any impairment losses for bad and doubtful debts. |
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Creditors |
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Short term creditors are measured at transaction price (which is usually the invoice price). Loans and other financial liabilities are initially recognised at transaction price net of any transaction costs and subsequently measured at amortised cost determined using the effective interest method. |
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|
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Taxation |
|
A current tax liability is recognised for the tax payable on the taxable profit of the current and past periods. A current tax asset is recognised in respect of a tax loss that can be carried back to recover tax paid in a previous period. Deferred tax is recognised in respect of all timing differences between the recognition of income and expenses in the financial statements and their inclusion in tax assessments. Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date and that are expected to apply to the reversal of the timing difference, except for revalued land and investment property where the tax rate that applies to the sale of the asset is used. Current and deferred tax assets and liabilities are not discounted. |
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Leased assets |
|
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. All other leases are classified as operating leases. The rights of use and obligations under finance leases are initially recognised as assets and liabilities at amounts equal to the fair value of the leased assets or, if lower, the present value of the minimum lease payments. Minimum lease payments are apportioned between the finance charge and the reduction in the outstanding liability using the effective interest rate method. The finance charge is allocated to each period during the lease so as to produce a constant periodic rate of interest on the remaining balance of the liability. Leased assets are depreciated in accordance with the company's policy for tangible fixed assets. If there is no reasonable certainty that ownership will be obtained at the end of the lease term, the asset is depreciated over the lower of the lease term and its useful life. Operating lease payments are recognised as an expense on a straight line basis over the lease term. |
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|
2 |
Analysis of turnover |
2022 |
|
2021 |
£ |
£ |
|
|
Sale of goods |
19,210,919 |
|
19,206,621 |
|
|
|
|
|
|
|
|
|
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By geographical market: |
|
|
UK |
19,210,919 |
|
19,206,621 |
|
|
|
|
|
|
|
|
|
|
3 |
Operating profit |
2022 |
|
2021 |
£ |
£ |
|
This is stated after charging: |
|
|
Depreciation of owned fixed assets |
179,025 |
|
175,495 |
|
Depreciation of assets held under finance leases and hire purchase contracts |
|
- |
|
37,513 |
|
Auditors' remuneration for audit services |
6,500 |
|
6,500 |
|
Carrying amount of stock sold |
12,004,940 |
|
12,808,722 |
|
|
|
|
|
|
|
|
|
|
4 |
Directors' emoluments |
2022 |
|
2021 |
£ |
£ |
|
|
Emoluments |
33,600 |
|
33,600 |
|
|
|
|
|
|
|
|
|
|
5 |
Staff costs |
2022 |
|
2021 |
£ |
£ |
|
|
Wages and salaries |
3,588,503 |
|
3,397,155 |
|
Social security costs |
266,834 |
|
214,265 |
|
Other pension costs |
42,629 |
|
37,454 |
|
|
|
|
|
|
3,897,966 |
|
3,648,874 |
|
|
|
|
|
|
|
|
|
|
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Average number of employees during the year |
Number |
Number |
|
|
Administration |
20 |
|
20 |
|
Distribution |
15 |
|
15 |
|
Manufacturing |
155 |
|
150 |
|
|
|
|
|
|
190 |
|
185 |
|
|
|
|
|
|
|
|
|
|
6 |
Interest payable |
2022 |
|
2021 |
£ |
£ |
|
|
Other loans |
- |
|
5,110 |
|
Finance charges payable under finance leases and hire purchase contracts |
|
2,034 |
|
5,439 |
|
|
|
|
|
|
2,034 |
|
10,549 |
|
|
|
|
|
|
|
|
|
|
7 |
Taxation |
2022 |
|
2021 |
|
Analysis of charge in period |
£ |
£ |
|
|
Current tax: |
|
UK corporation tax on profits of the period |
132,241 |
|
212,183 |
|
|
|
|
|
|
|
|
|
|
Deferred tax: |
|
Origination and reversal of timing differences |
(29,477) |
|
27,592 |
|
|
|
|
|
|
|
|
|
|
Tax on profit on ordinary activities |
102,764 |
|
239,775 |
|
|
|
|
|
|
|
|
|
|
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Factors affecting tax charge for period |
|
The differences between the tax assessed for the period and the standard rate of corporation tax are explained as follows: |
|
|
|
|
|
|
2022 |
|
2021 |
£ |
£ |
|
Profit on ordinary activities before tax |
576,207 |
|
1,109,048 |
|
|
|
|
|
|
|
|
|
|
Standard rate of corporation tax in the UK |
19% |
|
19% |
|
£ |
£ |
|
Profit on ordinary activities multiplied by the standard rate of corporation tax |
|
109,479 |
|
210,719 |
|
|
Effects of: |
|
Expenses not deductible for tax purposes |
359 |
|
53,935 |
|
Capital allowances for period in excess of depreciation |
(7,074) |
|
(24,879) |
|
|
Current tax charge for period |
102,764 |
|
239,775 |
|
|
|
|
|
|
|
|
|
8 |
Tangible fixed assets |
|
|
Land and buildings |
|
Plant and machinery |
|
Motor Vehicles |
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Total |
|
|
At cost |
|
At cost |
|
At cost |
£ |
£ |
£ |
£ |
|
Cost or valuation |
|
At 1 January 2022 |
21,112 |
|
1,304,461 |
|
980,066 |
|
2,305,639 |
|
Additions |
103,860 |
|
55,022 |
|
80,000 |
|
238,882 |
|
Disposals |
- |
|
- |
|
(240,061) |
|
(240,061) |
|
At 31 December 2022 |
124,972 |
|
1,359,483 |
|
820,005 |
|
2,304,460 |
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
At 1 January 2022 |
5,258 |
|
1,159,688 |
|
444,984 |
|
1,609,930 |
|
Charge for the year |
12,497 |
|
91,475 |
|
75,053 |
|
179,025 |
|
On disposals |
- |
|
- |
|
(188,227) |
|
(188,227) |
|
At 31 December 2022 |
17,755 |
|
1,251,163 |
|
331,810 |
|
1,600,728 |
|
|
|
|
|
|
|
|
|
|
Carrying amount |
|
At 31 December 2022 |
107,217 |
|
108,320 |
|
488,195 |
|
703,732 |
|
At 31 December 2021 |
15,854 |
|
144,773 |
|
535,082 |
|
695,709 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
2021 |
£ |
£ |
|
Carrying value of plant and machinery included above held under finance leases and hire purchase contracts |
|
- |
|
105,002 |
|
|
|
|
|
|
|
|
|
|
9 |
Stocks |
2022 |
|
2021 |
£ |
£ |
|
|
Raw materials & finished goods |
860,843 |
|
708,493 |
|
|
|
|
|
|
|
|
|
|
10 |
Debtors |
2022 |
|
2021 |
£ |
£ |
|
|
Trade debtors |
5,688,168 |
|
4,433,259 |
|
Other debtors |
218,889 |
|
78,849 |
|
Prepayments and accrued income |
19,619 |
|
8,689 |
|
|
|
|
|
|
5,926,676 |
|
4,520,797 |
|
|
|
|
|
|
|
|
|
|
11 |
Creditors: amounts falling due within one year |
2022 |
|
2021 |
£ |
£ |
|
|
Obligations under finance lease and hire purchase contracts |
- |
|
43,842 |
|
Trade creditors |
6,646,449 |
|
5,109,893 |
|
Corporation tax |
132,241 |
|
212,183 |
|
Other taxes and social security costs |
219,528 |
|
282,703 |
|
Other creditors |
79,013 |
|
59,849 |
|
Accruals and deferred income |
221,847 |
|
197,669 |
|
|
|
|
|
|
7,299,078 |
|
5,906,139 |
|
|
|
|
|
|
|
|
|
|
|
12 |
Creditors: amounts falling due after one year |
2022 |
|
2021 |
£ |
£ |
|
|
Amounts owed to group undertakings and undertakings in which the company has a participating interest |
|
453,039 |
|
378,801 |
|
|
|
|
|
|
|
|
|
|
|
The company has given a guarantee to its bank in respect of loan taken out by its Holding company by way of a fixed and floating charge over all the assets of the company. |
|
|
13 |
Obligations under finance leases and hire purchase |
2022 |
|
2021 |
|
contracts |
£ |
£ |
|
|
Amounts payable: |
|
Within one year |
- |
|
43,842 |
|
|
|
|
|
|
|
|
|
|
14 |
Deferred taxation |
2022 |
|
2021 |
£ |
£ |
|
|
Accelerated capital allowances |
108,998 |
|
138,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
2021 |
£ |
£ |
|
|
At 1 January |
138,475 |
|
110,883 |
|
(Credited)/charged to the profit and loss account |
(29,477) |
|
27,592 |
|
|
At 31 December |
108,998 |
|
138,475 |
|
|
|
|
|
|
|
|
|
|
|
15 |
Share capital |
Nominal |
|
2022 |
|
2022 |
|
2021 |
value |
Number |
£ |
£ |
|
Allotted, called up and fully paid: |
|
Ordinary shares |
£1 each |
|
100 |
|
100 |
|
100 |
|
|
|
|
|
|
|
|
|
|
16 |
Profit and loss account |
2022 |
|
2021 |
£ |
£ |
|
|
At 1 January |
1,010,181 |
|
785,908 |
|
Profit for the financial year |
473,443 |
|
869,273 |
|
Dividends |
(14,500) |
|
(645,000) |
|
|
At 31 December |
1,469,124 |
|
1,010,181 |
|
|
|
|
|
|
|
|
|
|
17 |
Dividends |
2022 |
|
2021 |
£ |
£ |
|
|
Dividends on ordinary shares (note 16) |
14,500 |
|
645,000 |
|
|
|
|
|
|
|
|
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18 |
Related party transactions |
|
|
During the period Deepsleep Beds UK Ltd paid rents of £210,000 (2021:£213,750) to 4DS (Holdings) Ltd. Deepsleep Beds UK Ltd paid a dividend of £14,500 (2021:£645,000) to 4DS (Holdings) Ltd. |
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|
19 |
Controlling party |
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|
Deepsleep Beds (UK) ltd is under the Ultimate control of 4DS (Holdings) Ltd by virtue of it owning 100% of the share capital. |
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|
20 |
Presentation currency |
|
|
The financial statements are presented in Sterling. |
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|
21 |
Legal form of entity and country of incorporation |
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|
DEEPSLEEP BEDS UK LTD is a private company limited by shares and incorporated in England. |
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|
22 |
Principal place of business |
|
|
The address of the company's principal place of business and registered office is: |
|
Phase 2 |
|
Watneford Avenue |
|
Ossett |
|
West Yorkshire |
|
WF5 9NJ |