Company registration number 1524006 (England and Wales)
PANACHE LINGERIE LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
PANACHE LINGERIE LIMITED
COMPANY INFORMATION
Directors
S M Graham
D T Power
J A Power
L E Power
Secretary
W Montague
Company number
1524006
Registered office
7 Drake House Crescent
Waterthorpe
Sheffield
S20 7HT
Auditor
Hart Shaw LLP
Europa Link
Sheffield Business Park
Sheffield
S9 1XU
PANACHE LINGERIE LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 24
PANACHE LINGERIE LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 1 -
The directors present the strategic report for the year ended 30 June 2023.
Business review and key performance indicators
The Directors are pleased to report that the Company’s revenue has increased by 4.4% to £18.9m (2022: £18.2m). This not only represents a return to pre-pandemic sales levels but represents a multi-year high.
The Company’s gross margin of £9.3m (49.4%) is in line with the prior year of £9.3m (51.3%). The rising cost of freight we experienced post-Covid has eased during the year although gross margins have remained under pressure due to the devaluation of sterling relative to the US Dollar.
The Company has experienced rising inflation in it’s cost base. With limited ability to pass on these inflationary costs in the short term, the inflationary impact has been absorbed by the business. Also, after two years of consistent growth and cash generation across the Groups activities, the Directors have chosen to invest in the long-term future of the business. In particular, focus and investment have been made in product development, distribution, leadership, and IT. As a consequence distribution costs and administrative expenses have risen from £7,650k to £8,889k. Staff numbers have increased from 96 to 107.
The Company reports a Profit Before Tax of £538k which compares to a prior year of £1,835k.
At 30 June 2023 the Company had £0.3m in cash (2022: £1.1m) and net assets of £9m (2022: £8.8m)
Principal risks and uncertainties
The business is reliant on the success of the retail sector and broader economic trends but where risks can be identified they have been addressed and actions taken where possible to control them. Currency fluctuations, particularly with the US dollar, affect the group's trading and the business reduces any future impact of further uncertainty by placing forward contracts for future seasons. The retail sector is constantly changing and Panache aims to keep up with the trends and is constantly looking for new markets and outlets both globally and in the UK.
The devaluation of Sterling has represented a challenge to the Company’s gross margin over recent years although there is also an opportunity within the international side of the business. The Company is an experienced exported with robust processes in place. In the UK we operate a Bonded warehouse facility and hold AEO accreditation which benefits the cashflow of the business and reduces the financial impact of duties post Brexit.
Financial risk management objectives and policies
The group uses financial instruments comprising borrowings, cash and other liquid resources and various other items such as trade debtors and creditors that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the group's operations.
The existence of these financial instruments exposes the group to a number of financial risks, which are described in more detail below. In order to manage the group's exposure to those risks, in particular its exposure to currency risk, the group enters into a number of derivative transactions including, but not limited to, forward foreign currency contracts.
All transactions in derivatives are undertaken to manage the risks arising from underlying business activities and no transactions of a speculative nature are undertaken.
The main risks arising from the group's financial instruments are liquidity risk, interest rate risk and foreign currency exchange rate risk. The directors review and agree policies for managing each of these risks and they are summarised below. These policies have remained unchanged from previous years.
PANACHE LINGERIE LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 2 -
Liquidity risk
The group seeks to manage liquidity risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The group has a mixture of asset-based debt facilities and general bank overdraft facilities which are regularly reviewed to ensure the group has sufficient facilities available to enable it to maintain sufficient headroom at the expected levels of activity.
Interest rate risk
The group finances its operations through a mixture of retained earnings and bank borrowings. The group's exposure to interest rate fluctuations on its borrowings is managed through the use of both fixed and floating facilities.
Foreign currency exchange rate risk
The group manages its exposure to foreign exchange rate risk through the use of foreign currency bank accounts and foreign currency exchange rate options.
Going concern
The uncertainty as to the continued impact on the Company of the Covid-19 outbreak has eased during the year. Sales revenue has surpassed pre-pandemic levels although the Directors remain mindful of the potential impact on staff attendance and the possible disruption to our supply chain. To mitigate this risk, contingency has been built into purchasing lead times and inventory levels of best-selling lines have been increased in order to be able to continue to service our customers.
There remains uncertainty as to the impact of the Global Economic downturn, the rising cost of living and the devaluation of sterling. However, trading levels since the year end have been satisfactory, the Group’s forward order book is comparable to the prior year and foreign currency forward contracts are utilised to mitigate currency fluctuations. Given these factors and the level of cash reserves and financial headroom the Directors are confident that the Group will continue to trade profitably and solvently. Therefore, the going concern basis of preparation of the accounts is considered to be appropriate.
J A Power
Director
23 November 2023
PANACHE LINGERIE LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 3 -
The directors present their annual report and financial statements for the year ended 30 June 2023.
Principal activities
The principal activity of the company continued to be that of the wholesale distribution of ladies undergarments and swimwear.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £nil (2022 - £1,000,000). The directors do not recommend payment of a final dividend
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
S M Graham
D T Power
J A Power
L E Power
Auditor
The auditor, Hart Shaw LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and these financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.
PANACHE LINGERIE LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 4 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
J A Power
Director
23 November 2023
PANACHE LINGERIE LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PANACHE LINGERIE LIMITED
- 5 -
Opinion
We have audited the financial statements of Panache Lingerie Limited (the 'company') for the year ended 30 June 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 30 June 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
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.
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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' 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.
PANACHE LINGERIE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PANACHE LINGERIE LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not 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 remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was considered capable of detecting irregularities, including fraud and the audit response
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:
At the planning stage we identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience and through discussion with the directors and other management, as required by auditing standards. The potential effect of any laws and regulation on the financial statements can vary considerably. There are laws and regulations that directly affect the financial statements (e.g. the Companies Act) as well as many other operational laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements. Owing to the size, nature and complexity of the organisation and the applicable laws and regulations to which it must adhere, the risk of material misstatement was deemed to be low, therefore the procedures performed by the audit team were limited to:
Communicating identified laws and regulations at planning throughout the audit team to remain alert to any indications of non-compliance throughout the audit.
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as non-compliance with laws and regulations.
Reviewing minutes of meetings of those charged with governance.
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
PANACHE LINGERIE LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PANACHE LINGERIE LIMITED
- 7 -
We have assessed the overall susceptibility of the financial statements to material misstatement due to fraud. Management override is the most likely way in which fraud might present itself and as such is inherently high risk on any audit. Management override, which may cause there to be a material misstatement within the financial statements, may present itself in a number of ways, for example:
Override of internal controls (e.g. segregation of duties).
Entering into transactions outside the normal course of business, especially with related parties.
Fraudulent revenue recognition, including fictitious sales and sales being recorded in the wrong period.
Presenting bias in accounting judgements and estimates, particularly ones that are key to the business.
In order to reduce the risk of material misstatement to an acceptable level, numerous audit procedures were performed including:
Enquiries of management as to whether they had any knowledge of any actual or suspected fraud.
Review of material journal entries made throughout the year as well as those made to prepare the financial statements.
Reviewing the underlying rationale behind transactions in order to assess whether they were outside the normal course of business.
Increased revenue substantive testing across all material income streams.
Assessing whether management’s judgements and estimates indicated potential bias, particularly those disclosed as key in note 2 to the financial statements that are more susceptible to management bias.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected material misstatements in the financial statements, even though we have performed our audit in accordance with auditing standards. Furthermore, as with all audits, there is a higher risk of irregularities (especially those relating to fraud) being undetected, as these may involve the override of internal controls, collusion, intentional omissions and misrepresentations etc. We are not responsible for preventing non-compliance or fraud and therefore cannot be expected to detect all instances of such. Our audit was not designed to identify misstatements or other irregularities that would not be considered to be material to the financial statements. The further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Adam Shield
Senior Statutory Auditor
For and on behalf of Hart Shaw LLP
6 December 2023
Chartered Accountants
Statutory Auditor
Europa Link
Sheffield Business Park
Sheffield
S9 1XU
PANACHE LINGERIE LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
- 8 -
2023
2022
Notes
£'000
£'000
Turnover
3
18,909
18,188
Cost of sales
(9,568)
(8,894)
Gross profit
9,341
9,294
Distribution costs
(1,544)
(1,408)
Administrative expenses
(7,345)
(6,242)
Other operating income
598
537
Other operating charges
(359)
(403)
Fair value movements
(103)
77
Operating profit
4
588
1,855
Interest payable and similar expenses
7
(50)
(20)
Profit before taxation
538
1,835
Tax on profit
8
(90)
(377)
Profit for the financial year
448
1,458
Other comprehensive income
Currency translation loss
(230)
(76)
Total comprehensive income for the year
218
1,382
The profit and loss account has been prepared on the basis that all operations are continuing operations.
PANACHE LINGERIE LIMITED
BALANCE SHEET
- 9 -
2023
2022
Notes
£'000
£'000
£'000
£'000
Fixed assets
Intangible assets
11
165
65
Tangible assets
12
583
601
Investment property
13
1,500
1,500
Investments
14
610
610
2,858
2,776
Current assets
Stocks
17
5,161
3,920
Debtors
18
6,385
7,161
Cash at bank and in hand
335
1,737
11,881
12,818
Creditors: amounts falling due within one year
19
(5,696)
(6,769)
Net current assets
6,185
6,049
Net assets
9,043
8,825
Capital and reserves
Called up share capital
23
5
5
Capital redemption reserve
5
5
Profit and loss reserves
9,033
8,815
Total equity
9,043
8,825
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true
The financial statements were approved by the board of directors and authorised for issue on 23 November 2023 and are signed on its behalf by:
J A Power
Director
Company registration number 1524006 (England and Wales)
PANACHE LINGERIE LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 10 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
Notes
£'000
£'000
£'000
£'000
Balance at 1 July 2021
5
5
8,433
8,443
Year ended 30 June 2022:
Profit
-
-
1,458
1,458
Other comprehensive income:
Currency translation differences
-
-
(76)
(76)
Total comprehensive income
-
-
1,382
1,382
Dividends
9
-
-
(1,000)
(1,000)
Balance at 30 June 2022
5
5
8,815
8,825
Year ended 30 June 2023:
Profit
-
-
448
448
Other comprehensive income:
Currency translation differences
-
-
(230)
(230)
Total comprehensive income
-
-
218
218
Balance at 30 June 2023
5
5
9,033
9,043
PANACHE LINGERIE LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 11 -
1
Accounting policies
Company information
Panache Lingerie Limited is a private company, limited by shares and incorporated in England and Wales. The registered office is 7 Drake House Crescent, Waterthorpe, Sheffield, S20 7HT.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £'000.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: The disclosure requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b), 11.48(c), 12.26, 12.27, 12.29(a), 12.29(b), and 12.29A;
Section 26 ‘Share based Payment’: Share based payment arrangements required under FRS 102 paragraphs 26.18(b), 26.19 to 26.21 and 26.23;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
Panache Lingerie Limited is a wholly owned subsidiary of Panache Holdings Limited and the results of Panache Lingerie Limited are included in the consolidated financial statements of Panache Holdings Limited which are available from companies house.
1.2
Going concern
Atruet 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. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
PANACHE LINGERIE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 12 -
1.4
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Software
33% on cost
Trademark
10% on cost
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Fixtures and fittings
10 - 33% straight line
Computers
20 - 33% straight line
Motor vehicles
25% straight line
Freehold land is not depreciated.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
Investment properties
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.
1.7
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.8
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
PANACHE LINGERIE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 13 -
1.9
Stocks
Stocks are stated at the lower of cost and net realisable value. The company uses standard costing.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.10
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.11
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
PANACHE LINGERIE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 14 -
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in the profit or loss account.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.12
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.13
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
PANACHE LINGERIE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 15 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
1.14
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.15
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.16
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.17
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.18
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss. Non monetary items which represent investment in overseas operations that are denominated in foreign currencies are retranslated on the reporting date, gains and losses are recognised in other comprehensive income.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
PANACHE LINGERIE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 16 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Stock valuation
The directors have used their knowledge and experience of the fashion industry in determining the level and rates of provisioning required to calculate the appropriate stock carrying values. Stock is carried in the financial statements at the lower of cost and net realisable value. Sales in the fashion industry can be extremely volatile with consumer demand changing significantly based on current trends. As a result, there is a risk that the cost of stock exceeds its net realisable value. Management calculate the stock provision on the basis of the ageing profile of what is in stock. Adjustments are made where appropriate based on directors’ knowledge and experience to calculate the appropriate stock carrying values. Actual outcomes could vary significantly.
3
Turnover and other revenue
2023
2022
£'000
£'000
Turnover analysed by geographical market
United Kingdom
9,444
9,488
Rest of Europe
5,638
5,224
Rest of World
3,827
3,476
18,909
18,188
2023
2022
£'000
£'000
Other revenue
Grants received
7
-
Management fees
591
537
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£'000
£'000
Government grants
(7)
-
Fees payable to the company's auditor for the audit of the company's financial statements
21
21
Depreciation of owned tangible fixed assets
79
66
Impairment of owned tangible fixed assets
136
Profit on disposal of tangible fixed assets
-
(48)
Amortisation of intangible assets
48
43
Operating lease charges
528
490
PANACHE LINGERIE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 17 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Warehouse
33
31
Distribution
10
9
Admin
64
56
Total
107
96
Their aggregate remuneration comprised:
2023
2022
£'000
£'000
Wages and salaries
3,526
3,040
Social security costs
344
244
Pension costs
123
89
3,993
3,373
6
Directors' remuneration
2023
2022
£'000
£'000
Remuneration for qualifying services
253
384
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£'000
£'000
Remuneration for qualifying services
153
303
7
Interest payable and similar expenses
2023
2022
£'000
£'000
Interest on bank overdrafts and loans
48
20
Other interest
2
50
20
PANACHE LINGERIE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 18 -
8
Taxation
2023
2022
£'000
£'000
Current tax
UK corporation tax on profits for the current period
20
370
Adjustments in respect of prior periods
38
101
Total current tax
58
471
Deferred tax
Origination and reversal of timing differences
32
(94)
Total tax charge
90
377
On 1 April 2023, the corporation tax rate attributable to the company changed from 19% to 25%.
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£'000
£'000
Profit before taxation
538
1,835
Expected tax charge based on the standard rate of corporation tax in the UK of 20.50% (2022: 19.00%)
110
349
Tax effect of expenses that are not deductible in determining taxable profit
5
29
Adjustments in respect of prior years
38
(1)
Effect of change in corporation tax rate
(47)
Deferred tax adjustments in respect of prior years
(12)
Enhanced capital allowances
(4)
Taxation charge for the year
90
377
9
Dividends
2023
2022
£'000
£'000
Interim paid
1,000
PANACHE LINGERIE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 19 -
10
Impairments
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
2023
2022
Notes
£'000
£'000
In respect of:
Property, plant and equipment
12
136
Recognised in:
Administrative expenses
-
136
11
Intangible fixed assets
Software
Trademark
Total
£'000
£'000
£'000
Cost
At 1 July 2022
1,338
16
1,354
Additions
148
148
At 30 June 2023
1,486
16
1,502
Amortisation and impairment
At 1 July 2022
1,279
10
1,289
Amortisation charged for the year
48
48
At 30 June 2023
1,327
10
1,337
Carrying amount
At 30 June 2023
159
6
165
At 30 June 2022
59
6
65
PANACHE LINGERIE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 20 -
12
Tangible fixed assets
Freehold land and buildings
Fixtures and fittings
Computers
Motor vehicles
Total
£'000
£'000
£'000
£'000
£'000
Cost
At 1 July 2022
490
987
513
155
2,145
Additions
1
10
50
61
At 30 June 2023
490
988
523
205
2,206
Depreciation and impairment
At 1 July 2022
136
920
462
26
1,544
Depreciation charged in the year
19
13
47
79
At 30 June 2023
136
939
475
73
1,623
Carrying amount
At 30 June 2023
354
49
48
132
583
At 30 June 2022
354
67
51
129
601
More information on impairment movements in the year is given in note 10.
Amounts included in bank loans and overdrafts are secured on the freehold property and the investment property.
The cost/valuation of freehold land is made up of land held at deemed cost, less impairments based on a directors' valuation at 1 July 2014. The historical cost of the land is £1,194,000. Land is not depreciated.
13
Investment property
2023
£'000
Fair value
At 1 July 2022 and 30 June 2023
1,500
All investment property is situated at one site. The directors are of the opinion that the fair value of the property has not materially changed during the period, and as such no valuation has taken place.
14
Fixed asset investments
2023
2022
Notes
£'000
£'000
Investments in subsidiaries
15
610
610
PANACHE LINGERIE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 21 -
15
Subsidiaries
Details of the company's subsidiaries at 30 June 2023 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Indirect
Panache Licensing Limited
7 Drake House Crescent, Waterthorpe, Sheffield, South Yorkshire, S20 7HT
Ordinary
100.00
-
Panache Contracts Lingerie Limited
7 Drakehouse Crescent, Waterthorpe, Sheffield, South Yorkshire, S20 7HT
Ordinary
100.00
-
Panache North America Inc
286 Madison Avenue, 23rd Floor, New York, United States, NY 10017
Ordinary
100.00
-
Panache Lingerie Canada
Fasken Martineau, 333 Bay Street, Suite 2400, Bay Adelaide Centre, Box 20, Toronto, Canada, M5 2T6
Ordinary
100.00
-
Panache Lingerie Asia Limited
16/F, Shing Lee Commercial Building, 8 Wing Kut Street, Central, Hong Kong
Ordinary
100.00
-
Panache China Limited
Panache House, 7 Drake House Crescent, Sheffield, S20 7HT
Ordinary
-
100.00
Panache Europe Group GmbH
Ganghoferstraße 31, 80339 München, Germany
Ordinary
100.00
-
16
Financial instruments
2023
2022
£'000
£'000
Carrying amount of financial assets
Instruments measured at fair value through profit or loss
-
62
Carrying amount of financial liabilities
Measured at fair value through profit or loss
- Other financial liabilities
40
-
The company enters into forward contracts to purchase foreign currency so as to mitigate its exchange rate risks. These forward contracts are held at fair value.
17
Stocks
2023
2022
£'000
£'000
Finished goods and goods for resale
5,161
3,920
Barclays Bank plc hold security over stock held by the company.
Included within the value of stocks is a write down provision of £1,476,000 (2022 - £1,011,000).
PANACHE LINGERIE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 22 -
18
Debtors
2023
2022
Amounts falling due within one year:
£'000
£'000
Trade debtors
2,724
3,141
Amounts owed by group undertakings
3,241
3,528
Derivative financial instruments
-
62
Other debtors
9
Prepayments and accrued income
356
325
6,321
7,065
Deferred tax asset (note 21)
64
96
6,385
7,161
Included within trade debtors are amounts that are subject to an invoice discount agreement.
Amounts owed by group are not secured, no interest is charged and they are repayable on demand.
19
Creditors: amounts falling due within one year
2023
2022
Notes
£'000
£'000
Bank loans and overdrafts
20
1,704
845
Trade creditors
1,007
2,165
Amounts owed to group undertakings
1,346
1,384
Corporation tax
4
256
Other taxation and social security
513
627
Derivative financial instruments
40
Other creditors
23
39
Accruals and deferred income
1,059
1,453
5,696
6,769
Amounts owed to group are not secured, no interest is charged and they are repayable on demand.
More information about bank loans and overdrafts can be found on note 20.
20
Loans and overdrafts
2023
2022
£'000
£'000
Bank loans
1,088
845
Bank overdrafts
616
1,704
845
Payable within one year
1,704
845
PANACHE LINGERIE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
20
Loans and overdrafts
(Continued)
- 23 -
The banking facilities of the company, for which advanced amounts are disclosed above as bank loans, are secured by an all monies debenture over the assets of the group, including the freehold land and buildings and the investment property.
One of the bank loans is paid in 12 monthly instalments of £3,475, maturing May 2024 with a lump sum payment of £756,580. Interest is charged at 6%.
The second bank loan is a trading loan and is due to be fully repaid in 3 months by a lump sum. Interest is charged at a fixed rate of 7.5%.
Amounts included in bank overdrafts relate to an invoice discounting facility and are secured over the trade debtors of the company,
21
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2023
2022
Balances:
£'000
£'000
Accelerated capital allowances
(57)
(31)
Short term timing differences
121
127
64
96
2023
Movements in the year:
£'000
Asset at 1 July 2022
(96)
Charge to profit or loss
32
Asset at 30 June 2023
(64)
The deferred tax liability set out above is expected to reverse within 3 years and relates to accelerated capital allowances that are expected to mature within the same period. The deferred tax asset which relates to short term timing differences is expected to reverse within 1 year.
22
Retirement benefit schemes
2023
2022
Defined contribution schemes
£'000
£'000
Charge to profit or loss in respect of defined contribution schemes
123
89
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
PANACHE LINGERIE LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 24 -
23
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£'000
£'000
Issued and fully paid
Ordinary shares of £1 each
4,800
4,800
5
5
24
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£'000
£'000
Within one year
559
540
Between two and five years
1,794
968
2,353
1,508
25
Related party transactions
The company has taken advantage of the exemptions allowed by FRS 102 section 33.1A and has not disclosed transactions with wholly owned subsidiaries. The company's accounts are consolidated into the accounts of the parent company as a wholly owned subsidiary.
26
Ultimate controlling party
The ultimate parent company is Panache Holdings Limited, a company registered in England & Wales, who are the largest and smallest group company to prepare group consolidated accounts. The group accounts are available at companies house. The registered office is 7 Drake House Crescent, Waterthorpe, Sheffield, S20 7HT.
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