REGISTERED NUMBER: |
REPORT OF THE DIRECTOR AND |
FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
FOR |
ZEPP HEALTH UK LIMITED |
REGISTERED NUMBER: |
REPORT OF THE DIRECTOR AND |
FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 DECEMBER 2022 |
FOR |
ZEPP HEALTH UK LIMITED |
ZEPP HEALTH UK LIMITED (REGISTERED NUMBER: 11603455) |
CONTENTS OF THE FINANCIAL STATEMENTS |
for the Year Ended 31 December 2022 |
Page |
Company Information | 1 |
Report of the Director | 2 |
Report of the Independent Auditors | 3 |
Income Statement | 6 |
Balance Sheet | 7 |
Notes to the Financial Statements | 8 |
ZEPP HEALTH UK LIMITED |
COMPANY INFORMATION |
for the Year Ended 31 December 2022 |
DIRECTOR: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Statutory Auditors |
Herschel House |
58 Herschel Street |
Slough |
Berkshire |
SL1 1PG |
ZEPP HEALTH UK LIMITED (REGISTERED NUMBER: 11603455) |
REPORT OF THE DIRECTOR |
for the Year Ended 31 December 2022 |
The director presents his report with the financial statements of the company for the year ended 31 December 2022. |
DIRECTOR |
STATEMENT OF DIRECTOR'S RESPONSIBILITIES |
The director is responsible for preparing the Report of the Director and the financial statements in accordance with applicable law and regulations. |
Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is 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 director is 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 director is 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 him to ensure that the financial statements comply with the Companies Act 2006. He is 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. |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the director is aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information. |
AUDITORS |
The auditors, Oury Clark Chartered Accountants, are deemed to be re-appointed under Section 487 (2) of the Companies Act 2006. |
This report has been prepared in accordance with the provisions of Part 15 of the Companies Act 2006 relating to small companies. |
ON BEHALF OF THE BOARD: |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
ZEPP HEALTH UK LIMITED |
Disclaimer of opinion |
We were engaged to audit the financial statements of Zepp Health UK Limited (the 'company') for the year ended 31 December 2022 which comprise the Income Statement, Balance Sheet and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice). |
We do not express an opinion on the accompanying financial statements of the company. Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements. |
Basis for disclaimer of opinion |
In the course of conducting our audit, we were unable to obtain sufficient evidence over the full amount of turnover from non-group companies to the value of £657,691. There were discrepancies in the quantities of stock sold by the company and the quantities received by the customer, which management were unable to reconcile. In addition, for two reasons we were unable to obtain sufficient audit evidence over stocks to the value of £237,458. This made up the full balance of stock as at 31 December 2022. Firstly we were only made aware that the company owned stock in a second warehouse after the period end which contained a value of £24,453, therefore we were unable to physically verify this stock at the period end. Secondly, the stock in the financial statements was overstated by £143,856 in comparison to the stock listing held by the other third party warehouse. As a result we were also unable to conclude on the accuracy of Cost of sales, which had a balance of £384,034 and therefore Retained earnings included as at 31 December 2022. It is not practicable to quantify the full financial effects of these potential misstatements. As a result of these matters, we were unable to determine whether any adjustments might have been found necessary in respect of Stock, Turnover, Taxation and social security creditor, Deferred revenue, Trade debtors and the elements making up the Income Statement and Balance Sheet. |
Identifying and assessing potential irregularities, including fraud |
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following: |
- Considering the nature of the industry, sector, control environment and current business activities, including possible performance targets and subsequent remuneration. |
- Enquiring of management concerning policies and procedures relating to: |
1. Complying with laws and regulations and whether there were any instances of non-compliance. |
2. Mitigating, detecting and responding to fraud risk and whether there has been any actual or possible instances of fraud. |
- Discussing within the engagement team and internal specialists where necessary, regarding how and where fraud may occur in the financial statements along with the possible indicators of fraud. We identified the following areas most likely to be susceptible to fraud: |
1. Revenue recognition; |
2. Stock manipulation; |
3. Management override. |
- Discussing within the engagement team and internal specialists where necessary, the legal and regulatory framework in which the company operates and in particular those which would have an impact on the financial statements. The key laws and regulations considered were the Companies Act 2006, UK tax legislation and UK employment law. |
We were unable to gain assurance on whether fraud had occurred in relation to revenue or stock due to the limitation of scope describe above. |
Audit response to the risks identified |
Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have been unable to carry out sufficient appropriate procedures to detect irregularities, including fraud and non-compliance with laws and regulations. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
ZEPP HEALTH UK LIMITED |
Other information |
The directors are responsible for the other information. The other information comprises the information in the Report of the Directors but does not include the financial statements and our Report of the Auditors thereon. |
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. |
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is inconsistent with the financial statements, or our knowledge obtained in the audit or otherwise appears to be misstated. If we identify such inconsistencies or apparent 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 misstatement of this other information, we are required to report that fact. |
Opinions on other matters prescribed by the Companies Act 2006 |
Notwithstanding our disclaimer of opinion on the financial statements, in our opinion, based on the work undertaken in the course of the audit: |
- The other information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- The directors' report has been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception |
Notwithstanding our disclaimer of an opinion on the financial statements, in light of the knowledge and understanding of the company and its environment obtained in the course of the audit performed subject to the pervasive limitation described above, we have not identified any matters in the Report of the Directors that are inconsistent with our overall view of the financial statements. |
Arising from the limitation of our work referred to the above: |
- We have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and |
- We were unable to determine whether adequate accounting records have been kept. |
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: |
- 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 |
- The directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemptions in preparing the directors' report and from the requirement to prepare a strategic report. |
Responsibilities of director |
As explained more fully in the Statement of Director's Responsibilities set out on page two, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
ZEPP HEALTH UK LIMITED |
Auditors' responsibilities for the audit of the financial statements |
Our responsibility is to conduct an audit of the company's financial statements in accordance with International Standards on Auditing (UK) and to issue an auditors' report. |
However, because of the matter described in the basis for disclaimer of opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements. |
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. |
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at ww.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors. |
Use of our report |
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. |
for and on behalf of |
Statutory Auditors |
Herschel House |
58 Herschel Street |
Slough |
Berkshire |
SL1 1PG |
ZEPP HEALTH UK LIMITED (REGISTERED NUMBER: 11603455) |
INCOME STATEMENT |
for the Year Ended 31 December 2022 |
31.12.22 | 31.12.21 |
Notes | £ | £ |
TURNOVER |
Cost of sales |
GROSS PROFIT |
Administrative expenses |
58,961 | 14,339 |
Other operating income |
OPERATING PROFIT | 4 |
Interest receivable and similar income |
PROFIT BEFORE TAXATION |
Tax on profit |
PROFIT FOR THE FINANCIAL YEAR |
ZEPP HEALTH UK LIMITED (REGISTERED NUMBER: 11603455) |
BALANCE SHEET |
31 December 2022 |
31.12.22 | 31.12.21 |
Notes | £ | £ | £ | £ |
FIXED ASSETS |
Tangible assets | 5 |
CURRENT ASSETS |
Stocks |
Debtors | 6 |
Cash at bank |
CREDITORS |
Amounts falling due within one year | 7 |
NET CURRENT LIABILITIES | ( |
) | ( |
) |
TOTAL ASSETS LESS CURRENT LIABILITIES |
( |
) |
( |
) |
CAPITAL AND RESERVES |
Called up share capital | 9 |
Capital contribution reserve | 10 |
Retained earnings | 10 | ( |
) | ( |
) |
SHAREHOLDERS' FUNDS | ( |
) | ( |
) |
The financial statements were approved by the director and authorised for issue on |
ZEPP HEALTH UK LIMITED (REGISTERED NUMBER: 11603455) |
NOTES TO THE FINANCIAL STATEMENTS |
for the Year Ended 31 December 2022 |
1. | STATUTORY INFORMATION |
Zepp Health UK Limited is a |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
The company has obtained a letter of support from its ultimate parent company. The directors have provided a commitment to provide any financial support which may be necessary in order that the company can meet its liabilities, as they fall due, for the foreseeable future being a period in excess of 12 months and 1 day following the signing of the audit report. As a result of this commitment the director has continued to adopt the going concern basis in preparing these financial statements. |
Related party exemption |
The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group. |
Turnover |
Turnover is measured at fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. |
Turnover of the company consists of sales of goods to external customers and intergroup sales with group companies. |
Sales of goods are recognised when goods are delivered and the risks and rewards are transferred to the customer. |
Intergroup sales is a cost recharge to group companies. This is charged in accordance with their agreements and recognised when re-chargeable expenses are incurred. |
Tangible fixed assets |
Tangible assets are initially measured at cost. After initial recognition, tangible assets are measured at cost less any accumulated depreciation and any accumulated impairment losses. |
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life: |
Computer equipment - Straight line over 3 to 5 years |
Stocks |
The cost of stocks is determined by the weighted average costing method. |
Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. |
Financial instruments |
Basic financial instruments are covered by Section 11 of FRS 102 (Section 1A) are measured at amortised cost. The company does not have any other financial instruments as covered by Section 12 of FRS 102 (Section 1A). |
ZEPP HEALTH UK LIMITED (REGISTERED NUMBER: 11603455) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the Year Ended 31 December 2022 |
2. | ACCOUNTING POLICIES - continued |
Taxation |
Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. |
Current or deferred taxation assets and liabilities are not discounted. |
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. |
Deferred tax |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. |
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference. |
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. |
Foreign currencies |
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result. |
Hire purchase and leasing commitments |
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease. |
Pension costs and other post-retirement benefits |
The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate. |
Share-based payments |
At the year end the company has an employment related transaction scheme: restricted share units (RSU). The scheme is equity-settled and awards shares over a 1 to 5 year period to employees in exchange for the rendering of services. |
The cost of equity-settled transactions is measured at the fair value of share value at time of grant. The fair value is determined by the open market value of the shares. |
The cost of equity-settled transactions is recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. |
The RSU share awards expense was recognised on a reasonable allocation of the group expense. |
3. | EMPLOYEES AND DIRECTORS |
The average number of employees during the year was |
ZEPP HEALTH UK LIMITED (REGISTERED NUMBER: 11603455) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the Year Ended 31 December 2022 |
4. | OPERATING PROFIT |
The operating profit is stated after charging: |
31.12.22 | 31.12.21 |
£ | £ |
Depreciation - owned assets |
5. | TANGIBLE FIXED ASSETS |
Plant and |
machinery |
etc |
£ |
COST |
At 1 January 2022 |
Additions |
At 31 December 2022 |
DEPRECIATION |
At 1 January 2022 |
Charge for year |
At 31 December 2022 |
NET BOOK VALUE |
At 31 December 2022 |
At 31 December 2021 |
6. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
31.12.22 | 31.12.21 |
£ | £ |
Trade debtors |
Amounts owed by group undertakings |
Other debtors |
7. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
31.12.22 | 31.12.21 |
£ | £ |
Trade creditors |
Amounts owed to group undertakings |
Taxation and social security |
Other creditors & accruals |
ZEPP HEALTH UK LIMITED (REGISTERED NUMBER: 11603455) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the Year Ended 31 December 2022 |
8. | LEASING AGREEMENTS |
Minimum lease payments under non-cancellable operating leases fall due as follows: |
31.12.22 | 31.12.21 |
£ | £ |
Within one year |
9. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 31.12.22 | 31.12.21 |
value: | £ | £ |
Ordinary | £1 | 100 | 100 |
10. | RESERVES |
Capital |
Retained | contribution |
earnings | reserve | Totals |
£ | £ | £ |
At 1 January 2022 | (162,777 | ) | 46,085 | (116,692 | ) |
Profit for the year | 59,085 | 59,085 |
Charge for the year | - | 6,504 | 6,504 |
At 31 December 2022 | (103,692 | ) | 52,589 | (51,103 | ) |
11. | SHARE-BASED PAYMENT TRANSACTIONS |
At the year end the company had an equity settled share based payment scheme in operation with its employees; the 2018 Share Incentive Plan: Restricted Share Unit Awards (RSU). |
The equity awarded is that of the ultimate parent company Zepp Health Corporation (incorporated in the Cayman Islands). The 2018 Share Incentive Plan awards shares to the employees over a 1 to 5 year period. |
i) 8,000 RSU share awards were outstanding at the beginning of the period; |
ii) 12,000 RSU share awards were granted during the year; |
iii) No RSU share awards were forfeited during the year; |
iv) 15,200 RSU share awards were exercised during the year; |
v) 4,800 RSU share awards were outstanding at the end of the period. |
The share based payment charge for the year amounted to £6,504 (2021: £-491). |
The share based payment expense is recognised on a reasonable allocation of the group expense. |
There were no liabilities arising from share-based transactions. |
ZEPP HEALTH UK LIMITED (REGISTERED NUMBER: 11603455) |
NOTES TO THE FINANCIAL STATEMENTS - continued |
for the Year Ended 31 December 2022 |
12. | ULTIMATE PARENT COMPANY |
At the balance sheet date the Company was a wholly-owned subsidiary undertaking of Zepp Europe Holding B.V., a company incorporated in the Netherlands with its registered office situated at Joop Geesinkweg 901, 1114AB Amsterdam-Duivendrecht, Netherlands. |
The ultimate parent company is Zepp Health Corporation, a company incorporated in Cayman Islands with its registered office situated at the offices of Maples Corporate Services Limited at PO Box 309 Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Zepp Health Corporation is the largest and only group company to prepare consolidated financial statements. |