Company registration number 14125126 (England and Wales)
MORPHY RICHARDS CONSUMER APPLIANCES LIMITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
PAGES FOR FILING WITH REGISTRAR
MORPHY RICHARDS CONSUMER APPLIANCES LIMITED
CONTENTS
Page
Balance sheet
1
Statement of changes in equity
2
Notes to the financial statements
3 - 9
MORPHY RICHARDS CONSUMER APPLIANCES LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 1 -
2023
2022
as restated
Notes
£
£
£
£
Fixed assets
Intangible assets
5
30,278,542
31,897,597
Current assets
Debtors
6
960,189
57,045
Cash at bank and in hand
128,765
24
1,088,954
57,069
Creditors: amounts falling due within one year
7
(23,885)
(10,883)
Net current assets
1,065,069
46,186
Net assets
31,343,611
31,943,783
Capital and reserves
Called up share capital
8
10,000,000
10,000,000
Share premium account
9
22,381,097
22,381,097
Profit and loss reserves
(1,037,486)
(437,314)
Total equity
31,343,611
31,943,783
The notes on pages 3 to 9 form part of these financial statements.
The director of the company has elected not to include a copy of the profit and loss account within the financial statements.true
These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements were approved by the board of directors and authorised for issue on 16 August 2024 and are signed on its behalf by:
J Guo
Director
Company registration number 14125126 (England and Wales)
MORPHY RICHARDS CONSUMER APPLIANCES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
As restated for the period ended 31 December 2022:
Balance at 23 May 2022
-
Period ended 31 December 2022:
Loss and total comprehensive income
-
-
(437,314)
(437,314)
Issue of share capital
8
10,000,000
22,381,097
-
32,381,097
Balance at 31 December 2022
10,000,000
22,381,097
(437,314)
31,943,783
Year ended 31 December 2023:
Loss and total comprehensive income
-
-
(535,978)
(535,978)
Dividends
4
-
-
(64,194)
(64,194)
Balance at 31 December 2023
10,000,000
22,381,097
(1,037,486)
31,343,611
The notes on pages 3 to 9 form part of these financial statements.
MORPHY RICHARDS CONSUMER APPLIANCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
1
Accounting policies
Company information
Morphy Richards Consumer Appliances Limited is a private company limited by shares incorporated in England and Wales. The registered office is 6th Floor, Manfield House, 1 Southampton Street, London, WC2R 0LR.
1.1
Reporting period
The prior year financial statements cover the period from incorporation to 31 December 2022, aligning with the group's reporting date. The current year represents a full 12 months from 1 January 2023 to 31 December 2023. The comparative period is therefore not directly comparable.
1.2
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 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
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 £1.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.3
Going concern
At the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. In forming this expectation, the director has considered the period of the company's agreed contracts and the company's expenditure minimal requirements. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
1.4
Turnover
Turnover represents royalties from licensed intellectual property, and is recognised at the fair value of consideration received or receivable, net of VAT and other sales related taxes. Royalty income is recognised when it is probable that the economic benefits will flow to the enterprise and the amount of revenue can be measured reliably. The revenue is recognised on an accruals basis, in accordance with the royalty periods specified within individual royalty agreements.
1.5
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.
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:
Intellectual property
20 years straight line
MORPHY RICHARDS CONSUMER APPLIANCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 4 -
Intangible assets represents a group of trademarks relating to a long established brand name. The trademarks have various terms and renewal dates and are infinitely renewable, subject to a nominal fee. Consequently, the useful economic life of the intangible assets cannot be reliably estimated.
In accordance with FRS 102 1AC.6, the directors must disclose the reasons for selecting a useful economic life where a reliable estimate cannot be made. In selecting the useful economic life, the directors have selected a 20 year economic life, representing a typical trademark term of 10 years, plus one renewal period as a reliable estimate cannot be made of furthur renewals.
The adoption of the cost model represents a change in accounting policy, as disclosed in note 13.
1.6
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.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.7
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.
1.8
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.
MORPHY RICHARDS CONSUMER APPLIANCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 5 -
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.
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, 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.
1.9
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.
1.10
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.
MORPHY RICHARDS CONSUMER APPLIANCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 6 -
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.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
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.
2
Change in accounting policy
The accounting policy regarding the measurement of intangible assets has been changed to the cost model this year. Previously the accounting policy was to use the revaluation model, with a valuation to be performed every 2 years. This change has been enacted to align the accounting policy with the requirements of FRS 102, as explained in note 13.
3
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Total
2
4
4
Dividends
2023
2022
£
£
Interim paid
64,194
MORPHY RICHARDS CONSUMER APPLIANCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
4
Dividends
(Continued)
- 7 -
On 3 March 2023, a dividend of £64,194 was paid to shareholders. At the time of declaration and payment of the dividend, management information suggested that sufficient distributable reserves were available to make a distribution. In light of the circumstances noted for restatement detailed in note 13, the company would not have had sufficient distributable reserves to lawfully make the distribution.
In accordance with the Companies Act section 847, as the directors had substantiated the interim dividend at the time of declaration and payment, a liability to repay is not expected to arise. The directors undertake to make no further distributions until such time as there are reserves available for this purpose.
5
Intangible fixed assets
Intellectual property
£
Cost
At 1 January 2023 and 31 December 2023
32,381,096
Amortisation and impairment
At 1 January 2023
483,499
Amortisation charged for the year
1,619,055
At 31 December 2023
2,102,554
Carrying amount
At 31 December 2023
30,278,542
At 31 December 2022
31,897,597
The carrying value of intangible assets relates to a group of trademarks treated as a single cash generating unit with a single useful economic life. The remaining amortisation period as at the reporting date is 18 years and 8 months (2022: 19 years and 8 months).
6
Debtors
2023
2022
Amounts falling due within one year:
£
£
Amounts owed by group undertakings
57,045
Prepayments and accrued income
620,364
620,364
57,045
2023
2022
Amounts falling due after more than one year:
£
£
Deferred tax asset
339,825
Total debtors
960,189
57,045
MORPHY RICHARDS CONSUMER APPLIANCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
6
Debtors
(Continued)
- 8 -
The amounts owed by group companies were unsecured, interest free and repayable on demand.
7
Creditors: amounts falling due within one year
2023
2022
£
£
Corporation tax
10,833
Other taxation and social security
3,201
Other creditors
20,684
50
23,885
10,883
8
Called up share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
10,000,000
10,000,000
10,000,000
10,000,000
All shares have attached to them full voting, dividend and capital distribution (including on winding up) rights. Ordinary shares do not include a right to redemption.
9
Share premium account
In the period ended 31 December 2022, the company issued 9,999,999 shares of £1 each. The consideration was satisfied by the transfer of intellectual property valued at £32,381,095. The difference between the fair value of the consideration received and nominal value of the shares issued has been recognised as share premium.
10
Audit report information
As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:
The auditor's report was unqualified.
Senior Statutory Auditor:
Nicholas Nicolaou FCCA
Statutory Auditor:
Alliotts LLP
Date of audit report:
19 August 2024
11
Related party transactions
The following amounts were outstanding at the reporting end date:
2023
2022
Amounts due from related parties
£
£
Entities with control, joint control or significant influence over the company
-
57,044
MORPHY RICHARDS CONSUMER APPLIANCES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
11
Related party transactions
(Continued)
- 9 -
Other information
The company has taken advantage of the exemption under FRS 102, para 1AC.35, stating that details need not be given in respect of transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly-owned by such a member.
12
Parent company
As of 8 March 2023, the smallest group for which consolidated financial statements will be drawn up is headed by Guangdong Xinbao Electrical Appliances Holdings Co. Limited, a company whose registered office is Zhenghe South Road, Leliu Town, Shunde District, Foshan, China.
Prior to 8 March 2023, the company's immediate parent company was Morphy Richards Limited, a company registered in Northern Ireland. The ultimate parent company was Kilkee Investments Unlimited, a company incorporated in the Isle of Man. The controlling shareholder was M. Naughton.
The smallest group in which the results of the company were consolidated was that of Glen Electric Limited, Rampart Road, Greenbank Industrial Estate, Warrenpoint Road, Newry, Co. Down, BT34 2QU, whose consolidated financial statements can be obtained from Companies House. The largest group in which the results of the company were consolidated was that of Glen Dimplex Europe Holdings Limited, with registered office of Airport Road, Cloghran, Co. Dublin, and whose consolidated financial statements are available to the public and may be obtained from the Companies Registration Office (Ireland).
13
Prior period adjustment
Reconciliation of changes in equity
23 May
31 December
2022
2022
Notes
£
£
Adjustments to prior year
Recognition of amortisation on intellectual property
(i)
-
(483,499)
Equity as previously reported
-
32,427,282
Equity as adjusted
-
31,943,783
Analysis of the effect upon equity
Profit and loss reserves
-
(483,499)
Notes to reconciliation
(i) Recognition of amortisation on intellectual property
In the prior period, the company's stated accounting policy in respect of intellectual property was to carry the intangible assets at fair value, with that fair value being determined by reference to an active market.
Upon further consideration, the directors do not consider there to be an active market for the intellectual property, and consequently consider the initial accounting policy to be inappropriate. The revised accounting policy, as disclosed in note 1.4, is to hold the intangible assets at cost less accumulated amortisation and impairment in accordance with FRS 102 18.18A.
A prior period adjustment has been recognised to record the appropriate amortisation on the intangible assets in the period ended 31 December 2022.
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