Megaman (UK) Limited - Limited company accounts 20.1

REGISTERED NUMBER: 04078537 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements for the Year Ended 31 December 2020

for

Megaman (UK) Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Income Statement

8

Other Comprehensive Income

9

Balance Sheet

10

Statement of Changes in Equity

11

Cash Flow Statement

12

Notes to the Cash Flow Statement

13

Notes to the Financial Statements

14

DIRECTORS:

W T Lee

K C Chan

G Krise

Mrs D Swann

SECRETARY:

Mrs D Swann

REGISTERED OFFICE:

Unit 2 Quadrant Park

Mundells

Welwyn Garden City

Hertfordshire

AL7 1FS

REGISTERED NUMBER:

04078537 (England and Wales)

AUDITORS:

NSO Associates LLP

Statutory Auditors

75 Springfield Road

Chelmsford

Essex

CM2 6JB

The directors present their strategic report for the year ended 31 December 2020.

Megaman (UK) Limited is a low energy lighting company, providing product to the electrical trade and OEM. It is fully owned by Neonlite Distribution Ltd.

REVIEW OF BUSINESS

2020 was the year that we gained market share in the lighting fixture market, we grew our trade business and a year that continued our transition from Lamp Manufacturer to a Lighting Solutions Company. During 2020 we had to deal with the effects of the Coronavirus and although this affected our sales during Q2 we recovered those lost sales in Q4.

As reported in the company's profit and loss account, revenue declined by 5% from 5.8M (2019) to 5.5M in 2020. Most of this decline was due to price erosion and a decline in our OEM Business, The products affected by this decline were from our LED lamps side, We have now put in place a number of correcting actions to reverse this decline in 2021. However, throughout 2020 our gross margin increased and resulted in a 6% increase against 2019. The Lamp revenue decline hastened strategic repositioning to move to a Lighting Solutions Company with added value products that would take the company into new market segments and continue our margin trend. Overheads were further reviewed in 2020.

As part of the transition Yankon (with an enhanced product range & extensive R & D facilities) have helped us to introduce new LED ranges including entering the Emergency lighting fixtures segment. This transition will accelerate as we progress through 2021, new ranges will be introduced during the year at regular intervals, with features unique to Megaman and at prices that will allow us to be more competitive and grow our gross margin further.

The outlook is good for the company and the investment from Yankon in Megaman (UK) Ltd allows us to develop our chosen sales channels with confidence, enter new segments throughout 2021, it also adds to the progress we have made in gaining a share of the specification market which, along with smart control of lighting products has resulted in changes to our approach. With increasing numbers of smart control and fixture stockists we will progress through 2021 with growing sales and will continue to see substantial growth in these segments.

The MEGAMAN ® brand globally achieves added value through its pedigree in low energy lighting, as it has done for over 20 years. It continues to invest in new technologies and market sectors that will enable Megaman (UK) Limited to grow in other key segments such as LED modules, Smart Control and OEM solutions.

The strategic objective for Megaman (UK) Limited is to become a Lighting Solutions Company that adds value through its brand, technologies and project specification.

PRINCIPAL RISKS AND UNCERTAINTIES

Coronavirus issues continue to affect sales and the business; however, we have taken all possible precautions and continue to be classified as an essential business by the Government, although business is continuing to suffer from the effects, we expect this to change in Q2 and the outlook is good for the company.

Although Brexit did not play any part in the performance in 2020, the first weeks of 2021 have been subject to delays in shipping to the EU & Northern Ireland we anticipate that these issues will slowly disappear as we end Q1 and will have no material cost to the company.

Foreign Currency Risk - Our strategy becomes even more important when you consider the continued uncertainty the market faces following Brexit, our vision of a healthy product mix with added value products and an improved margin will help protect us in the long-term.

POLITICAL AND CHARITABLE DONATIONS

The company has not made any charitable or political donations in the year.

ON BEHALF OF THE BOARD:

G Krise - Director

26 January 2021

The directors present their report with the financial statements of the company for the year ended 31 December 2020.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2020.

EVENTS SINCE THE END OF THE YEAR

Information relating to events since the end of the year is given in the notes to the financial statements.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2020 to the date of this report.

W T Lee

K C Chan

G Krise

Mrs D Swann

FINANCIAL INSTRUMENTS

Information relating to financial instruments are contained in the notes to the accounts.

POLITICAL DONATIONS AND EXPENDITURE

There were no political donations or expenditure in the year.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with 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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are 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 each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

ON BEHALF OF THE BOARD:

G Krise - Director

26 January 2021

Opinion

We have audited the financial statements of Megaman (UK) Limited (the 'company') for the year ended 31 December 2020 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, 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).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2020 and of its loss for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the 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.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and 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 materially inconsistent with the financial statements or our knowledge obtained in 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 the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page four, 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 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.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors 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.

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.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our 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.

Liam George Sillett (Senior Statutory Auditor)

for and on behalf of NSO Associates LLP

Statutory Auditors

75 Springfield Road

Chelmsford

Essex

CM2 6JB

28 January 2021

5,781,153

TURNOVER

3

5,475,006

4,840,798

Cost of sales

4,774,487

940,355

GROSS PROFIT

700,519

(160,136

)

Exchange Difference

(217,820

)

2,302,487

Administrative expenses

1,840,650

2,142,351

1,622,830

(1,201,996

)

OPERATING LOSS

5

(922,311

)

41,387

Interest payable and similar expenses

6

30,355

(1,243,383

)

LOSS BEFORE TAXATION

(952,666

)

-

Tax on loss

7

-

(1,243,383

)

LOSS FOR THE FINANCIAL YEAR

(952,666

)

(1,243,383

)

LOSS FOR THE YEAR

(952,666

)

-

OTHER COMPREHENSIVE INCOME

-

(1,243,383

)

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(952,666

)

FIXED ASSETS

53,486

Tangible assets

8

14,332

-

Investments

9

-

53,486

14,332

CURRENT ASSETS

2,503,789

Stocks

10

2,149,677

1,791,233

Debtors

11

1,884,027

247,051

Cash at bank

351,136

4,542,073

4,384,840

CREDITORS

6,946,647

Amounts falling due within one year

12

7,702,926

(2,404,574

)

NET CURRENT LIABILITIES

(3,318,086

)

(2,351,088

)

TOTAL ASSETS LESS CURRENT LIABILITIES

(3,303,754

)

CAPITAL AND RESERVES

11,054,800

Called up share capital

15

11,054,800

(13,405,888

)

Retained earnings

16

(14,358,554

)

(2,351,088

)

SHAREHOLDERS' FUNDS

(3,303,754

)

(2,351,088

)

(3,303,754

)

The financial statements were approved by the Board of Directors and authorised for issue on 26 January 2021 and were signed on its behalf by:

G Krise - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2019

11,054,800

(12,162,505

)

(1,107,705

)

Changes in equity

Total comprehensive income

-

(1,243,383

)

(1,243,383

)

Balance at 31 December 2019

11,054,800

(13,405,888

)

(2,351,088

)

Changes in equity

Total comprehensive income

-

(952,666

)

(952,666

)

Balance at 31 December 2020

11,054,800

(14,358,554

)

(3,303,754

)

Cash flows from operating activities

10,161

Cash generated from operations

1

139,202

(41,387

)

Interest paid

(30,355

)

(31,226

)

Net cash from operating activities

108,847

Cash flows from investing activities

(2,973

)

Purchase of tangible fixed assets

(4,761

)

-

Sale of tangible fixed assets

(1

)

(2,973

)

Net cash from investing activities

(4,762

)

(34,199

)

Increase/(decrease) in cash and cash equivalents

104,085

281,250

Cash and cash equivalents at beginning of year

2

247,051

247,051

Cash and cash equivalents at end of year

2

351,136

1.	RECONCILIATION OF LOSS BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

31.12.20

31.12.19

£

£

Loss before taxation

(952,666

)

(1,243,383

)

Depreciation charges

43,917

85,557

Finance costs

30,355

41,387

(878,394

)

(1,116,439

)

Decrease/(increase) in stocks

354,111

(2,050,522

)

(Increase)/decrease in trade and other debtors

(92,794

)

101,392

Increase in trade and other creditors

756,279

3,075,730

Cash generated from operations

139,202

10,161

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 December 2020

31.12.20

1.1.20

£

£

Cash and cash equivalents

351,136

247,051

Year ended 31 December 2019

31.12.19

1.1.19

£

£

Cash and cash equivalents

247,051

281,257

Bank overdrafts

-

(7

)

247,051

281,250

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.1.20

Cash flow

At 31.12.20

£

£

£

Net cash

Cash at bank

247,051

104,085

351,136

247,051

104,085

351,136

Total

247,051

104,085

351,136

1.	STATUTORY INFORMATION

Megaman (UK) Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

These financial statements are prepared on a going concern basis, under the historical cost convention as modified by the recognition of certain financial assets and liabilities measured at fair value.The Company relies on funding by its parent company to meet its day to day working capital requirements.

After making enquiries the directors have a reasonable expectation that the company has adequate resources to continue to in operational existence for the foreseeable future, with the support of its parent company.

The preparation of financial statements requires the use of certain critical accounting estimates, It also requires management to exercise its judgement in the process of applying the Company accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in the following notes.

Significant judgements and estimates

Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed reasonable under the circumstances.

The Company regularly reviews its stock and makes provision for any stock that is considered obsolete or damaged.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Revenue is measured at the fair value of the consideration received or receivable and represents the amount receivable for services rendered, net of discounts, rebates allowed by the company and value added taxes.

The company recognises turnover when (a) the company retain no significant further interest in the transaction (b) the amount of revenue can be calculated reliably.

The Company also sells goods via its website for delivery to the customer. Revenue is recognised when the risk and rewards of the inventory is passed to the customer.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Short leasehold

-

20% on cost

Plant and machinery

-

20% on cost

Fixtures and fittings

-

20% on cost

Computer equipment

-

33% on cost and 20% on cost

Tangible Assets are stated at cost (or deemed cost) less accumulated depreciation and accumulated impairment losses. Cost includes the original purchase price, costs directly attributable to bringing the asset to its working condition for its intended use, dismantling and restoration costs.

The assets residual values and useful lives are reviewed, and adjusted, if appropriate, at the end of each accounting period. The effect of any change is accounted for prospectively

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost less any provision for impairment.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Inventories are stated at the lower of cost and estimated selling price less costs to sell. Inventories are recognised as a cost in the period in which the related revenue is recognised.

Cost is determined on the first-in, first-out (FIFO) method. Cost includes the purchase price, including taxes and duties and transport and handling directly attributable to bringing the inventory to its present location and condition.

During the year inventories are assessed on an ongoing basis for impairment. If the inventory is impaired, then it is reduced to its anticipated selling price, less any costs associated with the sale. This impairment is recognised as a charge in the profit and loss account.

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

The Company's functional and presentation currency is the pound sterling.

Foreign Currency transactions are translated into the functional currency using HMRC exchange rates updated on a monthly basis.

At each period end foreign currency monetary items are translated using the closing rate.

Foreign exchange gains and losses resulting from the settlement of transactions and the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss account.lt.

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.

Financial instruments

Basic financial liabilities, including trade and other payables, bank loans, loans from fellow companies are initially recognised at transaction price, unless the arrangement constitutes a financial transaction, where the debt instrument is measured at the present value of the future receipt discounted at a market rate.

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers, Accounts 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 payables are recognised initially at transaction price and subsequently measured at amortised costing using the effective interest method.

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments.

Derivative 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 are recognised in the financial costs or financial income as appropriate, unless they are included in a hedging arrangement.

Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.

3.

TURNOVER

The turnover and loss before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

31.12.20

31.12.19

£

£

United Kingdom

4,893,001

4,745,827

Europe

330,834

558,469

Rest of the World

251,171

476,857

5,475,006

5,781,153

4.	EMPLOYEES AND DIRECTORS

31.12.20

31.12.19

£

£

Wages and salaries

678,152

961,986

Social security costs

83,029

98,832

Other pension costs

37,451

34,875

798,632

1,095,693

The average number of employees during the year was as follows:

31.12.20

31.12.19

Warehouse

4

4

Administration

5

6

Sales

12

15

21

25

31.12.20

31.12.19

£

£

Directors' remuneration

81,276

77,690

Directors' pension contributions to money purchase schemes

6,929

6,929

5.	OPERATING LOSS

The operating loss is stated after charging:

31.12.20

31.12.19

£

£

Hire of plant and machinery

8,254

14,047

Other operating leases

173,655

143,296

Depreciation - owned assets

43,916

85,558

Auditors' remuneration

10,500

10,300

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

31.12.20

31.12.19

£

£

Finance charges

30,355

41,387

7.

TAXATION

Analysis of the tax charge

No liability to UK corporation tax arose for the year ended 31 December 2020 nor for the year ended 31 December 2019.

8.	TANGIBLE FIXED ASSETS

Fixtures

Short

Plant and

and

Computer

Totals

leasehold

machinery

fittings

equipment

£

£

£

£

£

COST

At 1 January 2020

1,119,616

456,267

222,406

167,783

273,160

Additions

4,761

-

-

-

4,761

Disposals

(1,044,331

)

(444,707

)

(212,947

)

(144,655

)

(242,022

)

At 31 December 2020

80,046

11,560

9,459

23,128

35,899

DEPRECIATION

At 1 January 2020

1,066,130

430,203

216,289

159,066

260,572

Charge for year

43,916

25,136

3,955

5,494

9,331

Eliminated on disposal

(1,044,332

)

(444,707

)

(212,948

)

(144,655

)

(242,022

)

At 31 December 2020

65,714

10,632

7,296

19,905

27,881

NET BOOK VALUE

At 31 December 2020

14,332

928

2,163

3,223

8,018

At 31 December 2019

53,486

26,064

6,117

8,717

12,588

9.	FIXED ASSET INVESTMENTS

Shares in

group

undertakings

£

COST

At 1 January 2020

and 31 December 2020

1,324

PROVISIONS

At 1 January 2020

and 31 December 2020

1,324

NET BOOK VALUE

At 31 December 2020

-

At 31 December 2019

-

This represents a 5% shareholding in AVC Weeeco Limited. The directors have considered the open market value of this investment and after taking account of all known factors and making reasonable assumptions, the value has been reduced to nil.

10.

STOCKS

31.12.20

31.12.19

£

£

Finished goods

2,149,677

2,503,789