The Hawick Cashmere Company Limited - Period Ending 2020-12-31

THE HAWICK CASHMERE COMPANY LIMITED - Company Information

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Registration number: SC128179

The Hawick Cashmere Company Limited

Annual Report and Unaudited Financial Statements

for the Year Ended 31 December 2020

The Hawick Cashmere Company Limited

Contents

Company Information	1
Accountants' Report	2
Balance Sheet	3 to 4
Notes to the Unaudited Financial Statements	5 to 14

The Hawick Cashmere Company Limited

Company Information

Chairman

J A Thomson

Directors

Lord C R Sanderson of Bowden

C D R Sanderson

G W Scott

E R Thomson

M D Thomson

E E S Young

N J Garden

Company secretary

M D Thomson

Registered office

Trinity Mills
Duke Street
Hawick
TD9 9QA

Solicitors

Wright, Johnston and Mackenzie LLP
302 St Vincent Street
Glasgow
Strathclyde
G2 5RZ

Accountants

Deans Accountants And Business Advisors Ltd
Chartered Accountants and Business Advisors
27 North Bridge Street
Hawick
Borders
TD9 9BD

DEANS

Chartered Accountants

Chartered Accountants' Report to the Board of Directors on the Preparation of the Unaudited Statutory Accounts of
The Hawick Cashmere Company Limited for the Year Ended 31 December 2020

In order to assist you to fulfil your duties under the Companies Act 2006, we have prepared for your approval the accounts of The Hawick Cashmere Company Limited for the year ended 31 December 2020 as set out on pages 3 to 14 from the company's accounting records and from information and explanations you have given us.

As a practising member firm of the Institute of Chartered Accountants of Scotland (ICAS), we are subject to its ethical and other professional requirements which are detailed at http://www.icas.com/ethics/icas-code-of-ethics.

This report is made solely to the Board of Directors of The Hawick Cashmere Company Limited, as a body, in accordance with the terms of our engagement letter. Our work has been undertaken solely to prepare for your approval the accounts of The Hawick Cashmere Company Limited and state those matters that we have agreed to state to the Board of Directors of The Hawick Cashmere Company Limited, as a body, in this report in accordance with ICAS guidance (www.icas.com/accountsprep/guidance). To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than The Hawick Cashmere Company Limited and its Board of Directors as a body for our work or for this report.

It is your duty to ensure that The Hawick Cashmere Company Limited has kept adequate accounting records and to prepare statutory accounts that give a true and fair view of the assets, liabilities, financial position and loss of The Hawick Cashmere Company Limited. You consider that The Hawick Cashmere Company Limited is exempt from the statutory audit requirement for the year.

We have not been instructed to carry out an audit or a review of the accounts of The Hawick Cashmere Company Limited. For this reason, we have not verified the accuracy or completeness of the accounting records or information and explanations you have given to us and we do not, therefore, express any opinion on the statutory accounts.

......................................

Deans Accountants And Business Advisors Ltd
Chartered Accountants and Business Advisors
27 North Bridge Street
Hawick
Borders
TD9 9BD

30 April 2021

The Hawick Cashmere Company Limited

(Registration number: SC128179)
Balance Sheet as at 31 December 2020

	Note	2020 £	2019 £
Fixed assets
Tangible assets	4	272,573	353,760
Investment property	5	280,000	280,000
		552,573	633,760
Current assets
Stocks	6	1,467,402	1,687,902
Debtors	7	2,296,285	2,389,618
Cash at bank and in hand		291,477	146,215
		4,055,164	4,223,735
Creditors: Amounts falling due within one year	8	(1,192,239)	(1,642,150)
Net current assets		2,862,925	2,581,585
Total assets less current liabilities		3,415,498	3,215,345
Creditors: Amounts falling due after more than one year	8	(627,361)	(340,072)
Provisions for liabilities		(60,741)	(73,626)
Net assets		2,727,396	2,801,647
Capital and reserves
Called up share capital	9	329,500	329,500
Share premium reserve		110,000	110,000
Capital redemption reserve		95,500	95,500
Other reserves		112,590	112,590
Profit and loss account		2,079,806	2,154,057
Shareholders' funds		2,727,396	2,801,647

For the financial year ending 31 December 2020 the company was entitled to exemption from audit under section 477 of the Companies Act 2006 relating to small companies.

Directors' responsibilities:

•	The members have not required the company to obtain an audit of its accounts for the year in question in accordance with section 476; and
•	The directors acknowledge their responsibilities for complying with the requirements of the Act with respect to accounting records and the preparation of accounts.

These financial statements have been prepared in accordance with the special provisions relating to companies subject to the small companies regime within Part 15 of the Companies Act 2006.

These financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime and the option not to file the Profit and Loss Account has been taken.

The Hawick Cashmere Company Limited

(Registration number: SC128179)
Balance Sheet as at 31 December 2020

Approved and authorised by the Board on 30 April 2021 and signed on its behalf by:

.........................................

E R Thomson
Director

The Hawick Cashmere Company Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 December 2020

1	General information

The company is a private company limited by share capital, incorporated in Scotland.

The address of its registered office is:
Trinity Mills
Duke Street
Hawick
TD9 9QA

These financial statements were authorised for issue by the Board on 30 April 2021.

2	Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements have been prepared in accordance with Financial Reporting Standard 102 Section 1A - 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and the Companies Act 2006.

Basis of preparation

These financial statements have been prepared on a going concern basis, under the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

The financial statements are presented in Sterling (£) and rounded to the nearest £0.

The Hawick Cashmere Company Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 December 2020

Judgements

Preparation of the financial statements requires management to make significant judgements and estimates. The items in the financial statements where these judgements and estimates have been included:

Inventory Provisioning - when calculating the inventory provision, management considers the nature and condition of the inventory, as well as applying assumptions around anticipated saleability of finished goods and future usage of raw materials.

Impairment of debtors - the company makes an estimate of the recoverability value of trade debtors and other debtors. When assessing impairment of trade debtors and other debtors, management considers factors including current rating of the debtor, the ageing profile of debtors and historic experience.

Useful economic lives of tangible assets - the annual depreciation charge for tangible assets is sensitive to change in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are re-assessed annually. They are amended when necessary to reflect current estimates, based on economic utilisation,and the physical condition of the assets.

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the Company’s activities. Turnover is shown net of value added tax, returns and rebates.

Sale of Goods - Wholesale
Turnover from the sale of goods is recognised when the significant risks and rewards of ownership of the goods has transferred to the buyer. This is usually at the point that the customer has signed for the delivery of the goods.

Sale of goods – Retail
Sale of goods are recognised on sale to the customer, which is considered the point of delivery. Retail sales are usually by cash, credit or payment card.

The company does not operate any loyalty programmes.

Government grants

Government grants in respect of capital expenditure are credited to a deferred income account and are released to profit over the expected useful lives of the relevant assets by equal annual instalments.

Grants of a revenue nature are credited to income so as to match them with the expenditure to which they relate.

Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the initial transaction dates.

Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.

Tax

The tax expense for the period comprises current tax and deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

Current or deferred taxation assets and liabilities are not discounted.

The Hawick Cashmere Company Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 December 2020

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.

Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the company. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set off against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.

Tangible assets

Tangible assets are stated at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class	Depreciation method and rate
Land	nil
Buildings	4% straight line
Plant and machinery	15% reducing balance & 10% straight line
Fixtures and fittings	15% reducing balance & 25% straight line
Motor vehicles	25% straight line

Investment property

Investment property is carried at fair value, derived from the current market prices for comparable real estate. The value uses observable market prices, adjusted if necessary for any difference in the nature, location or condition of the specific asset. Changes in fair value are recognised in profit or loss.

Investments

Investments in joint ventures are stated at cost less accumulated impairment losses.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade debtors

Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.

The Hawick Cashmere Company Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 December 2020

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost is determined using the first-in, first-out (FIFO) method.

The cost of finished goods and work in progress comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. At each reporting date, stocks are assessed for impairment. If stocks are impaired, the carrying amount is reduced to its selling price less costs to complete and sell; the impairment loss is recognised immediately in profit or loss.

Trade creditors

Trade creditors 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 the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the Profit and Loss Account over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Defined contribution pension obligation

The company operates defined contribution pension schemes and contributes to the personal pension schemes of certain employees. Contributions are recognised in the profit and loss account in the period in which they become payable in accordance with the rules of the scheme.

The Hawick Cashmere Company Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 December 2020

Financial instruments

Classification
Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its' liabilities.
Recognition and measurement
Where shares are issued, any component that creates a financial liability of the company is presented as a liability in the balance sheet. The corresponding dividends relating to the liability component are charged as an interest expense in the profit and loss account.
Impairment
At the end of each reporting period financial instruments measured at fair value are assessed for objective evidence of impairment. The impairment loss is recognised in the profit and loss account.

Derivative financial instruments and hedging

Derivatives
The company uses derivative financial instruments to reduce exposure to foreign exchange risk. The company does not hold or issue derivative financial instruments for speculative purposes. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Changes in the fair value of derivatives are recognised in the profit or loss in finance costs or income as appropriate.
Hedging
The company does not currently apply hedge accounting for interest rate and foreign exchange derivatives.

3	Staff numbers

The average number of persons employed by the company (including directors) during the year, was 64 (2019 - 65).

The Hawick Cashmere Company Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 December 2020

4	Tangible assets

	Land and buildings £	Furniture, fittings and equipment £	Motor vehicles £	Plant and Equipment £
Cost or valuation
At 1 January 2020	270,763	400,702	18,492	2,387,074
Disposals	-	-	-	1,500
At 31 December 2020	270,763	400,702	18,492	2,388,574
Depreciation
At 1 January 2020	221,792	322,950	6,936	2,171,593
Charge for the year	3,288	26,175	4,623	47,101
Eliminated on disposal	-	-	-	1,500
At 31 December 2020	225,080	349,125	11,559	2,220,194
Carrying amount
At 31 December 2020	45,683	51,577	6,933	168,380
At 31 December 2019	48,971	77,752	11,556	215,481

	Total £
Cost or valuation
At 1 January 2020	3,077,031
Disposals	1,500
At 31 December 2020	3,078,531
Depreciation
At 1 January 2020	2,723,271
Charge for the year	81,187
Eliminated on disposal	1,500
At 31 December 2020	2,805,958
Carrying amount
At 31 December 2020	272,573
At 31 December 2019	353,760

Included within the net book value of land and buildings above is £45,683 (2019 - £48,971) in respect of freehold land and buildings.

The Hawick Cashmere Company Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 December 2020

5	Investment properties

	2020 £
At 31 December 2019 and 2020	280,000

Investment property is valued at open market value.

The property at Stow-on-the-wold was valued by Carter Jonas MRICS FAAV on 17 November 2017.

The property at Kelso was valued by D M Hall MRICS on 17 November 2017.

Stocks

	2020 £	2019 £
Raw materials and consumables	198,525	240,460
Work in progress	57,394	141,501
Finished goods and goods for resale	1,211,483	1,305,941
	1,467,402	1,687,902

Debtors

	2020 £	2019 £
Trade debtors	1,735,582	1,796,862
Prepayments	49,635	82,634
Other debtors	511,068	510,122
	2,296,285	2,389,618
Less non-current portion	(82,644)	(76,609)
	2,213,641	2,313,009

Details of non-current trade and other debtors

£82,644 (2019 -£76,609) of Trade debtors is classified as non current.

The Hawick Cashmere Company Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 December 2020

Creditors

Creditors: amounts falling due within one year

	Note	2020 £	2019 £
Due within one year
Loans and borrowings	10	784,914	1,095,076
Trade creditors		233,963	368,341
Taxation and social security		19,233	27,181
Accruals and deferred income		150,183	147,472
Other creditors		3,946	4,080
		1,192,239	1,642,150

Creditors include bank loans and overdrafts which are secured of £779,166 (2019 - £1,089,328).

Creditors: amounts falling due after more than one year

	Note	2020 £	2019 £
Due after one year
Loans and borrowings	10	627,361	340,072

	2020 £	2019 £
Due after more than five years
After more than five years by instalments	169,667	162,802


	-	-

Creditors include bank loans and overdrafts which are secured of £622,571 (2019 - £329,534).

Creditors include bank loans repayable by instalments of £169,667 (2019 - £162,802.00) due after more than five years.

9	Share capital

Allotted, called up and fully paid shares

	2020		2019
	No.	£	No.	£
Ordinary shares of £1 each	329,500	329,500	329,500	329,500

The Hawick Cashmere Company Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 December 2020

10	Loans and borrowings

	2020 £	2019 £
Non-current loans and borrowings
Bank borrowings	622,571	329,534
Other borrowings	4,790	10,538
	627,361	340,072

	2020 £	2019 £
Current loans and borrowings
Bank borrowings	56,939	38,032
Bank overdrafts	722,227	1,051,296
Other borrowings	5,748	5,748
	784,914	1,095,076

Bank borrowings

Bank Loans - the carrying amount at year end is £329,510 (2019 - £367,566).

HSBC holds a first legal charge over 2 Brewery Yard, Stow-on-the-Wold, North Shop, Spread Eagle House, Bridge Street, Kelso and the factory premises at Trinity Mills, Duke Street, Hawick and a bond and floating charge over the whole of the Company's assets.

11	Financial commitments, guarantees and contingencies

Amounts not provided for in the balance sheet

The total amount of financial commitments not included in the balance sheet is £Nil (2019 - £4,898). Operating lease commitments with no security given by the company.

12	Related party transactions

Summary of transactions with entities with joint control or significant interest

The company supplies goods and services to such entities in the normal course of business. The company has provided a guarantee in favour of HSBC in respect of the liabilities of certain companies over which it has significant influence. At the balance sheet date, those companies had no net liability owing to HSBC.

The company has provided unsecured loans to such entities during the year.

Loans to related parties

The Hawick Cashmere Company Limited

Notes to the Unaudited Financial Statements for the Year Ended 31 December 2020

2020	Entities with joint control or significant influence £	Total £
At start of period	450,004	450,004
Interest transactions	17,100	17,100
At end of period	467,104	467,104

2019	Entities with joint control or significant influence £	Total £
At start of period	450,004	450,004
Repaid	(17,100)	(17,100)
Interest transactions	17,100	17,100
At end of period	450,004	450,004

13	Financial instruments

Categorisation of financial instruments

	2020 £	2019 £
Financial assets measured at fair value through profit or loss	2,439,630	2,440,748
Financial liabilities measured at fair value through profit or loss	13,045	(4,892)
Financial liabilities measured at fair value through profit or loss that are not held as part of a trading portfolio and are not derivatives	(1,646,298)	(1,803,488)

Derivatives

Currency Contracts

The company enters into forward currency contracts to mitigate the exchange rate risk to certain foreign currency receivables. At 31 December 2020, the outstanding contracts all mature within 1 month of the year end. (2019: 7 months). As at 31 December 2020, the company was committed to sell US$ 400,000 and receive a fixed sterling amount.

The forward currency contracts are measured at fair value, which is determined using valuation techniques that utilise observable inputs. The key assumptions used in valuing the derivatives are the forward exchange rates for GBP:USD.

The company has no interest rate derivative financial instruments (2019: none)