Lavenham Leisure Limited - Limited company accounts 20.1

REGISTERED NUMBER: 03171370 (England and Wales)

Lavenham Leisure Limited

Strategic Report,

Report of the Directors and

Financial Statements

For The Year Ended

31st December 2020

Page

Company Information

1

Strategic Report

2

to

5

Report of the Directors

6

to

7

Report of the Independent Auditors

8

to

10

Income Statement

11

Balance Sheet

12

Statement of Changes in Equity

13

Notes to the Financial Statements

14

to

23

DIRECTORS:

Mr J T S Flynn

N E Santomauro

Mr K Tanabe

REGISTERED OFFICE:

37 Mount Pleasant

Clerkenwell

London

WC1X 0AA

REGISTERED NUMBER:

03171370 (England and Wales)

AUDITORS:

Haines Watts

Statutory Auditor

8 Hopper Way

Diss

Norfolk

IP22 4GT

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

REVIEW OF BUSINESS

Lavenham Leisure Limited's principal activities are the manufacture of superior quality quilted jackets, waistcoats and horse rugs. The company's principal market is Japan.

PRINCIPAL RISKS AND UNCERTAINTIES

As for many businesses of the same size, the environment the company operates in remains challenging. The

company faces competition from other businesses which manufacture abroad in lower cost environments.

Retail sales are subject to consumers' spending patterns and their disposable income. The company counteracts this risk by ensuring that it actively manages the brand's identity through marketing and controlled product distribution to ensure that the value of the brand is inherently strong and a continual demand for its products is maintained.

We are still a weather dependant brand, with later, shorter winters affecting sell through. However, we are focusing on gilets as a layering piece and trying to strengthen this offering in our seasonal collections. This has been quite successful the last two seasons and we are starting to become recognised as the brand that specialises in gilets, we do not have any competitors specialising in the same.

Our Japanese distributor, who we have been working with for over 25 years, was served notice that our ultimate holding company, Hit Union, would take over the Japanese distribution from spring summer 2021.

DEVELOPMENT AND PERFORMANCE

Unfortunately, our sales in Japan for AW20 were much lower than anticipated. The Japanese distributor we had been working with for 25 years was not able to secure the same volume of orders as 2019/2020, partly due to another warm winter and partly because they did not align to our new gilet strategy. It was their last season working with Lavenham and I believe their focus was on the other brands they represent. The fall in orders was not due to Covid-19 as we had received all orders from Japan before March 2020.

On 23rd March 2020, the UK government introduced a full lockdown and urged businesses to close. On the 24th March, Lavenham closed the factory for three weeks. During this time, all direct labour were furloughed with 100% of their wages being paid. The development team and office staff were able to work from home and were not furloughed. During these three weeks deliveries were still being accepted at the factory. On 14th April we reopened the factory to our quilting and cutting departments with strict Covid19 procedures in place. These were refined and improved during the two weeks before we asked our sewing and inspection teams to return to work. Initially we were operating two separate shifts, one early morning to lunch time and one from lunch time to 9pm. This was not going to be sustainable, and we realised that we were able to keep a safe distance within the factory, having made some modifications and it was the arrival, departure, breaks and lunch times that were our pinch points, therefore after working split shifts for three weeks, we started working staggered start and leaving times and the same with breaks and lunch. Common areas were modified for social distancing and personal hand sanitiser, enhanced cleaning and a wall mounted non-contact thermometer were made available. All staff are screened before entering the factory each day and must wash their hands at regular intervals. By the beginning of August all furloughed staff were back at work. Seven weeks production time was lost during lockdown and priming the factory again. Thankfully, we only had one of our small orders reduced and one order returned due to late delivery and Belgium going into lockdown shortly after receiving their late order.

Overall, it was a difficult year, falling behind on our targets due to 16 members of the sewing team shielding after losing seven weeks production time. Thankfully, most of our customers were understanding about the delay.

Our spring summer 21 collection, which was our first with Hit Union acting as our distributor, was highly praised and we received a total order intake of over 9,000 units, which was the best spring summer season we have ever had. We continue to have our collections designed by Kazu in Tokyo, each season he understands the factory's capabilities a little better, meaning we are more efficient in production. Having a Japanese designer is also helping secure orders within the UK as Japanese fashion is very well respected with UK independent stores, many of them stocking Japanese brands.

Our store in Kings Cross was performing relatively well, until lockdown began.

Our e-comm performed very well and continues to see large growth.

FINANCIAL KEY PERFORMANCE INDICATORS

The company's KPIs were in line with expectations:

In £

31/12/2020

31/12/2019

Variance %

Turnover

2,665,566

2,339,429

13.94%

Gross margin %

25.60%

39.85%

- 14.25%

Loss Before Tax % / Profit Before Tax %

-1.36%

14.55%

-15.91%

FUTURE DEVELOPMENTS

The company intends to continue to focus on building the brand by:

- continually improving the quality and depth of the products offered through the brand's core segments of

menswear, womenswear, children's wear, and accessories.

- Develop and introduce more sustainable raw materials with the intention of using 100% recycled polyester fibres in our outer and lining fabric, 65% recycled fibres in our wadding and 100% organic cotton trim by SS22. This is an ongoing project.

- continue innovative collaborations with iconic brands and designers like Labour and Wait, National Portrait Gallery, Saint James, and Nicholas Daley

- In January 2021 we employed a Brand Development Manager to make connections with key UK independent stores with the intention of having capsule collaborations

- Possibility of a pop-up store or concession (shop in shop)

- continue to target the North American market.

- continue to grow the South Korean market

- building on the unique relationship with the brand's customer base through social media using better product images and a seasonal brand film.

- Continue to have more communication with our markets out of season to build stronger relationships and strengthen the brand message

From 1st January 2021 Hit Union took over Lavenham.jp and Japanese social media, we hope to open our first store in Tokyo in October 2021 with the intention of having five stores in Japan within three years. Although Hit Union operate the stores and Japanese e-comm this means we can deliver a much clearer brand message in our biggest market, which will only strengthen the brand.

Many countries in the world still follow Japanese fashion so strengthening the brand in Japan has a global affect.

Forecast orders will be placed by Hit Union, Lavenham.jp, our UK store and Lavenham.com from S22 which will smooth out the peaks and troughs in our production capacity and make the factory much more efficient.

Both our cutting machines will be end of life within two years, we will replace both with one cutting machine on rails which can be moved between our cutting tables. The cost will be £148,000 and we would get an £18,000 buy back for our current cutting machines, which we could then sell on possibly for as much as £26,000. We would also benefit from the current super deduction scheme.

Many of our sewing machines were end of life 10 years ago and we are now struggling to buy parts therefore we are starting to replace with new machines and use the replaced machine as spare parts again benefiting from the current super deduction scheme.

We have expanded our product range in the spring summer season to include single cloth lightweight fabrics, our current sewing machines are specifically for quilted products therefore we have built a small room within the factory and invested in four oil free flat bed machines and two conventional overlockers specifically for this product. We sold almost 1200 units in the S21 season and have extended our offering in S22 and expect bigger sales.

POST BALANCE SHEET EVENTS

Due to the Alpha variant of Covid-19 discovered in December after many of our European staff had returned home for Christmas, most of them were not able to return until late in January 2021 making our S21 production quite challenging.

At the beginning of the year, we also faced delays of raw materials entering the country this was partly due to less transport coming into the UK due to the Alpha variant and also complications due to the new paper work and processes required for imports from Europe post Brexit.

A shortage in readily available labour is the biggest risk to business growth. Sewing machinists are not on the shortage skills list, therefore requiring the maximum number of points and commanding a much higher salary than we currently pay our direct labour. Although we believe there are many people in Europe with UK settled status with Covid they are reluctant to return here. We have found in the last few weeks that we have been able to employ, through an agency, three people local to the area, extensive training is needed unlike many of the European workers, but we feel the investment must be made to safeguard the business's future

ON BEHALF OF THE BOARD:

N E Santomauro - Director

2nd August 2021

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

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of manufacture, retail and export of high quality clothing and accessories.

DIVIDENDS

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

DIRECTORS

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

Mr J T S Flynn

N E Santomauro

Mr K Tanabe

DISCLOSURE IN THE STRATEGIC REPORT

Please refer to the Strategic Report for comments on future developments in accordance with s.414 C (II) of CA 2006.

DIRECTORS' RESPONSIBILITIES STATEMENT

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.

AUDITORS

The auditors, Haines Watts, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

N E Santomauro - Director

2nd August 2021

Opinion

We have audited the financial statements of Lavenham Leisure Limited (the 'company') for the year ended 31st December 2020 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity 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).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31st 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.

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to

you where:

- the directors' use of the going concern basis of accounting in the preparation of the financial statements is not

appropriate; or

- the directors have not disclosed in the financial statements any identified material uncertainties that may cast

significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period

of at least twelve months from the date when the financial statements are authorised for issue.

However, not all future events or conditions can be predicted. Brexit and the COVID-19 viral pandemic are the most significant economic events for the UK with unprecedented levels of uncertainty of outcomes. It is therefore difficult to evaluate all of the potential implications on the company's trade, customers, suppliers and wider economy. The Directors' view on the impact of COVID-19 and Brexit is disclosed within the accounting policies note.

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 Directors' Responsibilities Statement set out on page six, 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. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

- We considered the risk of fraud through management override and in response, we incorporated testing of manual journal entries into our audit approach throughout the financial year.

- We also considered the risk of fraud through assumptions and judgements used within accounting estimates and in response, reviewed and scrutinised these estimates in order to detect possible management bias.

- We also considered the risk of fraud associated with the preparation of the financial statements and in response, tested the disclosures prepared against relevant supporting documentation.

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.

Matthew Neale FCA (Senior Statutory Auditor)

for and on behalf of Haines Watts

Statutory Auditor

8 Hopper Way

Diss

Norfolk

IP22 4GT

2nd August 2021

TURNOVER

3

2,657,419

2,339,429

Cost of sales

1,983,309

1,407,156

GROSS PROFIT

674,110

932,273

Distribution costs

114,423

104,085

Administrative expenses

742,404

523,755

856,827

627,840

(182,717

)

304,433

Other operating income

4

84,351

35

OPERATING (LOSS)/PROFIT

6

(98,366

)

304,468

Interest receivable and similar income

22,345

35,980

(76,021

)

340,448

Interest payable and similar expenses

7

(1,253

)

-

(LOSS)/PROFIT BEFORE TAXATION

(74,768

)

340,448

Tax on (loss)/profit

8

(14,203

)

64,740

(LOSS)/PROFIT FOR THE FINANCIAL YEAR

(60,565

)

275,708

FIXED ASSETS

Tangible assets

9

96,903

113,370

Investments

10

100

100

97,003

113,470

CURRENT ASSETS

Stocks

11

541,850

573,512

Debtors

12

812,175

934,505

Cash at bank and in hand

7,235,436

7,112,440

8,589,461

8,620,457

CREDITORS

Amounts falling due within one year

13

138,183

122,455

NET CURRENT ASSETS

8,451,278

8,498,002

TOTAL ASSETS LESS CURRENT LIABILITIES

8,548,281

8,611,472

PROVISIONS FOR LIABILITIES

15

16,120

18,746

NET ASSETS

8,532,161

8,592,726

CAPITAL AND RESERVES

Called up share capital

16

4

4

Retained earnings

17

8,532,157

8,592,722

SHAREHOLDERS' FUNDS

8,532,161

8,592,726

The financial statements were approved by the Board of Directors and authorised for issue on 2nd August 2021 and were signed on its behalf by:

N E Santomauro - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1st April 2019

4

8,317,014

8,317,018

Changes in equity

Total comprehensive income

-

275,708

275,708

Balance at 31st December 2019

4

8,592,722

8,592,726

Changes in equity

Total comprehensive income

-

(60,565

)

(60,565

)

Balance at 31st December 2020

4

8,532,157

8,532,161

1.	STATUTORY INFORMATION

Lavenham Leisure Limited is a private company, limited by shares, registered in England. The company's registered number, registered office address and trading 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 on a going concern basis.

The financial statements have been prepared on a going concern basis. The Directors have reviewed and considered relevant information, including the annual budget and future cash flows in making their assessment. In particular, in response to the COVID-19 pandemic, the Directors have tested their cash flow analysis to take into account the impact on their business of possible scenarios brought on by the impact of COVID-19, alongside the measures that they can take to mitigate the impact. Based on these assessments, given the measures that could be undertaken to mitigate the current adverse conditions, and the current resources available, the Directors have concluded that they can continue to adopt the going concern basis in preparing the annual report and accounts.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemption in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows.

Consolidation

The company was, at the end of the year, a wholly-owned subsidiary of another company incorporated in the EEA and in accordance with Section 400 of the Companies Act 2006, is not required to produce, and has not published, consolidated accounts. These financial statements therefore include information relating to the company as an individual entity and not about its group.

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.

Significant judgements and estimates

In the application of the Company's accounting policies, management is required to make judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The key sources of estimation uncertainty that have a significant effect on the amounts recognised in the financial statements relate mainly to stock obsolescence and provision for doubtful debts.

Critical accounting judgements and key sources of estimation uncertainty

In the application of the Company's accounting policies, the directors are required to make judgements, estimates and assumptions about carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

There are no significant judgements (apart from those involving estimates) that have had an effect on amounts recognised in the financial statements and there are key sources of estimation uncertainty.

Turnover

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

Turnover from the sale of clothing and accessories is recognised when significant risks and rewards of ownership of the goods have transferred to the buyer, the amount of turnover can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the company and the costs incurred or to be incurred in respect of the transaction can be measured reliably. This is usually on dispatch of the goods.

Tangible fixed assets

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

Plant and machinery

-

20% on reducing balance

Fixtures and fittings

-

15% on reducing balance

Computer equipment

-

25% on reducing balance

Tangible fixed assets are stated at cost (or deemed cost) or valuation less accumulated depreciation and accumulated impairment losses. Cost includes costs directly attributable to making the asset capable of operating as intended.

Government grants

The company recognises income received from the government on an accruals basis. The entity recognises gross costs for which the grant is intended to compensate.

Investments in subsidiaries

Investments in subsidiaries are measured at cost less impairment.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing stock to its present location and condition. Cost is calculated using the first-in, first-out formula. Provision is made for damaged, obsolete and slow-moving stock where appropriate.

Financial instruments

Financial instruments are classified and accounted for, according to the substance of the contractual

arrangement, as either 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.

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.

Debtors and creditors receivable / payable within one year

Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the profit and loss account in other administrative expenses.

Impairment

Assets not measured at fair value are reviewed for any indication that the asset may be impaired at each balance sheet date. If such indication exists, the recoverable amount of the asset, or the asset's cash generating unit, is estimated and compared to the carrying amount. Where the carrying amount exceeds its recoverable amount, an impairment loss is recognised in profit or loss unless the asset is carried at a revalued amount where the impairment loss is a revaluation decrease.

Provisions

Provisions are recognised when the company has an obligation at the balance sheet date as a result of a past event, it is probable that an outflow of economic benefits will be required in settlement and the amount can be reliably estimated.

3.

TURNOVER

The turnover and loss (2019 - profit) before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

Period

1/4/19

Year Ended

to

31/12/20

31/12/19

£

£

United Kingdom

483,841

164,439

Europe

61,307

156,397

Rest of the world

2,112,271

2,018,593

2,657,419

2,339,429

4.	OTHER OPERATING INCOME

Period

1/4/19

Year Ended

to

31/12/20

31/12/19

£

£

Other operating income

506

35

Government grants

83,845

-

84,351

35

During the year, the company received furlough claims from the government totalling £83,845 under the Coronavirus Job Retention Scheme (2019: £Nil).

The sums assisted the company in paying for staff members who were put on temporary leave ("furlough") due to coronavirus (COVID-19) global pandemic.

5.	EMPLOYEES AND DIRECTORS

Period

1/4/19

Year Ended

to

31/12/20

31/12/19

£

£

Wages and salaries

1,529,531

1,105,429

Social security costs

106,246

73,577

Other pension costs

24,692

18,635

1,660,469

1,197,641

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

Period

1/4/19

Year Ended

to

31/12/20

31/12/19

Administration

8

8

Development

2

2

Director

1

-

Manufacturing

70

76

Marketing

1

1

82

87

Period

1/4/19

Year Ended

to

31/12/20

31/12/19

£

£

Directors' remuneration

114,292

83,329

6.	OPERATING (LOSS)/PROFIT

The operating loss (2019 - operating profit) is stated after charging:

Period

1/4/19

Year Ended

to

31/12/20

31/12/19

£

£

Hire of plant and machinery

-

535

Other operating leases

130,000

97,500

Depreciation - owned assets

18,274

14,636

Loss on disposal of fixed assets

1,896

-

Auditors' remuneration

4,500

4,500

Foreign exchange

385

1,916

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

Period

1/4/19

Year Ended

to

31/12/20

31/12/19

£

£

Corporation tax interest

(1,253

)

-

8.

TAXATION

Analysis of the tax (credit)/charge

The tax (credit)/charge on the loss for the year was as follows:

Period

1/4/19

Year Ended

to

31/12/20

31/12/19

£

£

Current tax:

UK corporation tax

(11,577

)

66,537

Deferred tax

(2,626

)

(1,797

)

Tax on (loss)/profit

(14,203

)

64,740

Reconciliation of total tax (credit)/charge included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

Period

1/4/19

Year Ended

to

31/12/20

31/12/19

£

£

(Loss)/profit before tax

(74,768

)

340,448

(Loss)/profit multiplied by the standard rate of corporation tax in the UK of 19% (2019 - 19%)

(14,206

)

64,685

Effects of:

Expenses not deductible for tax purposes

363

2,836

Capital allowances in excess of depreciation

-

(984

)

Depreciation in excess of capital allowances

2,265

-

Deferred tax

(2,625

)

(1,797

)

Total tax (credit)/charge

(14,203

)

64,740

All deferred tax balances have been calculated at 19%. There is no expiry date on timing differences, unused tax losses or tax credits.

9.	TANGIBLE FIXED ASSETS

Fixtures

Plant and

and

Computer

machinery

fittings

equipment

Totals

£

£

£

£

COST

At 1st January 2020

1,022,372

20,509

42,599

1,085,480

Additions

2,157

-

1,546

3,703

Disposals

(25,499

)

(5,961

)

(7,871

)

(39,331

)

At 31st December 2020

999,030

14,548

36,274

1,049,852

DEPRECIATION

At 1st January 2020

916,391

18,147

37,572

972,110

Charge for year

16,212

477

1,585

18,274

Eliminated on disposal

(24,837

)

(5,460

)

(7,138

)

(37,435

)

At 31st December 2020

907,766

13,164

32,019

952,949

NET BOOK VALUE

At 31st December 2020

91,264

1,384

4,255

96,903

At 31st December 2019

105,981

2,362

5,027

113,370

10.	FIXED ASSET INVESTMENTS

Shares in

group

undertakings

£

COST

At 1st January 2020

and 31st December 2020

100

NET BOOK VALUE

At 31st December 2020

100

At 31st December 2019

100

The company's investments at the Balance Sheet date in the share capital of companies include the following:

Lavenham Retail Limited

Registered office: 37 Mount Pleasant, Clerkenwell, London, WC1X 0AA

Nature of business: Dormant

%

Class of shares:

holding

Ordinary

100.00

2020

2019

£

£

Aggregate capital and reserves

100

100