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Registered number: 11518832
Saltrock Surfwear Limited (formerly Broadgate 1972 Company Limited)
Financial statements
Information for filing with the registrar
For the period ended 29 December 2019
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Saltrock Surfwear Limited (formerly Broadgate 1972 Company Limited)
Registered number: 11518832
Balance sheet
As at 29 December 2019
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Net current (liabilities)/assets
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime and in accordance with the provisions of FRS 102 Section 1A - small entities.
The financial statements have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The Company has opted not to file the statement of comprehensive income in accordance with provisions applicable to companies subject to the small companies' regime.
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 18 December 2020.
The notes on pages 3 to 13 form part of these financial statements.
Page 1
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Saltrock Surfwear Limited (formerly Broadgate 1972 Company Limited)
Statement of changes in equity
For the period ended 29 December 2019
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Comprehensive income for the period
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Other comprehensive income for the period
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Total comprehensive income for the period
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Shares issued during the period
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Total transactions with owners
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The notes on pages 3 to 13 form part of these financial statements.
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Page 2
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Saltrock Surfwear Limited (formerly Broadgate 1972 Company Limited)
Notes to the financial statements
For the period ended 29 December 2019
Saltrock Surfwear Limited is a private company limited by shares and is incorporated in England and Wales. The address of the registered office and principal place of business is 20 Lydden Road, London, SW18 4LR. The principal activity of the company is to create clothing and accessories for sale through its retail stores and website.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Section 1A of Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
After making enquiries of the parent company, Broadgate 1960 Company Limited, and its fellow subsidiary Crew Clothing Co. Limited, the directors have no reason to believe that a material uncertainty exists that may cast significant doubt about the ability of the company to continue as a going concern.
During the period the company made a loss of £824,689, had net current liabilities of £331,200 and had net liabilities of £824,687.
The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. However, if required, assurances have been provided that the majority shareholder of the group will continue to provide their support to ensure the company is able to pay its liabilities as they fall due. Consequently, the use of the going concern basis of accounting is appropriate because there are no material uncertainties related to events or conditions that may cast significant doubt about the ability of the company to continue as a going concern.
While the impact of COVID-19 has been assessed by the directors, so far as reasonably possible, due to its unprecedented impact on the wider economy, it is difficult to evaluate with any certainty the potential outcomes on the group’s trade, its customers and suppliers. However, taking into consideration the UK Government’s response and the company's planning, the directors have a reasonable expectation that the company will continue in operational existence for the foreseeable future.
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Functional and presentation currency
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The Company's functional and presentational currency is pounds sterling.
Revenue is the total amount receivable by the company, less credits and returns, in the ordinary course of business with customers for goods supplied, excluding VAT and trade discounts. Revenue is recognised when the risks and rewards of owning the goods have passed to the customer, which is generally on the point of sale. Online and wholesale sales are recognised on dispatch of goods to the customer.
Page 3
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Saltrock Surfwear Limited (formerly Broadgate 1972 Company Limited)
Notes to the financial statements
For the period ended 29 December 2019
2.Accounting policies (continued)
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Operating leases: the Company as lessee
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Rentals paid under operating leases are charged to the Statement of comprehensive income on a straight line basis over the lease term.
Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.
Goodwill
Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight line basis to the Statement of comprehensive income over its useful economic life.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Assets acquired following the transfer of trade and assets from the administrators of the former company Saltrock Surfwear Limited have been depreciated over their remaining useful economic life. Depreciation for subsequent additions is provided on the following basis:
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Short-term leasehold property
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Statement of comprehensive income.
Page 4
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Saltrock Surfwear Limited (formerly Broadgate 1972 Company Limited)
Notes to the financial statements
For the period ended 29 December 2019
2.Accounting policies (continued)
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to sell. Cost is based on the cost of purchase on a first in, first outbasis.
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to sell. The impairment loss is recognised immediately in profit or loss.
Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors and loans from related parties.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of comprehensive income.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the balance sheet date.
Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Page 5
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Saltrock Surfwear Limited (formerly Broadgate 1972 Company Limited)
Notes to the financial statements
For the period ended 29 December 2019
2.Accounting policies (continued)
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in the Statement of comprehensive income when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the Company in independently administered funds.
Tax is recognised in the Statement of comprehensive income, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Page 6
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Saltrock Surfwear Limited (formerly Broadgate 1972 Company Limited)
Notes to the financial statements
For the period ended 29 December 2019
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Judgments in applying accounting policies and key sources of estimation uncertainty
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In preparing these financial statements, the Directors have made the following judgements:
Going concern
The directors have made judgements when preparing their forecasts and budgets which support their conclusions that it is appropriate for the company to prepare its financial statements in accordance with the going concern basis of accounting. See note 2.2 for further details.
Goodwill
The company has recognised goodwill, following its acquisition of trade and assets from the administrators of the former company, Saltrock Surfwear Limited, with a carrying value of £388,285 at the reporting date (see note 5). On acquisition, the company determines a reliable estimate regarding the value of goodwill based upon forecasts of expected future results. The company has considered the useful life of goodwill based upon factors such as the expected use of the acquired trade and assets, forecasts of expected future results and cash flows, and any legal, regulatory or contractual provisions that can limit useful life. At each subsequent reporting date, the directors consider whether there are any factors such as technological advances or changes in market conditions that indicate a need to reconsider the useful life of goodwill.
Tangible fixed assets
The company has recognised tangible fixed assets with a carrying value of £373,367 at the reporting date (see note 6). These assets are stated at their cost less provision for depreciation and impairment. The company's accounting policy sets out the approach to calculating depreciation for assets acquired as part of the transfer of trade and assets from the administrators of the former company Saltrock Surfwear Limited and for subsequent additions. The company determines at acquisition reliable estimates for the useful life of the asset and its residual value. These estimates are based upon such factors as the expected use of the acquired assets and market conditions. At subsequent reporting dates the directors consider whether there are any factors such as technological advances or changes in market conditions that indicate a need to reconsider the estimates used.
Where there are indicators that the carrying value of tangible assets may be impaired the company undertakes tests to determine the recoverable value of assets. Recoverable value assessments include consideration of issues such as future market conditions, the remaining life of the asset and disposal values.
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The average monthly number of employees, including directors, during the period was 168.
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Page 7
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Saltrock Surfwear Limited (formerly Broadgate 1972 Company Limited)
Notes to the financial statements
For the period ended 29 December 2019
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Short-term leasehold property
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Acquisition of business combination
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Charge for the period on owned assets
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Page 8
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Saltrock Surfwear Limited (formerly Broadgate 1972 Company Limited)
Notes to the financial statements
For the period ended 29 December 2019
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Finished goods and goods for resale
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Page 9
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Saltrock Surfwear Limited (formerly Broadgate 1972 Company Limited)
Notes to the financial statements
For the period ended 29 December 2019
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Creditors: Amounts falling due after more than one year
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Amounts owed to group undertakings
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Amounts owed to group undertakings will be due on the fifth anniversary of the inception date of the loan being 15 August 2018. Interest is being charged at a commercial rate of 7.25% and will also be due for repayment on maturity of the loan.
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Allotted, called up and fully paid
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2 Ordinary shares of £1 each
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On incorporation 2 ordinary shares were issued at par value of £1 each
Page 10
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Saltrock Surfwear Limited (formerly Broadgate 1972 Company Limited)
Notes to the financial statements
For the period ended 29 December 2019
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On 18 August 2018 the Company acquired the trade and assets of the business known as Saltrock Surfwear Limitred from its administrators, for a consideration of £1,138,687 and subsequently carried out trading operations through Saltrock Surfwear Limited.
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Recognised amounts of identifiable assets acquired and liabilities assumed
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Total identifiable net assets
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Total purchase consideration
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Total purchase consideration
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The purchase consideration was paid in cash by the ultimate parent undertaking and was funded by way of a loan to the company.
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Cash outflow on acquisition
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Purchase consideration settled in cash, as above
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Less: Cash and cash equivalents acquired
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Net cash outflow on acquisition
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Page 11
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Saltrock Surfwear Limited (formerly Broadgate 1972 Company Limited)
Notes to the financial statements
For the period ended 29 December 2019
13.Business combinations (continued)
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The results following the acquisition of trade and assets from the administrators of the former company, Saltrock Surfwear Limited, for the period ended 29 December 2019 are as follows:
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Current period since acquisition
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The Company operates a defined contributions pension scheme. The assets of the scheme are held
separately from those of the Company in an independently administered fund. The pension cost charge
represents contributions payable by the Company to the fund and amounted to £50,808. Contributions totalling £9,646 were payable to the fund at the balance sheet date and are included in creditors.
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Commitments under operating leases
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At 29 December 2019 the Company had future minimum lease payments under non-cancellable operating leases as follows:
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Later than 1 year and not later than 5 years
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Post balance sheet events
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On 11 March 2020, the World Health Organisation assessed that COVID-19 was to be characterised as a pandemic. In light of the COVID-19 pandemic, the company has reviewed all of its short term liabilities and renegotiated most of the supplier terms which put the company into a strong cash position to manage the pandemic impact with a solid working capital basis.
The company closed its stores from the middle of March until June 2020 in accordance with restrictions imposed by the UK Government. Similarly, stores have closed for a second period (of announced 4 week duration) and re-opened on 02 December 2020 in compliance with UK Government restrictions. During these periods of restriction, the company has utilised the support made available by the UK Government. Specifically the Coronavirus Job Retention Scheme.
Page 12
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Saltrock Surfwear Limited (formerly Broadgate 1972 Company Limited)
Notes to the financial statements
For the period ended 29 December 2019
The company's immediate parent undertaking is Broadgate 1960 Company Limited which is registered in England. Copies of this company's group financial statements may be obtained from its registered office 20 Lydden Road, London, United Kingdom, SW18 4LR.
During the year there was a change in the ultimate parent undertaking from Three Wishes Limited to New Wishes 2020 Limited. New Wishes 2020 Limited is incorporated in Gibraltar.
The ultimate controlling party of the group is Menoshi Shina who is also a director of the company.
The auditors' report on the financial statements for the period ended 29 December 2019 was unqualified.
The audit report was signed on 18 December 2020 by Anne Dwyer (Senior statutory auditor) on behalf of Kreston Reeves LLP.
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