Wormser_UK_Limited - Accounts

The directors of the company have elected not to include a copy of the income statement within the financial statements.true

These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

Wormser UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit A Midway, Gilchrist Road, Irlam, Manchester, M44 5AY.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

The financial statements of the company are consolidated in the financial statements of FB Beauty Limited. These consolidated financial statements are available from its registered office, Third Floor, 29 Carnaby Street, London, WF1 9PY.

The company made a profit after taxation of £777,117 (2019 - 694,507) during the year ended 31 December 2020 of which £656,206 relates to foreign exchange gains (2019 - £792,469) primarily on the retranslation of a loan from Wormser Corporation, a company controlled by the directors Alan Wormser and David Wormser. At the balance sheet date, the company's liabilities exceeded its total assets by £5,048,878 (2019 - £5,825,995). Included within current liabilities is a loan of £20,504,100 (2019: £21,096,539) from Wormser Corporation. This loan is repayable on demand; however the directors of Wormser Corporation have provided written confirmation that they will not seek repayment until the group is able to meet its other liabilities as they fall due.

During 2020 the company’s trade was adversely affected by the Coronavirus pandemic which resulted in the shutdown of non-essential retail for a large part of the year, despite this the company increased turnover by 57%. Gross margin has been slightly eroded due to the direct costs for overseas purchases and freight costs increasing due to supply issues faced globally. The directors took steps to minimise losses and cash outflow by reviewing the company’s overhead structure and making savings where possible.

The company increased turnover further in 2021 to nearly £4.8m and returned a trading profit before foreign exchange movements. Looking forward to 2022 the directors have prepared forecasts which show that the company will remain profitable for the year. Further, the directors expect the company to remain cashflow positive allowing it to meet its third party liabilities as they fall due. However, Wormser Corporation has provided further written assurance that it will provide funding, if required, to enable the company to meet its ongoing liabilities and to continue to trade for a period of at least twelve months from the date of signing these financial statements.

The Board of Directors of Wormser Corporation have also considered the their own cash flow projections and have indicated to the directors of the group that they believe their cash resources will be sufficient to meet the expected cash requirements of the group for the foreseeable future and no less than twelve months from the signing of the financial statements.

The directors acknowledge that the going concern assumption for the group and company is materially uncertain if their financial forecasts for the coming year are not achieved and the support of Wormser Corporation is not forthcoming.

Turnover is recognised at the fair value of the consideration received or receivable for goods provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

At the year end date, the company reviews the carrying value of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indications exists, the recoverable amount of the assets is estimated in order to determine the extent of the impairment loss (if any). If the recoverable amount of an asset is estimates to be less that its carrying amount, the carrying amount of an asset is reduced to its recoverable amount, An impairment loss is recognised as an expense in profit or loss.

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads. At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit and loss.

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 fromthe date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

Basic financial assets are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

The company only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other accounts receivable and payable, loans from banks and other third parties, and loans to related parties,

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 profit and loss.The impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's originally effective interest rate.

Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

The tax expense represents the sum of the tax currently payable and deferred tax. Tax is recognised in profit or loss, except that a change 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 reporting date in the countries where the company operates and generates income.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Rentals paid under operating leases are charge to profit or loss on a straight line basis over the period of the lease.

The company's functional and presentation currency is GBP.

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the date of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. None-monetary items measured at historical costs are translated using the exchange rate at the date of the transactions and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

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

Finance costs

Finance costs are charged as costs in the 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.

Interest income

Interest income is recognised in profit and loss using the effective interest method.

The average monthly number of persons (including directors) employed by the company during the year was:

Amounts owed to the parent company/related parties are unsecured, interest free and are repayable on demand.

As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:

The auditor's report was unqualified.

Material uncertainty related to going concern

We draw attention to note 1.2 in the financial statements, which indicates that the company achieved a net profit after taxation of £777,117 during the year ended 31 December 2020 however, as of that date, the company’s current liabilities exceeded its total assets by £5,048,878. As stated in note 1.2, these events or conditions, along with other matters as set forth in note 1.2, indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern.

Our opinion is not modified in respect of this matter.

During the year to 31 December 2020 all amounts due in relation to the revolving loan facility agreement with Santander Bank were repaid in full. The agreement was entered into jointly with FB Beauty Limited and Wormser Corporation which are both companies under control of directors Alan Wormser and David Wormser. The basis of the agreement is that all companies guarantee the obligations of any entity that is drawn down against the loan facility with Santander Bank.

As the outstanding liability was repaid in full during the year, there is no guarantee in place at 31 December 2020.

As at 31 December 2020, the outstanding amount secured on the assets of the company and the joint borrowers is US $nil (2019 - US$13,258,209).

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:

Wormser Corporation

During the year the company purchased goods totalling £nil (2019 - £1,395) from Wormser Corporation a company controlled by Alan Wormser and David Wormser, who are directors of the company.

At the end of the year, the amounts due to Wormser Corporation were £20,504,180 (2019 - £21,095,029 ).

FB Beauty Limited

The company has taken advantage of the exemption permitted in paragraph 33.1A of FRS 102 regarding disclosure of transactions between wholly owned members of the same group.

The immediate parent undertaking is FB Beauty Ltd, a company incorporated in the United Kingdom. The ultimate controlling parties are Alan Wormser and David Wormser.