Company Registration No. 01928818 (England and Wales)
PENTEX LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
PENTEX LIMITED
COMPANY INFORMATION
Directors
S Iyikan - Managing Director
S Zeki - Managing Director
P Reeves - Finance Director
D Urban - Operations Director
Secretary
S Iyikan
Company number
01928818
Registered office
1st Floor North
94-100 Christian Street
London
E1 1RS
Auditors
Arram Berlyn Gardner LLP
30 City Road
London
EC1Y 2AB
Business address
1st Floor North
94-100 Christian Street
London
E1 1RS
PENTEX LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 6
Statement of comprehensive income
7
Statement of financial position
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 26
PENTEX LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2016
- 1 -
The directors present the strategic report for the year ended 31 December 2016.
Fair review of the business
The results are for the 12 month period to 31 December 2016. The comparative results are for 6 months to 31 December 2015.
The results and the financial position at the year end were considered satisfactory by the directors.
Principal risks and uncertainties
The company's principal financial instruments comprise bank balances, trade creditors and trade debtors.
In respect of bank balances the liquidity risk is managed by maintaining a balance between current, deposit and currency accounts. The company make use of money market facilities where funds are available.
Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits.
Trade creditors liquidity risk is managed by ensuring sufficient funds are available to meet the amounts due.
The company regularly review foreign exchange commitments thereby minimising exposure to currency risks.
Development and performance
The Directors consider that the results for the
year
reflect the hard work the Pentex team has put into all aspects of the business coupled with the good relationship the Company enjoys with both its customers and suppliers.
The Company regularly reviews its supplier base to ensure it is able to fulfill customer demand and that the factories run efficiently
.Pentex operate a balance of owned and subcontracted factories. These are located in the Far East as well as Europe, providing both speed to market as well as highly competitive pricing.
Ethical trading is at the forefront of our attentions and we are very proud of our strong record in this area. We conduct regular inspections of all our factories to ensure that the very highest standards are maintained.
During the
year
under review the Company has
continued to
invest heavily in
our overseas infrastructure.
The directors are pleased with the performance of the company during the year and look forward to continued growth in the future.
PENTEX LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 2 -
Key performance indicators
The key financial highlights are as follows:
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31 December
2016
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31 December
2015
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S Zeki
Director
27 September 2017
PENTEX LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2016
- 3 -
The directors present their report and financial statements for the year ended 31 December 2016.
Principal activities
The principal activity of the company continued to be that of the manufacture and distribution of clothing.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
S Iyikan
S Zeki
P Reeves
D Urban
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £2
22,
000
(2015: £4,232,046)
. The directors do not recommend payment of a final dividend.
Future developments
The Directors recognise that the market is increasing in its competiveness with continued pressure on
margins, together with costing pressures brought about by the decline in Sterling’s value post Brexit.
The company wide MIS was implemented in 2016 and has now bedded in. We are starting to see the benefits through improving our information flows, critical path management and speed of decision making.
Pentex will also continue to invest in and expand its overseas operations and factories, this ensures that the quality and prices remain highly competitive. Significant investment has been made to our Moldovan operations, with output in this region expected to grow during 2017.
Auditor
The auditor, Arram Berlyn Gardner LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
PENTEX LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 4 -
Statement of directors' responsibilities
The directors are responsible for preparing the Annual Report 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. 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;
-
• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
-
• 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 of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
S Zeki
Director
27 September 2017
PENTEX LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PENTEX LIMITED
- 5 -
We have audited the financial statements of Pentex Limited for the year ended 31 December 2016 set out on pages 7 to 26. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland".
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 an auditor's report 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.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities Statement set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the financial statements:
-
• give a true and fair view of the state of the company's affairs as at 31 December 2016 and of its profit 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.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit, the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements
true
, and the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
PENTEX LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PENTEX LIMITED
- 6 -
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 identifie
d
material misstatements in the Strategic Report and the Directors' Report
.
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.
Filiz Zekia (Senior Statutory Auditor)
for and on behalf of Arram Berlyn Gardner LLP
29 September 2017
Chartered Accountants
Statutory Auditor
30 City Road
London
EC1Y 2AB
PENTEX LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2016
- 7 -
Year
6 months
ended
ended
31 December
31 December
2016
2015
Notes
£
£
Turnover
3
69,796,842
30,673,751
Cost of sales
(63,889,273)
(27,405,980)
Gross profit
5,907,569
3,267,771
Administrative expenses
(2,128,299)
(1,652,546)
Other operating income
7,249
13,342
Operating profit
4
3,786,519
1,628,567
Interest receivable and similar income
8
1,109
20,769
Fair value gains and losses on foreign exchange contracts
(71,823)
71,823
Profit before taxation
3,715,805
1,721,159
Taxation
9
(810,159)
(440,633)
Profit for the financial year
22
2,905,646
1,280,526
The income statement has been prepared on the basis that all operations are continuing operations.
PENTEX LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2016
31 December 2016
- 8 -
2016
2015
Notes
£
£
£
£
Fixed assets
Tangible assets
11
243,966
289,601
Investment properties
12
225,855
225,855
469,821
515,456
Current assets
Stocks
15
6,890,629
7,124,977
Debtors falling due after one year
17
608,074
-
Debtors falling due within one year
17
7,187,911
7,826,102
Investments
16
4,605
4,605
Cash at bank and in hand
7,172,534
8,350,578
21,863,753
23,306,262
Creditors: amounts falling due within one year
18
(6,428,436)
(10,600,226)
Net current assets
15,435,317
12,706,036
Total assets less current liabilities
15,905,138
13,221,492
Capital and reserves
Called up share capital
21
106,600
1,066
Share premium account
227,917
227,917
Profit and loss reserves
22
15,570,621
12,992,509
Total equity
15,905,138
13,221,492
The financial statements were approved by the board of directors and authorised for issue on 27 September 2017 and are signed on its behalf by:
S Iyikan
S Zeki
Director
Director
Company Registration No. 01928818
PENTEX LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2016
- 9 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 July 2015
1,066
227,917
15,944,029
16,173,012
Period ended 31 December 2015:
Profit and total comprehensive income for the period
-
-
1,280,526
1,280,526
Dividends
10
-
-
(4,232,046)
(4,232,046)
Balance at 31 December 2015
1,066
227,917
12,992,509
13,221,492
Period ended 31 December 2016:
Profit and total comprehensive income for the period
-
-
2,905,646
2,905,646
Issue of share capital
21
105,534
-
-
105,534
Bonus issue of shares
21
-
-
(105,534)
(105,534)
Dividends
10
-
-
(222,000)
(222,000)
Balance at 31 December 2016
106,600
227,917
15,570,621
15,905,138
PENTEX LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016
- 10 -
2016
2015
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
28
(905,065)
5,004,199
Income taxes paid
(464,909)
(928,038)
Net cash (outflow)/inflow from operating activities
(1,369,974)
4,076,161
Investing activities
Purchase of tangible fixed assets
(128,475)
(71,874)
Proceeds on disposal of tangible fixed assets
11,249
-
Proceeds from other investments and loans
(8,317)
1,837
Interest received
-
20,696
Dividends received
1,109
73
Net cash used in investing activities
(124,434)
(49,268)
Financing activities
Dividends paid
(222,000)
(4,232,046)
Net cash used in financing activities
(222,000)
(4,232,046)
Net decrease in cash and cash equivalents
(1,716,408)
(205,153)
Cash and cash equivalents at beginning of year
8,350,578
8,575,842
Effect of foreign exchange rates
538,364
(20,111)
Cash and cash equivalents at end of year
7,172,534
8,350,578
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
- 11 -
1
Accounting policies
Company information
Pentex Limited is a
private
limited company
registered
and incorporated in England and Wales.
The registered office is
1st Floor North, 94-100 Christian Street, London, E1 1RS.
1.1
Accounting convention
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.
The financial statements are prepared in
Sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared on the historical cost convention, modified to include the revaluation of investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
A
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover represents amounts receivable for goods net of VAT and trade discounts.
Turnover
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.
1.4
Tangible fixed assets
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:
Plant and machinery
33% straight line
Fixtures, fittings & equipment
20% reducing balance
Computer equipment
33% straight line
Motor vehicles
20% straight line
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
.
1.5
Investment properties
Investment property, which is property held to earn rentals and/or for capital appreciation, is measured using the fair value model and stated at its fair value as the reporting end date.
The surplus or deficit on revaluation is recognised in the income statement.
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
1
Accounting policies
(Continued)
- 12 -
1.6
Impairment of fixed assets
At each reporting end date, the
company
reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.7
Stocks
Stocks
are stated at the lower of cost and
estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss.
1.8
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of 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, which include trade and other receivables and cash and bank balances, 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. Other financial assets classified as fair value through profit or loss are measured at fair value.
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
1
Accounting policies
(Continued)
- 13 -
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Loans and receivables
Trade debtors
, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.
Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
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.
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
1
Accounting policies
(Continued)
- 14 -
Basic financial liabilities
Basic financial liabilities, including trade and other payables
and
bank loans
,
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 receipts discounted at a market rate of interest.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade payables are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. Accounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade payables are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including
forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless they are included in a hedging arrangement.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Derivatives
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.
1.12
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
1
Accounting policies
(Continued)
- 15 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.13
Employee benefits
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.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
1.16
Foreign exchange
Transactions in currencies other than pounds
S
terling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the income statement for the period.
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 16 -
2
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 the 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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Stock
The company
manufactures clothing
and is subject to changing
consumer demands. As a result it is necessary to consider the
recoverability of the cost of
stock
and the associated provision required.
When calculating the
stock
provision, management considers the nature and
condition of the
stock
, as well as applying assumptions around anticipated
saleability of finished goods. See note 1
4
for the
net carrying amount of the
stock
and associated provision.
Impairment of debtors
The company makes an estimate of the recoverable value of trade and other debtors.
When assessing impairment of trade and other debtors, management considers
factors including the current credit rating of the debtor, the ageing profile of debtors
and historical experience.
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. This obligation may be legal or constructive deriving from regulations, contracts, normal practices or public commitments that lead third parties to reasonably expect that the Company will assume certain responsibilities. The amount of the provision is determined based on the best estimate of the outflow of resources required to settle the obligation, taking into account all available information.
No provision is recognised if the amount of liability cannot be estimated reliably. In this case, the relevant information is disclosed in the notes to the financial statements.
Given the uncertainties inherent in the estimates used to determine the amount of provision, actual outflows of resources may differ from the amounts recognised originally on the basis of the estimates.
Taxation
The Company evaluates the recoverability of deferred tax assets based on estimates of future earnings. The ability to recover these taxes depends ultimately on the Company’s ability to generate taxable earnings over the course of the period for which the deferred tax assets remain deductible. This analysis is based on the estimated reversal of deferred taxes as well as estimates of taxable earnings, which are sourced from internal projections and are updated to reflect the latest trends.
The appropriate classification of tax assets and liabilities depends on a number of factors, including estimates as to the timing and materialisation of deferred tax assets and the forecast tax payment schedule. Actual income tax receipts and payments could differ from the estimates made by Company as a result of changes in tax legislation or unforeseen transactions that could affect tax balances.
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 17 -
3
Turnover and other revenue
2016
2015
£
£
Turnover
Sales of goods
69,796,842
30,673,751
Other significant revenue
Interest income
-
20,696
Dividends received
1,109
73
Turnover analysed by geographical market
2016
2015
£
£
UK
27,389,064
14,688,122
EU
25,039,387
13,513,906
Rest of world
17,368,391
2,471,723
69,796,842
30,673,751
4
Operating profit
2016
2015
Operating profit for the period is stated after charging/(crediting):
£
£
Exchange losses/(gains)
(1,182,064)
(5,296)
Depreciation of owned tangible fixed assets
167,924
89,513
Profit on disposal of tangible fixed assets
(5,063)
-
Cost of stocks recognised as an expense
59,504,568
24,555,131
Operating lease charges
609,799
141,716
5
Auditor's remuneration
2016
2015
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the company's financial statements
26,000
18,900
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 18 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2016
2015
Number
Number
Administration
15
11
Design and production
71
73
Directors
4
4
90
88
Their aggregate remuneration comprised:
2016
2015
£
£
Wages and salaries
3,754,506
2,477,882
Social security costs
407,687
307,975
Pension costs
30,632
64,946
4,192,825
2,850,803
7
Directors' remuneration
2016
2015
£
£
Remuneration for qualifying services
96,931
752,445
Company pension contributions to defined contribution schemes
(30,751)
59,861
66,180
812,306
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2015: 4).
Remuneration disclosed above include the following amounts paid to the highest paid director:
Remuneration for qualifying services
202,407
314,361
Accrued pension at the end of the year
4,245
39,996
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 19 -
8
Interest receivable and similar income
2016
2015
£
£
Interest income
Other interest income
-
20,696
Other income from investments
Dividends received
1,109
73
Total income
1,109
20,769
9
Taxation
2016
2015
£
£
Current tax
UK corporation tax on profits for the current period
810,159
440,633
UK Corporation tax rates were substantively enacted as
part of the Finance Bill 201
5
on
15 July 2015
. These reduce the main rate to
19
% from
1 April 201
7. Further reductions to the UK Corporation tax rates were substantially enacted as part of the Finance Bill 2016 on 16 March 2016. This will reduce the main rate to 17% on 1 April 2020.
The deferred tax assets and liabilities
reflect these rates.
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2016
2015
£
£
Profit before taxation
3,715,805
1,721,159
Expected tax charge based on the standard rate of corporation tax in the UK of 20.00% (2015: 20.00%)
743,161
344,232
Tax effect of expenses that are not deductible in determining taxable profit
62,945
94,686
Permanent capital allowances in excess of depreciation
5,287
1,730
Dividend income
(222)
(15)
Other tax adjustments
(1,012)
-
Taxation for the period
810,159
440,633
10
Dividends
2016
2015
£
£
Interim paid
222,000
4,232,046
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 20 -
11
Tangible fixed assets
Plant and machinery
Fixtures, fittings & equipment
Computer equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2016
311,858
213,734
653,806
39,040
1,218,438
Additions
5,651
19,810
103,014
-
128,475
Disposals
-
-
-
(21,837)
(21,837)
At 31 December 2016
317,509
233,544
756,820
17,203
1,325,076
Depreciation and impairment
At 1 January 2016
299,140
168,604
441,936
19,157
928,837
Depreciation charged in the year
9,145
21,527
131,655
5,597
167,924
Eliminated in respect of disposals
-
-
-
(15,651)
(15,651)
At 31 December 2016
308,285
190,131
573,591
9,103
1,081,110
Carrying amount
At 31 December 2016
9,224
43,413
183,229
8,100
243,966
At 31 December 2015
12,718
45,130
211,870
19,883
289,601
12
Investment property
2016
£
Fair value
At 1 January 2016 and 31 December 2016
225,855
Investment property comprises a freehold property. The directors have assessed that the fair value of the investment property is not different from the cost of the investment property as at the year end date.
13
Financial instruments
2016
2015
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
14,497,426
15,620,202
Equity instruments measured at cost less impairment
4,605
4,605
Instruments measured at fair value through profit or loss
-
98,814
Carrying amount of financial liabilities
Measured at fair value through profit or loss
- Other financial liabilities
-
26,991
Measured at amortised cost
5,094,764
8,019,336
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 21 -
14
Cash and cash equivalents
Cash and cash equivalents consists of:
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15
Stocks
2016
2015
£
£
Raw materials and consumables
1,651,355
1,389,912
Work in progress
4,266,152
3,850,882
Finished goods and goods for resale
973,122
1,884,183
6,890,629
7,124,977
Stock is stated after provisions for impairment of £Nil (2015: £369,195).
There is no significant difference between the replacement cost of finished goods and their carrying amounts.
16
Current asset investments
2016
2015
£
£
Listed investments
4,605
4,605
Listed investments included above:
Listed investments carrying amount
4,605
4,605
17
Debtors
2016
2015
Amounts falling due within one year:
£
£
Trade debtors
5,668,131
5,802,032
Derivative financial instruments
-
98,814
Other debtors
1,196,391
1,727,351
Prepayments and accrued income
323,389
197,905
7,187,911
7,826,102
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
17
Debtors
(Continued)
- 22 -
2016
2015
Amounts falling due after more than one year:
£
£
Other debtors
608,074
-
Total debtors
7,795,985
7,826,102
Trade debtors disclosed above are classified as loans and receivables and are therefore measured at amortised cost. Trade debtors are stated after provisions for impairment of £169,218 (2015: £16,811).
18
Creditors: amounts falling due within one year
2016
2015
Notes
£
£
Loans and overdrafts
11,113
1,995,799
Trade creditors
3,076,763
3,987,503
Corporation tax
460,824
115,574
Other taxation and social security
151,239
754,173
Other creditors
2,000,000
2,026,991
Accruals and deferred income
728,497
1,720,186
6,428,436
10,600,226
Other creditors at 31 December 2016 includes £2,000,000 (2015: £2,000,000) owed to a shareholder.
19
Retirement benefit schemes
2016
2015
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
30,632
64,946
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
20
Share-based payment transactions
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 23 -
21
Share capital
2016
2015
£
£
Ordinary share capital
Issued and fully paid
60,000 'A' Ordinary of £1 each
60,000
600
40,000 'B' Ordinary of £1 each
40,000
400
6,600 'C' Ordinary of £1 each
6,600
66
106,600
1,066
There are 3 classes of Ordinary shares.
During the year, 59,400 Ordinary A shares were allotted at £1 per share, 39,600 Ordinary B shares were allotted at £1 per share and 6,534 Ordinary C shares were allotted at £1 per share. The issue of shares were charged against retained earnings.
One vote is attached to each 'A' Ordinary share.
The holders of the 'B' and 'C' Ordinary shares do not carry voting rights unless the resolution affects the rights of the 'B' and 'C' Ordinary shares respectively.
22
Profit and loss reserves
Retained earnings represents accumulated comprehensive income for the year and prior periods less dividends paid.
23
Financial commitments, guarantees and contingent liabilities
The company enters into forward foreign currency contracts to mitigate the exchange risk for certain foreign currency payables and receivables.
At the balance sheet date the company had commitments to purchase currency under foreign exchange currency contracts on which the total sterling equivalent outstanding amounted to £5,024,718 (2015: £4,053,506). These forward foreign currency contacts are measured at fair value which, at the balance sheet date amounted to an asset of £Nil (2015: £98.814).
The company also had commitments to sell currency under foreign exchange currency contracts on which the total sterling equivalent outstanding at the balance sheet date amounted to £Nil (2015: £1,105,380). These forward foreign currency contacts are measured at fair value which, at the balance sheet date amounted to a liability of £Nil (2015: £26,991).
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 24 -
24
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2016
2015
£
£
Within one year
200,000
105,000
Between two and five years
700,000
420,000
In over five years
-
52,500
900,000
577,500
25
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel, who are also directors, is as follows.
2016
2015
£
£
Aggregate compensation
95,721
856,890
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Purchase of goods
2016
2015
£
£
Companies and entities under common control
7,298,059
3,399,445
Interest receivable
2016
2015
£
£
Companies and entities under common control
-
18,330
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
25
Related party transactions
(Continued)
- 25 -
The following amounts were outstanding at the reporting end date:
2016
2015
Amounts owed to related parties
£
£
Companies and entities under common control
158,809
308,266
Other related parties
2,000,000
2,000,000
2,158,809
2,308,266
The following amounts were outstanding at the reporting end date:
2016
Balance
Amounts owed by related parties
£
Companies and entities under common control
1,016,304
Other related parties
28,000
1,044,304
2015
Balance
Amounts owed in previous period
£
Companies and entities under common control
858,464
No guarantees have been given or received.
26
Directors' transactions
The director's had loan accounts with the company as follows:
Description
% Rate
Opening balance
Amounts advanced
Amounts repaid
Closing balance
£
£
£
£
S Iyikan - Loan Account
3.00
(995,726)
(34,232)
1,018,845
(11,113)
S Zeki - Loan Account
3.00
(1,000,073)
(34,232)
1,042,622
8,317
(1,995,799)
(68,464)
2,061,467
(2,796)
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2016
- 26 -
27
Period of accounts
The accounts reflect the 12 months to 31 December 2016. The comparative results are for the 6 months ended 31 December 2015.
28
Cash generated from operations
2016
2015
£
£
Profit for the year after tax
2,905,646
1,280,526
Adjustments for:
Taxation charged
810,159
440,633
Investment income
(1,109)
(20,769)
Gain on disposal of tangible fixed assets
(5,063)
-
Fair value gains and losses on foreign exchange contracts and investment properties
71,823
(71,823)
Depreciation and impairment of tangible fixed assets
167,924
89,513
Foreign exchange gains on cash equivalents
(538,364)
20,111
Movements in working capital:
Decrease/(increase) in stocks
234,348
(1,362,263)
(Increase)/decrease in debtors
(60,380)
282,635
(Decrease)/increase in creditors
(4,490,049)
4,345,636
Cash (absorbed by)/generated from operations
(905,065)
5,004,199
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