Registered number: 02555629
Qualitex Supplies Limited
Annual Report and Financial Statements
For the Year Ended 31 December 2022
|
Qualitex Supplies Limited
Company Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chartered Accountants & Statutory Auditor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualitex Supplies Limited
Contents
|
|
|
|
|
|
Independent Auditor's Report
|
|
Statement of Comprehensive Income
|
|
|
|
Statement of Changes in Equity
|
|
|
|
|
|
Notes to the Financial Statements
|
|
|
Qualitex Supplies Limited
Strategic Report
For the Year Ended 31 December 2022
The directors present their Strategic Report for Qualitex Supplies Limited for the year ended 31 December 2022.
During 2022 the business continued to grow as turnover reached a record level of £21.5m. This was a result of good business performance and a buoyant market, as we enjoyed a sustained period of trading without covid restrictions.
The Directors were pleased with this achievement, although they were aware that the costs had increased considerably during the year which had an adverse effect on margin. These costs, in the main, were attributed to factors outside of their direct control, relating to freight costs, driver wage expectations and availability, agency staff fees and increasing fuel prices.
Another major factor that negatively affected the costs for the year was the continued increase in paper prices. This increased the marketing spend considerably for brochure production, but due to the route to market and importance of brochure circulation, was seen as a necessary expense to maintain sales growth.
Throughout the pandemic Qualitex ran a 3 brochure strategy, allowing prices to be held for 4 months at a time. This strategy continued in 2022 as uncertainty remained regarding freight prices and exchange rates for the majority of the year.
The freight costs, which had reached unprecedented highs during 2021, reduced steadily throughout the majority of 2022.
Exchange rates throughout the year continued to fluctuate, with record low levels experienced in the value of Sterling against the Dollar, resulting in an exchange rate loss for the year being reported.
The business continued to maintain good stock levels as the focus on customer service and stock availability was seen as key for the progress of the business.
Product development remained at the forefront of the company’s strategy with many new products being launched throughout the year.
Improvements were made throughout the supply chain in relation to sustainability. Many plastics and polystyrenes’ within packaging were replaced with recyclable materials, and greater visibility was given to the end consumer on identifying recyclable packaging.
The Directors are positive about the future, and although the market is expected to be fairly static for 2023, the expectation is that the business will continue to mature with focus for the year being on costs controls.
Principal risks and uncertainties
|
The company recognises the risks it faces in connection with it's business operation and monitors various key performance indicators as part of its monthly accounting and managements reporting procedures. The Directors continue to review and monitor management controls put in place to mitigate the risks associated to creditor and debtor controls, and foreign exchange risks - as above the company has introduced systems to manage these risks. Of equal significance are our stock control and cashflow management systems which allow management to control stock levels and forecast cash flow in order to meet the needs of our customers and the business.
Financial key performance indicators
|
With turnover and gross profit having further improved during the year, the company was able to improve forward stock purchases. Management consider Turnover, Gross Profit and Debtor days to be key performance indicators. Debtor days at the year end increased to 42 days at 31 December 2022 (2021 40 days).
Page 1
|
Qualitex Supplies Limited
Strategic Report (continued)
For the Year Ended 31 December 2022
This report was approved by the board on 5 June 2023 and signed on its behalf.
Page 2
|
Qualitex Supplies Limited
Directors' Report
For the Year Ended 31 December 2022
The directors present their report and the financial statements for the year ended 31 December 2022.
Directors' responsibilities statement
|
The directors are responsible for preparing the Strategic Report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the company's financial statements and then apply them consistently;
∙make judgments 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 to 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.
The profit for the year, after taxation, amounted to £541,222 (2021 - £722,291).
During the year the company paid dividends totaling £120,000 (2021 - £197,222). No further dividend for the year has been recommended by the directors.
The directors who served during the year were:
Page 3
|
Qualitex Supplies Limited
Directors' Report (continued)
For the Year Ended 31 December 2022
The Directors and Shareholders recognise that the economic situation, in both the UK and worldwide, is likely to have a negative impact on spending within the construction and building industry. The expectation is that this will only be short lived, and the trend of rising inflation will begin to reduce as the year progresses, facilitating spending and growth in the latter half of the year.
It is felt that 2023 should be a year for consolidation, focusing on improving internal procedures and practices, whilst continuing to offer a higher than average service level.
It is expected that the reduction in margin experienced in 2022 will be corrected during 2023 and maintained in future years.
The Directors are considering the options for their Head Office site in Aylesford, Kent, which has a lease expiring in 2024.
Matters covered in the Strategic Report
|
The company's business review, principal risks and key performance indicators are included in the Strategic Report.
Disclosure of information to auditor
|
Each of the persons who are directors at the time when this directors' report is approved has confirmed that:
• so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware, and
• the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the company's auditor is aware of that information.
Post balance sheet events
|
There have been no significant events affecting the company since the year end.
Under section 487(2) of the Companies Act 2006, Kreston Reeves LLP will be deemed to have been reappointed as auditor 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
This report was approved by the board on 5 June 2023 and signed on its behalf.
Page 4
|
Qualitex Supplies Limited
Independent Auditor's Report to the Members of Qualitex Supplies Limited
We have audited the financial statements of Qualitex Supplies Limited (the 'company') for the year ended 31 December 2022, which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Cash Flows, the Statement of Changes in Equity and the related notes, 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 31 December 2022 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.
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 Auditor's 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 United Kingdom, including the Financial Reporting Council'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.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's Report thereon. The directors are responsible for the other information contained within the Annual Report. 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. 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 course of 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.
Page 5
|
Qualitex Supplies Limited
Independent Auditor's Report to the Members of Qualitex Supplies Limited (continued)
Opinion 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 Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report 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 Directors' Report.
We have nothing to report in respect of the following matters in relation to which 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 3, 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 is 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.
Page 6
|
Qualitex Supplies Limited
Independent Auditor's Report to the Members of Qualitex Supplies Limited (continued)
Auditor's 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 an Auditor's Report 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:
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the company and industry, and through discussion with the directors and other management (as required by auditing standards), we identified that the principal risks of non-compliance with laws and regulations related to health and safety, anti-bribery and employment law. We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, taxation and pension legislation. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting inappropriate journal entries to increase revenue or reduce expenditure, management bias in accounting estimates. Audit procedures performed by the engagement team included:
• Discussions with management and the assessment of known or suspected instances of non- compliance with laws and regulations (including health and safety) and fraud; and
• Identifying and assessing the effectiveness of controls that management has in place to detect and prevent fraud; and
• Challenging assumptions and judgements made by management in its significant accounting estimates; and
• Checking and reperforming the reconciliation of key control accounts; and
• Performing analytical procedures to identify any unusual or unexpected relationships, including related party transactions, that may indicate a risk of material misstatement due to fraud; and
• Confirmation of related parties with management, and review of transactions throughout the period to identify any previously undisclosed transactions with related parties outside the normal course of business; and
• Review of significant and unusual transactions and evaluation of the underlying financial rationale supporting the transactions; and
• Identifying and testing journal entries, in particular any manual entries made at the year- end for financial statement preparation.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
∙Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
Page 7
|
Qualitex Supplies Limited
Independent Auditor's Report to the Members of Qualitex Supplies Limited (continued)
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
∙Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the company's internal control.
∙Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
∙Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditor's Report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditor's Report. However, future events or conditions may cause the company to cease to continue as a going concern.
∙Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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.
Mark Attwood FCCA (Senior Statutory Auditor)
for and on behalf of
Kreston Reeves LLP
Chartered Accountants
Statutory Auditor
Montague Place
Quayside
Chatham Maritime
Chatham
Kent
ME4 4QU
5 June 2023
Page 8
|
Qualitex Supplies Limited
Statement of Comprehensive Income
For the Year Ended 31 December 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest receivable and similar income
|
|
|
|
Interest payable and similar expenses
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the financial year
|
|
|
|
There was no other comprehensive income for 2022 (2021:£NIL).
|
The notes on pages 14 to 28 form part of these financial statements.
|
Page 9
|
Qualitex Supplies Limited
Registered number: 02555629
Balance Sheet
As at 31 December 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debtors: amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Creditors: amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
Total assets less current liabilities
|
|
|
|
|
|
Creditors: amounts falling due after more than one year
|
|
|
|
|
|
Provisions for liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The financial statements were approved and authorised for issue by the board and were signed on its behalf on 5 June 2023.
The notes on pages 14 to 28 form part of these financial statements.
Page 10
|
Qualitex Supplies Limited
Statement of Changes in Equity
For the Year Ended 31 December 2022
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income for the year
|
|
|
|
|
|
|
|
Other comprehensive income for the year
|
|
|
|
Total comprehensive income for the year
|
|
|
|
Contributions by and distributions to owners
|
|
|
|
Dividends: Equity capital
|
|
|
|
Total transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income for the year
|
|
|
|
|
|
|
|
Other comprehensive income for the year
|
|
|
|
Total comprehensive income for the year
|
|
|
|
Contributions by and distributions to owners
|
|
|
|
Dividends: Equity capital
|
|
|
|
Total transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 14 to 28 form part of these financial statements.
|
Page 11
|
Qualitex Supplies Limited
Statement of Cash Flows
For the Year Ended 31 December 2022
Cash flows from operating activities
|
|
|
Profit for the financial year
|
|
|
|
|
|
Depreciation of tangible assets
|
|
|
Loss on disposal of tangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase)/decrease in debtors
|
|
|
Increase/(decrease) in creditors
|
|
|
|
|
|
Net fair value losses/(gains) recognised in P&L
|
|
|
|
|
|
Net cash generated from operating activities
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
Purchase of tangible fixed assets
|
|
|
Sale of tangible fixed assets
|
|
|
|
|
|
|
|
|
Net cash from investing activities
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
Repayment of/new finance leases
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
Net (decrease) in cash and cash equivalents
|
|
|
Cash and cash equivalents at beginning of year
|
|
|
Cash and cash equivalents at the end of year
|
|
|
|
|
|
Cash and cash equivalents at the end of year comprise:
|
|
|
|
|
|
|
|
|
|
|
|
The notes on pages 14 to 28 form part of these financial statements.
|
Page 12
|
Qualitex Supplies Limited
Analysis of Net Debt
For the Year Ended 31 December 2022
The notes on pages 14 to 28 form part of these financial statements.
|
Page 13
|
Qualitex Supplies Limited
Notes to the Financial Statements
For the Year Ended 31 December 2022
Qualitex Supplies Limited is a limited liability company incorporated in England. The address of the registered office is Unit 3b, Deacon Trading Estate, Aylesford, Kent, ME20 7SP. The principal activity of the company is that of the distribution of shower and bathroom equipment which is sold via builder's merchants and bathroom studios throughout the United Kingdom.
2.Accounting policies
|
|
Basis of preparation of financial statements
|
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with 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:
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
∙the company has transferred the significant risks and rewards of ownership to the buyer;
∙the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of revenue can be measured reliably;
∙it is probable that the company will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.
|
|
Operating leases: the company as lessee
|
Rentals paid under operating leases are charged to profit or loss 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.
|
|
Leased assets: the company as lessee
|
Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to profit or loss so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
Page 14
|
Qualitex Supplies Limited
Notes to the Financial Statements
For the Year Ended 31 December 2022
2.Accounting policies (continued)
Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Statement of Comprehensive Income in the same period as the related expenditure.
Interest income is recognised in profit or loss using the effective interest method.
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.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
The company operates a defined contribution plan for it's employees. A defined contribution plan is a pension plan under which the company pays a fixed contribution 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 profit and loss 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.
Page 15
|
Qualitex Supplies Limited
Notes to the Financial Statements
For the Year Ended 31 December 2022
2.Accounting policies (continued)
|
|
Current and deferred taxation
|
The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss 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.
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.
The company adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the company. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.
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.
Depreciation is provided on the following basis:
|
|
|
|
Short-term leasehold improvements
|
|
|
Over the life of the lease
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 profit or loss.
Page 16
|
Qualitex Supplies Limited
Notes to the Financial Statements
For the Year Ended 31 December 2022
2.Accounting policies (continued)
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 including direct costs of delivery to the company, on a first in, first out basis.
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 complete and 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.
|
|
Cash and cash equivalents
|
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.
In the Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the company's cash management.
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.
A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the balance sheet date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the balance sheet date.
|
|
Provisions for liabilities
|
Provisions are made where an event has taken place that gives the company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the company becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
As part of the company's property leasing arrangements there is an obligation to repair damages which occur during the life of the lease, such as wear and tear. The cost is charged to the profit and loss as the obligation arises. The provision is expected to be utilised in 2024 as the leases terminate.
Page 17
|
Qualitex Supplies Limited
Notes to the Financial Statements
For the Year Ended 31 December 2022
2.Accounting policies (continued)
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, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
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 amortised cost, 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 original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
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.
Financial assets and liabilities are offset and the net amount reported in the Balance Sheet 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.
Derivatives, including interest rate swaps and 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 subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or income as appropriate. The company does not currently apply hedge accounting for interest rate and foreign exchange derivatives.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
Page 18
|
Qualitex Supplies Limited
Notes to the Financial Statements
For the Year Ended 31 December 2022
|
Judgments in applying accounting policies and key sources of estimation uncertainty
|
The preparation of the financial statements requires the directors to make judgements, estimates and assumptions that can affect the amounts reported for assets and liabilities, and the results for the year. The nature of estimation is such though that actual outcomes could differ significantly from those estimates.
There were no judgements that had a significant impact on amounts recognised in the financial statements.
The following are the Company's key sources of estimation uncertainty:
Tangible fixed assets
Tangible fixed assets are depreciated over the course of their useful economic lives to their residual balances. The directors have reviewed the asset lives and associated residual values of all fixed asset classes, and in particular, the useful economic life and residual values of fixtures and fittings, and have concluded that asset lives and residual values are appropriate.
Trade debtors
The directors have reviewed trade receivables at the end of the year, to consider the risk that these debts may not be recoverable and hence could be impaired. This impairment review is used to calculate the level of provisioning against trade receivables. The impairment review is based on the directors best estimates of the likelihood of debt recovery and considers factors such as the Company's relationship with the customer, the age of the debt, credit rating data and experience of recent transactions with the customer.
Stock
Stock is valued at the lower of cost and net realisable value, which requires management to consider the carrying value of slow moving or damaged stock. In making this assessment and when calculating the value of any impairment provisions, the directors must consider the likelihood that particular stock lines can be sold and must access the future selling price of stock lines. These assessments are based on the directors judgements of future sales levels and prices which are both subject to uncertainty.
Provisions
Provision is made for future costs incurred on relocation. This requires the directors to make a best estimate of the expenditure that will be incurred based on past contractual requirements. In addition, the timing of the cash flows and any discount rates used to establish net present value of the obligations requires management's judgement. Should future events vary from those expected by management and their associated calculations, the required provision may be higher or lower than the amount recognised in the balance sheet.
|
All turnover arose within the United Kingdom.
|
Page 19
|
Qualitex Supplies Limited
Notes to the Financial Statements
For the Year Ended 31 December 2022
|
|
|
The operating profit is stated after charging:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating lease rentals
|
|
|
|
|
|
During the year, the company obtained the following services from the company's auditor:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees payable to the company's auditor for the audit of the company's financial statements
|
|
|
|
|
Staff costs, including directors' remuneration, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The average monthly number of employees, including the directors, during the year was as follows:
|
Page 20
|
Qualitex Supplies Limited
Notes to the Financial Statements
For the Year Ended 31 December 2022
|
During the year retirement benefits were accruing to 4 directors (2021 - 4) in respect of defined contribution pension schemes.
|
|
The highest paid director received remuneration of £441,198 (2021 - £443,522).
|
|
The value of the company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £1,321 (2021 - £1,321).
|
|
Other interest receivable
|
|
|
|
|
|
|
|
Interest payable and similar expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other loan interest payable
|
|
|
|
Finance leases and hire purchase contracts
|
|
|
|
|
|
|
Page 21
|
Qualitex Supplies Limited
Notes to the Financial Statements
For the Year Ended 31 December 2022
|
|
|
|
|
Current tax on profits for the year
|
|
|
|
Adjustments in respect of previous periods
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Origination and reversal of timing differences
|
|
|
|
|
|
|
|
|
|
|
|
Taxation on profit on ordinary activities
|
|
|
|
Factors affecting tax charge for the year
|
|
The tax assessed for the year is higher than (2021 - the same as) the standard rate of corporation tax in the UK of 19% (2021 - 19%). The differences are explained below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit on ordinary activities before tax
|
|
|
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)
|
|
|
|
|
|
Other differences leading to an increase (decrease) in the tax charge
|
|
|
Total tax charge for the year
|
|
|
Factors that may affect future tax charges
|
As part of the Finance Bill 2020, which was substantively enacted on 17 March 2020, the corporation tax main rate is to remain at 19% until 31 March 2023.
The UK government have announced that the main rate will increase on 1 April 2023 to 25%, for companies with taxable profits above £250,000. Companies with taxable profits below £50,000 will continue to pay at 19%, and marginal relief will apply between these thresholds. This change forms part of the Finance Bill 2021, which was substantively enacted on 24 May 2021.
The company has no unused tax losses.
Page 22
|
Qualitex Supplies Limited
Notes to the Financial Statements
For the Year Ended 31 December 2022
|
|
Long-term leasehold property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge for the year on owned assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The net book value of land and buildings may be further analysed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 23
|
Qualitex Supplies Limited
Notes to the Financial Statements
For the Year Ended 31 December 2022
14.Tangible fixed assets (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepayments and accrued income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Page 24
|
Qualitex Supplies Limited
Notes to the Financial Statements
For the Year Ended 31 December 2022
|
Creditors: Amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other taxation and social security
|
|
|
|
Obligations under finance lease and hire purchase contracts
|
|
|
|
|
|
|
|
Accruals and deferred income
|
|
|
|
|
|
|
|
|
|
|
|
Creditors: Amounts falling due after more than one year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net obligations under finance leases and hire purchase contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Analysis of the maturity of loans is given below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due within one year
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due 1-2 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The bank loan is a 6 year facility obtained under the UK Government CBILS loan scheme. Interest accrues at 3.82% per annum. The loan is repayable by equal installments from April 2021 to April 2026
|
Page 25
|
Qualitex Supplies Limited
Notes to the Financial Statements
For the Year Ended 31 December 2022
|
Hire purchase and finance leases
|
|
Minimum lease payments under hire purchase fall due as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments measured at fair value through profit or loss
|
|
|
|
Other financial liabilities measured at fair value through profit or loss comprise contracts for the forward purchase of foreign currencies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged to profit or loss
|
|
|
|
|
|
|
|
The deferred tax asset is made up as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated capital allowances
|
|
|
|
|
|
|
Page 26
|
Qualitex Supplies Limited
Notes to the Financial Statements
For the Year Ended 31 December 2022
Page 27
|
Qualitex Supplies Limited
Notes to the Financial Statements
For the Year Ended 31 December 2022
|
|
Allotted, called up and fully paid
|
|
|
|
|
|
|
|
|
|
50,000 (2021 - 50,000) Ordinary Shares shares of £1.00 each
|
|
|
Profit and loss account
The Profit and Loss reserve represents the accumulated retained profits over the years of trading.
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 paid by the Company to the fund and amounted to £44,356 (2021 - £47,516).
|
Commitments under operating leases
|
|
At 31 December 2022 the company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Later than 1 year and not later than 5 years
|
|
|
|
|
|
|
The company’s ultimate controlling party is the Andrews family, who own 100% of the issued share capital of the company. No individual member of the family is considered to have ultimate control over the company.
Page 28
|