Company Registration No. 02823778 (England and Wales)
ZONES (UK) LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
Jeffreys Henry LLP
Finsgate, 5-7 Cranwood Street
London
EC1V 9EE
ZONES (UK) LTD
COMPANY INFORMATION
Directors
F Lalji
A D Kaye
R McFadden
J Bauer
Secretary
T Boyd
Company number
02823778
Registered office
St Clements House
27 Clements Lane
London
EC4N 7AE
Auditor
Jeffreys Henry LLP
Finsgate
5 - 7 Cranwood Street
London
EC1V 9EE
ZONES (UK) LTD
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 5
Statement of comprehensive income
6
Balance sheet
7
Statement of changes in equity
8
Statement of cash flows
9
Notes to the financial statements
10 - 22
ZONES (UK) LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
- 1 -
The directors present the strategic report for the year ended 31 December 2018.
Fair review of the business
This year has seen continued growth in revenue as Zones further expands into global markets, especially throughout Europe. This growth in European business has caused the company to put in place tight controls to protect against changes in currency values, especially the Euro.
We work with currency brokers and our bankers to ensure that we do not suffer losses in our currency exposure, whilst remaining competitive when quoting clients. Sales to global clients have increased and margins have increased as we pride ourselves on providing excellent service and value for money. This has helped us continue to increase our sales to such clients throughout 2017.
We are aware that a post-Brexit marketplace will lead to more challenges, many of which cannot yet be foreseen. However we have VAT registrations in many EU countries, employees operating in Germany and Ireland, and are hiring now in the Netherlands. We are also evaluating the benefits of incorporating a separate business entity within the EU.
In addition to this, we have invested in our e-commerce capabilities and can sync our catalogue with those of several local distributors in many EU countries. We are confident that this helps us to be well-placed to manage any future challenges we face in a post-Brexit world.
Principal risks and uncertainties
The management of the business and the execution of the company's strategy are subject to a number of risks. The key risks and uncertainties affecting the company are as follows:
- purchasing cycles of customers;
- more manufacturers going direct;
- industry consolidation and increased competition;
- loss of significant customers;
- decrease in gross margins due to increase in competition in the computer industry;
- decrease of rebates/incentives from key suppliers;
- rapid inventory obsolescence due to accelerating technological changes in the personal computer industry; or
- Brexit and general economic conditions.
A decline in sales could adversely affect our business, financial condition, cash flows or results of operation.
Key performance indicators
The main KPIs in the year are as follows:
- Sales up by 20.9% to £62.4m (2017: £51.6m)
- Gross profit up by 5.4% to £7.2m (2017: £6.8m)
A D Kaye
Director
26 September 2019
ZONES (UK) LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2018
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2018.
Principal activities
The principal activity of the company continued to be the trade of computer consumables, hardware, software and data centre, security mobility and cloud services.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
F Lalji
A D Kaye
R McFadden
J Bauer
Results and dividends
The results for the year are set out on page 6.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Financial instruments
Treasury operations and financial instruments
The company operates a treasury function which is responsible for managing the liquidity, interest and foreign currency risks associated with the company’s activities.
The company’s principal financial instruments include derivative financial instruments, the purpose of which is to manage currency risks and interest rate risks arising from the company’s activities. In addition, the company has various other financial assets and liabilities such as trade debtors and trade creditors arising directly from its operations. Derivative transactions which the company enters into principally comprise forward exchange contracts. In accordance with company’s treasury policy, derivative instruments are not entered into for speculative purposes.
Auditor
In accordance with the company's articles, a resolution proposing that Jeffreys Henry LLP be reappointed as auditor of the company will be put at a General Meeting.
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
A D Kaye
Director
26 September 2019
ZONES (UK) LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2018
- 3 -
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 (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
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.
ZONES (UK) LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ZONES (UK) LTD
- 4 -
Opinion
We have audited the financial statements of Zones (UK) Ltd (the 'company') for the year ended 31 December 2018 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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 2018 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 UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
-
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue
.
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the strategic report and the directors' r
eport 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.
ZONES (UK) LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ZONES (UK) LTD
- 5 -
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'
r
eport
.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of directors' remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, 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.
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.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in 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.
Sanjay Parmar (Senior Statutory Auditor)
for and on behalf of Jeffreys Henry LLP
26 September 2019
Chartered Accountants
Statutory Auditor
Finsgate
5 - 7 Cranwood Street
London
EC1V 9EE
ZONES (UK) LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2018
- 6 -
2018
2017
Notes
£
£
Turnover
3
62,617,899
51,621,180
Cost of sales
(55,215,034)
(44,800,421)
Gross profit
7,402,865
6,820,759
Administrative expenses
(6,711,107)
(6,590,778)
Operating profit
4
691,758
229,981
Interest payable and similar expenses
7
(143,171)
(114,478)
Profit before taxation
548,587
115,503
Tax on profit
8
(107,983)
(12,667)
Profit for the financial year
440,604
102,836
The Profit And Loss Account has been prepared on the basis that all operations are continuing operations.
ZONES (UK) LTD
BALANCE SHEET
AS AT
31 DECEMBER 2018
31 December 2018
- 7 -
2018
2017
Notes
£
£
£
£
Fixed assets
Tangible assets
9
172,790
211,036
Current assets
Stocks
11
1,517,059
1,189,609
Debtors
12
11,235,381
12,658,225
Cash at bank and in hand
728
729
12,753,168
13,848,563
Creditors: amounts falling due within one year
13
(10,881,270)
(12,277,116)
Net current assets
1,871,898
1,571,447
Total assets less current liabilities
2,044,688
1,782,483
Creditors: amounts falling due after more than one year
14
-
(176,604)
Provisions for liabilities
16
(7,904)
(9,699)
Net assets
2,036,784
1,596,180
Capital and reserves
Called up share capital
18
866,666
866,666
Share premium account
783,334
783,334
Profit and loss reserves
386,784
(53,820)
Total equity
2,036,784
1,596,180
The financial statements were approved by the board of directors and authorised for issue on 26 September 2019 and are signed on its behalf by:
A D Kaye
Director
Company Registration No. 02823778
ZONES (UK) LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
- 8 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2017
866,666
783,334
(156,656)
1,493,344
Year ended 31 December 2017:
Profit and total comprehensive income for the year
-
-
102,836
102,836
Balance at 31 December 2017
866,666
783,334
(53,820)
1,596,180
Year ended 31 December 2018:
Profit and total comprehensive income for the year
-
-
440,604
440,604
Balance at 31 December 2018
866,666
783,334
386,784
2,036,784
ZONES (UK) LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2018
- 9 -
2018
2017
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
24
2,861,077
(3,801,773)
Interest paid
(143,171)
(114,478)
Income taxes paid
(17,469)
(278,347)
Net cash inflow/(outflow) from operating activities
2,700,437
(4,194,598)
Investing activities
Purchase of tangible fixed assets
(75,238)
(155,726)
Proceeds from other investments and loans
(10,927)
-
Net cash used in investing activities
(86,165)
(155,726)
Financing activities
Repayment of borrowings
(176,604)
1,835
Net cash (used in)/generated from financing activities
(176,604)
1,835
Net increase/(decrease) in cash and cash equivalents
2,437,668
(4,348,489)
Cash and cash equivalents at beginning of year
(5,924,770)
(1,576,281)
Cash and cash equivalents at end of year
(3,487,102)
(5,924,770)
Relating to:
Cash at bank and in hand
728
729
Bank overdrafts included in creditors payable within one year
(3,487,830)
(5,925,499)
ZONES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
- 10 -
1
Accounting policies
Company information
Zones (UK) Ltd is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
St Clements House, 27 Clements Lane, London, EC4N 7AE.
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 under the historical cost convention.
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
and has the continued support of the shareholder
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 is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
(usually on dispatch of the goods)
, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue relating to the sale of goods whereby the buyer does not take immediate delivery of the goods is recognised when the buyer takes title of the goods providing; the delivery is probable, the goods are on hand and ready for delivery, the buyer acknowledges deferral of delivery and usual payment terms apply.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably
.
Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.
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.
ZONES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
1
Accounting policies
(Continued)
- 11 -
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:
Fixtures, fittings & equipment
20% - 30% p.a. on cost
Computer equipment
33% p.a. on cost
Motor vehicles
33% p.a. on cost
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
Impairment of fixed assets
At each reporting
period
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.
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.
1.6
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. Reversals of impairment losses are also recognised in profit or loss.
1.7
Cash at bank and in hand
Cash at bank and in hand
are basic financial assets
and
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.
1.8
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 balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally 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.
ZONES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
1
Accounting policies
(Continued)
- 12 -
Basic financial assets
Basic financial assets, which include debtors 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.
Financial assets classified as receivable within one year are not amortised.
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.
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.
ZONES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
1
Accounting policies
(Continued)
- 13 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from
fellow group companies and preference shares that are classified as debt, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade creditors are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
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
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 hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value though profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
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.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
ZONES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
1
Accounting policies
(Continued)
- 14 -
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account 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.
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 profit and loss account, 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.
1.12
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.
1.13
Foreign exchange
Transactions in currencies other than pounds sterling 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 profit and loss account for the period.
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.
The main estimates consist of depreciation, provisions against stock and trade debtors.
ZONES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
- 15 -
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2018
2017
£
£
Turnover analysed by class of business
Goods
59,887,349
48,744,089
Services
2,730,550
2,877,091
62,617,899
51,621,180
2018
2017
£
£
Turnover analysed by geographical market
United Kingdom
33,973,233
24,649,185
European Union
25,811,557
25,237,913
Other
2,833,109
1,734,082
62,617,899
51,621,180
4
Operating profit
2018
2017
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(91,186)
(164,645)
Fees payable to the company's auditor for the audit of the company's financial statements
14,683
18,125
Depreciation of owned tangible fixed assets
113,484
136,109
Cost of stocks recognised as an expense
55,306,220
44,965,066
Exchange differences recognised in profit or loss during the year, except for those arising on financial instruments measured at fair value through profit or loss, amounted to £91,186 (2017 - £164,645).
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2018
2017
Number
Number
Directors
4
4
Administration
31
40
Sales
19
21
Warehouse
9
6
63
71
ZONES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
5
Employees
(Continued)
- 16 -
Their aggregate remuneration comprised:
2018
2017
£
£
Wages and salaries
4,981,095
4,949,532
Social security costs
563,107
511,517
5,544,202
5,461,049
6
Directors' remuneration
2018
2017
£
£
Remuneration for qualifying services
512,500
281,250
Remuneration disclosed above include the following amounts paid to the highest paid director:
2018
2017
£
£
Remuneration for qualifying services
371,000
150,000
7
Interest payable and similar expenses
2018
2017
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
143,171
114,478
8
Taxation
2018
2017
£
£
Current tax
UK corporation tax on profits for the current period
109,778
17,469
Deferred tax
Origination and reversal of timing differences
(1,795)
(4,802)
Total tax charge
107,983
12,667
ZONES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
8
Taxation
(Continued)
- 17 -
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:
2018
2017
£
£
Profit before taxation
548,587
115,503
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2017: 19.00%)
104,232
21,946
Permanent capital allowances in excess of depreciation
5,546
(4,477)
Change in deferred tax provision
(1,795)
(4,802)
Taxation charge for the year
107,983
12,667
9
Tangible fixed assets
Fixtures, fittings & equipment
Computer equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2018
378,137
938,554
19,370
1,336,061
Additions
26,690
48,548
-
75,238
Disposals
-
-
(19,370)
(19,370)
At 31 December 2018
404,827
987,102
-
1,391,929
Depreciation and impairment
At 1 January 2018
302,256
803,399
19,370
1,125,025
Depreciation charged in the year
33,130
80,354
-
113,484
Eliminated in respect of disposals
-
-
(19,370)
(19,370)
At 31 December 2018
335,386
883,753
-
1,219,139
Carrying amount
At 31 December 2018
69,441
103,349
-
172,790
At 31 December 2017
75,881
135,155
-
211,036
ZONES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
- 18 -
10
Financial instruments
2018
2017
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
9,671,143
10,374,543
Carrying amount of financial liabilities
Measured at amortised cost
10,649,697
12,277,701
11
Stocks
2018
2017
£
£
Finished goods and goods for resale
1,517,059
1,189,609
12
Debtors
2018
2017
Amounts falling due within one year:
£
£
Trade debtors
9,236,707
10,154,573
Other debtors
717,391
1,973,403
Prepayments and accrued income
1,281,283
530,249
11,235,381
12,658,225
13
Creditors: amounts falling due within one year
2018
2017
Notes
£
£
Bank loans and overdrafts
15
3,487,830
5,925,499
Trade creditors
6,290,379
5,853,993
Corporation tax
109,778
17,469
Other taxation and social security
121,795
158,550
Accruals and deferred income
871,488
321,605
10,881,270
12,277,116
14
Creditors: amounts falling due after more than one year
2018
2017
Notes
£
£
Other borrowings
15
-
176,604
ZONES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
- 19 -
15
Loans and overdrafts
2018
2017
£
£
Bank facility
3,487,830
5,925,499
Other loans
-
176,604
3,487,830
6,102,103
Payable within one year
3,487,830
5,925,499
Payable after one year
-
176,604
The bank facility is secured by way of a fixed and floating charge over the company's assets and a guarantee of $1million from Zones Inc.
16
Provisions for liabilities
2018
2017
Notes
£
£
Deferred tax liabilities
17
7,904
9,699
17
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2018
2017
Balances:
£
£
ACAs
7,904
9,699
2018
Movements in the year:
£
Liability at 1 January 2018
9,699
Credit to profit or loss
(1,795)
Liability at 31 December 2018
7,904
The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
ZONES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
- 20 -
18
Share capital
2018
2017
£
£
Ordinary share capital
Issued and fully paid
520,000 A Ordinary shares of £1 each
520,000
520,000
346,666 B Ordinary shares of £1 each
346,666
346,666
866,666
866,666
Each Ordinary A and each Ordinary B share is entitled to one vote in any circumstances.
19
Operating lease commitments
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:
2018
2017
£
£
Within one year
535,272
349,764
Between two and five years
511,050
355,229
1,046,322
704,993
20
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2018
2017
£
£
Aggregate compensation
826,512
573,070
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Sale of goods
Purchase of goods
2018
2017
2018
2017
£
£
£
£
Entities with control, joint control or significant influence over the company
445,172
240,922
-
97,557
445,172
240,922
-
97,557
ZONES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
20
Related party transactions
(Continued)
- 21 -
The following amounts were outstanding at the reporting end date:
Amounts owed to related parties
2018
2017
£
£
Entities with control, joint control or significant influence over the company
(322,114)
192,780
(322,114)
192,780
No guarantees have been given or received.
21
Directors' transactions
City Consortium UK Limited, a company controlled by AD Kaye, was paid sales consultancy fees of £80,500 (2017: £50,000) during the year. At the year end the balance owed was £Nil (2017: £Nil).
22
Ultimate controlling party
The immediate parent undertaking is Zones (EMEA) Limited, a company incorporated in the UK.
The ultimate controlling party is F Lalji (Director).
23
Post reporting date events
There are no post reporting date events to report.
ZONES (UK) LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2018
- 22 -
24
Cash generated from operations
2018
2017
£
£
Profit for the year after tax
440,604
102,836
Adjustments for:
Taxation charged
107,983
12,667
Finance costs
143,171
114,478
Depreciation and impairment of tangible fixed assets
113,484
136,109
Movements in working capital:
(Increase) in stocks
(327,450)
(184,987)
Decrease/(increase) in debtors
1,433,771
(3,942,629)
Increase/(decrease) in creditors
949,514
(40,247)
Cash generated from/(absorbed by) operations
2,861,077
(3,801,773)
2018-12-31
2018-01-01
false
CCH Software
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A D Kaye
R McFadden
J Bauer
T Boyd
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2018-01-01
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2017-12-31
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2017-12-31
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