Company registration number 03077364 (England and Wales)
CARPET AND LATEX INTERNATIONAL LIMITED
ANNUAL REPORT
AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2023
CARPET AND LATEX INTERNATIONAL LIMITED
COMPANY INFORMATION
Director
Mr M D Greenhalgh
Company number
03077364
Registered office
Unit 35
Bradley Fold Trading Estate
Bradley Fold Road
Bolton
Auditor
Barlow Andrews LLP
Carlyle House
78 Chorley New Road
Bolton
CARPET AND LATEX INTERNATIONAL LIMITED
CONTENTS
Page
Strategic report
1 - 2
Director's report
3
Director's responsibilities statement
4
Independent auditor's report
5 - 8
Profit and loss account
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 26
CARPET AND LATEX INTERNATIONAL LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JULY 2023
- 1 -
The director presents the strategic report for the year ended 31 July 2023.
Principal activities
Carpet and Latex International Limited provide formulated water based latex compounds for the textile and floor coverings sector. The company provides products and industry leading technical service and support to all its customer base.
Company objectives and strategy
To offer customers the best cost per performance products in the industry,
To provide customers with the highest level of supplier confidence,
To implement integrated management systems to uphold their claims.
In 2022, the company was accredited with the following:
ISO 9001 Certification - Quality Management System,
ISO 14001 Certification - Environmental Management System,
ISO 45001 Certification – Occupational H&S Management System.
Review of the business
The key performance indicators for the company are as follows:
2023
2022
£
£
Turnover
15,429,104
15,386,789
Profit before taxation
995,291
745,318
Gross profit margin
14.46%
12.33%
Net current assets
3,118,993
2,650,997
Profit and loss reserves
3,214,127
2,780,621
Debtors days
66
72
Overall, a year of both consolidation and growth for the company with turnover of £15.43m (2022: £15.39m). The company has maintained a market leading position in the UK textile and floor covering sector whilst continuing to grow into new, more diverse, sectors.
The business has worked hard to remain competitive and support its customer base, combatting significant increases in energy costs, has required a constant review of internal efficiencies.
Stock holding has been strictly regulated, balancing the volatility in raw materials pricing and the desire to conserve cash with the increased lead times and higher stock holding to prevent run outs.
Selling prices continue to be reviewed monthly as a reflection of market volatility and as a reflection of end users desire to track and have greater price transparency. This improved understanding has led to a higher acceptance rate when pushing increases through.
Principal risks and uncertainties
The director considers that the company is subject to general risks and uncertainties experienced in the general course of business. The principal risks and uncertainties affecting the company and most businesses have been identified as;
Volatility - The implications of the Ukraine invasion,
Stock holding - The continuing prolonged lead times,
Exchange rate fluctuations – Primarily GBP : Euro.
CARPET AND LATEX INTERNATIONAL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 2 -
Future development and performance
The company boasts a strong management team with a strategic balance of both youth and experience.
Excluding the director, the company has a team of 5 individuals responsible for much of the day to day running of the business. Including the director, the company has 4 industry specialists with a combined surplus of 160 years of technical expertise.
Carpet and Latex International Limited strive to be the most innovative company in its field. The company looks to build upon its continued success with further investment into a new manufacturing unit, facilitating expansion into new markets.
Key performance indicators
The Director is of the opinion that the dynamic growth experienced in the last 3 years has been successfully consolidated by careful management of the metrics applied to all cost of sales efficiencies. This has enabled the company to achieve and maintain its strategic goals and continue growing its position in the market.
Mr M D Greenhalgh
Director
13 November 2023
CARPET AND LATEX INTERNATIONAL LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 JULY 2023
- 3 -
The director presents his annual report and financial statements for the year ended 31 July 2023.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £500,000. The director does not recommend payment of a further dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr M D Greenhalgh
Mr G Hallworth
(Resigned 8 November 2022)
Auditor
Barlow Andrews LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments.
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.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
Mr M D Greenhalgh
Director
13 November 2023
CARPET AND LATEX INTERNATIONAL LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 JULY 2023
- 4 -
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is 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 director is required to:
select suitable accounting policies and then apply them consistently;
make judgements 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 director is 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. He is 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.
CARPET AND LATEX INTERNATIONAL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF CARPET AND LATEX INTERNATIONAL LIMITED
- 5 -
We have audited the financial statements of Carpet and Latex International Limited (the 'company') for the year ended 31 July 2023 which comprise the profit and loss account, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including 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, except for the possible effects of the matter described in the basis for qualified opinion section of our report, the financial statements:
give a true and fair view of the state of the company's affairs as at 31 July 2023 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.
Basis for qualified opinion
We were not appointed as auditor of the company until after 31 July 2022 and thus did not observe the counting of physical inventories at the end of the previous financial year. We were unable to satisfy ourselves by alternative means concerning the inventory quantities of £1,812,002 held at 31 July 2022. Consequently we were unable to determine whether any adjustment to this amount at 31 July 2022 was necessary or whether there was any consequential effect on the cost of sales for the year end 31 July 2023. In addition were any adjustment to the 2022 inventory balance to be required, the strategic report would also need to be amended.
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 qualified opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's 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 director 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 director is 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, however, we draw your attention to the basis for qualified opinion section of this report.
CARPET AND LATEX INTERNATIONAL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF CARPET AND LATEX INTERNATIONAL LIMITED
- 6 -
Opinions on other matters prescribed by the Companies Act 2006
Except for the possible effects of the matter described in the basis for qualified opinion section of our report, in our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In respect solely of the limitation on our work relating to stock, described above:
we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and
we were unable to determine whether adequate accounting records had been maintained.
Except for the matter described in the basis for qualified opinion section of our report, 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 director's 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 remuneration specified by law are not made.
Responsibilities of director
As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has 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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with the director and other management, and from our commercial knowledge and experience of the manufacturing sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation and health and safety legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
CARPET AND LATEX INTERNATIONAL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF CARPET AND LATEX INTERNATIONAL LIMITED
- 7 -
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions; and
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Other matters which we are required to address
The financial statements of Carpet and Latex International Limited for the year ended 31 July 2022 were not required to be audited under UK GAAP. As such, the comparative figures in the financial statements for the year ended 31 July 2023 are unaudited.
CARPET AND LATEX INTERNATIONAL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF CARPET AND LATEX INTERNATIONAL LIMITED
- 8 -
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
Alison Cornes
Senior Statutory Auditor
For and on behalf of Barlow Andrews LLP
13 November 2023
Chartered Accountants
Statutory Auditor
Carlyle House
78 Chorley New Road
Bolton
CARPET AND LATEX INTERNATIONAL LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 JULY 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
15,429,104
15,386,789
Cost of sales
(13,198,695)
(13,489,284)
Gross profit
2,230,409
1,897,505
Administrative expenses
(1,139,834)
(1,151,781)
Operating profit
4
1,090,575
745,724
Interest receivable and similar income
8
2,243
204
Interest payable and similar expenses
9
(97,527)
(610)
Profit before taxation
995,291
745,318
Tax on profit
10
(61,785)
(142,428)
Profit for the financial year
933,506
602,890
The profit and loss account has been prepared on the basis that all operations are continuing operations.
There is no other comprehensive income for the year. The total comprehensive income is the profit for the financial year shown above.
CARPET AND LATEX INTERNATIONAL LIMITED
BALANCE SHEET
- 10 -
2023
2022
as restated
Notes
£
£
£
£
Fixed assets
Tangible assets
12
173,680
162,177
Current assets
Stocks
13
960,232
1,812,002
Debtors
14
4,969,753
3,081,248
Cash at bank and in hand
408,087
383,964
6,338,072
5,277,214
Creditors: amounts falling due within one year
15
(3,219,079)
(2,626,217)
Net current assets
3,118,993
2,650,997
Total assets less current liabilities
3,292,673
2,813,174
Creditors: amounts falling due after more than one year
16
(74,773)
Provisions for liabilities
Deferred tax liability
18
(2,773)
(31,553)
(2,773)
(31,553)
Net assets
3,215,127
2,781,621
Capital and reserves
Called up share capital
20
1,000
1,000
Profit and loss reserves
3,214,127
2,780,621
Total equity
3,215,127
2,781,621
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true
The financial statements were approved by the board of directors and authorised for issue on 13 November 2023 and are signed on its behalf by:
Mr M D Greenhalgh
Director
Company registration number 03077364 (England and Wales)
CARPET AND LATEX INTERNATIONAL LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JULY 2023
- 11 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
As restated for the period ended 31 July 2022:
Balance at 1 August 2021
1,000
2,735,716
2,736,716
Effect of prior year correction
-
(157,985)
(157,985)
As restated
1,000
2,577,731
2,578,731
Year ended 31 July 2022:
Profit and total comprehensive income
-
602,890
602,890
Dividends
11
-
(400,000)
(400,000)
Balance at 31 July 2022
1,000
2,780,621
2,781,621
Year ended 31 July 2023:
Profit and total comprehensive income
-
933,506
933,506
Dividends
11
-
(500,000)
(500,000)
Balance at 31 July 2023
1,000
3,214,127
3,215,127
CARPET AND LATEX INTERNATIONAL LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JULY 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
26
704,771
531,667
Interest paid
(97,527)
(610)
Income taxes paid
(150,521)
(94,535)
Net cash inflow from operating activities
456,723
436,522
Investing activities
Purchase of tangible fixed assets
(16,291)
(13,551)
Proceeds from disposal of tangible fixed assets
57,000
3,500
Interest received
2,243
204
Net cash generated from/(used in) investing activities
42,952
(9,847)
Financing activities
Repayment of borrowings
(76,949)
Net movement in finance leases obligations
24,448
(10,000)
Dividends paid
(500,000)
(400,000)
Net cash used in financing activities
(475,552)
(486,949)
Net increase/(decrease) in cash and cash equivalents
24,123
(60,274)
Cash and cash equivalents at beginning of year
383,964
444,238
Cash and cash equivalents at end of year
408,087
383,964
CARPET AND LATEX INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JULY 2023
- 13 -
1
Accounting policies
Company information
Carpet and Latex International Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 35, Bradley Fold Trading Estate, Bradley Fold Road, Bolton.
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 amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Prior period error
Following a review of the prior period financial statements, an adjustment has been identified in regard to the net book value of tangible fixed assets. Both tangible fixed assets and the profit and loss reserve have been overstated by £157,985.
The financial statements and related notes have been amended to reflect the above adjustment.
1.3
Going concern
Atruet the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
1.4
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods provided in the normal course of business, and is shown net of VAT. Sales are recognised at the point at which the company has fulfilled its contractual obligations and the risks and rewards attached to the product have been transferred to the customer.
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 delivery), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Plant and equipment
20% straight line
Motor vehicles
25% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
CARPET AND LATEX INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 14 -
1.6
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.
1.7
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials.
1.8
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand.
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ 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.
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.
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.
CARPET AND LATEX INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 15 -
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.
Basic financial liabilities
Basic financial liabilities, including creditors, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.10
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the 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.
CARPET AND LATEX INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
1
Accounting policies
(Continued)
- 16 -
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.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to the profit or loss statement so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
1.15
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 in the period are included in profit or loss.
CARPET AND LATEX INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 17 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is 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.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
15,385,179
15,294,221
Europe
43,925
92,568
15,429,104
15,386,789
2023
2022
£
£
Other revenue
Interest income
2,243
204
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses
7,225
Depreciation of owned tangible fixed assets
39,556
52,829
Depreciation of tangible fixed assets held under finance leases
24,489
19,623
Profit on disposal of tangible fixed assets
(38,388)
-
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
16,500
CARPET AND LATEX INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 18 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Directors
1
2
Administration
8
6
Manufacturing
8
9
Total
17
17
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
642,144
717,392
Social security costs
78,577
77,339
Pension costs
57,407
38,514
778,128
833,245
7
Director's remuneration
2023
2022
£
£
Remuneration for qualifying services
182,611
249,028
Company pension contributions to defined contribution schemes
15,958
13,459
198,569
262,487
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 2).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
n/a
154,131
Company pension contributions to defined contribution schemes
n/a
5,959
As total directors' remuneration was less than £200,000 in the current year, no disclosure is provided for that year.
CARPET AND LATEX INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 19 -
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
2,243
204
9
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank loans
28,672
-
Interest on invoice finance arrangements
56,584
85,256
-
Other finance costs:
Interest on finance leases and hire purchase contracts
3,139
610
Other interest
9,132
97,527
610
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
206,877
150,521
Adjustments in respect of prior periods
(116,312)
Total current tax
90,565
150,521
Deferred tax
Origination and reversal of timing differences
1,117
(8,093)
Changes in tax rates
120
Adjustment in respect of prior periods
(30,017)
Total deferred tax
(28,780)
(8,093)
Total tax charge
61,785
142,428
CARPET AND LATEX INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
10
Taxation
(Continued)
- 20 -
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:
2023
2022
£
£
Profit before taxation
995,291
745,318
Expected tax charge based on the standard rate of corporation tax in the UK of 21.01% (2022: 19.00%)
209,066
141,610
Tax effect of expenses that are not deductible in determining taxable profit
(652)
977
Permanent capital allowances in excess of depreciation
(1,537)
7,934
Under/(over) provided in prior years
(116,312)
Deferred tax adjustments in respect of prior years
(30,017)
Movements in deferred tax
1,237
(8,093)
Taxation charge for the year
61,785
142,428
11
Dividends
2023
2022
£
£
Final paid
500,000
400,000
12
Tangible fixed assets
Plant and equipment
Motor vehicles
Total (as restated)
£
£
£
Cost
At 1 August 2022
443,568
145,337
588,905
Additions
16,291
77,869
94,160
Disposals
(70,347)
(70,347)
At 31 July 2023
459,859
152,859
612,718
Depreciation and impairment
At 1 August 2022
341,661
85,067
426,728
Depreciation charged in the year
33,643
30,402
64,045
Eliminated in respect of disposals
(51,735)
(51,735)
At 31 July 2023
375,304
63,734
439,038
Carrying amount
At 31 July 2023
84,555
89,125
173,680
At 31 July 2022
101,907
60,270
162,177
CARPET AND LATEX INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
12
Tangible fixed assets
(Continued)
- 21 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Motor vehicles
89,125
35,142
13
Stocks
2023
2022
£
£
Raw materials and consumables
838,358
1,687,689
Finished goods and goods for resale
121,874
124,313
960,232
1,812,002
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
2,776,699
3,032,906
Amounts owed by group undertakings
2,152,840
Other debtors
4,958
16,570
Prepayments and accrued income
35,256
31,772
4,969,753
3,081,248
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
17
28,377
833
Trade creditors
1,550,778
1,388,221
Corporation tax
90,565
150,521
Other taxation and social security
398,602
764,695
Other creditors
1,045,154
174,127
Accruals and deferred income
105,603
147,820
3,219,079
2,626,217
Included within other creditors is an amount of £891,024 which is secured by a debenture over all the assets of the company.
CARPET AND LATEX INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 22 -
16
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
17
74,773
17
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
28,377
833
In two to five years
74,773
103,150
833
Finance lease payments represent rentals payable by the company for certain items of motor vehicles. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
2,773
31,553
2023
Movements in the year:
£
Liability at 1 August 2022
31,553
Charge to profit or loss
1,117
Effect of change in tax rate - profit or loss
120
Adjustment in respect of prior years
(30,017)
Liability at 31 July 2023
2,773
The current year deferred tax liability has been calculated using the updated future tax rate of 25%, effective from 1 April 2023, published by the UK government. Previously the deferred tax liability has been calculated using the standard rate of corporation tax of 19%.
CARPET AND LATEX INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 23 -
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
57,407
38,514
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
1,000
1,000
1,000
1,000
The holders of Ordinary shares are entitled to one vote per share at meetings of the Company. All Ordinary shares rank equally with regards to the Company's residual value.
21
Financial commitments, guarantees and contingent liabilities
The company is party to cross guarantees given to its bankers in respect of loan facilities.
The terms of the agreement provide cross guarantees between Carpet & Latex Holdings Ltd and Carpet and Latex International Limited. The amount outstanding under this facility, excluding any balance held in this company at 31 July 2023 was £395,980.
22
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:
2023
2022
£
£
Within one year
38,007
19,116
Between two and five years
37,675
41,760
75,682
60,876
23
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Name of related party
Nature of relationship
Entities with control, joint control or significant influence over the company
Parent company
Other related parties
Group company
CARPET AND LATEX INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
23
Related party transactions
(Continued)
- 24 -
Description of
Income
Payments
transaction
2023
2022
2023
2022
£
£
£
£
Entities with control, joint control or significant influence over the company
Loan
2,652,840
Other related parties
Consultancy fees and funds
1,198
156,041
214,172
377,873
During the year, the company paid a dividend of £500,000 to the parent company.
Balances with related parties
Amounts owed by
Amounts owed to
related parties
related parties
2023
2022
2023
2022
£
£
£
£
Entities with control, joint control or significant influence over the company
2,652,840
Other related parties
1,436
390
55,149
61,877
24
Directors' transactions
Dividends totalling £Nil (2022 - £400,000) were paid in the year in respect of shares held by the company's directors and close family members.
At the year end the company owed the director £98,801 (2022: £172,000). No interest is paid on the loan and there are no fixed terms for repayment.
25
Ultimate controlling party
On the 22 November 2022, Carpet & Latex Holdings Ltd purchased 100% of the Ordinary share capital of the company. The company is registered in England and Wales and the registered office of the parent is Bradley Fold Trading Estate, Bolton.
CARPET AND LATEX INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 25 -
26
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
933,506
602,890
Adjustments for:
Taxation charged
61,785
142,428
Finance costs
97,527
609
Investment income
(2,243)
(204)
Gain on disposal of tangible fixed assets
(38,388)
-
Depreciation and impairment of tangible fixed assets
64,045
72,452
Movements in working capital:
Decrease/(increase) in stocks
851,770
(1,120,483)
Increase in debtors
(1,888,505)
(49,175)
Increase in creditors
625,274
883,150
Cash generated from operations
704,771
531,667
27
Analysis of changes in net funds
1 August 2022
Cash flows
New finance leases
31 July 2023
£
£
£
£
Cash at bank and in hand
383,964
24,123
-
408,087
Obligations under finance leases
(833)
(24,448)
(77,869)
(103,150)
383,131
(325)
(77,869)
304,937
CARPET AND LATEX INTERNATIONAL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 JULY 2023
- 26 -
28
Prior period adjustment
Reconciliation of changes in equity
1 August
31 July
2021
2022
£
£
Adjustments to prior year
Correction in revaluation of tangible fixed assets
(157,985)
(157,985)
Equity as previously reported
2,736,716
2,939,606
Equity as adjusted
2,578,731
2,781,621
Analysis of the effect upon equity
Profit and loss reserves
(157,985)
(157,985)
Reconciliation of changes in profit for the previous financial period
2022
£
Total adjustments
-
Profit as previously reported
602,890
Profit as adjusted
602,890
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