Company Registration No. 01928818 (England and Wales)
PENTEX LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
PENTEX LIMITED
COMPANY INFORMATION
Directors
S Iyikan - Managing Director
S Zeki - Managing Director
P Reeves - Finance Director
D Urban - Operations Director
Secretary
S Iyikan
Company number
01928818
Registered office
1st Floor North
94-100 Christian Street
London
E1 1RS
Auditors
Arram Berlyn Gardner LLP
30 City Road
London
EC1Y 2AB
Business address
1st Floor North
94-100 Christian Street
London
E1 1RS
PENTEX LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 6
Statement of comprehensive income
7
Statement of financial position
8
Statement of changes in equity
9
Notes to the financial statements
10 - 22
PENTEX LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
- 1 -
The directors present the strategic report for the year ended 31 December 2019.
Fair review of the business
The results are for the year ended to 31 December 2019.
The results and the financial position at the year end were considered satisfactory by the directors.
Principal risks and uncertainties
The company's principal financial instruments comprise bank balances, trade creditors and trade debtors.
In respect of bank balances the liquidity risk is managed by maintaining a balance between current, deposit and currency accounts. The company make use of money market facilities where funds are available.
Trade debtors are managed in respect of credit and cash flow risk by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits.
Trade creditors liquidity risk is managed by ensuring sufficient funds are available to meet the amounts due.
The company regularly review foreign exchange commitments thereby minimising exposure to currency risks.
Development and performance
The Directors consider that the results for the
year
reflect the hard work the Pentex team has put into all aspects of the business coupled with the good relationship the Company enjoys with both its customers and suppliers.
The Company regularly reviews its supplier base to ensure it is able to fulfill customer demand and that the factories run efficiently
. Pentex operate a balance of owned and subcontracted factories. These are located in the Far East as well as Europe, providing both speed to market as well as highly competitive pricing.
Ethical trading is at the forefront of our attentions and we are very proud of our strong record in this area. We conduct regular inspections of all our factories to ensure that the very highest standards are maintained.
During the
year
under review the Company has
continued to
invest heavily in
our overseas infrastructure.
Key performance indicators
The key financial highlights are as follows:
PENTEX LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 2 -
Covid-19
The strong growth trajectory Pentex experienced in 2019 continued into the first quarter of the financial year 2020 due to a very strong order at the end of 2019.
The initial impact of Covid with the associated lockdown of retail stores had a major effect on all companies operating in the retail/ wholesale clothing sector.
During the 12 week retail closedown period from 21st March to 15
th
June 2020, the company management took quick and decisive action to mitigate overhead costs and preserve company liquidity.
The directors also put into place contingency plans in case of a second lockdown, these included remote working guidelines, hybrid teams that alternated time in the office, and extensive health and safety measures in the office.
As a result of the timely action taken by the Company’s management team and the extremely prudent policy adopted regarding the Company finances the Board are pleased to report that the initiatives were successful and Pentex remains a strong and robust company. Activity levels are again increasing rapidly. The directors are pleased to note that Pentex has returned to pre Covid-19 trading levels from November 2020, with a strong order book for 2021. We have also ensured that Pentex has retained sufficient reserves to withstand the impact of further lockdowns.
Brexit
The transition agreement ends on 31
st
December 2020, with the possible outcome of a deal, no deal or a blend.
Pentex are planning for a no deal scenario. We have reviewed our supply chains and logistics processes. With the assistance of our advisors, we are setting up an infrastructure to ensure delivery continuity for our customers in the UK and in Europe.
S Zeki
Director
15 December 2020
PENTEX LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
- 3 -
The directors present their report and financial statements for the year ended 31 December 2019.
Principal activities
The principal activity of the company continued to be that of the manufacture and distribution of clothing.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
S Iyikan
S Zeki
P Reeves
D Urban
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £
5,267,000 (2018: £404,000)
.
Future developments
The Board are continuing to assess the duel impact of Covid-19 and Brexit upon Pentex’s business activities. We are evaluating the various scenarios and contingencies are being developed and put in place.
Pentex will continue to invest to enhance their core strengths in design and development. The company will also invest in and expand its overseas operations and factories, to ensure both quality and prices remain highly competitive.
Statement of directors' responsibilities
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
PENTEX LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 4 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
S Zeki
Director
15 December 2020
PENTEX LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PENTEX LIMITED
- 5 -
Opinion
We have audited the financial statements of Pentex Limited (the 'company') for the year ended 31 December 2019 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity 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 2019 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.
PENTEX LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PENTEX LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the directors'
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.
Filiz Zekia FCCA (Senior Statutory Auditor)
for and on behalf of Arram Berlyn Gardner LLP
18 December 2020
Chartered Accountants
Statutory Auditor
30 City Road
London
EC1Y 2AB
PENTEX LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
- 7 -
2019
2018
Notes
£
£
Turnover
3
97,780,907
73,356,170
Cost of sales
(88,436,257)
(66,854,530)
Gross profit
9,344,650
6,501,640
Administrative expenses
(3,658,296)
(2,975,312)
Operating profit
4
5,686,354
3,526,328
Interest receivable and similar income
8
5,719
29,905
Interest payable and similar expenses
9
-
(6,690)
Profit before taxation
5,692,073
3,549,543
Tax on profit
10
(1,379,963)
(703,437)
Profit for the financial year
4,312,110
2,846,106
The income statement has been prepared on the basis that all operations are continuing operations.
PENTEX LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2019
31 December 2019
- 8 -
2019
2018
Notes
£
£
£
£
Fixed assets
Tangible assets
12
237,463
99,651
Current assets
Stocks
13
13,420,756
10,005,777
Debtors
14
8,845,804
13,566,910
Investments
15
4,605
4,605
Cash at bank and in hand
8,877,108
4,999,334
31,148,273
28,576,626
Creditors: amounts falling due within one year
16
(13,169,400)
(9,505,051)
Net current assets
17,978,873
19,071,575
Total assets less current liabilities
18,216,336
19,171,226
Capital and reserves
Called up share capital
18
106,600
106,600
Share premium account
227,917
227,917
Profit and loss reserves
17,881,819
18,836,709
Total equity
18,216,336
19,171,226
The financial statements were approved by the board of directors and authorised for issue on 15 December 2020 and are signed on its behalf by:
S Iyikan
S Zeki
Director
Director
Company Registration No. 01928818
PENTEX LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
- 9 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 January 2018
106,600
227,917
16,394,603
16,729,120
Year ended 31 December 2018:
Profit and total comprehensive income for the year
-
-
2,846,106
2,846,106
Dividends
11
-
-
(404,000)
(404,000)
Balance at 31 December 2018
106,600
227,917
18,836,709
19,171,226
Year ended 31 December 2019:
Profit and total comprehensive income for the year
-
-
4,312,110
4,312,110
Dividends
11
-
-
(5,267,000)
(5,267,000)
Balance at 31 December 2019
106,600
227,917
17,881,819
18,216,336
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
- 10 -
1
Accounting policies
Company information
Pentex Limited is a
private
limited company
registered
and incorporated in England and Wales.
The registered office is
1st Floor North, 94-100 Christian Street, London, E1 1RS.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
Sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared on the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares
publicly available consolidated financial statements
, including this company,
which are
intended to give a true and fair view of the assets, liabilities,
financial position and profit or loss
of the group
.
T
he company has
therefore
taken advantage of
e
xemptions from the following disclosure requirements:
- Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
-
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’
:
Interest income/expense and net gains/losses for each category of financial instrument;
basis
of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income
;
-
Section 33 ‘Related Party Disclosures’
:
Compensation for key management personnel
.
The financial statements of the company are consolidated in the financial statements of
Pentex Holdings Limited.
These consolidated financial statements are available from its registered office
, 94-100 Christian Street, London, E1 1RS.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover represents amounts receivable for goods net of VAT and trade discounts.
Turnover
from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
(usually on dispatch of the goods)
, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
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:
Plant and machinery
33% straight line
Fixtures, fittings & equipment
20% reducing balance
Computer equipment
33% straight line
Motor vehicles
20% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.5
Impairment of fixed assets
At each reporting end date, the
company
reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
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.
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 12 -
1.7
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Other financial assets classified as fair value through profit or loss are measured at fair value.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Loans and receivables
Trade debtors
, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.
Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 13 -
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 trade and other payables
,
are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future receipts discounted at a market rate of interest.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade payables are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. Accounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade payables are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including
forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless they are included in a hedging arrangement.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.8
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.
1.9
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.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
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 income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
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.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
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 lease
s
asset are consumed.
1.14
Foreign exchange
Transactions in currencies other than pounds
S
terling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the income statement for the period.
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 15 -
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.
Critical judgements
Stock
The company
manufactures and wholesales clothing
and is subject to changing
consumer demands. As a result it is necessary to consider the
recoverability of the cost of
stock
and the associated provision required.
When calculating the
stock
provision, management considers the nature and
condition of the
stock
, as well as applying assumptions around anticipated
saleability of finished goods. See note 1
6
for the
net carrying amount of the
stock
and associated provision.
Impairment of debtors
The company makes an estimate of the recoverable value of trade and other debtors.
When assessing impairment of trade and other debtors, management considers
factors including the current credit rating of the debtor, the ageing profile of debtors
and historical experience.
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. This obligation may be legal or constructive deriving from regulations, contracts, normal practices or public commitments that lead third parties to reasonably expect that the Company will assume certain responsibilities. The amount of the provision is determined based on the best estimate of the outflow of resources required to settle the obligation, taking into account all available information.
No provision is recognised if the amount of liability cannot be estimated reliably. In this case, the relevant information is disclosed in the notes to the financial statements.
Given the uncertainties inherent in the estimates used to determine the amount of provision, actual outflows of resources may differ from the amounts recognised originally on the basis of the estimates.
Taxation
The Company evaluates the recoverability of deferred tax assets based on estimates of future earnings. The ability to recover these taxes depends ultimately on the Company’s ability to generate taxable earnings over the course of the period for which the deferred tax assets remain deductible. This analysis is based on the estimated reversal of deferred taxes as well as estimates of taxable earnings, which are sourced from internal projections and are updated to reflect the latest trends.
The appropriate classification of tax assets and liabilities depends on a number of factors, including estimates as to the timing and materialisation of deferred tax assets and the forecast tax payment schedule. Actual income tax receipts and payments could differ from the estimates made by Company as a result of changes in tax legislation or unforeseen transactions that could affect tax balances.
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 16 -
3
Turnover and other revenue
2019
2018
£
£
Turnover analysed by class of business
Sales of clothing
97,780,907
73,356,170
2019
2018
£
£
Turnover analysed by geographical market
UK
46,046,522
43,063,225
EU
38,047,069
28,401,295
Rest of world
13,687,316
1,891,650
97,780,907
73,356,170
4
Operating profit
2019
2018
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
99,515
22,545
Depreciation of owned tangible fixed assets
111,168
107,266
(Loss)/profit on disposal of investment property
-
(4,035)
Operating lease charges
593,177
578,887
5
Auditor's remuneration
2019
2018
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
34,000
32,000
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2019
2018
Number
Number
Administration
15
12
Design and production
88
80
Directors
4
4
Total
107
96
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
6
Employees
(Continued)
- 17 -
Their aggregate remuneration comprised:
2019
2018
£
£
Wages and salaries
6,456,170
5,237,000
Social security costs
616,346
480,729
Pension costs
163,903
98,199
7,236,419
5,815,928
7
Directors' remuneration
2019
2018
£
£
Remuneration for qualifying services
1,718,243
1,250,584
Company pension contributions to defined contribution schemes
36,034
8,100
1,754,277
1,258,684
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2018: 4).
Remuneration disclosed above include the following amounts paid to the highest paid director:
Remuneration for qualifying services
514,179
247,328
8
Interest receivable and similar income
2019
2018
£
£
Interest income
Other interest income
5,643
29,541
Other income from investments
Dividends received
76
364
Total income
5,719
29,905
9
Interest payable and similar expenses
2019
2018
£
£
Other interest
-
6,690
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 18 -
10
Taxation
2019
2018
£
£
Current tax
UK corporation tax on profits for the current period
1,379,963
692,582
Adjustments in respect of prior periods
-
10,855
Total current tax
1,379,963
703,437
The corporation tax rate is 19%.
The deferred tax assets and liabilities
reflect these rates.
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2019
2018
£
£
Profit before taxation
5,692,073
3,549,543
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%)
1,081,494
674,413
Tax effect of expenses that are not deductible in determining taxable profit
326,086
25,730
Permanent capital allowances in excess of depreciation
(27,697)
(6,265)
Under/(over) provided in prior years
-
10,855
Dividend income
(14)
(69)
Other tax adjustments
(2,737)
(1,227)
Qualifying charitable donations
2,831
-
Taxation charge for the year
1,379,963
703,437
11
Dividends
2019
2018
£
£
Interim paid
5,267,000
404,000
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 19 -
12
Tangible fixed assets
Plant and machinery
Fixtures, fittings & equipment
Computer equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2019
322,117
265,706
836,807
17,203
1,441,833
Additions
7,295
23,034
218,651
-
248,980
At 31 December 2019
329,412
288,740
1,055,458
17,203
1,690,813
Depreciation and impairment
At 1 January 2019
318,811
225,046
782,341
15,984
1,342,182
Depreciation charged in the year
3,483
19,058
87,408
1,219
111,168
At 31 December 2019
322,294
244,104
869,749
17,203
1,453,350
Carrying amount
At 31 December 2019
7,118
44,636
185,709
-
237,463
At 31 December 2018
3,306
40,660
54,466
1,219
99,651
13
Stocks
2019
2018
£
£
Raw materials and consumables
2,645,260
1,377,472
Work in progress
8,978,335
7,830,938
Finished goods and goods for resale
1,797,161
797,367
13,420,756
10,005,777
There is no significant difference between the replacement cost of finished goods and their carrying amounts.
Stock is stated after provision for expected wastage on fabrics which, at the year end, stood at a provision of £579,908 (2018: £532,542).
14
Debtors
2019
2018
Amounts falling due within one year:
£
£
Trade debtors
8,325,188
11,429,601
Corporation tax recoverable
2,438
-
Other debtors
169,074
1,867,415
Prepayments and accrued income
349,104
269,894
8,845,804
13,566,910
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
14
Debtors
(Continued)
- 20 -
Trade debtors disclosed above are classified as loans and receivables and are therefore measured at amortised cost. Trade debtors are stated after provisions for impairment of £183,224 (2018: £183,224).
15
Current asset investments
2019
2018
£
£
Listed investments
4,605
4,605
Listed investments included above:
Listed investments carrying amount
4,605
4,605
16
Creditors: amounts falling due within one year
2019
2018
£
£
Bank loans and overdrafts
24,441
-
Trade creditors
6,340,856
7,467,667
Amounts due to group undertakings
40,200
40,200
Corporation tax
713,316
235,561
Other taxation and social security
161,423
155,077
Other creditors
2,610,316
134,007
Accruals and deferred income
3,278,848
1,472,539
13,169,400
9,505,051
The bank facilities are secured by way of fixed and float charge over all of the company's assets.
17
Retirement benefit schemes
2019
2018
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
163,903
98,199
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.
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 21 -
18
Share capital
2019
2018
£
£
Ordinary share capital
Issued and fully paid
60,000 'A' Ordinary of £1 each
60,000
60,000
40,000 'B' Ordinary of £1 each
40,000
40,000
6,600 'C' Ordinary of £1 each
6,600
6,600
106,600
106,600
There are 3 classes of Ordinary shares.
One vote is attached to each 'A' Ordinary share.
The holders of the 'B' and 'C' Ordinary shares do not carry voting rights unless the resolution affects the rights of the 'B' and 'C' Ordinary shares respectively.
19
Financial commitments, guarantees and contingent liabilities
The company enters into forward foreign currency contracts to mitigate the exchange risk for certain foreign currency payables and receivables.
At the balance sheet date the company had commitments to purchase currency under foreign exchange currency contracts on which the total sterling equivalent outstanding amounted to £nil (2018: £1,175,604). These forward foreign currency contracts have not been measured at fair value but if they had been, at the balance sheet date, would amount to an asset of £nil (2018: £8,828).
The company has provided a cross guarantee dated 21 December 2017 in favour of HSBC Bank plc, to guarantee the borrowings of Lavender Hill Properties Limited, a connected company.
20
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2019
2018
£
£
Within one year
530,000
530,000
Between two and five years
517,500
1,047,500
1,047,500
1,577,500
PENTEX LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 22 -
21
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Sale of goods
Purchase of goods
2019
2018
2019
2018
£
£
£
£
Companies and entities under common control
7,846,172
-
6,331,545
6,660,223
The following amounts were outstanding at the reporting end date:
2019
2018
Amounts owed to related parties
£
£
Companies and entities under common control
602
97,491
Other related parties
3,529,498
2,817,696
3,530,100
2,915,187
The following amounts were outstanding at the reporting end date:
2019
Balance
Amounts owed by related parties
£
Companies and entities under common control
396,483
2018
Balance
Amounts owed in previous period
£
Companies and entities under common control
2,429,370
No guarantees have been given or received.
22
Ultimate controlling party
The company is a wholly owned subsidiary of Pentex Holdings Limited, a company incorporated in England & Wales, whose registered office address is 94-100 Christian Street, London, E1 1RS.
2019-12-31
2019-01-01
false
CCH Software
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