Company Registration No. 10071438 (England and Wales)
STAR TISSUE HOLDINGS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
STAR TISSUE HOLDINGS LIMITED
COMPANY INFORMATION
Directors
Abid Ditta
Khalid Saifullah
Sajid Saifullah
Company number
10071438
Registered office
Unit K
Princess Street
Star Industrial Estate
Blackburn
Lancashire
BB2 2QR
Auditor
Pierce C A Limited
Mentor House
Ainsworth Street
Blackburn
Lancashire
BB1 6AY
Business address
Unit K
Princess Street
Star Industrial Estate
Blackburn
Lancashire
BB2 2QR
Bankers
HSBC Bank plc
60 Church Street
Blackburn
Lancashire
BB1 5AS
STAR TISSUE HOLDINGS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Group balance sheet
8
Company balance sheet
9
Group statement of changes in equity
10
Company statement of changes in equity
11
Group statement of cash flows
12
Notes to the financial statements
13 - 29
STAR TISSUE HOLDINGS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 1 -
The directors present the strategic report for the year ended 30 September 2019.
Fair review of the business
We are pleased that our growth plan is on course with the group achieving turnover of £29.4 million (2018 - £24.4 million), a 20.6% increase from the previous year. This year our focus was to increase productivity and efficiencies by investing in people and processes. We have successfully implemented a new WMS system and have made further investments in our production lines. We have received planning permission to increase our site by a further 30,000 sq ft, works we aim to complete by mid 2020. We have also implemented major improvements to our production lines to raise our production capacity to meet rising customer demand.
Business environment
The directors have assessed the important risks faced by the group including risks associated with Brexit. The directors plan to continue with the management policies which have led to the satisfactory results and the risks will be mitigated through the creation of good trading relationships, maintaining and enhancing product quality, continuous improvement philosophy and targeted marketing activities.
The tissue paper industry has been impacted by rising prices in energy, raw materials, fuel and currency volatility. We expect raw material prices to stabilise in 2020. We have built strong trading relationships locally and globally with suppliers to ensure we are flexible and well placed to react to changes in the environment or industry. The directors plan to continue building trading relationships with a view to the long term sustainable growth of the business.
The group is expanding its market share in the U.K. and Europe by selling a wide range of high quality products manufactured to suit the requirements of the diverse customer base. This year we have maintained our sales in Ireland and have also enjoyed healthy sales growth in the U.K. The group continues to enjoy increased demand for its products and will continue to invest in its products, plant, people and processes to maximise profitability.
Strategic management
In the coming year we will continue with our capital investment plan to further increase our warehouse and production capacity. The group has developed a strong relationship with its finance providers which has resulted in a generous working capital facility agreed at competitive borrowing rates to help fund continued growth. The group has continued to recruit the best people that are able to grow and develop in a fast-moving business where productivity and innovation drives improvements throughout the business.
Key performance indicators
The directors continue to measure the performance of the group by reference to the turnover growth and overall gross and net profitability of its subsidiary which are monitored on a monthly basis. We are pleased to report that the subsidiary's turnover has increased in line with expectations together with maintained gross profitability and an increased net profitability.
Khalid Saifullah
Director
16 December 2019
STAR TISSUE HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 2 -
The directors present their annual report and financial statements for the year ended 30 September 2019.
Principal activities
The principal activity of the company is that of a parent company coordinating the activities of the group, whose trading subsidiary's principal activity is that of the manufacture and distribution of quality hygiene paper products.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Abid Ditta
Khalid Saifullah
Sajid Saifullah
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £379,500. The directors do not recommend payment of a further dividend.
Auditor
The auditor, Pierce C.A. Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
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 (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group 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 group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor
of the
company 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 auditor
of the
company
is
aware of that information.
STAR TISSUE HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 3 -
On behalf of the board
Khalid Saifullah
Director
16 December 2019
STAR TISSUE HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF STAR TISSUE HOLDINGS LIMITED
- 4 -
Opinion
We have audited the
financial statements of Star Tissue Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 September 2019 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company statement of cash flows and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the group's and the parent company's affairs as at 30 September 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
group's or the parent
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.
STAR TISSUE HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF STAR TISSUE HOLDINGS LIMITED
- 5 -
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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the
group and the parent
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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
-
the parent company 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
group's and the parent
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
group or the parent
company or to cease operations, or have no realistic alternative but to do so.
STAR TISSUE HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF STAR TISSUE HOLDINGS LIMITED
- 6 -
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.
Paul Moulding (Senior Statutory Auditor)
for and on behalf of Pierce C.A. Limited
16 December 2019
Mentor House
Statutory Auditor
Ainsworth Street
Blackburn
Lancashire
BB1 6AY
STAR TISSUE HOLDINGS LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 7 -
2019
2018
Notes
£
£
Turnover
3
29,366,890
24,354,929
Cost of sales
(23,777,443)
(19,716,074)
Gross profit
5,589,447
4,638,855
Administrative expenses
(2,285,444)
(2,032,590)
Other operating income
38,760
45,160
Operating profit
4
3,342,763
2,651,425
Interest receivable and similar income
8
-
175
Interest payable and similar expenses
9
(45,485)
(43,130)
Profit before taxation
3,297,278
2,608,470
Tax on profit
10
(602,399)
(457,685)
Profit for the financial year
2,694,879
2,150,785
Other comprehensive income
Revaluation of tangible fixed assets
202,939
-
Total comprehensive income for the year
2,897,818
2,150,785
Profit and total comprehensive income for the year is all attributable to the owners of the parent company.
STAR TISSUE HOLDINGS LIMITED
GROUP BALANCE SHEET
AS AT
30 SEPTEMBER 2019
30 September 2019
- 8 -
2019
2018
Notes
£
£
£
£
Fixed assets
Goodwill
12
24,384
36,588
Tangible assets
13
3,978,322
3,821,895
4,002,706
3,858,483
Current assets
Stocks
17
2,157,757
1,818,586
Debtors
18
5,984,865
5,221,963
Cash at bank and in hand
2,375,660
1,549,992
10,518,282
8,590,541
Creditors: amounts falling due within one year
19
(5,476,250)
(6,025,082)
Net current assets
5,042,032
2,565,459
Total assets less current liabilities
9,044,738
6,423,942
Creditors: amounts falling due after more than one year
20
(1,384,944)
(1,313,349)
Provisions for liabilities
23
(229,355)
(198,472)
Net assets
7,430,439
4,912,121
Capital and reserves
Called up share capital
26
90
90
Revaluation reserve
202,939
-
Capital redemption reserve
10
10
Profit and loss reserves
7,227,400
4,912,021
Total equity
7,430,439
4,912,121
The financial statements were approved by the board of directors and authorised for issue on 16 December 2019 and are signed on its behalf by:
16 December 2019
Khalid Saifullah
Director
STAR TISSUE HOLDINGS LIMITED
COMPANY BALANCE SHEET
AS AT 30 SEPTEMBER 2019
30 September 2019
- 9 -
2019
2018
Notes
£
£
£
£
Fixed assets
Tangible assets
13
1,674,503
-
Investments
14
100
100
1,674,603
100
Current assets
Debtors
18
500,000
300,000
Cash at bank and in hand
641,436
445,156
1,141,436
745,156
Creditors: amounts falling due within one year
19
(46,413)
(270,350)
Net current assets
1,095,023
474,806
Total assets less current liabilities
2,769,626
474,906
Creditors: amounts falling due after more than one year
20
(578,491)
-
Net assets
2,191,135
474,906
Capital and reserves
Called up share capital
26
90
90
Capital redemption reserve
10
10
Profit and loss reserves
2,191,035
474,806
Total equity
2,191,135
474,906
As permitted by s408 Companies Act 2006, the
c
ompany has not presented its own profit and loss account and related notes. The
c
ompany’s profit for the year was £
2,095,729 (2018 - £742,306 profit).
The financial statements were approved by the board of directors and authorised for issue on 16 December 2019 and are signed on its behalf by:
16 December 2019
Khalid Saifullah
Director
Company Registration No. 10071438
STAR TISSUE HOLDINGS LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 10 -
Share capital
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 October 2017
90
-
10
3,028,736
3,028,836
Period ended 30 September 2018:
Profit and total comprehensive income for the period
-
-
-
2,150,785
2,150,785
Dividends
11
-
-
-
(267,500)
(267,500)
Balance at 30 September 2018
90
-
10
4,912,021
4,912,121
Year ended 30 September 2019:
Profit for the year
-
-
-
2,694,879
2,694,879
Other comprehensive income:
Revaluation of tangible fixed assets
-
202,939
-
-
202,939
Total comprehensive income for the year
-
202,939
-
2,694,879
2,897,818
Dividends
11
-
-
-
(379,500)
(379,500)
Balance at 30 September 2019
90
202,939
10
7,227,400
7,430,439
STAR TISSUE HOLDINGS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 11 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 October 2017
90
10
-
100
Period ended 30 September 2018:
Profit and total comprehensive income for the period
-
-
742,306
742,306
Dividends
11
-
-
(267,500)
(267,500)
Balance at 30 September 2018
90
10
474,806
474,906
Year ended 30 September 2019:
Profit and total comprehensive income for the year
-
-
2,095,729
2,095,729
Dividends
11
-
-
(379,500)
(379,500)
Balance at 30 September 2019
90
10
2,191,035
2,191,135
STAR TISSUE HOLDINGS LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 12 -
2019
2018
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
31
2,776,510
2,091,017
Interest paid
(45,485)
(43,130)
Income taxes paid
(735,821)
(257,478)
Net cash inflow from operating activities
1,995,204
1,790,409
Investing activities
Purchase of tangible fixed assets
(58,892)
(435,878)
Proceeds on disposal of tangible fixed assets
-
66,187
Interest received
-
175
Net cash used in investing activities
(58,892)
(369,516)
Financing activities
Repayment of borrowings
(21,254)
(24,909)
Payment of finance leases obligations
(268,211)
(290,777)
Dividends paid to equity shareholders
(379,500)
(267,500)
Net cash used in financing activities
(668,965)
(583,186)
Net increase in cash and cash equivalents
1,267,347
837,707
Cash and cash equivalents at beginning of year
1,108,313
270,606
Cash and cash equivalents at end of year
2,375,660
1,108,313
Relating to:
Cash at bank and in hand
2,375,660
1,549,992
Bank overdrafts included in creditors payable within one year
-
(441,679)
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 13 -
1
Accounting policies
Company information
Star Tissue Holdings Limited
(“the company”)
is a
private
limited company domiciled and incorporated in England and Wales.
The registered office is
Unit K, Princess Street, Star Industrial Estate, Blackburn, Lancashire, BB2 2QR.
The group consists of Star Tissue Holdings Limited and all of its subsidiaries.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Basis of consolidation
In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess
or deficit
of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill
or negative goodwill respectively
.
The acquired negative goodwill arising on consolidation has been written off in full in the period of acquisition. I
nvestments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.
The consolidated financial statements incorporate those of Star Tissue Holdings Limited and all of its subsidiaries (ie entities that the
g
roup controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 30 September 2019
.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the
g
roup.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
1.3
Going concern
At the time of approving the financial statements, the directors have a reasonable expectation that the company
and group
ha
ve
adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue 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 and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
1
Accounting policies
(Continued)
- 14 -
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.5
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of
a
business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated
amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 15 years.
1.6
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:
Leasehold land and buildings
2% straight line
Plant and equipment
7.5% straight line
Fixtures and fittings
15% 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 recognised in the profit and loss account.
1.7
Fixed asset investments
I
n the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the
group. Control is
the power to govern the financial and operating policies of
the
entity so as to obtain benefits from its activities.
1.8
Impairment of fixed assets
At each reporting
period
end date, the
group
reviews the carrying amounts of its tangible and intangible 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).
1.9
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
1
Accounting policies
(Continued)
- 15 -
1.10
Cash at bank and in hand
Cash and cash equivalents
are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.11
Financial instruments
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
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
m
ethod 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.
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.
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 group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans
and
loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
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.
1.12
Equity instruments
Equity instruments issued by the group 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 group.
1.13
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.
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
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.
The
group’s
liability for tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
1.14
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.
1.15
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.16
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 profit or loss
on a straight line basis.
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
d
asset are consumed.
1.17
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met
. Where a
grant does not specify performance conditions
it
is recognised in income when the proceeds are received or receivable
. A grant received before the recognition criteria are satisfied is recognised as a liability.
Grants received are amortised on a straight line basis at 7.5% per annum in line with the depreciation policy on the plant and machinery assets to which they relate.
1.18
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 17 -
2
Judgements and key sources of estimation uncertainty
In the application of the group’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.
3
Turnover and other revenue
2019
2018
£
£
Turnover analysed by class of business
Manufacture and supply of quality hygiene paper products
29,366,890
24,354,929
2019
2018
£
£
Other significant revenue
Interest income
-
175
Grants received
35,560
35,560
Rental income
3,200
9,600
2019
2018
£
£
Turnover analysed by geographical market
United Kingdom
28,800,880
23,607,769
Europe
566,010
747,160
29,366,890
24,354,929
4
Operating profit
2019
2018
£
£
Operating profit for the year is stated after charging/(crediting):
Exchange gains
(16,888)
(9,697)
Government grants
(35,560)
(35,560)
Depreciation of owned tangible fixed assets
102,245
119,294
Depreciation of tangible fixed assets held under finance leases
211,972
171,336
(Profit)/loss on disposal of tangible fixed assets
-
44,040
Amortisation of intangible assets
12,204
12,204
Cost of stocks recognised as an expense
21,717,012
18,076,732
Operating lease charges
149,999
75,941
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 18 -
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 group and company
3,000
2,500
Audit of the financial statements of the company's subsidiaries
5,500
5,500
8,500
8,000
6
Employees
The average monthly number of persons (including directors) employed by the group and company during the year was:
Group
Company
2019
2018
2019
2018
Number
Number
Number
Number
Administration
3
3
3
3
Production, sales and marketing
113
91
-
-
116
94
3
3
Their aggregate remuneration comprised:
Group
Company
2019
2018
2019
2018
£
£
£
£
Wages and salaries
2,079,574
1,698,492
-
-
Social security costs
148,977
119,104
-
-
Pension costs
31,946
17,802
-
-
2,260,497
1,835,398
-
-
7
Directors' remuneration
2019
2018
£
£
Remuneration for qualifying services
26,460
90,000
Company pension contributions to defined contribution schemes
-
101
26,460
90,101
Dividends paid to the directors during the year amounted to £379,500 (2018 - £267,500).
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 19 -
8
Interest receivable and similar income
2019
2018
£
£
Interest income
Other interest income
-
175
9
Interest payable and similar expenses
2019
2018
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
45,485
43,130
10
Taxation
2019
2018
£
£
Current tax
UK corporation tax on profits for the current period
606,539
485,844
Adjustments in respect of prior periods
(35,023)
(51,911)
Total current tax
571,516
433,933
Deferred tax
Origination and reversal of timing differences
30,883
23,752
Total tax charge
602,399
457,685
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
3,297,278
2,608,470
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%)
626,483
495,609
Tax effect of expenses that are not deductible in determining taxable profit
2,717
325
Tax effect of utilisation of tax losses not previously recognised
(1,462)
-
Unutilised tax losses carried forward
-
1,462
Adjustments in respect of prior years
(35,023)
(51,911)
Depreciation on assets not qualifying for tax allowances
6,227
5,919
Amortisation on assets not qualifying for tax allowances
2,319
2,319
Other non-reversing timing differences
1,138
3,962
Taxation charge
602,399
457,685
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 20 -
11
Dividends
2019
2018
£
£
Interim paid
379,500
267,500
12
Intangible fixed assets
Group
Goodwill
Negative goodwill
Total
£
£
£
Cost
At 1 October 2018 and 30 September 2019
67,098
(2,310,092)
(2,242,994)
Amortisation and impairment
At 1 October 2018
30,510
(2,310,092)
(2,279,582)
Amortisation charged for the year
12,204
-
12,204
At 30 September 2019
42,714
(2,310,092)
(2,267,378)
Carrying amount
At 30 September 2019
24,384
-
24,384
At 30 September 2018
36,588
-
36,588
The company had no intangible fixed assets at 30 September 2019 or 30 September 2018.
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 21 -
13
Tangible fixed assets
Group
Leasehold land and buildings
Plant and equipment
Fixtures and fittings
Total
£
£
£
£
Cost or valuation
At 1 October 2018
1,584,447
2,665,031
228,187
4,477,665
Additions
2,200
250,501
15,004
267,705
Revaluation
113,353
-
-
113,353
At 30 September 2019
1,700,000
2,915,532
243,191
4,858,723
Depreciation and impairment
At 1 October 2018
81,034
474,324
100,412
655,770
Depreciation charged in the year
34,049
237,603
42,565
314,217
Revaluation
(89,586)
-
-
(89,586)
At 30 September 2019
25,497
711,927
142,977
880,401
Carrying amount
At 30 September 2019
1,674,503
2,203,605
100,214
3,978,322
At 30 September 2018
1,503,413
2,190,707
127,775
3,821,895
Company
Leasehold land and buildings
£
Cost or valuation
At 1 October 2018
-
Additions
1,700,000
At 30 September 2019
1,700,000
Depreciation and impairment
At 1 October 2018
-
Depreciation charged in the year
25,497
At 30 September 2019
25,497
Carrying amount
At 30 September 2019
1,674,503
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
13
Tangible fixed assets
(Continued)
- 22 -
The carrying value of land and buildings comprises:
Group
Company
2019
2018
2019
2018
£
£
£
£
Long leasehold
1,674,503
1,503,413
1,674,503
-
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Group
Company
2019
2018
2019
2018
£
£
£
£
Plant and equipment
1,936,184
1,645,763
-
-
Depreciation charge for the year in respect of leased assets
211,972
171,336
-
-
Land and buildings with a carrying amount of £1,674,503 were revalued at
30 September 2018
by
Knight Frank LLP
, independent valuers not connected with the company on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.
If revalued assets were stated on an historical cost basis rather than a fair value basis, the total amounts included would have been as follows:
Group
Company
2019
2018
2019
2018
£
£
£
£
Cost
1,586,647
1,511,738
-
-
Accumulated depreciation
(115,083)
(239,961)
-
-
Carrying value
1,471,564
1,271,777
-
-
14
Fixed asset investments
Group
Company
2019
2018
2019
2018
Notes
£
£
£
£
Investments in subsidiaries
15
-
-
100
100
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
14
Fixed asset investments
(Continued)
- 23 -
Movements in fixed asset investments
Company
Shares in group undertakings
£
Cost or valuation
At 1 October 2018 and 30 September 2019
100
Carrying amount
At 30 September 2019
100
At 30 September 2018
100
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 24 -
15
Subsidiaries
Details of the company's subsidiaries at 30 September 2019 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Indirect
Star Tissue UK Limited
Unit K Princess Street, Star Industrial Estate, Blackburn BB2 2QR
Ordinary
100.00
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 25 -
16
Financial instruments
Group
Company
2019
2018
2019
2018
£
£
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
5,813,166
5,084,937
500,000
300,000
Carrying amount of financial liabilities
Measured at amortised cost
5,607,778
6,035,182
609,935
270,350
17
Stocks
Group
Company
2019
2018
2019
2018
£
£
£
£
Raw materials and consumables
1,376,395
1,180,208
-
-
Work in progress
11,447
-
-
-
Finished goods and goods for resale
769,915
638,378
-
-
2,157,757
1,818,586
-
-
18
Debtors
Group
Company
2019
2018
2019
2018
Amounts falling due within one year:
£
£
£
£
Trade debtors
5,680,869
4,926,301
-
-
Amounts owed by group undertakings
-
-
500,000
300,000
Other debtors
132,297
158,636
-
-
Prepayments and accrued income
171,699
137,026
-
-
5,984,865
5,221,963
500,000
300,000
19
Creditors: amounts falling due within one year
Group
Company
2019
2018
2019
2018
Notes
£
£
£
£
Bank loans and overdrafts
21
27,444
466,653
27,444
-
Obligations under finance leases
22
278,861
225,797
-
-
Trade creditors
4,055,484
3,842,499
-
2,850
Corporation tax payable
321,539
485,844
8,569
-
Other taxation and social security
701,045
551,013
6,400
-
Other creditors
7,251
272,500
-
267,500
Accruals and deferred income
84,626
180,776
4,000
-
5,476,250
6,025,082
46,413
270,350
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 26 -
20
Creditors: amounts falling due after more than one year
Group
Company
2019
2018
2019
2018
Notes
£
£
£
£
Bank loans and overdrafts
21
578,491
602,215
578,491
-
Obligations under finance leases
22
575,621
444,742
-
-
Government grants
24
230,832
266,392
-
-
1,384,944
1,313,349
578,491
-
Amounts included above which fall due after five years are as follows:
Payable by instalments
459,357
488,072
459,357
-
21
Loans and overdrafts
Group
Company
2019
2018
2019
2018
£
£
£
£
Bank loans
605,935
627,189
605,935
-
Bank overdrafts
-
441,679
-
-
605,935
1,068,868
605,935
-
Payable within one year
27,444
466,653
27,444
-
Payable after one year
578,491
602,215
578,491
-
The group's bankers, HSBC Bank plc, hold as security fixed and floating charges over all of the group's property and other assets, together with a cross guarantee over all group borrowings.
The group also operates an invoice discounting facility with HSBC Invoice Finance (UK) Limited whereby working capital is provided to the subsidiary company under an agreement to purchase that company's eligible debts, against which fixed and floating charges have been granted over the subsidiary company's assets.
The group bank loan borrowings carry interest payable at a rate of 2.5% over the bank's base rate.
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 27 -
22
Finance lease obligations
Group
Company
2019
2018
2019
2018
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
278,861
225,797
-
-
In two to five years
575,621
444,742
-
-
854,482
670,539
-
-
Obligations under finance lease and hire purchase agreements are secured by fixed charges on the assets concerned.
23
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
Liabilities
Liabilities
2019
2018
Group
£
£
Accelerated capital allowances
229,355
198,472
The company has no deferred tax assets or liabilities.
Group
Company
2019
2019
Movements in the year:
£
£
Liability at 1 October 2018
198,472
-
Charge to profit or loss
30,883
-
Liability at 30 September 2019
229,355
-
24
Government grants
Grants have been made available under the Regional Growth Fund to facilitate the acquisition of items of plant and machinery.
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 28 -
25
Retirement benefit schemes
2019
2018
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
31,946
17,802
D
efined contribution pension scheme
s are operated
for all qualifying employees.
The assets of these schemes are held separately from those of the group in independently administered funds.
26
Share capital
Group and company
2019
2018
Ordinary share capital
£
£
Issued and fully paid
40 Ordinary 'A' shares of £1 each
40
40
25 Ordinary 'B' shares of £1 each
25
25
25 Ordinary 'C' shares of £1 each
25
25
90
90
27
Operating lease commitments
Lessee
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Group
Company
2019
2018
2019
2018
£
£
£
£
Within one year
14,008
-
-
-
Between two and five years
675,238
896,673
-
-
689,246
896,673
-
-
28
Capital commitments
Amounts contracted for but not provided in the financial statements:
Group
Company
2019
2018
2019
2018
£
£
£
£
Acquisition of tangible fixed assets
-
9,448
-
-
STAR TISSUE HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2019
- 29 -
29
Directors' transactions
Included within other creditors are interest free loans advanced to the group by the directors. At the financial year-end the amounts owed by the group to the directors were £nil (2018 - £267,500).
30
Controlling party
The company is ultimately controlled by the directors by virtue of their shareholdings in the company.
31
Cash generated from group operations
2019
2018
£
£
Profit for the year after tax
2,694,879
2,150,785
Adjustments for:
Taxation charged
602,399
457,685
Finance costs
45,485
43,130
Investment income
-
(175)
(Gain)/loss on disposal of tangible fixed assets
-
44,040
Amortisation and impairment of intangible assets
12,204
12,204
Depreciation and impairment of tangible fixed assets
314,217
290,630
Movements in working capital:
(Increase) in stocks
(339,171)
(475,389)
(Increase) in debtors
(762,902)
(1,569,984)
Increase in creditors
244,959
1,173,651
(Decrease) in deferred income
(35,560)
(35,560)
Cash generated from operations
2,776,510
2,091,017
2019-09-30
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