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Registered number: 00518615









Continental Textiles (Manchester) Limited









Annual Report and Financial Statements

For the year ended 31 December 2021

 
Continental Textiles (Manchester) Limited
 
 
Company Information


Directors
Mr A D Crewe 
Mr J A Crewe 
Mrs L Ellis 
Mr P Barlow 
R Poole (appointed 1 June 2022)




Company secretary
Mr P Barlow



Registered number
00518615



Registered office
3 Avocado Court
Commerce Way

Trafford Park

Manchester

M17 1HW




Independent auditors
Hurst Accountants Limited
Chartered Accountants & Statutory Auditors

Lancashire Gate

21 Tiviot Dale

Stockport

Cheshire

SK1 1TD





 
Continental Textiles (Manchester) Limited
 

Contents



Page
Strategic Report
 
1 - 2
Directors' Report
 
3 - 4
Independent Auditors' Report
 
5 - 8
Statement of Comprehensive Income
 
9
Balance Sheet
 
10
Statement of Changes in Equity
 
11
Statement of Cash Flows
 
12 - 13
Analysis of Net Debt
 
13
Notes to the Financial Statements
 
14 - 27

 
Continental Textiles (Manchester) Limited
 
 
Strategic report
For the year ended 31 December 2021

Introduction
 
The Directors present the Strategic Report for the year ended 31 December 2021.

Business review
 
The Principal activity of the business is importing garments under our own brands as well as our customers brands. 
The company has traded well in very challenging circumstances that include Brexit, the COVID-19 global pandemic and ongoing supply chain issues. The company was well placed with a large number of online retailers who have traded well and haven’t been exposed to high street retailers. Turnover has increased by 50% to £16,867,192 from £11,231,771 in 2020, with volumes increasing by 35% from 2020 with 2.7 million pieces sold. Gross profit has margin has decreased from 31.3% to 25.6 % due to additional shipping and logistics costs incurred during the year. The increase in turnover and demand has resulted in an increase in employee numbers from 26 in 2020 to 32 in 2021. 

Principal risks and uncertainties
 
The main issue faced during the year has been the impact of Brexit which has lead to increase in paperwork as well as double duty charges. The company is still experiencing port closures in China and facing the prospect of suppliers having to shut down for a number of weeks. The ongoing global shipping issues have lead to higher container costs and delays in shipping goods which will impact margins going into 2022. With this, and ongoing port closures in China, the company has a much larger stock holding then it would have liked due to the seasonal nature of products. With the increased warehouse costs in the UK this will also hit margin.
The company takes its social responsibility obligations very seriously, and became a member of the SEDEX Global Network, which monitors supply chains from an ethical perspective. We are also considering our impact on the environment, and are using the Higg Index to monitor our supply chains from an environmental point of view. These are all on going projects. 
The company also started trading on the Zalando partner Programme initially launching in 3 countries and soon will launch into another 3. The Zalando partner programme is Europe’s leading fashion platform, and will give us access to almost 49 million active customers across 23 European countries through the marketplace model, the Partner Program. We can set our own prices, track our real-time performance at any time, and retain control over assortment, branding, marketing and logistics. The company intend to launch similar projects with New look and Lipsy in 2022. The initial costs may be higher as we look to develop a B2C strategy.

Financial key performance indicators
 
The company's key financial performance indicators during the year were as follows:
 

2021
2020

£
£



Turnover
16,867,192
11,231,771
Gross Profit
4,318,714
3,520,699
Gross Profit Margin
25.6%
31.3%
Operating Profit
2,414,633
2,137,866
Operating Profit Margin
14.3%
19.0%



Page 1

 
Continental Textiles (Manchester) Limited
 

Strategic report (continued)
For the year ended 31 December 2021

Other key performance indicators
 
The business has a strategy of employee engagement to try and keep the most valued members of staff within the business. With many e-commerce companies in Manchester, it is key that the company is able to attract and retain the best talent. Part of this strategy was the move and refurbishment of our new offices that were purchased in 2020 to provide a more modern workplace with more breakout areas.


This report was approved by the board on 9 August 2022 and signed on its behalf.



................................................
Mr J A Crewe
Director
Page 2

 
Continental Textiles (Manchester) Limited
 
 
 
Directors' report
For the year ended 31 December 2021

The directors present their report and the financial statements for the year ended 31 December 2021.

Directors' responsibilities statement

The directors are responsible for preparing the Strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations.
 
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

 In preparing these financial statements, the directors are required to:


select suitable accounting policies for the Company's financial statements and then apply them consistently;

make 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 to enable them to ensure that the financial statements comply with the Companies Act 2006They 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.

Results and dividends

The profit for the year, after taxation, amounted to £1,942,323 (2020 - £1,691,385).

Dividends of £1,095,000 (2020: £1,250,000) were paid during the year.
The directors do not recommend the paymnet of a final dividend.

Directors

The directors who served during the year were:

Mr A D Crewe 
Mr J A Crewe 
Mrs L Ellis 
Mr P Barlow 

Future developments

The future developments of the Company are disclosed within the Strategic Report.

Page 3

 
Continental Textiles (Manchester) Limited
 
 
 
Directors' report (continued)
For the year ended 31 December 2021

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Post balance sheet events and going concern

There have been no significant events affecting the Company since the year-end.

Auditors

The auditorsHurst Accountants Limitedwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board and signed on its behalf.
 





................................................
Mr J A Crewe
Director

Date: 9 August 2022
Page 4

 
Continental Textiles (Manchester) Limited
 
 
 
Independent Auditors' Report to the Members of Continental Textiles (Manchester) Limited
 

Opinion


We have audited the financial statements of Continental Textiles (Manchester) Limited (the 'Company') for the year ended 31 December 2021, which comprise the Statement of comprehensive income, the Balance sheet, the Statement of cash flows, the Statement of changes in equity and the related notes, including a summary of significant accounting policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the Company's affairs as at 31 December 2021 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for opinion


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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.


Conclusions relating to going concern


In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.


Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.


Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.


Other information


The other information comprises the information included in the Annual Report other than the financial statements and  our Auditors' report thereon.  The directors are responsible for the other information contained within the Annual Report.  Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.  If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves.  If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.


We have nothing to report in this regard.


Page 5

 
Continental Textiles (Manchester) Limited
 
 
 
Independent Auditors' Report to the Members of Continental Textiles (Manchester) Limited (continued)


Opinion on other matters prescribed by the Companies Act 2006
 

In our opinion, based on the work undertaken in the course of the audit:


the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.


Matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.


We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:


adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.


Responsibilities of directors
 

As explained more fully in the Directors' responsibilities statement set out on page 3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.


Page 6

 
Continental Textiles (Manchester) Limited
 
 
 
Independent Auditors' Report to the Members of Continental Textiles (Manchester) Limited (continued)


Auditors' 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 Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and
then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and
appropriate to provide a basis for our opinion.
Identifying and assessing potential risks related to irregularities
In identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non compliance with laws and regulations, we considered the following:
• The nature of the industry and sector, control environment and business performance including key drivers for
 directors' remuneration, bonus levels and performance targets.
• Enquiring of local management and parent company management, including obtaining and reviewing supporting
 documentation, concerning the Company's policies and procedures relating to:
 - Identifying, evaluating and complying with laws and regulations and whether they were aware of any
  instances of non-compliance;
 - Detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected of
  alleged fraud;
 - The internal controls established to mitigate risks related to fraud or non-compliance with laws and
  regulations.
• Discussing among the engagement team regarding how and where fraud might occur in the financial statements and
 any potential indicators of fraud;
• Obtaining an understanding of the legal and regulatory frameworks that the Company operates in, focusing on those
 laws and regulations that had a direct effect on the financial statements, such as the Companies Act 2006, pensions
 and tax legislation, or that had a fundamental effect on the operations of the Company, including General Data
 Protection requirements, and Anti-bribery and corruption policy.
Audit response to risks identified
Our procedures to respond to risk identified included the following:
• Reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with
 provisions of relevant laws and regulations described as having a direct effect on the financial statements;
• Discussions with management, including consideration of known or suspected instances of non-compliance with
 laws and regulations and fraud;
• Evaluation and testing of the operating effectiveness of management’s controls designed to prevent and detect
 irregularities;
• Enquiring of management concerning actual and potential litigation and claims;
• Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of
 material misstatement due to fraud; and
• Reading minutes of meetings of those charged with governance, and correspondence with regulators.
We have also considered the risks noted above in addressing the risk of fraud through management override of controls:
 
Page 7

 
Continental Textiles (Manchester) Limited
 
 
 
Independent Auditors' Report to the Members of Continental Textiles (Manchester) Limited (continued)



• Testing the appropriateness of journal entries and other adjustments;
• Challenging assumptions made by management in their significant accounting estimates, and assessing whether the
 judgements made in making accounting estimates are indicative of a potential bias; and
• Evaluating the business rationale of any significant transactions that are unusual or outside the normal course of
 business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members
and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
There are inherent limitations in the audit procedures described above, and the further removed non-compliance with laws
and regulations is from the events and transactions reflected in the financial statements, the less likely we would become
aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
 


A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' report.


Use of our 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 2006Our 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 Auditors' 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.





Tim Potter (Senior Statutory Auditor)
for and on behalf of
Hurst Accountants Limited
Chartered Accountants
Statutory Auditors
Lancashire Gate
21 Tiviot Dale
Stockport
Cheshire
SK1 1TD

11 August 2022
Page 8

 
Continental Textiles (Manchester) Limited
 
 
Statement of comprehensive income
For the year ended 31 December 2021

2021
2020
Note
£
£

  

Turnover
 4 
16,867,192
11,231,771

Cost of sales
  
(12,548,478)
(7,711,072)

Gross profit
  
4,318,714
3,520,699

Administrative expenses
  
(1,904,081)
(1,415,721)

Other operating income
 5 
-
32,888

Operating profit
  
2,414,633
2,137,866

Interest payable and similar expenses
 10 
(10,549)
(34,623)

Profit before tax
  
2,404,084
2,103,243

Tax on profit
 11 
(461,761)
(411,858)

Profit for the financial year
  
1,942,323
1,691,385

There were no recognised gains and losses for 2021 or 2020 other than those included in the statement of comprehensive income.

There was no other comprehensive income for 2021 (2020:£NIL).

The notes on pages 14 to 27 form part of these financial statements.
Page 9

 
Continental Textiles (Manchester) Limited
Registered number: 00518615

Balance sheet
As at 31 December 2021

2021
2020
Note
£
£

Fixed assets
  

Tangible assets
 13 
1,247,066
1,292,211

Current assets
  

Stocks
 14 
659,333
320,658

Debtors: amounts falling due within one year
 15 
5,668,226
5,051,726

Cash at bank and in hand
 16 
770,610
312,489

  
7,098,169
5,684,873

Creditors: amounts falling due within one year
 17 
(2,812,030)
(2,195,458)

Net current assets
  
 
 
4,286,139
 
 
3,489,415

Total assets less current liabilities
  
5,533,205
4,781,626

Creditors: amounts falling due after more than one year
 18 
(606,949)
(705,327)

Provisions for liabilities
  

Deferred tax
  
(6,904)
(4,270)

Net assets
  
4,919,352
4,072,029


Capital and reserves
  

Called up share capital 
 21 
500
500

Profit and loss account
 22 
4,918,852
4,071,529

  
4,919,352
4,072,029


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 

................................................
Mr J A Crewe
Director

Date: 9 August 2022

The notes on pages 14 to 27 form part of these financial statements.
Page 10

 
Continental Textiles (Manchester) Limited
 

Statement of changes in equity
For the year ended 31 December 2021


Called up share capital
Profit and loss account
Total equity

£
£
£


At 1 January 2020
500
3,630,144
3,630,644


Comprehensive income for the year

Profit for the year
-
1,691,385
1,691,385

Dividends: Equity capital
-
(1,250,000)
(1,250,000)



At 1 January 2021
500
4,071,529
4,072,029


Comprehensive income for the year

Profit for the year
-
1,942,323
1,942,323

Dividends: Equity capital
-
(1,095,000)
(1,095,000)


At 31 December 2021
500
4,918,852
4,919,352


The notes on pages 14 to 27 form part of these financial statements.
Page 11

 
Continental Textiles (Manchester) Limited
 

Statement of cash flows
For the year ended 31 December 2021

2021
2020
£
£

Cash flows from operating activities

Profit for the financial year
1,942,323
1,691,385

Adjustments for:

Depreciation of tangible assets
74,439
78,220

Loss on disposal of tangible assets
(2,581)
(1,095)

Government grants
-
(32,888)

Interest paid
10,549
34,623

Taxation charge
461,761
411,858

(Increase)/decrease in stocks
(338,675)
237,558

(Increase) in debtors
(616,717)
(1,999,883)

Decrease in amounts owed by groups
217
1,020,000

Increase in creditors
841,950
132,317

Corporation tax (paid)
(395,544)
(175,167)

Net cash generated from operating activities

1,977,722
1,396,928


Cash flows from investing activities

Purchase of tangible fixed assets
(28,988)
(1,321,100)

Sale of tangible fixed assets
2,275
1,095

Government grants received
-
32,888

Net cash from investing activities

(26,713)
(1,287,117)

Cash flows from financing activities

New secured loans
-
840,000

Repayment of loans
(96,000)
(60,253)

Movements on invoice discounting
(279,081)
668,732

Dividends paid
(1,095,000)
(1,250,000)

Interest paid
(10,549)
(34,623)

Net cash used in financing activities
(1,480,630)
163,856

Net increase in cash and cash equivalents
470,379
273,667

Cash and cash equivalents at beginning of year
300,231
26,564

Cash and cash equivalents at the end of year
770,610
300,231
Page 12

 
Continental Textiles (Manchester) Limited
 

Statement of cash flows (continued)
For the year ended 31 December 2021


2021
2020

£
£



Cash and cash equivalents at the end of year comprise:

Cash at bank and in hand
770,610
312,489

Bank overdrafts
-
(12,258)

770,610
300,231



Analysis of Net Debt
For the year ended 31 December 2021




At 1 January 2021
Cash flows
At 31 December 2021
£

£

£

Cash at bank and in hand

312,489

458,121

770,610

Bank overdrafts

(12,258)

12,258

-

Debt due after 1 year

(705,327)

98,378

(606,949)

Debt due within 1 year

(141,690)

(28,514)

(170,204)


(546,786)
540,243
(6,543)

The notes on pages 14 to 27 form part of these financial statements.
Page 13

 
Continental Textiles (Manchester) Limited
 
 
 
Notes to the financial statements
For the year ended 31 December 2021

1.


General information

Continental Textiles (Manchester) Limited is a private company limited by share capital. The company is incorporated in England, number 00518615. The address of the registered office and principal place of business is 3 Avocado Court, Commerce Way, Trafford Park, Manchester, M17 1HW.
The principal activity is the wholesale of clothing and footwear.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified
within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial
Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).

The following principal accounting policies have been applied:

 
2.2

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
the Company has transferred the significant risks and rewards of ownership to the buyer;
the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the Company will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

 
2.3

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Page 14

 
Continental Textiles (Manchester) Limited
 
 
 
Notes to the financial statements
For the year ended 31 December 2021

2.Accounting policies (continued)


2.3
Tangible fixed assets (continued)

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

Freehold property
-
4% straight line
Leasehold improvements
-
Staight line over the term of the lease
Plant and machinery
-
20% straight line
Motor vehicles
-
20% straight line
Fixtures and fittings
-
15% straight line

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

 
2.4

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to store, complete and sell. Cost is based on the cost of purchase on a first in, first out basis.
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

 
2.5

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

 
2.6

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Company's cash management.

 
2.7

Financial instruments

The Company only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, and loans to related parties.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of comprehensive income.
Page 15

 
Continental Textiles (Manchester) Limited
 
 
 
Notes to the financial statements
For the year ended 31 December 2021

2.Accounting policies (continued)


2.7
Financial instruments (continued)


For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the balance sheet date.

Financial assets and liabilities are offset and the net amount reported in the Balance sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

 
2.8

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

  
2.9

Foreign currency translation

Functional and presentation currency
The company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.

Page 16

 
Continental Textiles (Manchester) Limited
 
 
 
Notes to the financial statements
For the year ended 31 December 2021

2.Accounting policies (continued)

 
2.10

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is GBP.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.

 
2.11

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

 
2.12

Government grants

Grants of a revenue nature are recognised in the Statement of comprehensive income in the same period as the related expenditure.

 
2.13

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 
2.14

Borrowing costs

All borrowing costs are recognised in profit or loss in the year in which they are incurred.

Page 17

 
Continental Textiles (Manchester) Limited
 
 
 
Notes to the financial statements
For the year ended 31 December 2021

2.Accounting policies (continued)

 
2.15

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the Company in independently administered funds.

 
2.16

Holiday pay accrual

A liability is recognised to the extent of any material unused holiday pay entitlement which is accrued at the Balance sheet date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the Balance sheet date.

 
2.17

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Page 18

 
Continental Textiles (Manchester) Limited
 
 
 
Notes to the financial statements
For the year ended 31 December 2021

3.


Judgements in applying accounting policies and key sources of estimation uncertainty

Preparation of the financial statements requires management to make significant judgements and estimates that affect amounts recognised for assets and liabilities at the reporting date and the amounts of revenue and expenses incurred during the reporting period. Actual outcomes may differ from these judgements, estimates and assumptions. The judgements, estimes and assumptions that have the most significant effect on the carrying value of assets and liabilities of the Company as at 31 December 2021 are discussed below:
Recoverable value of trade debtors
The company has recognised trade debtors with a carrying valye of £3,373,585 (2020: £2,739,768). The recoverability of trade debtors is regularly reviewed in the light of the available economic information specific to each debtor and specific provisions are recognised for balances considered to be a risk or irrecoverable. A bad debt expense  of £28,776 (2020: gain of £12,416) was charged to the Statement of Comprehensive income during the year.
Stock valuation
The company exercises judgement in estimating the obsolescence of stock and making impairments to reflect the difference between cost and estimated net realisable value. The value of stock at the year end totalled £659,333 (2020: £320,658). Stock provisions at the year end totalled £708,644 (2020: £489,326)
Property, plant and equipment
Management also exercises judgement in estimating the useful life of tangible fixed assets. At the year end, the company recognised assets with a net book value of £1,247,066 (2020: £1,292,211). The depreciation rates are shown in note 2.3.
Should these estimate vary, the profit or loss and balance sheet of the Company could be impaired.


4.


Turnover

The whole of the turnover is attributable to the principal activity of the company, as described in note 1.

Analysis of turnover by country of destination:

2021
2020
£
£

United Kingdom
12,120,136
9,054,295

Rest of Europe
2,177,400
1,477,476

Rest of the world
2,569,656
700,000

16,867,192
11,231,771



5.


Other operating income

2021
2020
£
£

Government grant income
-
32,888


Government grant income relates to amounts claimed in accordance with the Coronavirus Job Retention Scheme.

Page 19

 
Continental Textiles (Manchester) Limited
 
 
 
Notes to the financial statements
For the year ended 31 December 2021

6.


Operating profit

The operating profit is stated after charging:

2021
2020
£
£

Exchange differences
-
(61,749)


7.


Auditors' remuneration

Fees payable to the Company's auditor for the audit of the Company's annual financial statements totalled £ (2020 - ).


8.


Employees

2021
2020
£
£

Wages and salaries
1,014,222
771,535

Social security costs
93,306
78,302

Cost of defined contribution scheme
67,783
23,443

1,175,311
873,280


The average monthly number of employees, including the directors, during the year was as follows:


        2021
        2020
            No.
            No.







Management
5
5



Administration & shipping
14
12



Buying & Technology
8
6



Design & Marketing
5
3

32
26

Page 20

 
Continental Textiles (Manchester) Limited
 
 
 
Notes to the financial statements
For the year ended 31 December 2021

9.


Directors' remuneration

2021
2020
£
£

Directors' emoluments
220,358
192,619

Company contributions to defined contribution pension schemes
41,259
4,600

261,617
197,219


During the year retirement benefits were accruing to 3 directors (2020 - 3) in respect of defined contribution pension schemes.

The highest paid director received remuneration of £88,829 (2020 - £72,814).

The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £NIL (2020 - £NIL).


10.


Interest payable and similar expenses

2021
2020
£
£


Bank interest payable
10,549
34,623


11.


Taxation


2021
2020
£
£

Corporation tax


Current tax on profits for the year
466,301
400,030

Adjustments in respect of previous periods
(7,174)
-


Total current tax
459,127
400,030

Deferred tax


Origination and reversal of timing differences
2,634
11,828


Taxation on profit on ordinary activities
461,761
411,858
Page 21

 
Continental Textiles (Manchester) Limited
 
 
 
Notes to the financial statements
For the year ended 31 December 2021
 
11.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is higher than (2020 - higher than) the standard rate of corporation tax in the UK of 19% (2020 - 19%). The differences are explained below:

2021
2020
£
£


Profit on ordinary activities before tax
2,404,084
2,103,243


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2020 - 19%)
456,776
399,616

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
13,085
1,900

Adjustments to tax charge in respect of prior periods
(7,174)
-

Short term timing difference leading to an increase (decrease) in taxation
(926)
10,342

Total tax charge for the year
461,761
411,858


12.


Dividends

2021
2020
£
£


Ordinary shares
1,095,000
1,250,000

Page 22

 
Continental Textiles (Manchester) Limited
 
 
 
Notes to the financial statements
For the year ended 31 December 2021

13.


Tangible fixed assets





Freehold property
Leasehold improvements
Motor vehicles
Fixtures and fittings
Total

£
£
£
£
£



Cost or valuation


At 1 January 2021
1,155,500
96,165
58,984
203,810
1,514,459


Additions
-
-
-
28,988
28,988


Disposals
-
(96,165)
-
(38,210)
(134,375)



At 31 December 2021

1,155,500
-
58,984
194,588
1,409,072



Depreciation


At 1 January 2021
46,220
96,165
41,347
38,516
222,248


Charge for the year on owned assets
46,220
-
11,659
16,560
74,439


Disposals
-
(96,165)
-
(38,516)
(134,681)



At 31 December 2021

92,440
-
53,006
16,560
162,006



Net book value



At 31 December 2021
1,063,060
-
5,978
178,028
1,247,066



At 31 December 2020
1,109,280
-
17,637
165,294
1,292,211


14.


Stocks

2021
2020
£
£

Finished goods and goods for resale
659,333
320,658


Page 23

 
Continental Textiles (Manchester) Limited
 
 
 
Notes to the financial statements
For the year ended 31 December 2021

15.


Debtors

2021
2020
£
£


Trade debtors
3,359,469
2,739,768

Amounts owed by group undertakings
1,294,370
1,294,587

Other debtors
977,432
975,673

Prepayments and accrued income
36,955
41,698

5,668,226
5,051,726


A charge of £14,660 (2020: a debit of £12,419) was made to the Statemetn of comprehensive income during the year in respect of doubtful debts.


16.


Cash and cash equivalents

2021
2020
£
£

Cash at bank and in hand
770,610
312,489

Less: bank overdrafts
-
(12,258)

770,610
300,231


Page 24

 
Continental Textiles (Manchester) Limited
 
 
 
Notes to the financial statements
For the year ended 31 December 2021

17.


Creditors: Amounts falling due within one year

2021
2020
£
£

Bank overdrafts
-
12,258

Bank loans
76,798
74,420

Trade creditors
1,225,895
433,631

Corporation tax
462,841
399,258

Other taxation and social security
30,894
28,881

Advances from invoice discounting and trade credit facility
419,675
698,756

Other creditors
125,750
99,933

Accruals and deferred income
470,177
448,321

2,812,030
2,195,458


Advances from invoice discounting are secured against stocks and trade debtors of the company. 
Bank overdrafts are secured by means of fixed and floating charges over the assets of the company.
On 14th February 2020 a bank loan  totalling £840,000 was taken out and is secured by means of charges over the company's freehold property. The related interest rate is 3.15% until Febraury 2025. The loan is repaid on a monthly basis.
Included in other creditors are amounts of £254 (
2020: £3,177) which are secured by means of a second floating charge over the assets of the company. 


18.


Creditors: Amounts falling due after more than one year

2021
2020
£
£

Bank loans
606,949
705,327


On 14th February 2020 a bank loan  totalling £840,000 was taken out and is secured by means of charges over the company's freehold property. The related interest rate is 3.15% until Febraury 2025. The loan is repaid on a monthly basis.

Page 25

 
Continental Textiles (Manchester) Limited
 
 
 
Notes to the financial statements
For the year ended 31 December 2021

19.


Loans


Analysis of the maturity of loans is given below:


2021
2020
£
£

Amounts falling due within one year

Bank loans
76,798
74,420

Amounts falling due 1-2 years

Bank loans
79,252
76,798

Amounts falling due 2-5 years

Bank loans
527,697
628,529


683,747
779,747



20.


Deferred taxation




2021
2020


£

£






At beginning of year
(4,270)
7,558


Charged to profit or loss
(2,634)
(11,828)



At end of year
(6,904)
(4,270)

The provision for deferred taxation is made up as follows:

2021
2020
£
£


Accelerated capital allowances
(11,998)
(9,820)

Other timing differences
5,094
5,550

(6,904)
(4,270)


21.


Share capital

2021
2020
£
£
Allotted, called up and fully paid



500 (2020 - 500) Ordinary shares of £1.00 each
500
500


Page 26

 
Continental Textiles (Manchester) Limited
 
 
 
Notes to the financial statements
For the year ended 31 December 2021

22.


Reserves

Profit and loss account

Profit and loss account includes all current and prior period profits and losses.


23.


Guarantees

All companies in the group headed by the ultimate parent have entered into a guarantee with the bankers of the subsidiary company, which secures the debts of the company over all the assets of the group.
As at 31 December 2021, such debts amounted to £683,747 (
2020: £711,014).


24.


Pension commitments

The company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £67,783 (2020: £23,443). £1,811 (2020: £3,301) was payable to the fund at the balance sheet date and is included in creditors.


25.


Related party transactions

The company has made use of the provisions available under FRS 102 to not disclose transactions with entities that are wholly owned by its parent.
At 31 December 2020 the company owed the directors £67,270 (
2020: £6,921) in respect of directors loan accounts. The company received new advances of £803,883 (2020: £180,000), and made repayments of £777,747 (2020: £119,651). At 31 December 2021, the company owed £93,406 (2020: £67,270) to its directors. No interest has been charged on this balance, which is repayable on demand and included within other creditors.


26.


Controlling party

The company is a wholly owned subsidiary of Sprint Group Limited, which in turn is a wholly owned subsidiary of Continental Textiles (Holdings) Limited.
The ultimate parent company is deemed to be Continental Textiles (Group) Limited, a company registered in England, by virtue of its contolling stake in the voting share capital of Continental Textiles (Holdings) Limited.

 
Page 27