Registered number:
For the year ended
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Continental Textiles (Manchester) Limited
Company Information
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Continental Textiles (Manchester) Limited
Contents
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Continental Textiles (Manchester) Limited
Strategic report
For the year ended 31 December 2021
The Directors present the Strategic Report for the year ended 31 December 2021.
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.
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.
The company's key financial performance indicators during the year were as follows:
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Continental Textiles (Manchester) Limited
Strategic report (continued)
For the year ended 31 December 2021
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.
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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.
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 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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.
The directors who served during the year were:
The future developments of the Company are disclosed within the Strategic Report.
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Continental Textiles (Manchester) Limited
Directors' report (continued)
For the year ended 31 December 2021
There have been no significant events affecting the Company since the year-end.
The auditors, Hurst Accountants Limited, will 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.
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Continental Textiles (Manchester) Limited
Independent Auditors' Report to the Members of Continental Textiles (Manchester) Limited
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 policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
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.
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.
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.
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Continental Textiles (Manchester) Limited
Independent Auditors' Report to the Members of Continental Textiles (Manchester) Limited (continued)
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.
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.
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Continental Textiles (Manchester) Limited
Independent Auditors' Report to the Members of Continental Textiles (Manchester) Limited (continued)
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:
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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.
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 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.
for and on behalf of
Chartered Accountants
Statutory Auditors
Lancashire Gate
21 Tiviot Dale
Stockport
Cheshire
SK1 1TD
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Continental Textiles (Manchester) Limited
Statement of comprehensive income
For the year ended 31 December 2021
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Continental Textiles (Manchester) Limited
Registered number: 00518615
Balance sheet
As at
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 14 to 27 form part of these financial statements.
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Continental Textiles (Manchester) Limited
Statement of changes in equity
For the year ended 31 December 2021
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Continental Textiles (Manchester) Limited
Statement of cash flows
For the year ended 31 December 2021
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Continental Textiles (Manchester) Limited
Statement of cash flows (continued)
For the year ended 31 December 2021
Analysis of Net Debt
For the year ended 31 December 2021
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Continental Textiles (Manchester) Limited
Notes to the financial statements
For the year ended 31 December 2021
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
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:
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Continental Textiles (Manchester) Limited
Notes to the financial statements
For the year ended 31 December 2021
2.Accounting policies (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:
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.
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.
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.
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Continental Textiles (Manchester) Limited
Notes to the financial statements
For the year ended 31 December 2021
2.Accounting policies (continued)
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.
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Continental Textiles (Manchester) Limited
Notes to the financial statements
For the year ended 31 December 2021
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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Continental Textiles (Manchester) Limited
Notes to the financial statements
For the year ended 31 December 2021
2.Accounting policies (continued)
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Continental Textiles (Manchester) Limited
Notes to the financial statements
For the year ended 31 December 2021
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.
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:
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Continental Textiles (Manchester) Limited
Notes to the financial statements
For the year ended 31 December 2021
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Continental Textiles (Manchester) Limited
Notes to the financial statements
For the year ended 31 December 2021
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Continental Textiles (Manchester) Limited
Notes to the financial statements
For the year ended 31 December 2021
11.Taxation (continued)
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Continental Textiles (Manchester) Limited
Notes to the financial statements
For the year ended 31 December 2021
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Continental Textiles (Manchester) Limited
Notes to the financial statements
For the year ended 31 December 2021
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Continental Textiles (Manchester) Limited
Notes to the financial statements
For the year ended 31 December 2021
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Continental Textiles (Manchester) Limited
Notes to the financial statements
For the year ended 31 December 2021
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Continental Textiles (Manchester) Limited
Notes to the financial statements
For the year ended 31 December 2021
Profit and loss account
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).
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.
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.
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