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COMPANY REGISTRATION NUMBER: 02832312
Ink (Clothing) Limited
Financial Statements
31 December 2023
Ink (Clothing) Limited
Financial Statements
Year ended 31 December 2023
Contents
Page
Officers and professional advisers
1
Strategic report
2
Directors' report
4
Independent auditor's report to the members
6
Consolidated statement of income and retained earnings
10
Company statement of income and retained earnings
11
Consolidated statement of financial position
12
Company statement of financial position
13
Consolidated statement of cash flows
14
Notes to the financial statements
15
Ink (Clothing) Limited
Officers and Professional Advisers
The board of directors
R. Batra
P. Rudran
Company secretary
K. Uthayakumaran
Registered office
Unit 1, Colonial Business Park
Colonial way
Watford
Hertfordshire
WD24 4PR
Auditor
SRV Delson
Chartered accountants & statutory auditor
Maruti House
1st Floor
369 Station Road
Harrow
HA1 2AW
Solicitors
Gunnercooke
1 Cornhill
London
EC3V 3ND
Ink (Clothing) Limited
Strategic Report
Year ended 31 December 2023
The directors hereby present their strategic report, directors' report and the audited financial statements of Ink (Clothing) Ltd for the year ended 31st December 2023.
Principal activities
The principal activity of the group during the period was that of design, manufacture and wholesale and e-commerce sale of casual wear, sportswear, leisure wear and outdoor wear products consisting of apparel, accessories and footwear for men, women, and children.
Business review and key performance indicators
Ink (Clothing) Ltd has been profitable since acquiring the licence for Juicy Couture® brand in 2020. The group signed up two major licences, namely Hunter® brand in June 2023 and Hoodrich® brand in November 2023. The group currently operate three divisions within Ink (Clothing) Ltd: (a) Juicy Couture Division (b) Hunter Division and (c) Hoodrich Division. All these three divisions operate independently with separate teams, ERP systems and accounting systems. The group has also signed licences for PONY, Dirty London and Ted Baker Sports brands for smaller but niche markets. These brands are under Juicy Couture Division. The directors consider that the key financial performance indicators are those that monitor the performance in respect of each of these divisions. The key performance indicators of the business are turnover, gross profit margin, EBITDA, Profit Before Taxation, forward sales order book, purchase order log, development of new product categories, expansion in new markets and exploring new brands/products to diversify the business.
Principal risk and uncertainty
Just like any other companies in these market, Ink (Clothing) Ltd also continues to face number of risk factors. The board acknowledges that there are risks that may affect the group and accordingly actions have been taken to minimise any such risk that can be controlled and/or which is insurable. The credit risk is mitigated by having credit insurance policies in place and by following stringent credit control procedures. Currency exposures are minimised by using forward foreign exchange contracts. Stock risk is controlled by encouraging forward sales orders and following careful stock purchasing policies. The group has in place sound contingent planning, internal audit functions and management control systems to cope with any unexpected risk and adverse situations that may arise.
Research and development
Ink (Clothing) Ltd is continuing to undertake substantial research and development in all categories of products to improve the performance of its brands under each division to enhance its product offers and to maintain its competitiveness. The group is also promoting higher standards of social compliance, sustainability and fair trading.
This report was approved by the board of directors on 15 August 2024 and signed on behalf of the board by:
P. Rudran
Director
Registered office:
Unit 1, Colonial Business Park
Colonial way
Watford
Hertfordshire
WD24 4PR
Ink (Clothing) Limited
Directors' Report
Year ended 31 December 2023
The directors present their report and the financial statements of the group for the year ended 31 December 2023 .
Directors
The directors who served the company during the year were as follows:
R. Batra
P. Rudran
Dividends
Particulars of recommended dividends are detailed in note 12 to the financial statements.
Future developments
The directors anticipate that the business environment will remain competitive and extremely challenging due to the recent Global events. However, they believe that the group is in good financial position and they remain confident that the group and its brands will continue to grow over the foreseeable future.
Financial instruments
The group uses forward foreign currency contracts to reduce exposure to foreign exchange rates.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit and loss in finance costs or income as appropriate.
Directors' responsibilities statement
The directors are responsible for preparing the strategic report, 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 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 the company and 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 judgments and accounting estimates that are reasonable and prudent. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Auditor
Each of the persons who is a director at the date of approval of this report confirms that:
- so far as they are aware, there is no relevant audit information of which the group and the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the group and the company's auditor is aware of that information. A resolution to reappoint SRV Delson as auditors will be proposed at the forthcoming Annual General Meeting.
This report was approved by the board of directors on 15 August 2024 and signed on behalf of the board by:
P. Rudran
Director
Registered office:
Unit 1, Colonial Business Park
Colonial way
Watford
Hertfordshire
WD24 4PR
Ink (Clothing) Limited
Independent Auditor's Report to the Members of Ink (Clothing) Limited
Year ended 31 December 2023
Opinion
We have audited the financial statements of Ink (Clothing) Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the consolidated statement of income and retained earnings, company statement of income and retained earnings, consolidated statement of financial position, company statement of financial position, consolidated statement of cash flows 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 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 of the parent company's affairs as at 31 December 2023 and of the group's profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; - 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 auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group 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
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 group's or the parent 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 auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of 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 group and the parent 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 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' responsibilities statement, 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.
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. 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: Enquiry of management and those charged with governance around actual and potential litigation and claims; Performing audit work over the risk of management override of controls. including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias. Reviewing minutes of meetings of those charged with governance; Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group's internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. - Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's or the parent company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. - Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 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 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.
Sailesh Rameshchandra Vaghjee
(Senior Statutory Auditor)
For and on behalf of
SRV Delson
Chartered accountants & statutory auditor
Maruti House
1st Floor
369 Station Road
Harrow
HA1 2AW
15 August 2024
Ink (Clothing) Limited
Consolidated Statement of Income and Retained Earnings
Year ended 31 December 2023
2023
2022
Note
£
£
Turnover
4
53,188,206
30,787,187
Cost of sales
27,367,511
15,444,767
-------------
-------------
Gross profit
25,820,695
15,342,420
Distribution costs
2,258,271
529,349
Administrative expenses
15,099,665
6,556,514
Other operating income
5
660,060
108,065
-------------
-------------
Operating profit
6
9,122,819
8,364,622
Other interest receivable and similar income
9
411,534
33,298
Interest payable and similar expenses
10
331,998
-------------
-------------
Profit before taxation
9,202,355
8,397,920
Tax on profit
11
2,235,613
1,478,225
------------
------------
Profit for the financial year and total comprehensive income
6,966,742
6,919,695
------------
------------
Dividends paid and payable
12
( 1,000,000)
( 850,000)
Retained earnings at the start of the year
12,204,124
6,134,429
-------------
-------------
Retained earnings at the end of the year
18,170,866
12,204,124
-------------
-------------
All the activities of the group are from continuing operations.
Ink (Clothing) Limited
Company Statement of Income and Retained Earnings
Year ended 31 December 2023
2023
2022
Note
£
£
Profit for the financial year and total comprehensive income
7,095,551
6,919,695
Dividends paid and payable
12
( 1,000,000)
( 850,000)
Retained earnings at the start of the year
12,204,124
6,134,429
-------------
-------------
Retained earnings at the end of the year
18,299,675
12,204,124
-------------
-------------
Ink (Clothing) Limited
Consolidated Statement of Financial Position
31 December 2023
2023
2022
Note
£
£
Fixed assets
Intangible assets
13
2
Tangible assets
14
926,849
186,640
Investments
15
22,553
---------
---------
926,851
209,193
Current assets
Stocks
16
7,932,063
953,696
Debtors
17
10,742,035
4,944,517
Cash at bank and in hand
21,719,017
13,885,804
-------------
-------------
40,393,115
19,784,017
Prepayments and accrued income
763,070
301,609
Creditors: amounts falling due within one year
18
18,243,014
4,912,535
-------------
-------------
Net current assets
22,913,171
15,173,091
-------------
-------------
Total assets less current liabilities
23,840,022
15,382,284
Provisions
19
19,548
5,426
Accruals and deferred income
3,613,056
1,323,700
-------------
-------------
Net assets
20,207,418
14,053,158
-------------
-------------
Capital and reserves
Called up share capital
22
1,849,034
1,849,034
Profit and loss account
23
18,358,384
12,204,124
-------------
-------------
Shareholders funds
20,207,418
14,053,158
-------------
-------------
These financial statements were approved by the board of directors and authorised for issue on 15 August 2024 , and are signed on behalf of the board by:
P. Rudran
Director
Company registration number: 02832312
Ink (Clothing) Limited
Company Statement of Financial Position
31 December 2023
2023
2022
Note
£
£
Fixed assets
Intangible assets
13
1
Tangible assets
14
926,298
186,640
Investments
15
22,553
22,553
---------
---------
948,852
209,193
Current assets
Stocks
16
6,315,212
953,696
Debtors
17
16,755,603
4,944,517
Cash at bank and in hand
20,686,798
13,885,804
-------------
-------------
43,757,613
19,784,017
Prepayments and accrued income
763,070
301,609
Creditors: amounts falling due within one year
18
21,896,203
4,912,535
-------------
-------------
Net current assets
22,624,480
15,173,091
-------------
-------------
Total assets less current liabilities
23,573,332
15,382,284
Provisions
19
19,548
5,426
Accruals and deferred income
3,405,075
1,323,700
-------------
-------------
Net assets
20,148,709
14,053,158
-------------
-------------
Capital and reserves
Called up share capital
22
1,849,034
1,849,034
Profit and loss account
23
18,299,675
12,204,124
-------------
-------------
Shareholders funds
20,148,709
14,053,158
-------------
-------------
The profit for the financial year of the parent company was £ 7,095,551 (2022: £ 6,919,695 ).
These financial statements were approved by the board of directors and authorised for issue on 15 August 2024 , and are signed on behalf of the board by:
P. Rudran
Director
Company registration number: 02832312
Ink (Clothing) Limited
Consolidated Statement of Cash Flows
Year ended 31 December 2023
2023
2022
£
£
Cash flows from operating activities
Profit for the financial year
6,966,742
6,919,695
Adjustments for:
Depreciation of tangible assets
57,844
51,292
Other interest receivable and similar income
( 411,534)
( 33,298)
Interest payable and similar expenses
331,998
Tax on profit
2,235,613
1,478,225
Accrued expenses
2,289,356
309,052
Other operating cash flow adjustment
210,071
(14,311)
Changes in:
Stocks
( 6,978,367)
53,741
Trade and other debtors
( 6,258,979)
761,486
Trade and other creditors
11,497,357
( 436,226)
Provisions and employee benefits
14,122
3,218
-------------
------------
Cash generated from operations
9,954,223
9,092,874
Interest paid
( 331,998)
Interest received
411,534
33,298
Tax paid
( 1,402,491)
( 691,292)
------------
------------
Net cash from operating activities
8,631,268
8,434,880
------------
------------
Cash flows from investing activities
Purchase of tangible assets
( 798,285)
Proceeds from sale of tangible assets
232
Purchase of intangible assets
( 2)
------------
------------
Net cash used in investing activities
( 798,055)
------------
------------
Cash flows from financing activities
Proceeds from borrowings
1,000,000
Dividends paid
( 1,000,000)
( 850,000)
------------
------------
Net cash used in financing activities
( 850,000)
------------
------------
Net increase in cash and cash equivalents
7,833,213
7,584,880
Cash and cash equivalents at beginning of year
13,885,804
6,300,924
-------------
-------------
Cash and cash equivalents at end of year
21,719,017
13,885,804
-------------
-------------
Ink (Clothing) Limited
Notes to the Financial Statements
Year ended 31 December 2023
1. General information
The company is a private company limited by shares, registered in England and Wales. The address of the registered office is Unit 1, Colonial Business Park, Colonial way, Watford, WD24 4PR, Hertfordshire.
2. Statement of compliance
These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.
3. Accounting policies
Basis of preparation
The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through profit or loss.
The financial statements are prepared in sterling, which is the functional currency of the entity.
Going concern
The directors have used the going concern basis of accounting in the preparation of the financial statements Based on the future orders and there are no 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 12 months from when the financial statements are authorised for issue. The directors have also have taken into account all the information that could reasonably be expected to be available together with their continued support and that of the bank to the company. These financial statements do not include any adjustments that would result if the company would cease trading.
Disclosure exemptions
The parent company satisfies the criteria of being a qualifying entity as defined in FRS 102. As such, advantage has been taken of the following reduced disclosures available under FRS 102:
(a) Disclosures in respect of each class of share capital have not been presented.
(b) No cash flow statement has been presented for the company.
(c) Disclosures in respect of financial instruments have not been presented.
(d) No disclosure has been given for the aggregate remuneration of key management personnel.
Consolidation
The financial statements consolidate the financial statements of Ink (Clothing) Limited and all of its subsidiary undertakings.
The results of subsidiaries acquired or disposed of during the year are included from or to the date that control passes.
The parent company has applied the exemption contained in section 408 of the Companies Act 2006 and has not presented its individual profit and loss account.
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Revenue recognition
Turnover is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of discounts and Value Added Tax. Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on despatch of the goods); the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably.
Income tax
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Foreign currencies
Foreign currency transactions are initially recorded in the functional currency, by applying the spot exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date, with any gains or losses being taken to the profit and loss account.
Goodwill
Goodwill arises on business acquisitions and represents the excess of the cost of the acquisition over the company's interest in the net amount of the identifiable assets, liabilities and contingent liabilities of the acquired business. Goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. It is amortised on a straight-line basis over its useful life. Where a reliable estimate of the useful life of goodwill or intangible assets cannot be made, the life is presumed not to exceed ten years.
Tangible assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. An increase in the carrying amount of an asset as a result of a revaluation, is recognised in other comprehensive income and accumulated in equity, except to the extent it reverses a revaluation decrease of the same asset previously recognised in profit or loss. A decrease in the carrying amount of an asset as a result of revaluation, is recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity in respect of that asset. Where a revaluation decrease exceeds the accumulated revaluation gains accumulated in equity in respect of that asset, the excess shall be recognised in profit or loss.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Fixtures and fittings
-
25% straight line
Investments
Fixed asset investments are initially recorded at cost, and subsequently stated at cost less any accumulated impairment losses.
Listed investments are measured at fair value with changes in fair value being recognised in profit or loss.
Investments in associates
Investments in associates are accounted for using the equity method of accounting, whereby the investment is initially recognised at the transaction price and subsequently adjusted to reflect the group's share of the profit or loss, other comprehensive income and equity of the associate.
Investments in joint ventures
Investments in joint ventures are accounted for using the equity method of accounting, whereby the investment is initially recognised at the transaction price and subsequently adjusted to reflect the group's share of the profit or loss, other comprehensive income and equity of the joint venture.
Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets. For impairment testing of goodwill, the goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the company are assigned to those units.
Stocks
Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the stock to its present location and condition.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of the provision as an expense. Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in profit or loss unless the provision was originally recognised as part of the cost of an asset. When a provision is measured at the present value of the amount expected to be required to settle the obligation, the unwinding of the discount is recognised as a finance cost in profit or loss in the period it arises.
Financial instruments
A financial asset or a financial liability is recognised only when the company becomes a party to the contractual provisions of the instrument. Basic financial instruments are initially recognised at the transaction price, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Debt instruments are subsequently measured at amortised cost. Where investments in non-convertible preference shares and non-puttable ordinary shares or preference shares are publicly traded or their fair value can otherwise be measured reliably, the investment is subsequently measured at fair value with changes in fair value recognised in profit or loss. All other such investments are subsequently measured at cost less impairment. Other financial instruments, including derivatives, are initially recognised at fair value, unless payment for an asset is deferred beyond normal business terms or financed at a rate of interest that is not a market rate, in which case the asset is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Other financial instruments are subsequently measured at fair value, with any changes recognised in profit or loss, with the exception of hedging instruments in a designated hedging relationship.
Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss immediately. For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets are either assessed individually or grouped on the basis of similar credit risk characteristics. Any reversals of impairment are recognised in profit or loss immediately, to the extent that the reversal does not result in a carrying amount of the financial asset that exceeds what the carrying amount would have been had the impairment not previously been recognised.
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund. When contributions are not expected to be settled wholly within 12 months of the end of the reporting date in which the employees render the related service, the liability is measured on a discounted present value basis. The unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
4. Turnover
Turnover arises from:
2023
2022
£
£
Sale of goods
53,188,206
30,387,507
Commissions
399,680
-------------
-------------
53,188,206
30,787,187
-------------
-------------
The turnover is attributable to the one principal activity of the group. An analysis of turnover by the geographical markets that substantially differ from each other is given below:
2023
2022
£
£
United Kingdom
45,451,554
30,787,187
Overseas
7,736,652
-------------
-------------
53,188,206
30,787,187
-------------
-------------
5. Other operating income
2023
2022
£
£
Commission receivable
44,366
Other operating income
615,694
108,065
---------
---------
660,060
108,065
---------
---------
6. Operating profit
Operating profit or loss is stated after charging/crediting:
2023
2022
£
£
Depreciation of tangible assets
57,844
51,292
Impairment of trade debtors
91,599
(52,672)
Foreign exchange differences
22,172
--------
--------
7. Auditor's remuneration
2023
2022
£
£
Fees payable for the audit of the financial statements
21,000
21,000
--------
--------
8. Staff costs
The average number of persons employed by the group during the year, including the directors, amounted to:
2023
2022
No.
No.
Production staff
27
10
Distribution staff
2
Administrative staff
64
1
----
----
91
13
----
----
The aggregate payroll costs incurred during the year, relating to the above, were:
2023
2022
£
£
Wages and salaries
2,553,643
764,914
Social security costs
148,768
88,496
Other pension costs
83,511
49,900
------------
---------
2,785,922
903,310
------------
---------
9. Other interest receivable and similar income
2023
2022
£
£
Interest on bank deposits
411,534
33,298
---------
--------
10. Interest payable and similar expenses
2023
2022
£
£
Interest on banks loans and overdrafts
331,998
---------
----
11. Tax on profit
Major components of tax expense
2023
2022
£
£
Current tax:
UK current tax expense
2,235,613
1,478,225
Tax on profit
2,235,613
1,478,225
------------
------------
Reconciliation of tax expense
The tax assessed on the profit on ordinary activities for the year is lower than (2022: lower than) the standard rate of corporation tax in the UK of 25.79 % (2022: 19 %).
2023
2022
£
£
Profit on ordinary activities before taxation
9,202,355
8,397,920
------------
------------
Profit on ordinary activities by rate of tax
2,406,507
1,595,605
Effect of expenses not deductible for tax purposes
19,945
( 10,007)
Effect of capital allowances and depreciation
( 190,839)
9,255
Research & Development tax credit
(116,628)
------------
------------
Tax on profit
2,235,613
1,478,225
------------
------------
12. Dividends
2023
2022
£
£
Dividends paid during the year (excluding those for which a liability existed at the end of the prior year )
1,000,000
850,000
------------
---------
13. Intangible assets
Group
Goodwill
£
Cost
At 1 January 2023
Additions
2
----
At 31 December 2023
2
----
Amortisation
At 1 January 2023 and 31 December 2023
----
Carrying amount
At 31 December 2023
2
----
At 31 December 2022
----
Company
Goodwill
£
Cost
At 1 January 2023
Additions
1
----
At 31 December 2023
1
----
Amortisation
At 1 January 2023 and 31 December 2023
----
Carrying amount
At 31 December 2023
1
----
At 31 December 2022
----
14. Tangible assets
Group
Fixtures and fittings
£
Cost
At 1 January 2023
262,190
Additions
798,285
Disposals
( 310)
------------
At 31 December 2023
1,060,165
------------
Depreciation
At 1 January 2023
75,550
Charge for the year
57,844
Disposals
( 78)
------------
At 31 December 2023
133,316
------------
Carrying amount
At 31 December 2023
926,849
------------
At 31 December 2022
186,640
------------
Company
Fixtures and fittings
£
Cost
At 1 January 2023
262,190
Additions
797,459
Disposals
( 310)
------------
At 31 December 2023
1,059,339
------------
Depreciation
At 1 January 2023
75,550
Charge for the year
57,569
Disposals
( 78)
------------
At 31 December 2023
133,041
------------
Carrying amount
At 31 December 2023
926,298
------------
At 31 December 2022
186,640
------------
15. Investments
Group
Shares in group undertakings
£
Cost
At 1 January 2023
22,553
Other movements
( 22,553)
--------
At 31 December 2023
--------
Impairment
At 1 January 2023 and 31 December 2023
--------
Carrying amount
At 31 December 2023
--------
At 31 December 2022
22,553
--------
Company
Shares in group undertakings
£
Cost
At 1 January 2023 and 31 December 2023
22,553
--------
Impairment
At 1 January 2023 and 31 December 2023
--------
Carrying amount
At 1 January 2023 and 31 December 2023
22,553
--------
At 31 December 2022
22,553
--------
Subsidiaries, associates and other investments
Details of the investments in which the group and the parent company have an interest of 20% or more are as follows:
Class of share
Percentage of shares held
Subsidiary undertakings
Ink (Clothing) GMBH
Ordinary
100
16. Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Finished goods
7,932,063
953,696
6,315,212
953,696
------------
---------
------------
---------
17. Debtors
Group
Company
2023
2022
2023
2022
£
£
£
£
Trade debtors
9,807,546
2,835,108
7,758,532
2,835,108
Amounts owed by group undertakings
2,109,409
8,062,948
2,109,409
Other debtors
934,489
934,123
-------------
------------
-------------
------------
10,742,035
4,944,517
16,755,603
4,944,517
-------------
------------
-------------
------------
18. Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
£
£
£
£
Bank loans and overdrafts
1,000,000
1,000,000
Trade creditors
10,036,838
2,489,975
9,614,195
2,489,975
Amounts owed to group undertakings
4,164,458
Corporation tax
2,325,476
1,492,354
2,286,308
1,492,354
Social security and other taxes
1,806,217
930,206
1,756,759
930,206
Other creditors
3,074,483
3,074,483
-------------
------------
-------------
------------
18,243,014
4,912,535
21,896,203
4,912,535
-------------
------------
-------------
------------
19. Provisions
Group and company
Pensions and similar obligations
£
At 1 January 2023
5,426
Additions
14,122
--------
At 31 December 2023
19,548
--------
20. Employee benefits
Defined contribution plans
The amount recognised in profit or loss as an expense in relation to defined contribution plans was £ 83,511 (2022: £ 49,900 ).
21. Financial instruments
The group uses forward foreign currency contracts to reduce exposure to foreign exchange rates. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit and loss in finance costs or income as appropriate.
22. Called up share capital
Issued, called up and fully paid
2023
2022
No.
£
No.
£
Ordinary shares of £ 1 each
125,000
125,000
125,000
125,000
Preference shares shares of £ 1 each
1,724,034
1,724,034
1,724,034
1,724,034
------------
------------
------------
------------
1,849,034
1,849,034
1,849,034
1,849,034
------------
------------
------------
------------
The preference shares are non-redeemable. Called-up share capital represents the nominal value of shares that have been issued.
23. Reserves
The profit & loss reserves include all current and prior years retained profit and losses
24. Analysis of changes in net debt
At 1 Jan 2023
Cash flows
At 31 Dec 2023
£
£
£
Cash at bank and in hand
13,885,804
7,833,213
21,719,017
Debt due within one year
(1,000,000)
(1,000,000)
-------------
------------
-------------
13,885,804
6,833,213
20,719,017
-------------
------------
-------------
25. Related party transactions
Company
During the year the group carried out transactions between companies under common control. The total balance owed to various companies under common control is £391,910 All the transactions have been carried out on an arms length basis.
Ink (Clothing) Limited
Notes to the Financial Statements (continued)
Year ended 31 December 2023
26. Controlling party
The ultimate controlling interest is held by the director, R. Batra .