Company registration number 01604582 (England and Wales)
PELICANS MANUFACTURING CO. LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
PELICANS MANUFACTURING CO. LTD
COMPANY INFORMATION
Directors
Mrs. S. Merchant
Mr. P. Kabra
Secretary
Mrs. S Merchant
Company number
01604582
Registered office
Qualitas House
100 Elmgrove Road
Harrow
Middlesex
HA1 2RW
Auditor
RDP Newmans LLP
Lynwood House
373-375 Station Road
Harrow
Middlesex
HA1 2AW
Business address
Qualitas House
100 Elmgrove Road
Harrow
Middlesex
HA1 2RW
Bankers
National Westminster Bank Plc
Hendon Central Circus Branch
5 Central Circus
Hendon
London
NW4 3LE
The Royal Bank of Scotland
Smith House
Elmwood Avenue
Feltham
MIddlesex
TW13 7QD
PELICANS MANUFACTURING CO. LTD
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 24
PELICANS MANUFACTURING CO. LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 1 -
The directors present the strategic report for the year ended 31 May 2023.
Principal activities
The company's principal activities are the design, manufacturing and sale of business promotional gifts.
Review of the business
The directors are satisfied with the results for the year.
The turnover has increased by 28.85% from £9.11 million to £11.74 million. The gross profit margin has gone up from 1.80% to 4.22%. This was largely due to the prior year write down of stock on the relocation to new premises, as a large quantity of stock held by the company for many years was no longer deemed adequate for resale and was thus scrapped. Due to Brexit restrictions (several of the company's customers being based in Europe) this stock was not replenished. Despite the increase in gross margins, the company generated a pre tax loss of £1,489k for the year compared to a profit of £4,649k in 2022. The prior year profits were driven by profit generated from the disposal of freehold property.
The company's debtor days have increased from 81 days to 96 days in 2023.
At 31 May 2023 the company's current ratio was 1.04 (2022: 1.33) and its quick ratio was 1.00 (2022: 1.30).
Principal risks and uncertainties
The principal risks and uncertainties facing Pelicans Manufacturing Co. Ltd are liquidity risk, credit risk, interest rate and foreign currency risk. The board reviews and agrees policies for managing each of these risks and they are summarised below.
Liquidity risk: Liquidity risk arises in relation to managing the company's working capital requirements. The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the businesses.
Credit risk: Credit risk arises where customers fail to make timely payments or default on amounts that they owe. All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on a regular basis and provision is made for doubtful debts where necessary.
Interest rate risk: The company is exposed to interest rate risk on bank overdrafts and loans. The company manages the mix of fixed and variable rate debts so as to reduce its exposure to changes in interest rates.
Foreign currency risk: The company’s principal foreign currency exposures arise from trading with overseas companies. Company policy permits, but does not demand, that these exposures be hedged in order to fix the cost in sterling. This hedging activity involves the use of foreign exchange forward contracts.
Future developments: The directors anticipate the business environment will remain challenging and competitive. They believe that the company is in a sound financial position and they remain confident that the company will be able to reverse the decline in profitability in future.
Research and development: The company is continually undertaking research and development to improve its product range.
Treasury operations and financial instruments: The company operates a treasury function which is responsible for managing the liquidity, interest and foreign currency risks associated with the company’s activities.
Mrs. S. Merchant
Director
30 October 2024
PELICANS MANUFACTURING CO. LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 2 -
The directors present their annual report and the audited financial statements for the year ended 31 May 2023.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid during the year. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr. A. N. Merchant
(Deceased 24 January 2024)
Mr. S. Maxton
(Resigned 31 January 2024)
Mrs. S. Merchant
Mr. C. Acharya
(Resigned 2 October 2024)
Ms. S. Merchant
(Resigned 9 October 2023)
Mr. P. Kabra
Auditor
The auditor, RDP Newmans LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
Mrs. S. Merchant
Director
30 October 2024
PELICANS MANUFACTURING CO. LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 MAY 2023
- 3 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
PELICANS MANUFACTURING CO. LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PELICANS MANUFACTURING CO. LTD
- 4 -
Opinion
We have audited the financial statements of Pelicans Manufacturing Co. Ltd (the 'company') for the year ended 31 May 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including 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).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 May 2023 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
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 auditor's 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' 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.
PELICANS MANUFACTURING CO. LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PELICANS MANUFACTURING CO. LTD (CONTINUED)
- 5 -
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 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 company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities is available on the Financial Reporting Council's website at:
https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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.
The extent to which the audit was considered capable of detecting irregularities including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation and data protection, anti-bribery and employment;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
PELICANS MANUFACTURING CO. LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PELICANS MANUFACTURING CO. LTD (CONTINUED)
- 6 -
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
reviewed and tested journal entries to identify unusual transactions and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business;
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
reviewing and agreeing financial statement disclosures and testing to underlying supporting documentation;
enquiring of management as to actual and potential litigation and claims;
reviewing correspondence with HMRC and bankers
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Paresh Radia FCA
Senior Statutory Auditor
For and on behalf of RDP Newmans LLP
30 October 2024
Chartered Accountants
Statutory Auditor
Lynwood House
373-375 Station Road
Harrow
Middlesex
PELICANS MANUFACTURING CO. LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PELICANS MANUFACTURING CO. LTD (CONTINUED)
- 7 -
HA1 2AW
PELICANS MANUFACTURING CO. LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
11,744,451
9,114,627
Cost of sales
(11,249,269)
(8,950,263)
Gross profit
495,182
164,364
Administrative expenses
(1,943,062)
(4,103,462)
Other operating (expenses)/income
(51,931)
8,615,795
Operating (loss)/profit
5
(1,499,811)
4,676,697
Interest receivable and similar income
8
27,206
14,773
Interest payable and similar expenses
9
(16,067)
(42,702)
(Loss)/profit before taxation
(1,488,672)
4,648,768
Tax on (loss)/profit
10
84,917
(619,778)
(Loss)/profit for the financial year
(1,403,755)
4,028,990
The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.
PELICANS MANUFACTURING CO. LTD
BALANCE SHEET
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
12
505,273
298,854
Current assets
Stocks
13
236,590
166,021
Debtors
14
5,609,189
6,524,047
Cash at bank and in hand
170,741
181,539
6,016,520
6,871,607
Creditors: amounts falling due within one year
15
(5,932,301)
(5,174,820)
Net current assets
84,219
1,696,787
Total assets less current liabilities
589,492
1,995,641
Provisions for liabilities
Deferred tax liability
18
32,819
35,213
(32,819)
(35,213)
Net assets
556,673
1,960,428
Capital and reserves
Called up share capital
20
117,000
117,000
Capital redemption reserve
21
100,000
100,000
Profit and loss reserves
22
339,673
1,743,428
Total equity
556,673
1,960,428
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 30 October 2024 and are signed on its behalf by:
Mrs. S. Merchant
Director
Company registration number 01604582 (England and Wales)
PELICANS MANUFACTURING CO. LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2023
- 10 -
Share capital
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 June 2021
117,000
4,365,092
100,000
1,089,438
5,671,530
Year ended 31 May 2022:
Profit and total comprehensive income
-
-
-
4,028,990
4,028,990
Dividends
11
-
-
-
(3,375,000)
(3,375,000)
Amouts written off
-
(4,347,922)
-
-
(4,347,922)
Other movements
-
(17,170)
-
-
(17,170)
Balance at 31 May 2022
117,000
100,000
1,743,428
1,960,428
Year ended 31 May 2023:
Loss and total comprehensive income
-
-
-
(1,403,755)
(1,403,755)
Balance at 31 May 2023
117,000
100,000
339,673
556,673
PELICANS MANUFACTURING CO. LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MAY 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
26
(179,814)
3,143,405
Interest paid
(16,067)
(42,702)
Income taxes paid
(236,169)
(747,887)
Net cash (outflow)/inflow from operating activities
(432,050)
2,352,816
Investing activities
Purchase of tangible fixed assets
(307,669)
(114,611)
Proceeds from disposal of tangible fixed assets
6,776,923
Proceeds from disposal of investments
125,685
Increase in/(repayment of) loans
942,821
(1,671,282)
Interest received
27,206
14,773
Net cash generated from investing activities
662,358
5,131,488
Financing activities
Repayment of bank loans
(3,937,907)
Payment of finance leases obligations
(13,393)
(12,792)
Dividends paid
(3,375,000)
Net cash used in financing activities
(13,393)
(7,325,699)
Net increase in cash and cash equivalents
216,915
158,605
Cash and cash equivalents at beginning of year
(227,845)
(386,450)
Cash and cash equivalents at end of year
(10,930)
(227,845)
Relating to:
Cash at bank and in hand
170,741
181,539
Bank overdrafts included in creditors payable within one year
(181,671)
(409,384)
PELICANS MANUFACTURING CO. LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
- 12 -
1
Accounting policies
Company information
Pelicans Manufacturing Co. Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Qualitas House, 100 Elmgrove Road, Harrow, Middlesex, HA1 2RW.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Land and buildings leasehold
10 years straight line basis
Plant and machinery
12.5% reducing balance
Fixtures, fittings and equipment
20% reducing balance
Motor vehicles
25% reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
PELICANS MANUFACTURING CO. LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 13 -
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally 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.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
PELICANS MANUFACTURING CO. LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 14 -
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
PELICANS MANUFACTURING CO. LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 15 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Pension contributions are paid to an external scheme and payments are charged to the profit and loss account as incurred.
PELICANS MANUFACTURING CO. LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 16 -
1.13
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
1.14
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.15
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
In the opinion of the directors, there are no judgements nor key sources of estimation uncertainty required in applying the company's accounting policies.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Goods
11,744,451
9,114,627
PELICANS MANUFACTURING CO. LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
3
Turnover and other revenue
(Continued)
- 17 -
2023
2022
£
£
Turnover analysed by geographical market
Europe
8,491,981
7,202,206
UK
3,252,470
1,912,421
11,744,451
9,114,627
2023
2022
£
£
Other revenue
Interest income
27,206
14,773
4
Exceptional item
2023
2022
£
£
Income
Profit on disposal of property
-
8,600,316
5
Operating (loss)/profit
2023
2022
Operating (loss)/profit for the year is stated after charging:
£
£
Exchange losses
51,931
72,666
Fees payable to the company's auditor for the audit of the company's financial statements
22,500
45,000
Depreciation of owned tangible fixed assets
94,553
55,569
Depreciation of tangible fixed assets held under finance leases
6,697
8,930
(Profit)/loss on disposal of tangible fixed assets
-
125,685
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Selling and distribution
1
1
Administration
12
12
Production
28
27
Total
41
40
PELICANS MANUFACTURING CO. LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
6
Employees
(Continued)
- 18 -
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,503,618
1,580,709
Pension costs
33,166
26,885
1,536,784
1,607,594
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
390,771
422,608
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
157,546
130,710
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
27,206
14,773
9
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
-
40,185
Other finance costs:
Interest on finance leases and hire purchase contracts
676
1,721
Other interest
15,391
796
16,067
42,702
PELICANS MANUFACTURING CO. LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 19 -
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
(252,523)
613,270
Adjustments in respect of prior periods
170,000
Total current tax
(82,523)
613,270
Deferred tax
Origination and reversal of timing differences
(2,394)
6,508
Total tax (credit)/charge
(84,917)
619,778
The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
(Loss)/profit before taxation
(1,488,672)
4,648,768
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
(282,848)
883,266
Tax effect of expenses that are not deductible in determining taxable profit
30,188
19,936
Tax effect of utilisation of tax losses not previously recognised
170,000
(171,000)
Depreciation on assets not qualifying for tax allowances
15,435
11,724
Deferred tax movement
(2,394)
6,508
Capital allowances
(15,215)
(62,269)
Indexation allowance
(68,387)
Pensions
(83)
Taxation (credit)/charge for the year
(84,917)
619,778
11
Dividends
2023
2022
£
£
Interim paid
3,375,000
PELICANS MANUFACTURING CO. LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 20 -
12
Tangible fixed assets
Land and buildings leasehold
Plant and machinery
Fixtures, fittings and equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 June 2022
27,919
1,033,109
20,046
163,904
1,244,978
Additions
172,222
2,058
33,744
99,645
307,669
At 31 May 2023
200,141
1,035,167
53,790
263,549
1,552,647
Depreciation and impairment
At 1 June 2022
2,792
859,351
17,907
66,074
946,124
Depreciation charged in the year
20,014
24,689
7,177
49,370
101,250
At 31 May 2023
22,806
884,040
25,084
115,444
1,047,374
Carrying amount
At 31 May 2023
177,335
151,127
28,706
148,105
505,273
At 31 May 2022
25,127
173,758
2,139
97,830
298,854
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Motor vehicles
20,092
26,789
13
Stocks
2023
2022
£
£
Finished goods and goods for resale
236,590
166,021
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
3,137,723
2,252,613
Corporation tax recoverable
390,819
294,161
Amounts owed by group undertakings
149,321
228,448
Other debtors
1,910,592
3,688,017
Prepayments and accrued income
20,734
60,808
5,609,189
6,524,047
PELICANS MANUFACTURING CO. LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 21 -
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
16
181,671
409,384
Obligations under finance leases
17
15,280
28,673
Trade creditors
449,788
315,417
Amounts owed to group undertakings
1,788,794
1,858,223
Corporation tax
683,497
905,531
Other taxation and social security
81,979
39,991
Other creditors
2,556,043
1,533,776
Accruals and deferred income
175,249
83,825
5,932,301
5,174,820
Creditors amounting to £181,671 (£409,384) were secured by way of fixed and floating charges over the company's assets.
16
Loans and overdrafts
2023
2022
£
£
Bank overdrafts
181,671
409,384
Payable within one year
181,671
409,384
17
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
6,060
14,069
In two to five years
9,220
14,604
15,280
28,673
Finance lease payments represent rentals payable by the company for certain items of plant and machinery as well as motor vehicles. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts £20,092 (2022: £26,789). The depreciation charge in respect of such assets amounted to £6,697 (2022: £8,930).
PELICANS MANUFACTURING CO. LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 22 -
18
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
32,819
35,213
2023
Movements in the year:
£
Liability at 1 June 2022
35,213
Credit to profit or loss
(2,394)
Liability at 31 May 2023
32,819
The deferred tax liability set out above in respect of capital allowances is expected to reverse within 12 months.
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
33,166
26,885
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
117,000
117,000
117,000
117,000
21
Capital redemption reserve
2023
2022
£
£
At the beginning and end of the year
100,000
100,000
PELICANS MANUFACTURING CO. LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 23 -
22
Profit and loss reserves
2023
2022
£
£
At the beginning of the year
1,743,428
1,089,438
(Loss)/profit for the year
(1,403,755)
4,028,990
Dividends declared and paid in the year
-
(3,375,000)
At the end of the year
339,673
1,743,428
23
Operating lease commitments
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
291,478
218,609
Between two and five years
1,165,912
1,165,912
In over five years
1,165,912
1,457,390
2,623,302
2,841,911
24
Related party transactions
During the year the company purchased goods worth £9,748,525 (2022: £6,520,330) from Pelicans Automotive & Promotional Products (Pvt.) Limited, a company registered in India, in which the late Mr A N Merchant and Mrs S Merchant were directors and shareholders. At the year end balance due to Pelicans Automotive & Promotional Products (Pvt.) Limited was £2,553,966 (2022: £1,533,776).
Included within other debtors is an amount of £870,393 (2022: £96,332) due from FF Propco Ltd, a company incorporated in Jersey. Mr R M Merchant, the son of Mrs S A Merchant, is a director and beneficial owner in FF Propco Ltd.
Also included within other debtors is an amount of £nil (2022: £1,474,151) due from 110/116 Cheshire Street Limited, a previously associated company, in which Mrs S A Merchant is a common director.
During the year, amounts of £nil (2022: £1,379,895) owing from The Collective Holdco Jersey Limited, a company incorporated in Jersey, was deemed irrecoverable and written off. Mr R M Merchant, the son of Mr A N Merchant, is a director and beneficial owner in The Collective Holdco Jersey Limited.
During the year, amounts of £nil (2022: £456,809) owing from 14 Bedford Square Ltd was deemed irrecoverable and written off. Mr R M Merchant, the son of Mr A N Merchant, is a director and beneficial owner of 14 Bedford Square Ltd.
During the year an amount of £nil (2022: £20,737) owing from the director, Mr P Kabra, was written off.
Included with other debtors are balances of £877,878 (2022: £1,820,668) due from the directors of the company. Interest of £27,206 (2022: £14,773) has been charged on these balances.
PELICANS MANUFACTURING CO. LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 24 -
25
Ultimate controlling party
The ultimate parent company is Al-Noor Investments Limited, a company registered in Jersey, Channel Islands. Al-Noor Investments Limited is not required to prepare consolidated financial statements.
Pelicans Limited is the parent of the smallest and largest group for which consolidated financial statements are prepared. The parent company’s registered office is Qualitas House, 100 Elmgrove Road, Harrow, Middlesex, HA1 2RW. The consolidated financial statements can be obtained from Companies House.
26
Cash (absorbed by)/generated from operations
2023
2022
£
£
(Loss)/profit for the year after tax
(1,403,755)
4,028,990
Adjustments for:
Taxation (credited)/charged
(84,917)
619,778
Finance costs
16,067
42,702
Investment income
(27,206)
(14,773)
(Gain)/loss on disposal of tangible fixed assets
-
125,685
Depreciation and impairment of tangible fixed assets
101,250
64,499
Decrease in provisions
(4,365,092)
Movements in working capital:
(Increase)/decrease in stocks
(70,569)
652,809
Decrease/(increase) in debtors
68,695
(572,259)
Increase in creditors
1,220,621
2,561,066
Cash (absorbed by)/generated from operations
(179,814)
3,143,405
27
Analysis of changes in net debt
1 June 2022
Cash flows
31 May 2023
£
£
£
Cash at bank and in hand
181,539
(10,798)
170,741
Bank overdrafts
(409,384)
227,713
(181,671)
(227,845)
216,915
(10,930)
Obligations under finance leases
(28,673)
13,393
(15,280)
(256,518)
230,308
(26,210)
2023-05-312022-06-01falseCCH SoftwareCCH Accounts Production 2024.100Mr. A. N. MerchantMr. S. MaxtonMrs. S. MerchantMr. C. AcharyaMs. S. MerchantMr. P. KabraMrs. S Merchantfalsefalse016045822022-06-012023-05-3101604582bus:Director32022-06-012023-05-3101604582bus:Director62022-06-012023-05-3101604582bus:CompanySecretary12022-06-012023-05-3101604582bus:Director12022-06-012023-05-3101604582bus:Director22022-06-012023-05-3101604582bus:Director42022-06-012023-05-3101604582bus:Director52022-06-012023-05-3101604582bus:RegisteredOffice2022-06-012023-05-3101604582bus:Agent12022-06-012023-05-31016045822023-05-31016045822021-06-012022-05-3101604582core:RetainedEarningsAccumulatedLosses2021-06-012022-05-3101604582core:RetainedEarningsAccumulatedLosses2022-06-012023-05-31016045822022-05-3101604582core:LandBuildingscore:LeasedAssetsHeldAsLessee2023-05-3101604582core:PlantMachinery2023-05-3101604582core:FurnitureFittings2023-05-3101604582core:MotorVehicles2023-05-3101604582core:LandBuildingscore:LeasedAssetsHeldAsLessee2022-05-3101604582core:PlantMachinery2022-05-3101604582core:FurnitureFittings2022-05-3101604582core:MotorVehicles2022-05-3101604582core:CurrentFinancialInstrumentscore:WithinOneYear2023-05-3101604582core:CurrentFinancialInstrumentscore:WithinOneYear2022-05-3101604582core:CurrentFinancialInstruments2023-05-3101604582core:CurrentFinancialInstruments2022-05-3101604582core:ShareCapital2023-05-3101604582core:ShareCapital2022-05-3101604582core:CapitalRedemptionReserve2023-05-3101604582core:CapitalRedemptionReserve2022-05-3101604582core:RetainedEarningsAccumulatedLosses2023-05-3101604582core:RetainedEarningsAccumulatedLosses2022-05-3101604582core:ShareCapital2021-05-3101604582core:RevaluationReserve2021-05-3101604582core:CapitalRedemptionReserve2021-05-3101604582core:RetainedEarningsAccumulatedLosses2021-05-3101604582core:RevaluationReserve2022-05-3101604582core:RevaluationReserve2023-05-3101604582core:RetainedEarningsAccumulatedLosses2022-05-310160458212022-06-012023-05-310160458212021-06-012022-05-31016045822022-05-31016045822021-05-3101604582core:WithinOneYear2023-05-3101604582core:WithinOneYear2022-05-3101604582core:LandBuildingscore:LongLeaseholdAssets2022-06-012023-05-3101604582core:PlantMachinery2022-06-012023-05-3101604582core:FurnitureFittings2022-06-012023-05-3101604582core:MotorVehicles2022-06-012023-05-3101604582core:UKTax2022-06-012023-05-3101604582core:UKTax2021-06-012022-05-310160458222022-06-012023-05-310160458222021-06-012022-05-310160458232022-06-012023-05-310160458232021-06-012022-05-310160458242022-06-012023-05-310160458242021-06-012022-05-310160458252022-06-012023-05-310160458252021-06-012022-05-3101604582core:LandBuildingscore:LeasedAssetsHeldAsLessee2022-05-3101604582core:PlantMachinery2022-05-3101604582core:FurnitureFittings2022-05-3101604582core:MotorVehicles2022-05-3101604582core:LandBuildingscore:LeasedAssetsHeldAsLessee2022-06-012023-05-3101604582core:BetweenTwoFiveYears2023-05-3101604582core:BetweenTwoFiveYears2022-05-3101604582core:MoreThanFiveYears2023-05-3101604582core:MoreThanFiveYears2022-05-3101604582bus:PrivateLimitedCompanyLtd2022-06-012023-05-3101604582bus:FRS1022022-06-012023-05-3101604582bus:Audited2022-06-012023-05-3101604582bus:FullAccounts2022-06-012023-05-31xbrli:purexbrli:sharesiso4217:GBP