Company registration number 3228364 (England and Wales)
PENLON LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
PENLON LIMITED
COMPANY INFORMATION
Directors
L Moss
T Xiao
J Liu
X Gao
Y Zhong
Company number
3228364
Registered office
Abingdon Science Park
Barton Lane
Abingdon
Oxfordshire
OX14 3NB
Auditor
Critchleys Audit LLP
First Floor, Park Central
40-41 Park End Street
Oxford
OX1 1JD
PENLON LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 9
Profit and loss account
10
Statement of comprehensive income
11
Balance sheet
12
Statement of changes in equity
13
Notes to the financial statements
14 - 26
PENLON LIMITED
STRATEGIC REPORT
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
- 1 -

The directors present the strategic report for the 9 month period ended 31 December 2023.

Review of the business

The directors intend to present a balanced and comprehensive review of the development and performance of the business during the year and its position at year end. The review is consistent with the size and non-complex nature of the business and is written in the context of the risks and uncertainties we face.

 

The Company is a UK-based medical device brand with 80 years of experience, well recognised in the anaesthesia equipment sector. Principally engaged in the development, manufacture, distribution, installation and maintenance of anaesthesia medical devices, vaporisers, and related products such as Suction Oxygen Therapy (SOT) and Laryngoscopes to the global healthcare industry. Penlon has a global presence through their network of 100+ loyal distributors across 90+ countries and are known for their high-quality products in most of these regions. We are Market Leader in vaporisers with strong relationships with pharma majors and preferred partner of multiple OEM.

 

The company continuously works to improve the distributor network to have more penetration on the market since this is the key growth factor for Penlon export business. For UK market, we have introduced new product line, endoscopy, which is completely new for Penlon. We are confident that this new business will bring good revenue and profit to Penlon for the mid to long term. Heavy backlog of surgery case in the UK does help to support this business.

 

To improve the company’s efficiency, we decided to move to a new ERP system SAP after the old system Sage served the company more than 20 years. It is a big investment and change for the company, and it is a challenging transition, but it will help Penlon to achieve more success such as sustainability goals.

 

Cost is always a challenge as a UK manufacturer, and we have carried out several actions to lower the cost. This will help Penlon in the following years.

 

To align with the parent company, Penlon has changed the financial year to calendar year. Therefore, 2023 will be only 9 months from 1st April to 31st December.

 

Principal risks and uncertainties

The market for the Company’s medical devices remains highly competitive. The Company seeks to manage the risk of losing market share by providing high quality products at competitive prices. In addition, the company provides after sales services to its customers and encourages its distributor network to provide similar after sale services to its international customer base where a hub is not present. Additionally, management is continually exploring the cost down solution without affecting the product quality to remain competitive.

 

With the global geopolitics risk and concern and local manufacturing increasing, more and more companies are planning production assembly in cheaper cost base countries with support from local government incentives. This will be the potential challenge for us.

 

The Company’s credit risk is primarily attributable to its trade debtors. Credit risk is managed by undertaking credit checks on new customers and by monitoring the aggregate amount and exposure to any one customer depending on their credit rating.

 

The Company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs. Short term flexibility is achieved through support from the parent Company if required.

 

Key performance indicators

The Directors consider that the key financial performance indicators of the Company are those that communicate the financial performance and strength of the Company as a whole, these being turnover and profit margins.

 

In the year ended 31 December 2023 (“CY2023”), the company recorded turnover of £15.176 million compared with £18.180 million for the 12 months ended 31 March 2023 (“FY2023”).

 

The Company achieved a gross margin of 37.2% in CY2023 versus 22.0% in FY2023.

PENLON LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
- 2 -

On behalf of the board

X Gao
Director
18 November 2024
PENLON LIMITED
DIRECTORS' REPORT
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
- 3 -

The directors present their annual report and financial statements for the 9 month period ended 31 December 2023.

Principal activities

The principal activity of the company continued to be that of manufacturing medical instruments and supplies.

Results and dividends

The results for the 9 month period are set out on page 10.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

No preference dividends were paid.

Directors

The directors who held office during the 9 month period and up to the date of signature of the financial statements were as follows:

L Moss
P Worrallo
(Resigned 30 June 2023)
T Xiao
J Liu
X Gao
Y Zhong
Future developments

As set out in our Strategic Report, management have a well-defined growth strategy which is underpinned by innovation. They are looking to strength the new endoscopy business and fasten the R&D of next generation anaesthesia machines to launch on the market. Besides, they are also exploring the possibilities to add more OT product lines to UK and Global market to increase revenue further.

 

Continued investment is to be made around cost optimisation, especially to increase the global sourcing approach based on the business volume growth.

 

Additionally, the Company has continued to invest in research and development activities to strengthen the Company’s core portfolio of products. Penlon is working closely with Medcaptain R&D team to develop next generation product and optimize current product range.

 

With the improved product portfolio, continuous cost optimisation, and increase in geographical penetration, the management have high expectations for growth and profitability over the coming few years.

 

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.

PENLON LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
- 4 -
On behalf of the board
X Gao
Director
18 November 2024
PENLON LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
- 5 -

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:

 

 

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.

PENLON LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PENLON LIMITED
- 6 -

Qualified opinion on financial statements

We have audited the financial statements of Penlon Limited (the 'company') for the 9 month period ended 31 December 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity 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, except for the effects of the matter described in the basis for qualified opinion section of our report, the financial statements:

Basis for qualified opinion

The company's year end stock balance is a material component of the financial statements, representing £6.1m as at 31 December 2023. We were appointed as auditors of the company in May 2024, after the company's period end, and were therefore unable to attend the physical stock count conducted as at 31 December 2023 or observe related stock procedures. Since stock is a significant component of the financial statements, we were unable to obtain sufficient appropriate audit evidence regarding the existence and valuation of stock as at 31 December 2023 by alternative audit procedures. Consequently, we were unable to determine whether any adjustments might have been necessary to stock, cost of sales and the related disclosures in the financial statements. In addition, were any adjustments to the stock balance to be required, the strategic report would also need to be amended.

 

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 qualified 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.

PENLON LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PENLON LIMITED (CONTINUED)
- 7 -

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 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.

 

 

As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning the stock quantity and valuation as at 31 December 2023. We have concluded that where the other information refers to the stock balance ore related items such as cost of sales, or operating profit it may be materially misstated for the same reasons.

Opinions on other matters prescribed by the Companies Act 2006

Except for the possible effects of the matter described in the basis for qualified opinion section of our report, in our opinion, based on the work undertaken in the course of our audit:

Matters on which we are required to report by exception

In respect solely of the limitation on our work relating to stock, described above:

 

Except for the matter described in the basis for qualified opinion section of our report, 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:

 

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.

PENLON LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PENLON LIMITED (CONTINUED)
- 8 -
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.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

To address the risk of fraud through management bias and override of controls, we:

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

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.

PENLON LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PENLON LIMITED (CONTINUED)
- 9 -

We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

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.

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.

Katherine Wilkes
Senior Statutory Auditor
For and on behalf of Critchleys Audit LLP
25 November 2024
Chartered Accountants
Statutory Auditor
First Floor, Park Central
40-41 Park End Street
Oxford
OX1 1JD
PENLON LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
- 10 -
9 months
Year
ended
ended
31 December
31 March
2023
2023
Notes
£
£
Turnover
3
15,176,271
18,180,801
Cost of sales
(9,533,831)
(14,177,069)
Gross profit
5,642,440
4,003,732
Distribution costs
(1,796,882)
(2,691,753)
Administrative expenses
(2,449,700)
(4,315,248)
Other operating income
54,527
-
0
Operating profit/(loss)
4
1,450,385
(3,003,269)
Interest receivable and similar income
15,860
-
0
Interest payable and similar expenses
7
(40,093)
(23,188)
Profit/(loss) before taxation
1,426,152
(3,026,457)
Tax on profit/(loss)
8
199,846
21,502
Profit/(loss) for the financial 9 month period
1,625,998
(3,004,955)

The profit and loss account has been prepared on the basis that all operations are continuing operations.

PENLON LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
- 11 -
9 months
Year
ended
ended
31 December
31 March
2023
2023
£
£
Profit/(loss) for the 9 month period
1,625,998
(3,004,955)
Other comprehensive income
-
-
Total comprehensive income for the 9 month period
1,625,998
(3,004,955)
PENLON LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 12 -
31 December 2023
31 March 2023
Notes
£
£
£
£
Fixed assets
Intangible assets
10
530,732
639,207
Tangible assets
11
618,861
675,452
1,149,593
1,314,659
Current assets
Stocks
12
6,176,232
3,796,732
Debtors
13
6,624,871
6,181,174
Cash at bank and in hand
1,036,318
1,634,020
13,837,421
11,611,926
Creditors: amounts falling due within one year
14
(8,416,126)
(7,981,695)
Net current assets
5,421,295
3,630,231
Net assets
6,570,888
4,944,890
Capital and reserves
Called up share capital
17
12,265,340
12,265,340
Share premium account
4,821,922
4,821,922
Profit and loss reserves
(10,516,374)
(12,142,372)
Total equity
6,570,888
4,944,890

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 18 November 2024 and are signed on its behalf by:
X Gao
Director
Company registration number 3228364 (England and Wales)
PENLON LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
- 13 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 April 2022
12,265,340
4,821,922
(9,137,417)
7,949,845
Year ended 31 March 2023:
Loss and total comprehensive income
-
-
(3,004,955)
(3,004,955)
Balance at 31 March 2023
12,265,340
4,821,922
(12,142,372)
4,944,890
Period ended 31 December 2023:
Profit and total comprehensive income
-
-
1,625,998
1,625,998
Balance at 31 December 2023
12,265,340
4,821,922
(10,516,374)
6,570,888
PENLON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
- 14 -
1
Accounting policies
Company information

Penlon Limited is a private company limited by shares incorporated in England and Wales. The registered office is Abingdon Science Park, Barton Lane, Abingdon, Oxfordshire, OX14 3NB.

1.1
Reporting period

The reporting period is a short 9 month period from 1 April 2023 to 31 December 2023. Therefore comparative amounts presented in the financial statements (including the related notes) are not entirely comparable.

1.2
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. The principal accounting policies adopted are set out below.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

 

 

The financial statements of the company are consolidated in the financial statements of Medcaptain UK Limited as at 31 December 2023. These consolidated financial statements are available from its registered office, 1-5 Barton Lane, Abingdon Science Park, Abingdon, Oxfordshire, United Kingdom, OX14 3NB.

1.3
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.

1.4
Turnover

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

PENLON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -

Sale of goods

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:

 

1.5
Research and development expenditure

In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight-line basis over their useful economic lives, which range from 3 to 5 years.

 

If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.

1.6
Intangible fixed assets other than goodwill

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Development costs
3 years
1.7
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold land and buildings
10% straight line
Plant and equipment
10% - 25% straight line
Fixtures and fittings
10% - 25% straight line

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

 

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.

1.8
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). 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.

PENLON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -

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.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.9
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

 

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

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.

1.10
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.

1.11
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. Financial assets classified as receivable within one year are not amortised.

PENLON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
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.

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 and loans from fellow group companies are initially recognised at transaction price. Financial liabilities classified as payable within one year are not amortised.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

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.

PENLON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.12
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.

1.13
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. 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.

1.14
Retirement benefits

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

 

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

1.15
Leases

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

PENLON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
- 19 -
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.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Provisions for stock

The Company makes provisions for stock based upon the volume of stock and the expected use of that stock., Any volume of stock that is not expected to be consumed within 52 weeks is provided for at 100% of costs. Stock that is expected to be consumed after 26 weeks is provided for at 50% unless reasonable justification to override.

Provisions for trade debtors

The Company makes provisions for trade debtors where the management predict that it is more likely than not that a debt is uncollectable. These debts are provided in full.

Warranty

A provision has been recognised for expected warranty claims on products sold during the last two years. It is expected that most of these costs will be incurred in the next financial year, however, this provision is revised annually based on warranty costs incurred.

3
Turnover and other revenue
2023
2023
£
£
Turnover analysed by class of business
Sale of goods
15,176,271
18,180,801
2023
2023
£
£
Turnover analysed by geographical market
United Kingdom
1,250,677
1,536,220
Rest of Europe
2,530,108
4,411,560
Rest of the world
11,395,486
12,233,021
15,176,271
18,180,801
2023
2023
£
£
Other revenue
Interest income
15,860
-
PENLON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
- 20 -
4
Operating profit/(loss)
2023
2023
Operating profit/(loss) for the period is stated after charging/(crediting):
£
£
Exchange gains
(173,881)
(261,102)
Fees payable to the company's auditor for the audit of the company's financial statements
38,000
84,873
Depreciation of owned tangible fixed assets
182,941
141,660
Amortisation of intangible assets
108,475
163,426
Impairment of intangible assets
-
0
157,882
Operating lease charges
396,521
494,744
5
Employees

The average monthly number of persons (including directors) employed by the company during the 9 month period was:

2023
2023
Number
Number
Production
78
69
Selling and Distribution
21
29
Administration
32
22
Total
131
120

Their aggregate remuneration comprised:

2023
2023
£
£
Wages and salaries
3,888,819
4,766,064
Social security costs
374,570
351,282
Pension costs
151,608
211,185
4,414,997
5,328,531
6
Directors' remuneration
2023
2023
£
£
Remuneration for qualifying services
293,552
328,871
Company pension contributions to defined contribution schemes
12,188
15,106
305,740
343,977

The number of directors for whom retirement benefits are accruing under defined benefit schemes amounted to 2 (2023 - 2).

PENLON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
6
Directors' remuneration
(Continued)
- 21 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2023
£
£
Remuneration for qualifying services
112,370
115,220
Company pension contributions to defined contribution schemes
5,267
6,848
7
Interest payable and similar expenses
2023
2023
£
£
Other interest
40,093
23,188
8
Taxation
2023
2023
£
£
Current tax
Adjustments in respect of prior periods
(161,322)
(21,502)
Deferred tax
Origination and reversal of timing differences
(38,524)
-
0
Total tax credit
(199,846)
(21,502)
PENLON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
8
Taxation
(Continued)
- 22 -

The actual credit for the 9 month period can be reconciled to the expected charge/(credit) for the 9 month period based on the profit or loss and the standard rate of tax as follows:

2023
2023
£
£
Profit/(loss) before taxation
1,426,152
(3,026,457)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
356,538
(575,027)
Tax effect of expenses that are not deductible in determining taxable profit
52,456
219,061
Tax effect of income not taxable in determining taxable profit
(9,156)
-
0
Change in unrecognised deferred tax assets
-
0
474,937
Adjustments in respect of prior years
(161,322)
(21,502)
Group relief
20,571
-
0
Fixed asset differences
1,957
(5,557)
Other permanent differences
289
135
Deferred tax adjustments in respect of prior years
(461,179)
573
Remeasurement of deferred tax for changes in tax rates
-
0
(114,122)
Taxation credit for the period
(199,846)
(21,502)
9
Impairments

Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:

2023
2023
Notes
£
£
In respect of:
Intangible assets
10
-
0
157,882
Recognised in:
Administrative expenses
-
157,882
PENLON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
- 23 -
10
Intangible fixed assets
Development costs
£
Cost
At 1 April 2023
1,504,472
Disposals
(792,951)
At 31 December 2023
711,521
Amortisation and impairment
At 1 April 2023
865,265
Amortisation charged for the 9 month period
108,475
Disposals
(792,951)
At 31 December 2023
180,789
Carrying amount
At 31 December 2023
530,732
At 31 March 2023
639,207

More information on impairment movements in the 9 month period is given in note 9.

11
Tangible fixed assets
Leasehold land and buildings
Assets under construction
Plant and equipment
Fixtures and fittings
Total
£
£
£
£
£
Cost
At 1 April 2023
596,024
35,812
2,055,968
746,933
3,434,737
Additions
1
114,262
53,495
4,397
172,155
Disposals
(490,627)
(3,234)
(1,494,535)
(670,072)
(2,658,468)
At 31 December 2023
105,398
146,840
614,928
81,258
948,424
Depreciation and impairment
At 1 April 2023
469,425
-
0
1,645,515
644,345
2,759,285
Depreciation charged in the 9 month period
55,313
-
0
56,531
71,097
182,941
Eliminated in respect of disposals
(482,693)
-
0
(1,459,878)
(670,092)
(2,612,663)
At 31 December 2023
42,045
-
0
242,168
45,350
329,563
Carrying amount
At 31 December 2023
63,353
146,840
372,760
35,908
618,861
At 31 March 2023
126,599
35,812
410,453
102,588
675,452
PENLON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
- 24 -
12
Stocks
2023
2023
£
£
Raw materials and consumables
1,506,085
1,769,854
Work in progress
6,636
600,603
Finished goods and goods for resale
4,663,511
1,426,275
6,176,232
3,796,732
13
Debtors
2023
2023
Amounts falling due within one year:
£
£
Trade debtors
3,246,689
3,723,370
Amounts owed by group undertakings
1,169,282
49,818
Other debtors
209,283
450,247
Prepayments and accrued income
379,246
375,892
5,004,500
4,599,327
2023
2023
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 15)
1,620,371
1,581,847
Total debtors
6,624,871
6,181,174
14
Creditors: amounts falling due within one year
2023
2023
£
£
Trade creditors
2,320,665
2,956,588
Amounts owed to group undertakings
4,533,312
3,442,811
Taxation and social security
297,803
104,577
Other creditors
185,450
838,551
Accruals and deferred income
1,078,896
639,168
8,416,126
7,981,695
PENLON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
- 25 -
15
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Assets
Assets
2023
2023
Balances:
£
£
Accelerated capital allowances
(128,246)
(161,609)
Tax losses
1,744,607
1,718,378
Short term timing differences
4,010
25,078
1,620,371
1,581,847
2023
Movements in the 9 month period:
£
Asset at 1 April 2023
(1,581,847)
Credit to profit or loss
(38,524)
Asset at 31 December 2023
(1,620,371)

The deferred tax asset set out above is expected to reverse within the next few years and relates to the utilisation of tax losses against future expected profits of the same period.

16
Retirement benefit schemes
2023
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
151,608
211,185

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.

Included in the balance sheet are unpaid pension contributions of £77,565 (31 March 2023: £58,192).

17
Share capital
2023
2023
2023
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Share A shares of £1 each
12,131,000
12,131,000
12,131,000
12,131,000
Ordinary Share B shares of £1 each
95,000
95,000
95,000
95,000
12,226,000
12,226,000
12,226,000
12,226,000
PENLON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE 9 MONTH PERIOD ENDED 31 DECEMBER 2023
17
Share capital
(Continued)
- 26 -
2023
2023
2023
2023
Preference share capital
Number
Number
£
£
Issued and fully paid
Preference shares of 1p each
3,934,000
3,934,000
39,340
39,340
Preference shares classified as equity
39,340
39,340
Total equity share capital
12,265,340
12,265,340

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

 

All shares rank pari-passu as per the Articles of Association.

 

The preference shares are non-redeemable and have no interest coupon attached to them.

18
Operating lease commitments
Lessee

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
2023
£
£
Within one year
552,182
448,974
Between two and five years
3,014,944
1,807,329
3,567,126
2,256,303

During the period £404,756 was recognised as an expense in the profit and loss account in respect of operating leases (31 March 2023: £447,028).

19
Ultimate controlling party

The ultimate parent undertaking and controlling party is Medcaptain Medical Technology Co., Ltd a company incorporated in China. The financial statements of the company are consolidated into the financial statements of the immediate parent undertaking, Medcaptain UK Limited, a company incorporated in the United Kingdom. The registered office is 1-5 Barton Lane, Abingdon Science Park, Abingdon, Oxfordshire, United Kingdom, OX14 3NB.

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