During the period there was decrease in sales and associated gross profit. The company made a net profit of £99,210 (2023: £290,085). At the year end the current liabilities exceeded its current assets by £270,227 (2023: £370,083).
The directors recognise the importance of improving profitability and liquidity.The company is actively looking for new customers and projects with a view to increasing sales and improve profitability. The directors of Misnak International (UK) Limited have prepared prudent forecast which give a reasonable expectation that the company has sufficient resources to improve it's liquidity and operational existence for the foreseeable future. The directors have received a confirmation from the parent company Misnak International DWC LLC that it will provide all the necessary financial support to the company for a period of 12 months from the date of approval of these financial statements. Enquiries made by the directors indicate that the parent company has the ability to provide such ongoing support. As with any company placing reliance on other parent entity for financial support, the directors acknowledge that there can be no certainty that this support will continue although, at the date of approval of these financial statements, they have no reason to believe that it will not do so.
In the year ended 31 December 2018 the company had entered into a dispute with a customer. The case was decided in favour of the company in year ended 31 December 2019. The amount due from the customer is £69,397. As a result of the legal case the company was given an option to exercise its rights of lien in respect of the indebtness.
In March 2020 the customer filed a new civil suit disputing the original judgement and restraining Misnak International UK) Limited from exercising a contractual lien. The new civil suit was dismissed by the Court. Following the dismissal of the case the customer has further sued the company (see note 7). An application to challenge jurisdiction of the suit has been made by the company. Ruling was delivered whereby the court declined to dismiss the suit and held that it had jurisdiction. An appeal against the court ruling has been filed by the company. The company is awaiting direction from the court on the hearing of the appeal. The outcome of the case is uncertain and as a result no provision has been made by the company in the accounts. The directors are confident that the company will be successful in the legal dispute. The directors are confident that the company will recover the outstanding balance.
The directors have carefully considered these risks including an assessment on future trading projection for a period of at least 12 months from the date of signing the financial statements, and the extent to which they might affect the preparation of the financial statements on a going concern basis.
Therefore, after making relevant enquiries, the directors have reasonable expectation that the company has adequate resources to continue in operation for the foreseeable future. Thus the directors have continued to adopt the going concern basis of accounting in preparing these financial statements.