Future Garments Limited - Limited company accounts 20.1

REGISTERED NUMBER: 02690536 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 29 MAY 2020

FOR

FUTURE GARMENTS LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

7

Income Statement

9

Other Comprehensive Income

10

Balance Sheet

11

Statement of Changes in Equity

12

Cash Flow Statement

13

Notes to the Cash Flow Statement

14

Notes to the Financial Statements

15

DIRECTORS:

K S Palak

H S Palak

SECRETARY:

Mr. K S Palak

REGISTERED OFFICE:

Aqua House, Buttress Way

Smethwick

Warley

West Midlands

B66 3DL

REGISTERED NUMBER:

02690536 (England and Wales)

BANKERS:

Handelsbanken

35 Newhall Street

Birmingham

West Midlands

B3 3PU

The directors present their strategic report for the year ended 29 May 2020.

REVIEW OF BUSINESS

The directors have pleasure in presenting their report and the financial statements of the company Future Garments Limited, registration number 02690536 (England and Wales) for the year ended 29 May 2020.

The business review sets the performance for the year ended 29 May 2020 and of future developments.

The Companies Act requires the company to set out in this annual report a fair review of the business of the company during the year ended 29 May 2020, including an analysis of the position of the company at the end of the period and an analysis of the company's performance.

This has been a good year for the company, with increased levels of turnover, despite the continuing uncertainty around Brexit and the value of pound deteriorating along with the global pandemic COVID-19 and the national lockdowns imposed in the last quarter of the financial year. This, in part, is attributed to the company widening its product range from previous years. Furthermore, through a separate trading subsidiary, the group diversified its business into welding related safety products. The venture produced a modest return, which the directors hope will continue into the future.

Despite the occurrence of a cyber-attack on the company resulting in some disruption and data loss for few days, the company continued with good controls and managed to recover some, if not all, data. The sales growth in this year is over 25%, following on from 6% in the previous reporting period with the healthy increased gross profit margins of 30%. The company has also realigned its pricing to reflect the exchange rate conditions. Despite more competition in the market, the client retention rate has not been affected and the company has made a strong profit. The liquidity rate of the company has been stable with less borrowings this year as compared to last year.

The directors have decided to pass a modest return to shareholders by way of a dividend.

By taking good care as we undertake our business in the present we will ensure the long-term sustainability of our business in the future. At the heart of our operation we consider carefully how we interact with the world around us, work hard to minimise our impact and strive to make a positive contribution, taking on board the views of all of our key stakeholders. Corporate Responsibility is a specific business discipline that takes a proactive approach to forward thinking management. It recognises that business decisions have to consider social and environmental factors alongside economic ones. We care about where our garments and material come from, how it is produced, the people who make it and how it is moved & sold.

With the recent economic and political uncertainty due to the global pandemic COVID-19 and the Brexit, we at Future Garments Limited are trying our best to keep our business running as smoothly as possible by getting majority of our staff to work from home to keep social distancing in place. We also have put into place staggered work day patterns where we have employees working from home a few days and at work. Daily temperature checks and provision of appropriate sanitizing facilities is the key point at the moment to ensure our staff feel safe and protected. Also, as a company we have taken the decision to conduct all external meetings on social media platforms such as Microsoft Teams and Zoom. Might I add that this has only diversified our thought process and allowed more flexibility with staff and client base making them feel more valued and in turn productive. In short, we have adapted to the situation and continue to operate as normal. During the pandemic all material required by staff in terms of what makes them comfortable and efficient has been provided to them such as laptops, and use of company mobile phones.

The global lockdown, which had a big effect on the countries China and India and with the majority of our suppliers being based in those countries, may have an impact on our business, but we are trying to mitigate that risk as much as possible by using the stock we already have in warehouses. Also, our procurement department have worked closely with our Sales representatives to curb the lead times on supply of products and ensuring that we have good stock levels to meet customer demand.

We are an equal opportunities employer, committed to giving fair and equal treatment to all employees and job applicants in terms of recruitment, pay conditions, promotions, training and all employment matters regardless of their race, sex, ethnic background or religious beliefs, sexual orientation or disabilities. An equal opportunities policy is in force which aims to ensure that all employees are selected, trained, compensated, promoted and transferred solely on the strength of their ability, skills, qualifications and merit. We also believe that all employees have a right to work in an environment free from discrimination and bullying.

ON BEHALF OF THE BOARD:

K S Palak - Director

25 May 2021

The directors present their report with the financial statements of the company for the year ended 29 May 2020.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of Manufacture of workwear

DIVIDENDS

No interim dividend was paid during the year. The directors recommend a final dividend of 2 per share.

The total distribution of dividends for the year ended 29 May 2020 will be £ 25,000 .

EVENTS SINCE THE END OF THE YEAR

Information relating to events since the end of the year is given in the notes to the financial statements.

DIRECTORS

The directors' who also served the parent company, had the following interests in the parent company Aqua Holdings Limited:

£1 Ordinary Shares 29/5/19

£1 Ordinary Shares30/05/18

Mr K S Palak

6,250

6,250

Mr H S Palak

3,125

3,125

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Thapers Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

K S Palak - Director

25 May 2021

Opinion

We have audited the financial statements of Future Garments Limited (the 'company') for the year ended 29 May 2020 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 29 May 2020 and of its profit 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.

Basis for qualified opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where 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 directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page five, 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 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.

Auditors' 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 a Report of the Auditors 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 for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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 a Report of the Auditors 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.

Andeep Mangal F.C.A. (Senior Statutory Auditor)

for and on behalf of Thapers Limited

Chartered Accountants

Harpal House

14 Holyhead Road

Handsworth

Birmingham

West Midlands

B21 0LT

25 May 2021

TURNOVER

12,847,022

10,211,891

Cost of sales

8,985,286

7,450,343

GROSS PROFIT

3,861,736

2,761,548

Administrative expenses

2,661,695

2,040,824

1,200,041

720,724

Other operating income

181,822

-

OPERATING PROFIT

4

1,381,863

720,724

Profit/loss on sale of tang fa

5

-

4,156

1,381,863

716,568

Interest payable and similar expenses

6

6,277

5,195

PROFIT BEFORE TAXATION

1,375,586

711,373

Tax on profit

7

263,928

157,799

PROFIT FOR THE FINANCIAL YEAR

1,111,658

553,574

PROFIT FOR THE YEAR

1,111,658

553,574

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,111,658

553,574

FIXED ASSETS

Tangible assets

9

68,973

80,735

CURRENT ASSETS

Stocks

10

1,643,842

1,742,891

Debtors

11

6,252,201

5,382,143

Cash at bank and in hand

1,923,662

1,699,639

9,819,705

8,824,673

CREDITORS

Amounts falling due within one year

12

2,014,159

2,055,712

NET CURRENT ASSETS

7,805,546

6,768,961

TOTAL ASSETS LESS CURRENT LIABILITIES

7,874,519

6,849,696

CREDITORS

Amounts falling due after more than one year

13

(150,000

)

(210,000

)

PROVISIONS FOR LIABILITIES

16

-

(1,835

)

NET ASSETS

7,724,519

6,637,861

CAPITAL AND RESERVES

Called up share capital

17

12,500

12,500

Retained earnings

18

7,712,019

6,625,361

SHAREHOLDERS' FUNDS

7,724,519

6,637,861

The financial statements were approved by the Board of Directors and authorised for issue on 25 May 2021 and were signed on its behalf by:

K S Palak - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 31 May 2018

12,500

6,096,787

6,109,287

Changes in equity

Dividends

-

(25,000

)

(25,000

)

Total comprehensive income

-

553,574

553,574

Balance at 29 May 2019

12,500

6,625,361

6,637,861

Changes in equity

Dividends

-

(25,000

)

(25,000

)

Total comprehensive income

-

1,111,658

1,111,658

Balance at 29 May 2020

12,500

7,712,019

7,724,519

Cash flows from operating activities

Cash generated from operations

1

400,309

(1,140,220

)

Interest paid

(6,277

)

(5,195

)

Tax paid

(82,587

)

(113,634

)

Net cash from operating activities

311,445

(1,259,049

)

Cash flows from investing activities

Purchase of tangible fixed assets

(2,422

)

(16,900

)

Sale of tangible fixed assets

-

4,456

Net cash from investing activities

(2,422

)

(12,444

)

Cash flows from financing activities

Loan repayments in year

(60,000

)

(60,000

)

Equity dividends paid

(25,000

)

(25,000

)

Net cash from financing activities

(85,000

)

(85,000

)

Increase/(decrease) in cash and cash equivalents

224,023

(1,356,493

)

Cash and cash equivalents at beginning of year

2

1,699,639

3,056,132

Cash and cash equivalents at end of year

2

1,923,662

1,699,639

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

PERIOD

31.5.18

YEAR ENDED

TO

29.5.20

29.5.19

£

£

Profit before taxation

1,375,586

711,373

Depreciation charges

14,183

17,322

Finance costs

6,277

5,195

1,396,046

733,890

Decrease in stocks

99,049

55,787

Increase in trade and other debtors

(870,058

)

(2,171,829

)

(Decrease)/increase in trade and other creditors

(224,728

)

241,932

Cash generated from operations

400,309

(1,140,220

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 29 May 2020

29.5.20

30.5.19

£

£

Cash and cash equivalents

1,923,662

1,699,639

Period ended 29 May 2019

29.5.19

31.5.18

£

£

Cash and cash equivalents

1,699,639

3,056,132

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 30.5.19

Cash flow

At 29.5.20

£

£

£

Net cash

Cash at bank and in hand

1,699,639

224,023

1,923,662

1,699,639

224,023

1,923,662

Debt

Debts falling due within 1 year

(60,000

)

-

(60,000

)

Debts falling due after 1 year

(210,000

)

60,000

(150,000

)

(270,000

)

60,000

(210,000

)

Total

1,429,639

284,023

1,713,662

1.	STATUTORY INFORMATION

Future Garments Limited is a private company, limited by shares, registered in England and Wales. The company's registered number is 02690536 (England & Wales) and registered office address is Aqua House, Buttress Way, Smethwick, Warley, West Midlands, B66 3DL.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Improvements to property

-

2% on cost

Plant and machinery

-

15% on cost

Fixtures and fittings

-

50% on cost, 33% on cost and 15% on cost

Motor vehicles

-

25% on cost

Stock

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

3.	EMPLOYEES AND DIRECTORS

PERIOD

31.5.18

YEAR ENDED

TO

29.5.20

29.5.19

£

£

Wages and salaries

1,060,312

924,791

Social security costs

79,566

66,203

Other pension costs

14,004

14,242

1,153,882

1,005,236

The average number of employees during the year was as follows:

PERIOD

31.5.18

YEAR ENDED

TO

29.5.20

29.5.19

Accounts & Admin

7

7

Sales & Marketing

10

10

Warehouse

25

25

Purchasing

1

1

Management

3

3

46

46

PERIOD

31.5.18

YEAR ENDED

TO

29.5.20

29.5.19

£

£

Directors' remuneration

24,000

24,000

4.	OPERATING PROFIT

The operating profit is stated after charging:

PERIOD

31.5.18

YEAR ENDED

TO

29.5.20

29.5.19

£

£

Depreciation - owned assets

14,184

17,322

Auditors' remuneration

8,180

7,000

Depreciation of assets held under hire purchase agreements

2,651

4,500

Net loss/(profit) on foreign currency translation

(33,452

)

304,459

5.	EXCEPTIONAL ITEMS

PERIOD

31.5.18

YEAR ENDED

TO

29.5.20

29.5.19

£

£

Profit/loss on sale of tang fa

-

(4,156

)

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

PERIOD

31.5.18

YEAR ENDED

TO

29.5.20

29.5.19

£

£

Bank loan interest

6,277

5,195

7.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

PERIOD

31.5.18

YEAR ENDED

TO

29.5.20

29.5.19

£

£

Current tax:

UK corporation tax

263,928

157,799

Tax on profit

263,928

157,799

8.

DIVIDENDS

PERIOD

31.5.18

YEAR ENDED

TO

29.5.20

29.5.19

£

£

Ordinary Shares shares of 1 each

Final

25,000

25,000

9.	TANGIBLE FIXED ASSETS

Improvements

Fixtures

to

Plant and

and

Motor

property

machinery

fittings

vehicles

Totals

£

£

£

£

£

COST

At 30 May 2019

67,521

310,242

121,489

84,499

583,751

Additions

-

-

2,422

-

2,422

At 29 May 2020

67,521

310,242

123,911

84,499

586,173

DEPRECIATION

At 30 May 2019

15,164

307,289

121,489

59,074

503,016

Charge for year

1,351

1,426

807

10,600

14,184

At 29 May 2020

16,515

308,715

122,296

69,674

517,200

NET BOOK VALUE

At 29 May 2020

51,006

1,527

1,615

14,825

68,973

At 29 May 2019

52,357

2,953

-

25,425

80,735

Fixed assets with a net book value of £NIL (2019: £NIL) are on hire purchase.

10.

STOCKS

29/5/20

29/5/19

£

£

Finished Goods

1,643,842

1,742,891

11.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

29/5/20

29/5/19

£

£

Trade debtors

1,711,434

1,606,197

Other debtors

4,449,470

3,775,946

VAT

91,297

-

6,252,201

5,382,143

12.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

29/5/20

29/5/19

£

£

Bank loans and overdrafts (see note 14)

60,000

60,000

Trade creditors

1,348,922

784,022

Corporation tax payable

422,837

239,662

Social security and other taxes

20,148

36,328

VAT

-

12,607

Other creditors

162,252

919,220

Associate companies

-

3,873

2,014,159

2,055,712