Mobus Fabrics Limited Company accounts

Mobus Fabrics Limited Company accounts

MOBUS FABRICS LIMITED - Company Information

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COMPANY REGISTRATION NUMBER: 02954897
Mobus Fabrics Limited
Financial Statements
30 September 2021
Mobus Fabrics Limited
Financial Statements
Year ended 30 September 2021
Contents
Pages
Officers and professional advisers 1
Strategic report 2 to 3
Directors' report 4 to 5
Independent auditor's report to the members 6 to 9
Profit and loss account 10
Balance sheet 11
Statement of cash flows 12
Notes to the financial statements 13 to 24
Mobus Fabrics Limited
Officers and Professional Advisers
The board of directors
Mr M S Presley
Mr G D R McConnell
Mr L Paxman
Mr D R Barnes
Company secretary
Mr M S Presley
Registered office
Russell Way
Off Bradford Road
Brighouse
West Yorkshire
HD6 4LX
Auditor
Wheawill & Sudworth Limited
Chartered Accountants & statutory auditor
35 Westgate
Huddersfield
HD1 1PA
Bankers
HSBC Bank plc
33 Park Row
Leeds
LS1 1LD
Mobus Fabrics Limited
Strategic Report
Year ended 30 September 2021
The principal activity of the Company continued to be the design, manufacture and sale of fabrics for the upholstery market . Results, Performance and Developments during the year We are pleased to report another profitable year of operations. Turnover has increased 15.6% to £24m which is down to increased demand following the pandemic and increased activity in our core UK market. Gross profit was better than anticipated due to lower stock losses, higher priced clearance sales and improved efficiencies from our new facility. Due to longer lead times and supply chain pressure we have increase UK stocks to protect both Mobus and our partners. The £2m stock investment reported in the accounts underlines our ongoing investment in the future of Mobus. Principal risks and uncertainties The Directors consider that the key risks and principal uncertainties faced by the Company are: Raw material price volatility Exchange rate variances Supply chain disruption These risks are managed through monitoring of the appropriate markets, the use of forward contracts and currency hedges, maintaining close supplier relationships and multiple sourcing of key resources. Financial Instruments Due to the nature of the financial instruments used by the company there is no material exposure to price risk. The Company's approach to managing other risk applicable to the financial instruments concerned are shown below. In respect of bank balances the liquidity risk is managed by maintaining a balance between the continuity of funding and flexibility through the use of short term invoice finance and trade loan facilities. Trade debtors are managed in respect of credit and cash flow by policies concerning the credit offered to customers and the regular monitoring of amounts outstanding for both time and credit limits. Trade creditors liquidity risk is managed by ensuring sufficient funds are available to meet amounts due. Key Performance indicators Key performance indicators monitored by management include order in-take, gross margin, stock volumes and cash collection. Outlook Despite the uncertainty in the marketplace, on the backdrop of rising inflation and a changing market, Mobus remains confident we are on the right path to support our partners. We have invested heavily in new developments, launching 6 collections since the year-end and another 6 collections due to launch before the end of 2022. As part of the sustainable direction, we have launched our first recycled polyester collection with more sustainably designed fabrics in development. These coupled with the GreenFR® finish, Oeko-tex, ZDHC and GRS accreditation ensures Mobus is on track to improve our environmental credentials and support the sector in making the right choices.
This report was approved by the board of directors on 28 June 2022 and signed on behalf of the board by:
Mr G D R McConnell
Mr D R Barnes
Director
Director
Mobus Fabrics Limited
Directors' Report
Year ended 30 September 2021
The directors present their report and the financial statements of the company for the year ended 30 September 2021 .
Directors
The directors who served the company during the year were as follows:
Mr M S Presley
Mr G D R McConnell
Mr L Paxman
Mr D R Barnes
Mr I Bostock
(Resigned 28 May 2021)
Dividends
Particulars of recommended dividends are detailed in note 13 to the financial statements.
Disclosure of information in the strategic report
In accordance with Section 414C(11), Companies Act 2006, the following information required to be contained in this report is set out in the company's Strategic Report on page 2: principal activities, key risks and principal uncertainties, business review, future developments, and key performance indicators.
Directors' responsibilities statement
The directors are responsible for preparing the directors' report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and 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 judgments 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. Going Concern - Covid-19 assessment The directors have considered the impact of the Covid-19 pandemic on the business. Whilst acknowledging that its operations will continue to be affected in the year ending 30 September 2022, the directors believe they have put suitable measures in place to ensure that the company will continue to operate and develop its activities going forward. The directors therefore believe that the preparation of the financial statements on the going concern basis is appropriate. Auditor
Each of the persons who is a director at the date of approval of this report confirms that:
- so far as they are aware, there is no relevant audit information of which the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information.
This report was approved by the board of directors on 28 June 2022 and signed on behalf of the board by:
Mr G D R McConnell
Mr D R Barnes
Director
Director
Mobus Fabrics Limited
Independent Auditor's Report to the Members of Mobus Fabrics Limited
Year ended 30 September 2021
Opinion
We have audited the financial statements of Mobus Fabrics Limited (the 'company') for the year ended 30 September 2021 which comprise the profit and loss account, balance sheet, statement of cash flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In our opinion the financial statements: - give a true and fair view of the state of the company's affairs as at 30 September 2021 and of its profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; - have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the 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.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
- the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the 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 directors' remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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. 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: We gained an understanding of the legal and regulatory framework applicable to the Company, considered the risk of acts by the Directors which were contrary to applicable laws and regulations, including fraud. We made enquiries of the Directors to obtain further understanding of risks of non-compliance. We focused on laws and regulations that could give rise to a material misstatement in the financial statements. Our tests included, but were not limited to: - agreement of the financial statement disclosures to underlying supporting documentation; - enquiries of management regarding known or suspected instances of non-compliance with laws and regulations; - review of minutes of the Directors' Board meetings throughout the year; and - obtaining an understanding of the control environment in place to prevent and detect irregularities. Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. - Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Use of our report
This report is made solely to the company's members, as a body, in accordance with chapter 3 of part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
David Butterworth
(Senior Statutory Auditor)
For and on behalf of
Wheawill & Sudworth Limited
Chartered Accountants & statutory auditor
35 Westgate
Huddersfield
HD1 1PA
28 June 2022
Mobus Fabrics Limited
Profit and Loss Account
Year ended 30 September 2021
2021
2020
Note
£
£
Turnover
4
23,994,252
20,747,541
Cost of sales
( 19,613,721)
( 17,447,291)
--------------
--------------
Gross profit
4,380,531
3,300,250
Administrative expenses
( 2,546,499)
( 2,603,256)
Other operating income
5
8,000
130,078
------------
------------
Operating profit
6
1,842,032
827,072
Other interest receivable and similar income
10
–
3,809
Interest payable and similar expenses
11
( 109,184)
( 98,676)
------------
------------
Profit before taxation
1,732,848
732,205
Tax on profit
12
( 295,539)
( 109,379)
------------
------------
Profit for the financial year and total comprehensive income
1,437,309
622,826
------------
------------
Dividends paid and payable
13
( 389,088)
( 468,093)
Retained earnings at the start of the year
8,638,000
8,483,267
------------
------------
Retained earnings at the end of the year
9,686,221
8,638,000
------------
------------
All the activities of the company are from continuing operations.
Mobus Fabrics Limited
Balance Sheet
30 September 2021
2021
2020
Note
£
£
Fixed assets
Tangible assets
14
583,096
598,105
Investments
15
131,264
131,264
------------
------------
714,360
729,369
Current assets
Stocks
16
8,367,071
6,345,106
Debtors
17
9,588,193
9,008,076
Cash at bank and in hand
457,347
555,891
--------------
--------------
18,412,611
15,909,073
Creditors: amounts falling due within one year
18
9,305,646
7,883,033
--------------
--------------
Net current assets
9,106,965
8,026,040
------------
------------
Total assets less current liabilities
9,821,325
8,755,409
Creditors: amounts falling due after more than one year
19
58,000
66,000
Provisions
Taxation including deferred tax
20
76,104
50,409
------------
------------
Net assets
9,687,221
8,639,000
------------
------------
Capital and reserves
Called up share capital
24
750
750
Capital redemption reserve
25
250
250
Profit and loss account
25
9,686,221
8,638,000
------------
------------
Shareholders funds
9,687,221
8,639,000
------------
------------
These financial statements were approved by the board of directors and authorised for issue on 28 June 2022 , and are signed on behalf of the board by:
Mr G D R McConnell
Mr D R Barnes
Director
Director
Company registration number: 02954897
Mobus Fabrics Limited
Statement of Cash Flows
Year ended 30 September 2021
2021
2020
£
£
Cash flows from operating activities
Profit for the financial year
1,437,309
622,826
Adjustments for:
Depreciation of tangible assets
119,018
94,553
Government grant income
( 8,000)
( 130,078)
Other interest receivable and similar income
–
( 3,809)
Interest payable and similar expenses
109,184
98,676
Loss on disposal of tangible assets
–
128,424
Tax on profit
295,539
109,379
Changes in:
Stocks
( 2,021,965)
( 400,120)
Trade and other debtors
( 580,117)
( 281,832)
Trade and other creditors
566,076
308,040
------------
------------
Cash generated from operations
( 82,956)
546,059
Interest paid
( 109,184)
( 98,676)
Interest received
–
3,809
Tax paid
( 402,427)
( 55,846)
------------
------------
Net cash (used in)/from operating activities
( 594,567)
395,346
------------
------------
Cash flows from investing activities
Purchase of tangible assets
( 104,009)
( 557,209)
Proceeds from sale of tangible assets
–
5,000
------------
------------
Net cash used in investing activities
( 104,009)
( 552,209)
------------
------------
Cash flows from financing activities
Proceeds from borrowings
981,120
( 2,004)
Government grant income
8,000
130,078
Dividends paid
( 389,088)
( 468,093)
------------
------------
Net cash from/(used in) financing activities
600,032
( 340,019)
------------
------------
Net decrease in cash and cash equivalents
( 98,544)
( 496,882)
Cash and cash equivalents at beginning of year
555,891
1,052,773
------------
------------
Cash and cash equivalents at end of year
457,347
555,891
------------
------------
Mobus Fabrics Limited
Notes to the Financial Statements
Year ended 30 September 2021
1. General information
The company is a private company limited by shares, registered in England and Wales. The address of the registered office is Russell Way, Off Bradford Road, Brighouse, West Yorkshire, HD6 4LX.
2. Statement of compliance
These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.
3. Accounting policies
Basis of preparation
The financial statements have been prepared on the historical cost basis. , The financial statements are prepared in sterling, which is the functional currency of the entity and rounded to the nearest pound.
Consolidation
The entity has taken advantage of the exemption from preparing consolidated financial statements contained in Section 400 of the Companies Act 2006 on the basis that it is a subsidiary undertaking and its immediate parent undertaking is established under the law of an EEA State.
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Revenue recognition
Turnover is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of discounts and Value Added Tax. Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on despatch of the goods); the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably. Revenue from the rendering of services is measured by reference to the stage of completion of the service transaction at the end of the reporting period provided that the outcome can be reliably estimated. When the outcome cannot be reliably estimated, revenue is recognised only to the extent that it is probable the expenses recognised will be recovered.
Taxation
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Foreign currencies
Foreign currency transactions are initially recorded in the functional currency, by applying the spot exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date, with any gains or losses being taken to the profit and loss account.
Tangible assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. An increase in the carrying amount of an asset as a result of a revaluation, is recognised in other comprehensive income and accumulated in equity, except to the extent it reverses a revaluation decrease of the same asset previously recognised in profit or loss. A decrease in the carrying amount of an asset as a result of revaluation, is recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity in respect of that asset. Where a revaluation decrease exceeds the accumulated revaluation gains accumulated in equity in respect of that asset, the excess shall be recognised in profit or loss.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Leasehold improvements
-
Over the life of the lease
Plant & machinery
-
20% reducing balance
Fixtures & fittings
-
20% reducing balance
Motor vehicles
-
25% straight line
Investments
Fixed asset investments are initially recorded at cost, and subsequently stated at cost less any accumulated impairment losses.
Listed investments are measured at fair value with changes in fair value being recognised in profit or loss.
Investments in associates
Investments in associates accounted for in accordance with the cost model are recorded at cost less any accumulated impairment losses. Investments in associates accounted for in accordance with the fair value model are initially recorded at the transaction price. At each reporting date, the investments are measured at fair value, with changes in fair value recognised in other comprehensive income/profit or loss. Where it is impracticable to measure fair value reliably without undue cost or effort, the cost model will be adopted. Dividends and other distributions received from the investment are recognised as income without regard to whether the distributions are from accumulated profits of the associate arising before or after the date of acquisition.
Investments in joint ventures
Investments in jointly controlled entities accounted for in accordance with the cost model are recorded at cost less any accumulated impairment losses. Investments in jointly controlled entities accounted for in accordance with the fair value model are initially recorded at the transaction price. At each reporting date, the investments are measured at fair value, with changes in fair value recognised in other comprehensive income/profit or loss. Where it is impracticable to measure fair value reliably without undue cost or effort, the cost model will be adopted. Dividends and other distributions received from the investment are recognised as income without regard to whether the distributions are from accumulated profits of the joint venture arising before or after the date of acquisition.
Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets. For impairment testing of goodwill, the goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the company are assigned to those units .
Stocks
Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the stock to its present location and condition.
Government grants
Government grants are recognised at the fair value of the asset received or receivable. Grants are not recognised until there is reasonable assurance that the company will comply with the conditions attaching to them and the grants will be received. Government grants are recognised using the accrual model and the performance model. Under the accrual model, government grants relating to revenue are recognised on a systematic basis over the periods in which the company recognises the related costs for which the grant is intended to compensate. Grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs are recognised in income in the period in which it becomes receivable. Grants relating to assets are recognised in income on a systematic basis over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred income and not deducted from the carrying amount of the asset. Under the performance model, where the grant does not impose specified future performance-related conditions on the recipient, it is recognised in income when the grant proceeds are received or receivable. Where the grant does impose specified future performance-related conditions on the recipient, it is recognised in income only when the performance-related conditions have been met. Where grants received are prior to satisfying the revenue recognition criteria, they are recognised as a liability.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the balance sheet and the amount of the provision as an expense. Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in profit or loss unless the provision was originally recognised as part of the cost of an asset. When a provision is measured at the present value of the amount expected to be required to settle the obligation, the unwinding of the discount is recognised as a finance cost in profit or loss in the period it arises.
Financial instruments
A financial asset or a financial liability is recognised only when the company becomes a party to the contractual provisions of the instrument. Basic financial instruments are initially recognised at the transaction price, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Debt instruments are subsequently measured at amortised cost. Where investments in non-convertible preference shares and non-puttable ordinary shares or preference shares are publicly traded or their fair value can otherwise be measured reliably, the investment is subsequently measured at fair value with changes in fair value recognised in profit or loss. All other such investments are subsequently measured at cost less impairment. Other financial instruments, including derivatives, are initially recognised at fair value, unless payment for an asset is deferred beyond normal business terms or financed at a rate of interest that is not a market rate, in which case the asset is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Other financial instruments are subsequently measured at fair value, with any changes recognised in profit or loss, with the exception of hedging instruments in a designated hedging relationship.
Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss immediately. For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets are either assessed individually or grouped on the basis of similar credit risk characteristics. Any reversals of impairment are recognised in profit or loss immediately, to the extent that the reversal does not result in a carrying amount of the financial asset that exceeds what the carrying amount would have been had the impairment not previously been recognised.
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund. When contributions are not expected to be settled wholly within 12 months of the end of the reporting date in which the employees render the related service, the liability is measured on a discounted present value basis. The unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
4. Turnover
Turnover arises from:
2021
2020
£
£
UK
19,625,012
16,084,961
Europe
2,441,329
2,222,506
Asia
1,655,652
2,262,056
USA
272,259
178,018
--------------
--------------
23,994,252
20,747,541
--------------
--------------
The whole of the turnover is attributable to the principal activity of the company.
5. Other operating income
2021
2020
£
£
Government grant income
8,000
130,078
------------
------------
6. Operating profit
Operating profit or loss is stated after charging/crediting:
2021
2020
£
£
Depreciation of tangible assets
119,018
94,553
Loss on disposal of tangible assets
–
128,424
Impairment of trade debtors
5,403
44,613
Foreign exchange differences
( 49,388)
91,968
------------
------------
7. Auditor's remuneration
2021
2020
£
£
Fees payable for the audit of the financial statements
29,500
20,000
------------
------------
8. Staff costs
The average number of persons employed by the company during the year, including the directors, amounted to:
2021
2020
No.
No.
Distribution staff
22
17
Administrative staff
12
12
Management staff
4
5
------------
------------
38
34
------------
------------
The aggregate payroll costs incurred during the year, relating to the above, were:
2021
2020
£
£
Wages and salaries
1,022,510
880,623
Social security costs
80,775
72,019
Other pension costs
152,328
123,703
------------
------------
1,255,613
1,076,345
------------
------------
9. Directors' remuneration
The directors' aggregate remuneration in respect of qualifying services was:
2021
2020
£
£
Remuneration
162,860
174,891
Company contributions to defined contribution pension plans
95,626
78,841
Compensation for loss of office
30,000
–
------------
------------
288,486
253,732
------------
------------
The number of directors who accrued benefits under company pension plans was as follows:
2021
2020
No.
No.
Defined contribution plans
4
4
------------
------------
10. Other interest receivable and similar income
2021
2020
£
£
Interest on cash and cash equivalents
–
3,809
------------
------------
11. Interest payable and similar expenses
2021
2020
£
£
Interest on banks loans and overdrafts
47,837
53,536
Other interest payable and similar charges
61,347
45,140
------------
------------
109,184
98,676
------------
------------
12. Tax on profit
Major components of tax expense
2021
2020
£
£
Current tax:
UK current tax expense
269,844
100,470
Deferred tax:
Origination and reversal of timing differences
25,695
8,909
------------
------------
Tax on profit
295,539
109,379
------------
------------
Reconciliation of tax expense
The tax assessed on the profit on ordinary activities for the year is lower than (2020: lower than) the standard rate of corporation tax in the UK of 19 % (2020: 19 %).
2021
2020
£
£
Profit on ordinary activities before taxation
1,732,848
732,205
------------
------------
Profit on ordinary activities by rate of tax
329,241
139,118
Effect of expenses not deductible for tax purposes
( 2,271)
7,026
Effect of capital allowances and depreciation
1,566
711
Effect of revenue exempt from tax
( 1,520)
( 1,140)
Utilisation of tax losses
( 31,477)
( 36,336)
------------
------------
Tax on profit
295,539
109,379
------------
------------
13. Dividends
2021
2020
£
£
Dividends paid during the year (excluding those for which a liability existed at the end of the prior year )
389,088
468,093
------------
------------
14. Tangible assets
Short leasehold improvements
Plant and machinery
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 October 2020
384,696
360,996
87,495
97,245
930,432
Additions
36,600
40,694
26,715
–
104,009
Transfers
( 25,246)
50,383
( 25,137)
–
–
------------
------------
------------
------------
------------
At 30 September 2021
396,050
452,073
89,073
97,245
1,034,441
------------
------------
------------
------------
------------
Depreciation
At 1 October 2020
28,852
194,070
27,661
81,744
332,327
Charge for the year
40,011
51,913
11,593
15,501
119,018
Transfers
( 1,892)
( 1,560)
3,452
–
–
------------
------------
------------
------------
------------
At 30 September 2021
66,971
244,423
42,706
97,245
451,345
------------
------------
------------
------------
------------
Carrying amount
At 30 September 2021
329,079
207,650
46,367
–
583,096
------------
------------
------------
------------
------------
At 30 September 2020
355,844
166,926
59,834
15,501
598,105
------------
------------
------------
------------
------------
15. Investments
Shares in group undertakings
Shares in participating interests
Total
£
£
£
Cost
At 1 October 2020 and 30 September 2021
83,833
47,431
131,264
------------
------------
------------
Impairment
At 1 October 2020 and 30 September 2021
–
–
–
------------
------------
------------
Carrying amount
At 30 September 2021
83,833
47,431
131,264
------------
------------
------------
At 30 September 2020
83,833
47,431
131,264
------------
------------
------------
The company owns 31% of the ordinary share capital of Shaoxing Sian Flame Retardant Co Limited, a company registered in China. The principal activity of the company is that of flame retardant processing.
The company also owns 100% of the ordinary share capital of Shaoxing Mobus Fabrics Co Limited, a company registered in China. The principal activity of the company is that of the distribution of upholstery fabrics.
The company also owns 100% of the ordinary share capital of Hangzhou Mobus Fabrics Co Limited, a company registered in China. The principal activity of the company is that of the distribution of upholstery fabrics. As at the 30 September 2021 the company had not paid for the share capital and this has been disclosed as a capital commitment in note 27.
16. Stocks
2021
2020
£
£
Finished goods and goods for resale
8,367,071
6,345,106
------------
------------
17. Debtors
2021
2020
£
£
Trade debtors
4,766,166
4,604,697
Amounts owed by group undertakings
4,545,365
4,045,364
Prepayments and accrued income
137,851
118,282
Other debtors
138,811
239,733
------------
------------
9,588,193
9,008,076
------------
------------
18. Creditors: amounts falling due within one year
2021
2020
£
£
Bank loans and overdrafts
657,091
–
Trade creditors
3,348,197
4,796,816
Accruals and deferred income
1,542,815
1,344,142
Corporation tax
113,789
246,372
Social security and other taxes
789,563
60,082
Director loan accounts
354,267
30,238
Invoice finance facility
2,499,924
1,405,383
------------
------------
9,305,646
7,883,033
------------
------------
The invoice finance facility is secured by a fixed and floating charge over the company's assets. The bank loans are secured by fixed and floating charges over the company's assets.
19. Creditors: amounts falling due after more than one year
2021
2020
£
£
Accruals and deferred income
58,000
66,000
------------
------------
20. Provisions
Deferred tax (note 21)
£
At 1 October 2020
50,409
Additions
25,695
------------
At 30 September 2021
76,104
------------
21. Deferred tax
The deferred tax included in the balance sheet is as follows:
2021
2020
£
£
Included in provisions (note 20)
76,104
50,409
------------
------------
The deferred tax account consists of the tax effect of timing differences in respect of:
2021
2020
£
£
Accelerated capital allowances
94,056
70,079
Deferred income
( 16,500)
( 14,090)
Provisions
( 1,452)
( 5,580)
------------
------------
76,104
50,409
------------
------------
22. Employee benefits
Defined contribution plans
The amount recognised in profit or loss as an expense in relation to defined contribution pension plans was £ 152,328 (2020: £ 123,703 ).
23. Government grants
The amounts recognised in the financial statements for government grants are as follows:
2021
2020
£
£
Recognised in other operating income:
Government grants recognised directly in income
8,000
130,078
------------
------------
24. Called up share capital
Issued, called up and fully paid
2021
2020
No.
£
No.
£
Ordinary A shares of £ 1 each
645
645
645
645
Ordinary B shares of £ 1 each
50
50
50
50
Ordinary C shares of £ 1 each
50
50
50
50
Ordinary D shares of £ 1 each
5
5
5
5
------------
------------
------------
------------
750
750
750
750
------------
------------
------------
------------
The various classes of share rank pari-passu .
25. Reserves
Capital redemption reserve - This reserve records the nominal value of shares repurchased by the company. Profit and loss account - This reserve records retained earnings and accumulated losses.
26. Analysis of changes in net debt
At 1 Oct 2020
Cash flows
At 30 Sep 2021
£
£
£
Cash at bank and in hand
555,891
(98,544)
457,347
Debt due within one year
(30,238)
(981,120)
(1,011,358)
------------
------------
------------
525,653
( 1,079,664)
( 554,011)
------------
------------
------------
27. Capital commitments
Capital expenditure contracted for but not provided for in the financial statements is as follows:
2021
2020
£
£
Intangible assets
112,993
–
------------
------------
Mobus Fabrics Limited
Notes to the Financial Statements (continued)
Year ended 30 September 2021
28. Operating leases
The total future minimum lease payments under non-cancellable operating leases are as follows:
2021
2020
£
£
Not later than 1 year
228,347
360,290
Later than 1 year and not later than 5 years
1,360,221
1,390,235
Later than 5 years
1,246,666
1,445,000
------------
------------
2,835,234
3,195,525
------------
------------
Total lease payments recognised as an expense in the profit and loss was £409,002 (2020 - £410,659)
29. Contingencies
The company is party to an unlimited multilateral bank guarantee with the parent company .
30. Related party transactions
At the year end the company had loans totalling £Nil (2020: £22,510) owed by key management personnel and loans totalling £354,266 (2020: £30,238) owing to key management personnel. These loans are unsecured, repayable upon demand and currently interest is being paid at base rate + 2%. During the year the company paid rent totalling £18,637 (2020: £68,779) to related parties.
31. Controlling party
The company is a wholly owned subsidiary of Mobus Fabrics Holdings Limited; there is no one controlling party of this company. The company is exempt from preparing group accounts as it is included in the consolidated accounts of Mobus Fabrics Holdings Limited, a company registered in the UK whose registered office is Russell Way, Off Bradford Road, Brighouse, West Yorkshire, HD6 4LX. A copy of the group accounts are available to the public at Companies House.