Rejoyce Motorcycles Limited - Final Audit Report

REJOYCE MOTORCYCLE SPARES LIMITED
REPORT AND FINANCIAL STATEMENTS
FOR FOUR MONTHS PERIOD TO 31 DECEMBER 2021

REPORT AND FINANCIAL STATEMENTS

FOR FOUR MONTHS PERIOD ENDED 31 DECEMBER 2021
Table of contents Page
Directors, administration and service providers 1
Report of the directors 2
Statement of directors’ responsibilities 3
Report of the independent auditors 4–6
Statement of profit or loss and other comprehensive income 7
Statement of financial position 8
Statement of changes in equity 9
Statement of cash flows 10
Notes to the financial statements 11 – 20

DIRECTORS, ADMINISTRATION AND SERVICE PROVIDERS
DIRECTOR
Eliud Muli Muiruri
AUDITORS
CK & Partners
Certified Public Accountants of Kenya
3rd Floor, College House
University Way
P.O. Box 100509 - 00101
Nairobi, Kenya
REGISTERED OFFICE
Dune Plaza Ruai
Kangundo Road
Nairobi Block 105/1609
Nairobi Kenya
BANKERS
Equity Bank (Kenya) Limited
Ruai Branch
Next to Quickmart
Kangundo Road
Nairobi, Kenya
1
REPORT OF THE DIRECTORS

FOR FOUR MONTHS PERIOD ENDED 31 DECEMBER 2021
The directors present their report and the audited financial statements for the four months period ended
31 December 2021.
1. INCORPORATION
The company is incorporated in Kenya under the Companies Act, and is domiciled in Kenya.
2. PRINCIPAL ACTIVITY
The Company is engaged in the business of trading in motorcycle spares and accessories.
3. OPERATING RESULTS
The results of operation are shown on page 7
4. DIRECTORS
The Directors who served during the four months period are shown on page 1.
5. AUDITORS
The auditors CK & Partners, Certified Public Accountants of Kenya, have expressed their
willingness to continue in office in accordance with Section 719(2) of the Companies Act 2015
BY ORDER OF THE BOARD
DIRECTOR
Date: 27 April 2022
2
REJOYCE MOTORCYCLE SPARES LIMIED
STATEMENT OF THE DIRECTORS’ RESPONSIBILITIES
The Kenyan Companies Act, 2015 requires the directors to prepare financial statements for each
financial year that give a true and fair view of the financial position of the company as at the end of the
financial year and of its profit or loss for that year. It also requires the directors to ensure that the
company maintains proper accounting records that are sufficient to show and explain the transactions of
the company and disclose, with reasonable accuracy, the financial position of the company. The directors
are also responsible for safeguarding the assets of the company, and for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors accept responsibility for the preparation and presentation of these financial statements in
accordance with the International Financial Reporting Standard for Small and Medium-sized Entities
and in the manner required by the Kenyan Companies Act, 2015. They also accept responsibility for:
1) Designing, implementing and maintaining such internal control as they determine necessary to
enable the presentation of financial statements that are free from material misstatement, whether
due to fraud or error;
2) Selecting suitable accounting policies and applying them consistently; and
3) Making accounting estimates and judgements that are reasonable in the circumstances.
Having made an assessment of the company’s ability to continue as a going concern, the directors are
not aware of any material uncertainties related to events or conditions that may cast doubt upon the
company’s ability to continue as a going concern.
The directors acknowledge that the independent audit of the financial statements does not relieve them
of their responsibilities.
Approved by the board of directors on 27 April 2022 and signed on its behalf by:
______________________________ ______________________________
Director Director
3
CK & Partners 00101 Jamia, Nairobi, Kenya
Certified Public Accountants (CPAs) Tel: + 2540202022180
College House 3rd Floor Mobile: +254 721 514 301
University Way info@ibds.co.ke
P.O. Box 100509 www.ibds.co.ke
REPORT OF THE INDEPENDENT AUDITORS TO THE DIRECTORS OF

Report on the audit of the financial statements
Opinion
We have audited the financial statements of Rejoyce Motorcycle Spares Limited (the “Company”) set
out on pages 7 to 20 which comprise the statement of financial position as at 31 December 2021, and
the statement of profit or loss, statement of other comprehensive income, statement of changes in equity
and statement of cash flows for the four months period then ended, and a summary of significant
accounting policies and other explanatory information.
In our opinion, the accompanying financial statements give a true and fair view of the financial
position of Rejoyce Motorcycle Spares Limited as at 31 December 2021 and its financial performance
and its cash flows for the four months period then ended in accordance with International Financial
Reporting Standards for Small and Medium-sized Entities and the Kenyan Companies Act, 2015.
Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). 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 International Ethics Standards Board for Accountants’ Code of Ethics for
Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our
audit of the financial statements in Kenya, and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the IESBA Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Other information
The Directors are responsible for the other information. The other information comprises the
information included in the report of directors and statement of director’s responsibilities, but does not
include the financial statements and our auditors’ report thereon.
Our opinion on the financial statements does not cover the other information and 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, based on the work that we have performed, we conclude that there is a material
misstatement of this information, then we are required to report that fact. We have nothing to report in
this regard.
Directors’ responsibility for the financial statements

As stated on page 3, the directors are responsible for the preparation and fair presentation of these
financial statements in accordance with International Financial Reporting Standards for Small and
Medium-sized Entities and in the manner required by the Kenyan Companies Act, 2015 and for such
internal control, as the directors determine necessary to enable the preparation of financial statements
that are free from material misstatements, whether due to fraud or error.
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In preparing the financial statements, 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 management either intends to liquidate the Company or to
cease operations, or has no realistic alternative but to do so. The directors are responsible for overseeing
the company’s financial reporting process.
Auditors’ responsibility 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 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 consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional skepticism 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 Company’s 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.
— Obtain sufficient appropriate audit evidence regarding the financial information of the Company or
business activities of the Company to express an opinion on the financial statements. We are
responsible for the direction, supervision and performance of the Company audit. We remain solely
responsible for our audit opinion.
We communicate with the Directors 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.
5
Report on other legal and regulations requirements

As required by the Kenyan Companies Act, 2015, we report to you based on our audit, that:
i) we have obtained all the information and explanations which to the best of our knowledge and
belief were necessary for the purposes of our audit;
ii) in our opinion proper books of account have been kept by the Company, so far as appears from
our examination of those books; and
iii) the Company’s statement of financial position and statement of profit or loss are in agreement
with the books of account.
The Engagement Partner responsible for the audit resulting in this independent auditors’ report is CPA
Charles Kabuthu, practising certificate No. P/No 2236
For and behalf of:

CK & Partners
Certified Public Accountants of Kenya
Date: 27 April 2022
6
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE FOUR MONTHS PERIOD ENDED 31 DECEMBER 2021
2021
Note KShs
Turnover 5 949,281
Expenses
Cost of goods sold 5 (655,512)
Staff Costs 6 (15,000)
Administrative expenses 7 (76,590)
Operating expenses 8 (37,337)
Total operating expenses 784,439
Operating profit (loss) before tax 164,842
Tax charge 9 (49,453)
Net Profit (loss) after tax 115,390
The notes set out on pages 11 to 20 form an integral part of these financial statements.
7
STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2021
2021
Note KShs
Non-current assets
Property, plant and equipment 10 145,257
145,257
Current assets
Inventory 386,954
Trade and other receivables 11 10,600
Cash at bank and in hand 12 69,051
466,604
TOTAL ASSETS 611,861
CAPITAL EMPLOYED
Ordinary Share capital 13 100,000
Share Premium 13 -
Retained earnings 115,390
Shareholders' funds 215,390
Current liabilities
Deferred tax liability 9 49,453
Trade and other payables 14 347,019

347,019
TOTAL EQUITY AND LIABILITIES 611,861
The financial statements on pages 7 to 20 were approved by the Board of directors on 27 April 2022 and
were signed on its behalf by:
____________________________ __________________________
Director Director
8
STATEMENT OF CHANGES IN EQUITY

Share Capital Retained Total

PERIOD END 31.12.2021 Profit Equity
Kshs Kshs Kshs
Issue in share capital in 2021 100,000 - 100,000
Profit/(Loss) for the period - 115,390 115,390
At 31 December 2021 100,000 115,390 215,390
9
STATEMENT OF CASH FLOWS

2021
Note KShs
Cash flows from operating activities
Profit after tax 115,390
Adjustments for:
Depreciation and amortisation 10 24,473

Operating profit before working capital changes 139,863
Working Capital Changes
Increase in tax recoverable -

Increase in net investments in inventory (386,954)
Increase in Trade receivables (10,600)
Increase in Tax payable 49,453
Increase in Trade payables 347,019
Net cash generated from operating activities 138,781
Cash flows from investing activities

Purchase of property and equipment 10 (169,730)
Net cash generated from/(used in) investing activities (169,730)
Cash flows from financing activities

Share Capital account 13 100,000
Net cash generated from financing activities 100,000
Net increase in cash and cash equivalents 69,051
Cash and cash equivalents at 1st January 2021 -

Cash and cash equivalents at 31st December 2021 12 69,051
10
NOTES TO THE FINANCIAL STATEMENTS

FOR THE FOUR MONTHS PERIOD ENDED 31 DECEMBER 2021 (CONTINUED)
1. BASIS OF PREPARATION
(a) Statement of compliance

The financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRSs), as issued by the International Accounting Standards Board and
in the manner required by the Kenyan Companies Act.
For Kenyan Companies Act reporting purposes in these financial statements, the balance
sheet is represented by the statement of financial position and the profit and loss account is
presented in the statement of profit or loss and other comprehensive income.
(b) Basis of measurement

The financial statements have been prepared under the historical cost basis.
(c) Use of estimates and judgements

The preparation of financial statements in conformity with IFRSs requires the use of
estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent liabilities at the date of financial statements and the reported
amounts of revenues and expenses during the reporting period. Although these estimates are
based on the directors’ best knowledge of current events, actual results may ultimately differ
from those estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to the
accounting estimates are recognised in the period in which the estimate is revised and in any
future periods affected.
(d) Functional and presentation currency

These financial statements are presented in Kenya shillings (Kshs) which is the currency of
the primary economic environment in which the company operates.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Revenue recognition

Revenue represents the fair value of the consideration received or receivable for sales of
services, and is stated net of value-added tax (VAT), rebates and discounts. Sales revenue
can only be recognised when the associated costs can be estimated reliably and the amount
of revenue can be estimated reliably.
The Company earns income from sale of motor cycle spare parts.
(b) Property and equipment

(i) Recognition and measurement
Items of property and equipment are stated at historical cost less accumulated
depreciation and impairment losses. Cost includes expenditure that is directly
attributable to the acquisition of the asset.
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(ii) Subsequent expenditure

Subsequent expenditure is capitalised only if it is probable that future economic
benefits associated with the expenditure will flow to the Company. Ongoing repairs
and maintenance is expensed as incurred.
(iii) Depreciation
Depreciation is charged on a straight-line basis over the estimated useful lives of the
assets. The following rates of depreciation are used based on the estimated useful lives
as below:
Furniture & Equipments 10%

Computers and Printers 25%
Computer software 25%
Motorbikes & Vehicles 25%
The depreciation methods, useful lives and residual values are reviewed, and adjusted
if appropriate, at each reporting date if appropriate.
(iv) Gain or loss on disposal

Any gain or loss on de-recognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the item) is included in profit or
loss in the year the item is de-recognised.
(c) Employee benefits

(i) Retirement benefit obligations
The Company and all its employees contribute to the National Social Security Fund,
which is a defined contribution scheme.
The Company’s contributions are charged to the profit or loss in the period to which
they relate.
(ii) Short term employee benefits

Short-term employee benefits are expensed as the related service is provided. A
liability is recognised for the amount expected to be paid if the company has a present
legal or constructive obligation to pay this amount as a result of past service provided
by the employee and the obligation can be measured reliably.
(d) Income tax

Income tax expense comprises current and deferred tax. It is recognised in profit or loss
except to the extent that it relates to items recognised directly in equity or other
comprehensive income.
(i) Current tax

Current tax assets and liabilities for the current period are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax
laws used to compute the amount are those that are enacted or substantively enacted,
by the reporting date. Current tax relating to items recognised directly in other
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comprehensive income or equity is recognised in other comprehensive income or

equity and not in profit or loss. Management
periodically evaluates positions taken in the tax returns with respect to situations in
which applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.
(ii) Deferred tax

Deferred tax is provided in respect of temporary differences at the reporting date
between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes.
Deferred tax assets are recognised for all deductible temporary differences, carry
forward of unused tax credits and unused tax losses, to the extent that it is probable
that taxable profit will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and unused tax losses can be
utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be utilised. Unrecognised
deferred tax assets are reassessed at each reporting date and are recognised to the extent
that it has become probable that future taxable profits will allow the deferred tax asset
to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to
apply in the year when the asset is realised or the liability is settled, based on tax rates
(and tax laws) that have been enacted or substantively enacted at the reporting date.
(e) Cash and cash equivalents

For the purposes of the statement of cash flows, cash and cash equivalents comprise cash in
hand, bank balances, and deposits held at call with the banks net of bank overdrafts.
(f) Financial instruments

Financial instruments include balances with banks, trade and other receivables and trade and
other payables and intercompany balances.
(i) Recognition
A financial instrument is a contract that gives rise to both a financial asset of one
enterprise and a financial liability of another enterprise. The Company recognises loans
and receivables on the date when they are originated. These assets are initially recognised
at fair value plus any directly attributable transaction cost. Subsequent to initial
recognition, they are measured at amortised cost using the effective interest method.
All other financial instruments are recognized on the trade date which is the date on
which the company becomes party to the contractual provisions of the instrument.
(ii) Classification and measurement
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The company classifies its non-derivative financial assets into loans and receivables
while non-derivative financial liabilities are classified into other financial liability
category.
Management determines the appropriate classification of its financial instruments at the

time of purchase and re-evaluates its portfolio on a regular basis to ensure that all
financial assets are appropriately classified.
Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market other than those that the company
intends to sell in the short-term or that it has designated as at fair value through profit or
loss or available for sale. Loans and receivables comprise trade and other receivables,
cash and bank balances and balances due from group companies.
These are measured at amortised cost using the effective interest method, less any
impairment losses.
Other financial liabilities

Other financial liabilities are initially recognized at fair value less any directly
attributable transaction costs. Subsequent to initial recognition, these liabilities are
measured at amortized cost using the effective interest method. Other financial liabilities
comprise trade and other payables, shareholders loans and intercompany balances.
(iii) De-recognition
A financial asset is derecognised when the company loses control over the contractual
rights that comprise that asset. This occurs when the rights are realised, expire or are
surrendered. A financial liability is derecognised when it is extinguished, cancelled or
expires.
(iv) Offsetting of financial assets and liabilities

Financial assets and liabilities are offset and the net amount reported on the statement
of financial position when there is a legally enforceable right to set-off the recognised
amount and there is an intention to settle on a net basis, or to realise the asset and settle
the liability simultaneously.
(v) Fair value of financial assets and liabilities

Fair value of financial assets and financial liabilities is the price that would be received
to sell an asset or paid to transfer a liability respectively in an orderly transaction between
market participants at the measurement date.
(g) Comparatives
There are no comparatives since the company was incorporated on 3 September 2021.
(h) Impairment
(i) Financial assets
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A financial asset is assessed at each reporting date to determine whether there is any
objective evidence that it is impaired. A financial asset is considered to be impaired if
objective evidence indicates that one or more events have had a negative effect on the
estimated future cash flows of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is

calculated as the difference between its carrying amount and the present value of the
estimated future cash flows discounted at the original effective interest rate.
Individually significant financial assets are tested for impairment on an individual

basis. The remaining financial assets are assessed collectively in groups that share
similar credit risk characteristics.
All impairment losses are recognised in profit or loss.
An impairment loss is reversed if the reversal can be related objectively to an event

occurring after the impairment loss was recognised. For financial assets measured at
amortised cost that are debt securities, the reversal is recognised in profit or loss.
(ii) Non-financial assets

The carrying amounts of the company’s non-financial assets other than inventories are
reviewed at each reporting date to determine whether there is any indication of
impairment. If any such indication exists then the assets’ recoverable amount is
estimated.
An impairment loss is recognised if the carrying amount of an asset or its cash-

generating unit exceeds its recoverable amount. A cash-generating unit is the smallest
identifiable asset group that generates cash flows that largely are independent from
other assets and groups. Impairment losses are recognised in profit or loss. Impairment
losses recognised in respect of cash-generating units are allocated first to reduce the
carrying amount of any goodwill allocated to the units and then to reduce the carrying
amount of the other assets in the unit (group of units) on a pro-rata basis.
The recoverable amount of an asset or cash-generating unit is the greater of its value
in use and its fair value less costs to sell. 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.
3. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Risk management is carried out by the management under policies approved by the board of
directors. Management identifies, evaluates and manages financial risks in close co-operation
with various departmental heads. The board provides written principles for overall risk
management, as well as written policies covering specific areas, such as foreign exchange risk,
interest rate risk, credit risk, use of non derivative financial instruments and investment of excess
liquidity.
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(a) Market risk

Market risk is the risk that the fair value or future cash flows of financial instruments will
fluctuate due to changes in market variables such as interest rates, foreign exchange rates
and equity prices. The objective of market risk management is to manage and control market
risk exposure within acceptable levels, while optimizing on the return on the risk.
(i) Interest rate risk
The Company’s exposure to interest rate risk is with regards to fluctuation in interest
rates in the market which affects the borrowings by the Company
(b) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a
financial instrument fails to meet its contractual obligations. The largest concentrations of
credit exposure within the Company arises from cash and cash equivalents held with banks
and trade and other receivables. The Company only places significant amounts of funds with
recognised financial institutions with strong credit ratings and does not consider the credit
risk exposure on cash and bank balances to be significant.
(c) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting its obligations
from its financial liabilities. The Company’s approach to managing liquidity is to ensure, as
far as possible, that it will always have sufficient liquidity to meet its liabilities when due
under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Company’s reputation.
Prudent liquidity risk management implies maintaining sufficient cash and marketable
securities, the availability of funding through an adequate amount of committed credit
facilities and the ability to close out market positions.
(d) Operational risk

Operational risk is the risk of direct or indirect loss arising from a wide variety of causes
associated with the Company’s processes, personnel, technology and infrastructure and from
external factors other than credit, market and liquidity risks such as those arising from legal
and regulatory requirements and generally accepted standards of corporate behaviour.
Operational risks arise from all of the Company’s operations.
The Company’s objective is to manage operational risk so as to balance the avoidance of

financial losses and damage to the Company’s reputation with overall cost effectiveness and
to avoid control procedures that restrict initiative and creativity. The primary responsibility
for the development and implementation of controls to address operational risk is assigned to
management. This responsibility is supported by the development of overall Company’s
standards for the management of operational risk in the following areas:
 Requirements for appropriate segregation of duties, including the independent

authorisation of transactions.
 Requirements for the reconciliation and monitoring of transactions.
 Compliance with regulatory and other legal requirements.
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 Documentation of controls and procedures.

 Requirements for the periodic assessment of operational risks faced, and the adequacy
of controls and procedures to address the risks identified.
 Requirement for the reporting of operational losses and proposed remedial action.
 Development of contingency plans.
 Training and professional development.
 Ethical and business standards.
 Risk mitigation, including insurance where this is effective
(d) Capital management

The primary objectives of the Company’s capital management are to ensure that the Company
complies with capital requirements and maintains healthy capital ratios in order to support its
business and to maximize shareholders’ value.
The Capital Management policy as approved by the Board of directors (the Board) is to
maintain a strong capital base so as to maintain investor, creditor and market confidence and
to sustain future development of the business. The Board monitors the return on capital, which
the Company defines as net operating income divided by total
shareholders’ equity. The Board also monitors the level of dividends to ordinary
shareholders.
The Company manages its capital structure and makes adjustments to it, in light of changes
in economic conditions. To maintain or adjust the capital structure, the Company may adjust
the dividend payment to shareholders, return capital to shareholders or issue new shares as
circumstances would dictate. There were no changes in the Company’s approach to capital
management as regards the objectives, policies or processes during the period.
4. CRITICAL JUDGEMENT’S IN APPLYING THE COMPANY’S ACCOUNTING

POLICIES
The following are the key assumptions concerning the future, and other key sources of estimation
uncertainty at the reporting date that have a significant risk of causing material adjustment to the
carrying amounts of assets and liabilities within the next financial year:
Property and equipment

Critical estimates are made by the directors in determining depreciation rates of property and
equipment.
Income taxes
The Company is subject to income taxes in Kenya. Significant judgment is required in determining
the Company’s provision for income taxes. There are many transactions and calculations for which
the ultimate tax determination is uncertain during the ordinary course of business. The Company
recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes
will be due. Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such differences will impact the income tax and deferred tax in the period in
which such determination is made.
Impairment losses
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At the end of each reporting period, the Company reviews the carrying amounts of its financial
assets, 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. 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.
Provisions and contingent liabilities

The Company reviews its obligations at the end of the reporting period to determine whether
provisions need to be made and if there are any contingent liabilities.
5. TURNOVER
2021
KShs
Sales 949,281
Cost of goods sold (655,512)
293,769
6. STAFF COSTS
2021
KShs
Staff salaries 15,000
15,000
7. ADMINISTRATIVE EXPENSES
2021
KShs
System/Software Subscription 12,000
Audit Fees 6,000
Travel and accommodation 4,440
Office Expenses 9,150
Rent 45,000
76,590
8. OPERATING EXPENSES
2021
KShs
Depreciation of assets 24,473
Bank charges 2,087
Advertising & business promotion 27
Permits and licences 10,750
37,337
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9. TAXATION
2021
KShs
Current Tax Charge/(credit) 49,453
The tax charge is calculated as below:
Accounting profit before tax 164, 842

Tax calculated at applicable rate (30%) 49,453
Tax effect on non-allowable expenses 7,342
Tax effect on capital allowances (7,342)
Tax charge for the period 49,453
10. PROPERTY AND EQUIPMENT

Furniture Motor
Computers & Bikes and Computer
& Printers Equipment Vehicles Software Total
KShs KShs KShs KShs KShs

COST/VALUATION 30% 10% 25% 25%
As at 1 January 2021 - - - - -
Additions - 119,730 - 50,000 169,730
Disposals/Writeoffs - - - - -
As at 31 December 2021 - 119,730 - 50,000 169,730
ACCUM DEPRECIATION
As at 1 January 2021 - - - - -
Charge for the period - 11,973 - 12,500 24,473
Disposals /Writeoffs - - - - -
As at 31 December 2021 - 11,973 - 12,500 24,473
NET BOOK VALUES

As at 31 December 2021 - 107,757 - 37,500 145,257
As at 31 December 2020 - - - - -
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11. TRADE AND OTHER RECEIVABLES

2021
KShs
Sundry Debtors 10,600
12. CASH AND CASH EQUIVALENTS

2021
KShs
Equity Bank 69,051
69,051
13. SHARE CAPITAL

2021
KShs
Authorised:
1,000 ordinary shares of KShs 100 each 100,000
Share premium -
Issued and fully paid:
1000 ordinary shares of KShs 100 each 100,000
14. TRADE AND OTHER PAYABLES

2021
KShs
Sundry Creditors 347,019
347,019
15. Contingent Liabilities
There were no significant contingent liabilities at the end of 2021.
16. Capital Commitments
There were no significant capital commitments at the end of 2021.
20

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REJOYCE MOTORCYCLE SPARES LIMITED

REPORT AND FINANCIAL STATEMENTS

FOR FOUR MONTHS PERIOD TO 31 DECEMBER 2021

REPORT AND FINANCIAL STATEMENTS

Table of contents Page

Directors, administration and service providers 1

Report of the directors 2

Statement of directors’ responsibilities 3

Report of the independent auditors 4–6

Statement of profit or loss and other comprehensive income 7

Statement of financial position 8

Statement of changes in equity 9

Statement of cash flows 10

Notes to the financial statements 11 – 20

DIRECTORS, ADMINISTRATION AND SERVICE PROVIDERS

REPORT OF THE DIRECTORS

The results of operation are shown on page 7

BY ORDER OF THE BOARD

Date: 27 April 2022

STATEMENT OF THE DIRECTORS’ RESPONSIBILITIES

2) Selecting suitable accounting policies and applying them consistently; and

REPORT OF THE INDEPENDENT AUDITORS TO THE DIRECTORS OF

Report on the audit of the financial statements

Basis for opinion

Directors’ responsibility for the financial statements

Report on other legal and regulations requirements

For and behalf of:

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Operating profit (loss) before tax 164,842

Tax charge 9 (49,453)

Net Profit (loss) after tax 115,390

STATEMENT OF FINANCIAL POSITION

TOTAL ASSETS 611,861

Trade and other payables 14 347,019

TOTAL EQUITY AND LIABILITIES 611,861

STATEMENT OF CHANGES IN EQUITY

Share Capital Retained Total

Issue in share capital in 2021 100,000 - 100,000

Profit/(Loss) for the period - 115,390 115,390

At 31 December 2021 100,000 115,390 215,390

STATEMENT OF CASH FLOWS

Depreciation and amortisation 10 24,473

Working Capital Changes

Increase in tax recoverable -

Cash flows from investing activities

Cash flows from financing activities

Net increase in cash and cash equivalents 69,051

Cash and cash equivalents at 1st January 2021 -

NOTES TO THE FINANCIAL STATEMENTS

(a) Statement of compliance

(b) Basis of measurement

(c) Use of estimates and judgements

(d) Functional and presentation currency

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Revenue recognition

(b) Property and equipment

NOTES TO THE FINANCIAL STATEMENTS

(ii) Subsequent expenditure

Furniture & Equipments 10%

(iv) Gain or loss on disposal