Company Registration No. 00563681 (England and Wales)
NEWBERY METALS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NEWBERY METALS LIMITED
COMPANY INFORMATION
Directors
Mrs P M Toghill
Mr R A Toghill
Mr M A Crocker
Company number
00563681
Registered office
Orchard Works
4 Ashton Road
Marsh Barton
Exeter
Devon
EX2 8LN
Auditor
Darnells Chartered Accountants
Quay House
Quay Road
Newton Abbot
Devon
TQ12 2BU
NEWBERY METALS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 6
Statement of income and retained earnings
7
Balance sheet
8
Statement of cash flows
9
Notes to the financial statements
10 - 22
NEWBERY METALS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2019
- 1 -
The directors present the strategic report for the year ended 30 June 2019.
Fair review of the business
The directors consider that the key performance indicators are Turnover, Gross margin, Earnings before interest, tax, depreciation and amortisation (EBITDA) and Net assets. Together these demonstrate the financial performance and strength of the company. An overview of these indicators for both the current and prior periods are given below:
Turnover: £25,357,003 (2018 - £25,430,344)
Gross profit: £3,770,669 (2018 - £4,403,668)
Gross margin: 14.9% (2018 - 17.3%)
EBITDA: £2,669,551 (2018 - £3,016,619)
Net assets: £9,608,990 (2018 - £9,075,932)
The company's sales have decreased by 0.29% compared with 2018, with a decrease of 1.9% in tonnage sold, as a result of the decrease in metal prices over the year.
The company's gross profit has decreased by £0.63 million compared to 2018 as a result of the decrease in sales and a reduction in metal prices over the year. The gross margin achieved is dependent on the performance of metal commodity prices on the London Metal Exchange and the levels of market supply and demand for each type of metal. The decrease in the gross margin from 17.3% to 14.9% reflects the level of competitive fixed margins on contracts in a challenging market.
The decrease in both EBITDA and Profit before tax compared with the previous year (the latter decreasing by £0.36 million) is a result of the decrease in gross profit.
At the end of the year the retained profit of the company is £0.53 million compared with £0.48 million for the previous year, after voting dividends to transfer reserves to the parent company of £1.5 million (2018 - £1.8 million).
The company has maintained a strong financial position with net current assets of £8.97 million compared with £8.56 million at 30 June 2018. Net assets are up £0.53 million from £9.08 million at 30 June 2018 to £9.61 million.
Principal risks and uncertainties
The company's principal operational risks include foreign currency risk from the exposure to metal prices denominated in US dollars, and the health and safety of employees. The company's principal operational uncertainties include global economic factors creating fluctuating metal prices and reduced supply and demand, which provide challenges for businesses operating in this sector and make long-term prediction of performance difficult.
Britain leaving the European Union ("Brexit") is one of the most significant economic events for the UK in recent history, and its effects at the date of these financial statements are subject to unprecedented levels of uncertainty of outcomes, with the full range of possible effects unknown. The impact of Brexit upon the company's operations is therefore uncertain, and may take years to become known. In the short term the company manages the foreign currency risk from its exposure to metal prices denominated in US dollars by entering into contracts to supply scrap metal where the price is not fixed by the company on delivery but at some specified future date.
The company manages price fluctuations, together with pressures on supply and demand, through tight control of both prices paid to suppliers and the margin charged to customers. The company continues to diversify its supplier and customer bases to provide further resilience against market uncertainties.
The management of health and safety risks includes a Health and Safety Manual, risk assessments and periodic inspection visits by an external organisation.
NEWBERY METALS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 2 -
Future developments
Since its low in December 2015, the copper price in sterling has since recovered to levels not seen since the second quarter of 2013. Although global economic uncertainties, including "Brexit", make future market predictions difficult, the directors are confident that metal prices will continue to recover, and that through shrewd pricing management the company can continue to trade profitably in the years ahead.
Mr R A Toghill
Director
26 March 2020
NEWBERY METALS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2019
- 3 -
The directors present their annual report and financial statements for the year ended 30 June 2019.
Principal activities
The principal activity of the company continued to be that of metal merchanting and processing.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mrs P M Toghill
Mr R A Toghill
Mr M A Crocker
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £1,500,000. The directors do not recommend payment of a further dividend.
Financial instruments
The company's principal financial instruments comprise bank balances, trade debtors, loans by the company and trade creditors. The main purpose of these instruments is to raise funds for the company's operations and to finance its operations.
Due to the nature of the financial instruments used by the company, the only exposure to price risk is on sales under contracts where the price is not fixed on delivery, but at an unspecified future date to be determined by the company. The price risk is managed by daily monitoring of prices on the London Metal Exchange by the directors. Credit risk for these contracts is managed by vetting customers and carrying out credit checks.
The directors' approach to managing other risks applicable to the financial instruments concerned is shown below:
In respect of bank balances, the liquidity risk is managed by maintaining sufficient cash reserves to cover planned expenditure in the foreseeable future.
Trade debtors are managed in respect of credit and cash flow risk 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 that sufficient funds are available to meet amounts due.
Loans by the company are unsecured and interest free.
Future developments
Future developments are discussed in the strategic report.
Auditor
The auditor, Darnells Chartered Accountants, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
NEWBERY METALS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 4 -
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
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 of disclosure to auditor
So far as the directors who held office at the date of approval of these financial statements are aware, there is no relevant audit information of which the company's auditor are unaware. Additionally, the directors have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company's auditors are aware of that information.
On behalf of the board
Mr R A Toghill
Director
26 March 2020
NEWBERY METALS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF NEWBERY METALS LIMITED
- 5 -
Opinion
We have audited the financial statements of Newbery Metals Limited (the 'company') for the year ended 30 June 2019 which comprise the statement of income and retained earnings, the balance sheet, the statement of cash flows and 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 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 June 2019 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.
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
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
.
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report 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 our audit
:
-
the information given in the strategic report and the directors' r
eport 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.
NEWBERY METALS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NEWBERY METALS LIMITED
- 6 -
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 identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
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 directors'
r
esponsibilities
s
tatement
on page 4
, 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.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Sean Murphy (Senior Statutory Auditor)
for and on behalf of Darnells Chartered Accountants
Statutory Auditor
Quay House
Quay Road
Newton Abbot
Devon
TQ12 2BU
NEWBERY METALS LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 30 JUNE 2019
- 7 -
2019
2018
Notes
£
£
Turnover
2
25,357,003
25,430,344
Cost of sales
(21,586,334)
(21,026,676)
Gross profit
3,770,669
4,403,668
Administrative expenses
(1,326,473)
(1,628,994)
Other operating income
27,282
40,980
Operating profit
3
2,471,478
2,815,654
Interest receivable and similar income
1,799
15,875
Interest payable and similar expenses
-
(178)
Profit before taxation
2,473,277
2,831,351
Tax on profit
6
(440,219)
(552,239)
Profit for the financial year
2,033,058
2,279,112
Retained earnings brought forward
2,925,932
2,446,820
Dividends
7
(1,500,000)
(1,800,000)
Retained earnings carried forward
3,458,990
2,925,932
The Statement of Income and Retained Earnings has been prepared on the basis that all operations are continuing operations.
NEWBERY METALS LIMITED
BALANCE SHEET
AS AT
30 JUNE 2019
30 June 2019
- 8 -
2019
2018
Notes
£
£
£
£
Fixed assets
Tangible assets
8
819,864
707,358
Current assets
Stocks
9
2,918,109
2,942,449
Debtors
10
5,001,913
7,703,949
Cash at bank and in hand
4,638,656
307,316
12,558,678
10,953,714
Creditors: amounts falling due within one year
11
(3,591,693)
(2,397,790)
Net current assets
8,966,985
8,555,924
Total assets less current liabilities
9,786,849
9,263,282
Provisions for liabilities
12
(177,859)
(187,350)
Net assets
9,608,990
9,075,932
Capital and reserves
Called up share capital
15
6,140,000
6,140,000
Capital redemption reserve
10,000
10,000
Profit and loss reserves
3,458,990
2,925,932
Total equity
9,608,990
9,075,932
The financial statements were approved by the board of directors and authorised for issue on 26 March 2020 and are signed on its behalf by:
Mr R A Toghill
Director
Company Registration No. 00563681
NEWBERY METALS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
- 9 -
2019
2018
as restated
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
19
5,847,650
1,348,920
Interest paid
-
(178)
Income taxes paid
(469,799)
(789,065)
Net cash inflow from operating activities
5,377,851
559,677
Investing activities
Purchase of tangible fixed assets
19
(30,428)
(122,443)
Proceeds on disposal of tangible fixed assets
19
66,799
32,000
Interest received
1,799
15,875
Net cash generated from/(used in) investing activities
38,170
(74,568)
Financing activities
Repayment of loans from group undertakings
(913,318)
(1,375,956)
Non-trading loans to related parties
(171,363)
-
Repayment of non-trading loans by related parties
-
189,020
Payment of finance leases obligations
-
(6,362)
Net cash used in financing activities
(1,084,681)
(1,193,298)
Net increase/(decrease) in cash and cash equivalents
4,331,340
(708,189)
Cash and cash equivalents at beginning of year
307,316
1,015,505
Cash and cash equivalents at end of year
4,638,656
307,316
NEWBERY METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
- 10 -
1
Accounting policies
Company information
Newbery Metals Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Orchard Works, 4 Ashton Road, Marsh Barton, Exeter, Devon, EX2 8LN.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £
1
.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of certain financial instruments at fair value. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares
publicly available consolidated financial statements
, including this company,
which are
intended to give a true and fair view of the assets, liabilities,
financial position and profit or loss
of the group
.
T
he company has
therefore
taken advantage of
e
xemptions from the following disclosure requirements:
-
Section 4 ‘Statement of Financial Position’ – Reconciliation of the opening and closing number of shares
;
-
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income
;
-
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel
.
The financial statements of the company are consolidated in the financial statements of
Togs Limited
. These consolidated financial statements are available from its registered office
at Orchard Works, 4 Ashton Road, Marsh Barton, Exeter Devon EX2 8LN
.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
,
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
NEWBERY METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
1
Accounting policies
(Continued)
- 11 -
Revenue from the sale of
scrap metal
is recognised when the significant risks and rewards of ownership of the
scrap metal
have passed to the buyer
(usually on dispatch)
, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Where under certain contracts for the delivery of scrap metal the price is not fixed by the company on delivery but at an unspecified future date to be determined by the company, the revenue recognised is restated based on the London Metal Exchange prices at the end of each month with any price movement being taken to Turnover.
1.4
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Buildings freehold
2% per annum on a straight-line basis
Land & buildings short leasehold
On a straight-line basis over the term of the lease
Plant and machinery
7.5% and 15% per annum on a straight-line basis
Fixtures, fittings & equipment
20% and 33% per annum on a straight-line basis
Motor vehicles
20% per annum on a straight-line basis
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.5
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.
Cost comprises direct material cost and is calculated using both the LIFO (last-in, first-out) and weighted average methods. This is a departure from the requirement of FRS 102, which requires either the FIFO (first-in, first-out) or weighted average methods to be used. In the opinion of the directors the use of the LIFO method is necessary for the financial statements to give a true and fair view, as the physical limitations of the storage space in the main warehouse mean that the LIFO method is the basis actually used when stock is delivered to the warehouse and subsequently sold.
1.6
Financial instruments
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Other financial assets
Other financial assets are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
NEWBERY METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
1
Accounting policies
(Continued)
- 12 -
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from
fellow group companies and preference shares that are classified as debt, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade creditors are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value though profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
NEWBERY METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
1
Accounting policies
(Continued)
- 13 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.7
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit
.
1.8
Provisions
Provisions are recognised when the
company
has a legal or constructive present obligation as a result of a past event, it is probable that the
company
will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation.
Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision i
s
measured at present value
,
the unwinding of the discount is recognised as a finance cost in profit or loss in the period
in which
it arises.
1.9
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.10
Leases
Rentals payable under operating leases,
including
any lease incentives received, are charged to income on a straight
-
line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease asset are consumed.
1.11
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.
NEWBERY METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 14 -
2
Turnover and other revenue
An analysis of the company's turnover is as follows:
2019
2018
£
£
Turnover analysed by class of business
Sale of goods
25,294,663
25,367,938
Plant hire, haulage and miscellaneous
62,340
62,406
25,357,003
25,430,344
Turnover analysed by geographical market
UK
22,970,728
22,893,740
EU
278,809
272,121
Rest of World
2,107,466
2,264,483
25,357,003
25,430,344
3
Operating profit
2019
2018
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
7,800
7,600
Depreciation of owned tangible fixed assets
198,073
192,632
Profit on disposal of tangible fixed assets
(58,059)
(13,269)
Amortisation of intangible assets
-
8,333
Cost of stocks recognised as an expense
20,032,828
19,586,903
Operating lease charges
242,224
214,327
4
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2019
2018
Number
Number
Directors
3
3
Works
34
32
Drivers
4
4
Administration
10
10
51
49
NEWBERY METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
4
Employees
(Continued)
- 15 -
Their aggregate remuneration comprised:
2019
2018
£
£
Wages and salaries
1,112,451
1,106,690
Social security costs
93,335
91,331
Pension costs
20,767
13,268
1,226,553
1,211,289
5
Directors' remuneration
2019
2018
£
£
Remuneration for qualifying services
134,000
155,657
Company pension contributions to defined contribution schemes
4,927
4,051
138,927
159,708
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2018 - 2).
6
Taxation
2019
2018
£
£
Current tax
UK corporation tax on profits for the current period
449,710
550,004
Adjustments in respect of prior periods
-
(10,777)
Total current tax
449,710
539,227
Deferred tax
Origination and reversal of timing differences
(9,491)
13,012
Total tax charge
440,219
552,239
NEWBERY METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
6
Taxation
(Continued)
- 16 -
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2019
2018
£
£
Profit before taxation
2,473,277
2,831,351
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%)
469,923
537,957
Tax effect of expenses that are not deductible in determining taxable profit
5,355
6,255
Adjustments in respect of prior years
-
(10,777)
Group relief
(32,971)
-
Permanent capital allowances in excess of depreciation
(6,695)
17,000
Depreciation on assets not qualifying for tax allowances
2,692
1,804
Other permanent differences
1,915
-
Taxation charge for the year
440,219
552,239
7
Dividends
2019
2018
£
£
Final dividend paid
1,500,000
1,800,000
NEWBERY METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 17 -
8
Tangible fixed assets
Buildings freehold
Land & buildings short leasehold
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 July 2018
100,460
190,769
731,807
114,218
388,862
1,526,116
Additions
-
-
425,772
3,066
179,372
608,210
Disposals
-
-
(314,353)
-
(34,793)
(349,146)
At 30 June 2019
100,460
190,769
843,226
117,284
533,441
1,785,180
Depreciation and impairment
At 1 July 2018
6,725
67,373
455,426
101,795
187,439
818,758
Depreciation charged in the year
1,200
26,921
89,032
4,710
76,210
198,073
Eliminated in respect of disposals
-
-
(20,875)
-
(30,640)
(51,515)
At 30 June 2019
7,925
94,294
523,583
106,505
233,009
965,316
Carrying amount
At 30 June 2019
92,535
96,475
319,643
10,779
300,432
819,864
At 30 June 2018
93,735
123,396
276,381
12,423
201,423
707,358
9
Stocks
2019
2018
£
£
Finished goods and goods for resale
2,918,109
2,942,449
The value of stock as stated above is lower than its equivalent replacement cost by £410,428 (2018 - £1,023,240).
10
Debtors
2019
2018
Amounts falling due within one year:
£
£
Trade debtors
4,557,445
7,355,036
Other debtors
189,561
76,545
Prepayments and accrued income
254,907
272,368
5,001,913
7,703,949
NEWBERY METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
10
Debtors
(Continued)
- 18 -
Included in Trade debtors are amounts totalling £2,894,839 (2018 - £4,962,088) due under contracts for the delivery of scrap metal where the price was not fixed by the company at the date of delivery, accounted for at fair value based on metal prices on the London Metal Exchange at the year-end date.
11
Creditors: amounts falling due within one year
2019
2018
£
£
Trade creditors
1,223,855
1,119,999
Amounts owed to group undertakings
1,582,560
741,477
Corporation tax
79,915
100,004
Other taxation and social security
477,657
218,423
Other creditors
2,232
455
Accruals and deferred income
225,474
217,432
3,591,693
2,397,790
12
Provisions for liabilities
2019
2018
Notes
£
£
Provisions
100,000
100,000
Deferred tax liabilities
13
77,859
87,350
177,859
187,350
Movements on provisions apart from deferred tax liabilities:
Provisions
£
At 1 July 2018 and 30 June 2019
100,000
Provisions represent an estimate of the costs of maintaining the concreting of the yard and decontaminating the land under the terms of the company's occupation of the sites.
13
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2019
2018
Balances:
£
£
Accelerated capital allowances
77,859
87,350
NEWBERY METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
13
Deferred taxation
(Continued)
- 19 -
2019
Movements in the year:
£
Liability at 1 July 2018
87,350
Credit to profit or loss
(9,491)
Liability at 30 June 2019
77,859
The deferred tax liability set out relates to accelerated capital allowances that are expected to mature within the foreseeable future.
14
Retirement benefit schemes
2019
2018
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
20,767
13,268
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
15
Share capital
2019
2018
£
£
Ordinary share capital
Issued and fully paid
6,140,000 Ordinary shares of £1 each
6,140,000
6,140,000
16
Operating lease commitments
Lessee
The company leases premises and plant and machinery under operating leases.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2019
2018
£
£
Within one year
37,794
36,823
Between two and five years
87,010
104,112
In over five years
11,400
12,558
136,204
153,493
NEWBERY METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 20 -
17
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Purchase of goods
2019
2018
£
£
Other related parties
971,078
1,067,568
Provision of services
Receipt of services
2019
2018
2019
2018
£
£
£
£
Other related parties
27,282
58,980
128,000
183,500
The company is a wholly-owned subsidiary of Togs Limited, a company registered in England & Wales that prepares publicly available consolidated financial statements, and is therefore exempt under FRS 102 from disclosing intra-group related party transactions.
The following amounts were outstanding at the reporting end date:
2019
2018
Amounts owed to related parties
£
£
Other related parties
116,854
142,520
The following amounts were outstanding at the reporting end date:
2019
Balance
Amounts owed by related parties
£
Other related parties
145,697
2018
Balance
Amounts owed in previous period
£
Other related parties
72,274
The Other related parties above include companies controlled by the directors (or a close family member of a director), or in which the directors have an interest.
The loans to Other related parties are unsecured, interest free and repayable on demand.
NEWBERY METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
17
Related party transactions
(Continued)
- 21 -
There is a cross-guarantee between the company and a company controlled by the domestic partner of a director, covering all bank borrowings of both companies in favour of National Westminster Bank Plc.
18
Ultimate controlling party
The company's ultimate parent company is Togs Limited, a company registered in England & Wales which heads the group to consolidate these financial statements. Copies of the consolidated group accounts can be obtained from its registered office at Orchard Works, Ashton Road, Marsh Barton, Exeter, Devon, EX2 8LN.
The ultimate controlling party is Mr R A Toghill, the majority shareholder.
19
Cash generated from operations
2019
2018
as restated
£
£
Profit for the year after tax
2,033,058
2,279,112
Adjustments for:
Taxation charged
440,219
552,239
Finance costs
-
178
Investment income
(1,799)
(15,875)
Gain on disposal of tangible fixed assets
(58,059)
(13,269)
Amortisation and impairment of intangible assets
-
8,333
Depreciation and impairment of tangible fixed assets
198,073
192,632
Movements in working capital:
Decrease/(increase) in stocks
24,340
(693,617)
Decrease/(increase) in debtors
2,850,399
(1,132,819)
Increase in creditors
361,419
172,006
Cash generated from operations
5,847,650
1,348,920
Non-cash items in Investing activities:
Purchase of tangible fixed assets in the Statement of Cash Flows excludes tangible fixed assets acquired from the parent company for non-cash consideration of £288,891 (2018 - £nil).
In addition, tangible fixed assets part-exchanged for new assets for non-cash consideration of £288,891 (2018 - £nil) have been excluded from both Purchase of tangible fixed assets and Proceeds on disposal of tangible fixed assets in the Statement of Cash Flows.
Restatement of Cash flows for 2018:
Non-cash movements on non-trading loans to related parties have been excluded from both Cash generated from operations and Financing activities in the Statement of Cash Flows . Non-cash movements of £3,138,483 have been reanalysed for the year ended 30 June 2018 and the comparatives restated accordingly.
NEWBERY METALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2019
- 22 -
20
Analysis of changes in net funds
1 July 2018
Cash flows
30 June 2019
£
£
£
Cash at bank and in hand
307,316
4,331,340
4,638,656
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