Company Registration No. 00106442 (England and Wales)
MURPHY & SON LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
MURPHY & SON LIMITED
COMPANY INFORMATION
Directors
J A Carmichael
S L Hale
B A McCluskie
Dr C J Fleming
C W R Nicholds
J J Oates
(Appointed 20 April 2022)
B Critchell
(Appointed 19 April 2022)
Secretary
J J Oates
Company number
00106442
Registered office
Alpine Street
Old Basford
Nottingham
NG6 0HQ
Auditor
UHY Hacker Young
14 Park Row
Nottingham
NG1 6GR
Bankers
Barclays Bank PLC
Basildon 9
Leicester
LE87 2BB
Solicitors
Nelsons Solicitors
Pennine House
8 Stanford Street
Nottingham
NG1 7BQ
MURPHY & SON LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 7
Statement of comprehensive income
8
Balance sheet
9 - 10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 30
MURPHY & SON LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2022
- 1 -
The directors present the strategic report for the year ended 31 March 2022.
Fair review of the business
This year has seen the most encouraging turn around in the Company’s performance in its history. A record turnover at £13.85m up from £8.5m the previous year. A record profit at £1.4m up from £0.3m the previous year and the latter after over £0.5m in furlough payments. A record Balance Sheet valuation at £9.3m up from £8.01m all endorse the Company’s improved position.
We will be looking to propose a final dividend of £300,000 at the AGM, this will be shown within the accounts to 31 March 2023 by virtue of the date at which the dividend is committed to.
As the economy gradually settled down and our key customer base benefitted from a surge in demand, we were able to respond, having maintained good stock levels of most raw materials, as our purchasing manager met the challenge of sourcing supplies in a very difficult marketplace, together with our entire work force going the extra mile to satisfy our customers with enhanced levels of service. This along with the technical sales team seeking out new opportunities, that we hope can be maintained in the years ahead.
Principal risks and uncertainties
Whilst the corona virus looks to have become a challenge for all of us to manage, at least for now it has become more manageable, and we have embraced the need for a more flexible working environment. Raw material procurement continues to be our biggest uncertainty along with spiralling freight costs, managing our exports into Europe and supporting our subsidiary in the USA. The staffing shortage across the UK is also making recruitment very challenging. Warehouses and logistical depots are being built all over the East Midlands and the ability recruit staff in this area is therefore increasingly difficult.
Future
T
he fantastic growth in sales has brought with it enormous pressure on our storage facilities, which is now where our focus turns to as we seek to maintain this year’s success and grow further. This means finding a solution for more space and improving our carbon footprint and achieving the Nottingham City Councils target of carbon neutrality by 2028 is critical. To maintain our growth curve, we must look to a new facility.
Key performance indicators
The Directors could not be more pleased with the year’s performance and to reflect this propose a record Final Dividend payment. We welcome the addition of two new Executive Board Members in Jemima Oates (Finance Director) and Brandon Critchell (Commercial Director) both of whom have made a major contribution to this year’s success as we wish them a long and successful tenure with the Company.
J A Carmichael
Director
15 July 2022
MURPHY & SON LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2022
- 2 -
The directors present their annual report and financial statements for the year ended 31 March 2022.
Principal activities
The principal activity of the company continued to be that of consulting and manufacturing chemists.
Results and dividends
The results for the year are set out on page 8.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
J A Carmichael
S L Hale
B A McCluskie
Dr C J Fleming
C W R Nicholds
J J Oates
(Appointed 20 April 2022)
B Critchell
(Appointed 19 April 2022)
Auditor
UHY Hacker Young were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
MURPHY & SON LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 3 -
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 each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s
auditor
is unaware. Additionally, the directors individually 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
auditor
is aware of that information.
On behalf of the board
J A Carmichael
Director
15 July 2022
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MURPHY & SON LIMITED
- 4 -
Opinion
We have audited the financial statements of Murphy & Son Limited (the 'company') for the year ended 31 March 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including 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 31 March 2022 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
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.
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MURPHY & SON LIMITED
- 5 -
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 contained within the annual report. 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. 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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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.
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
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit.
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MURPHY & SON LIMITED
- 6 -
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, 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
.
Based on our understanding of the Group and the industry in which it operates, we identified that the principal risks of non-compliance with laws and regulations related to UK tax legislation, employment and health and safety regulation, anti-bribery, corruption and fraud, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to inflated revenue and profit. Audit procedures performed included: review of the financial statement disclosures to underlying supporting documentation, review of correspondence with and reports to the regulators, including review of correspondence with legal advisors, enquiries of management, and testing of journals and evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.
There are inherent limitations in the audit procedures described above 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 would become aware of it. Also, 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 or intentional misrepresentations, or through collusion.
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MURPHY & SON LIMITED
- 7 -
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's 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.
James Simmonds (Senior Statutory Auditor)
For and on behalf of UHY Hacker Young
25 July 2022
Chartered Accountants
Statutory Auditor
MURPHY & SON LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2022
- 8 -
2022
2021
as restated
Notes
£
£
Turnover
3
13,853,500
8,504,157
Cost of sales
(8,149,127)
(5,696,145)
Gross profit
5,704,373
2,808,012
Distribution costs
(1,372,308)
(821,066)
Administrative expenses
(2,697,413)
(2,143,499)
Other operating income
3
51,738
561,419
Exceptional item
4
(5,000)
Operating profit
5
1,686,390
399,866
Interest receivable and similar income
8
3,327
5,542
Fair value gains and losses on investment properties
13
119,000
Profit before taxation
1,808,717
405,408
Tax on profit
9
(397,641)
(35,266)
Profit for the financial year
1,411,076
370,142
The profit and loss account has been prepared on the basis that all operations are continuing operations.
MURPHY & SON LIMITED
BALANCE SHEET
AS AT
31 MARCH 2022
31 March 2022
- 9 -
2022
2021
as restated
Notes
£
£
£
£
Fixed assets
Tangible assets
12
3,838,694
3,819,360
Investment properties
13
689,000
570,000
Investments
14
200
200
4,527,894
4,389,560
Current assets
Stocks
16
2,652,741
1,908,349
Debtors
17
2,520,881
1,384,738
Cash at bank and in hand
2,008,640
1,864,664
7,182,262
5,157,751
Creditors: amounts falling due within one year
18
(1,926,057)
(1,104,294)
Net current assets
5,256,205
4,053,457
Total assets less current liabilities
9,784,099
8,443,017
Provisions for liabilities
Deferred tax liability
19
409,503
274,497
(409,503)
(274,497)
Net assets
9,374,596
8,168,520
Capital and reserves
Called up share capital
21
40,000
40,000
Revaluation reserve
140,248
143,232
Non-distributable profits reserve
22
277,378
198,895
Distributable profit and loss reserves
8,916,970
7,786,393
Total equity
9,374,596
8,168,520
MURPHY & SON LIMITED
BALANCE SHEET (CONTINUED)
AS AT
31 MARCH 2022
31 March 2022
- 10 -
The financial statements were approved by the board of directors and authorised for issue on 15 July 2022 and are signed on its behalf by:
J A Carmichael
S L Hale
Director
Director
Company Registration No. 00106442
MURPHY & SON LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022
- 11 -
Share capital
Revaluation reserve
Non-distri-butable profits
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 April 2020
40,000
146,216
288,187
7,423,975
7,898,378
Year ended 31 March 2021:
Profit and total comprehensive income for the year
-
-
-
370,142
370,142
Dividends
10
-
-
-
(100,000)
(100,000)
Transfers (depreciation)
-
(2,984)
-
2,984
-
Transfers (investment property)
-
-
(89,292)
89,292
-
Balance at 31 March 2021
40,000
143,232
198,895
7,786,393
8,168,520
Year ended 31 March 2022:
Profit and total comprehensive income for the year
-
-
78,483
1,332,593
1,411,076
Dividends
10
-
-
-
(205,000)
(205,000)
Transfers (depreciation)
-
(2,984)
-
2,984
-
Balance at 31 March 2022
40,000
140,248
277,378
8,916,970
9,374,596
MURPHY & SON LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2022
- 12 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
26
764,899
809,839
Income taxes paid
(98,190)
(58,119)
Net cash inflow from operating activities
666,709
751,720
Investing activities
Purchase of tangible fixed assets
(350,106)
(147,610)
Proceeds on disposal of tangible fixed assets
29,046
26,833
Proceeds on disposal of investment property
170,000
Interest received
3,327
5,542
Net cash (used in)/generated from investing activities
(317,733)
54,765
Financing activities
Proceeds from borrowings
1,500,000
Repayment of borrowings
(1,500,000)
Dividends paid
(205,000)
(100,000)
Net cash used in financing activities
(205,000)
(100,000)
Net increase in cash and cash equivalents
143,976
706,485
Cash and cash equivalents at beginning of year
1,864,664
1,158,179
Cash and cash equivalents at end of year
2,008,640
1,864,664
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2022
- 13 -
1
Accounting policies
Company information
Murphy & Son Limited is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
Alpine Street, Old Basford, Nottingham, NG6 0HQ.
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 £.
The financial statements have been prepared under the historical cost convention, modified to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The company has taken advantage of the exemption under section 400 of the
Companies Act 2006 not to prepare consolidated accounts. The
financial statements
present information about the company as an individual entity and not about its group
.
Murphy & Son Limited is a wholly owned subsidiary of Murphy & Son International Limited and the results of Murphy & Son Limited are included in the consolidated financial statements of Murphy & Son International Limited which are available from Alpine Street, Old Basford, Nottingham, NG6 0HQ.
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.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
(usually on dispatch of the goods)
, 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.
Revenue for the provision of
professional
services is recognised by reference to
when the services were provided.
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
1
Accounting policies
(Continued)
- 14 -
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated
amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and has been fully amortised.
1.5
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:
Freehold land and buildings
10% to 2% on cost
Plant and equipment
20% and 10% on cost
Fixtures and fittings
33%, 20% and 10% on cost
Laboratory apparatus
20% and 10% on cost
Motor vehicles
25% on reducing balance
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
.
Assets in the course of construction are not depreciated.
1.6
Investment properties
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure
. Subsequently it is measured
at fair value a
t
the reporting end date.
Changes in fair value are recognised in profit or loss.
1.7
Fixed asset investments
Interests in subsidiaries
are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
The investments are assessed for impairment at each reporting date
and
any
impairment
losses or reversals of impairment losses are recognised immediately in
profit
or
loss
.
A subsidiary is an entity controlled by the company
. Control is
the power to govern the financial and operating policies of
the
entity so as to obtain benefits from its activities.
1.8
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its 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 (if any).
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
1
Accounting policies
(Continued)
- 15 -
Recoverable amount is the higher of fair value less costs to sell and value in use. 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 for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset
in
prior years. A reversal of an impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.9
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.10
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.11
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its 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.
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
1
Accounting policies
(Continued)
- 16 -
Basic financial assets
Basic financial assets, which include
debtors
and cash and bank balances, are initially measured at transaction price including transaction
costs
.
Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, 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.
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.
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.
Basic financial liabilities
Basic financial liabilities, including
creditors and
loans from
fellow group
companies
, are
initially recognised at transaction
price
.
Financial liabilities classified as payable within one year are not amortised.
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.
Trade creditors
are recognised initially at transaction price
.
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
1
Accounting policies
(Continued)
- 17 -
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 th
r
ough 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.12
Equity instruments
Share capital issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on shares are recognised as liabilities once they are no longer at the discretion of the company.
1.13
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.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the
profit and loss account
, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
1
Accounting policies
(Continued)
- 18 -
1.14
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or
fixed assets
.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.15
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
1
Accounting policies
(Continued)
- 19 -
1.16
Leases
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
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
s
asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
1.17
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met
. Where a
grant does not specify performance conditions
it
is recognised in income when the proceeds are received or receivable
. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.18
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
in the period
are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are
as follows.
Investment property valuation
The investment properties have been revalued based on a starting valuation from 2017 plus an estimated uplift with reference to RPI increases and specific factors relating to the valuation of the properties during the year.
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 20 -
3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by geographical market
UK
11,619,490
6,913,328
Rest of World
2,234,010
1,590,829
13,853,500
8,504,157
2022
2021
£
£
Other operating income
Grants received
21,744
534,541
Rental income arising from investment properties
21,894
21,835
Sundry income
8,100
5,043
51,738
561,419
4
Exceptional item
2022
2021
£
£
Expenditure
Loss on sale of investment property
-
5,000
5
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
19,888
54,980
Government grants
(21,744)
(534,541)
Fees payable to the company's auditor for the audit of the company's financial statements
18,150
16,500
Depreciation of owned tangible fixed assets
290,928
543,052
Loss on disposal of tangible fixed assets
10,798
5,074
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 21 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Directors
5
5
Production, distribution and office
53
51
Total
58
56
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
2,686,644
2,209,078
Pension costs
99,652
76,921
2,786,296
2,285,999
Voluntary redundancy payments made or committed
149,623
7
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
405,042
330,698
Company pension contributions to defined contribution schemes
47,863
45,726
452,905
376,424
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2021 - 2).
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
7
Directors' remuneration
(Continued)
- 22 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
239,124
171,728
8
Interest receivable and similar income
2022
2021
£
£
Interest income
Interest on bank deposits
464
4,351
Other interest income
2,863
1,191
Total income
3,327
5,542
Investment income includes the following:
Interest on financial assets not measured at fair value through profit or loss
464
4,351
9
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
263,866
99,431
Adjustments in respect of prior periods
(1,231)
(19,158)
Total current tax
262,635
80,273
Deferred tax
Origination and reversal of timing differences
135,006
(45,007)
Total tax charge
397,641
35,266
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
9
Taxation
(Continued)
- 23 -
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:
2022
2021
£
£
Profit before taxation
1,808,717
405,408
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
343,656
77,028
Tax effect of expenses that are not deductible in determining taxable profit
1,825
2,347
Adjustments in respect of prior years
(1,231)
(19,158)
Permanent capital allowances in excess of depreciation
7,058
34,364
Research and development tax credit
(46,930)
(44,460)
Other non-reversing timing differences
(5,019)
4,764
Change in rates of deferred tax
98,282
Losses utilised on chargable gains
(19,619)
Taxation charge for the year
397,641
35,266
10
Dividends
2022
2021
2022
2021
as restated
as restated
Per share
Per share
Total
Total
£
£
£
£
Ordinary shares
Paid during financial year
5.13
2.50
102,500
50,000
Preference shares
Paid during financial year
5.13
2.50
102,500
50,000
Total dividends
Paid during financial year
205,000
100,000
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 24 -
11
Intangible fixed assets
Goodwill
£
Cost
At 1 April 2021 and 31 March 2022
1,670,969
Amortisation and impairment
At 1 April 2021 and 31 March 2022
1,670,969
Carrying amount
At 31 March 2022
At 31 March 2021
12
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Laboratory apparatus
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 April 2021
4,166,553
2,920,153
482,390
452,060
349,093
8,370,249
Additions
31,798
139,735
53,663
21,247
103,663
350,106
Disposals
(8,400)
(35,326)
(20,378)
(64,104)
At 31 March 2022
4,189,951
3,024,562
536,053
473,307
432,378
8,656,251
Depreciation and impairment
At 1 April 2021
1,553,344
2,090,240
377,387
324,921
204,997
4,550,889
Depreciation charged in the year
109,177
118,519
22,144
3,591
37,497
290,928
Eliminated in respect of disposals
(980)
(6,820)
(16,460)
(24,260)
At 31 March 2022
1,661,541
2,201,939
399,531
328,512
226,034
4,817,557
Carrying amount
At 31 March 2022
2,528,410
822,623
136,522
144,795
206,344
3,838,694
At 31 March 2021
2,613,209
829,913
105,003
127,139
144,096
3,819,360
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 25 -
13
Investment property
2022
£
Fair value
At 1 April 2021
570,000
Net gains or losses through fair value adjustments
119,000
At 31 March 2022
689,000
Investment property comprises four properties based in the Nottingham area and one property based in the Wheathampstead area.
The fair value of the investment properties have been arrived at on the basis of a previous valuation carried out in June 2017 by FHP Property Consultants and the Directors in respect of properties based in the Nottingham area and a valuation carried out in April 2017 by Cassidy & Tate in respect of the property in the Wheathampstead area, both Chartered Surveyors are not connected with the company. The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties.
The revaluation in 2022 was been estimated by the directors by reviewing RPI since the last professional valuation and discussions with agents for a valuation due to take place in 2023.
14
Fixed asset investments
2022
2021
Notes
£
£
Investments in subsidiaries
15
200
200
15
Subsidiaries
Details of the company's subsidiaries at 31 March 2022 are as follows:
Micro-Audit Limited
Registered office: Alpine Street, Nottingham, Nottinghamshire, NG6 0HQ
Nature of business: Non-trading
Class of shares: Ordinary
Direct share holding (%): 100.00
16
Stocks
2022
2021
£
£
Raw materials and consumables
2,652,741
1,908,349
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 26 -
17
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
1,805,408
1,058,328
Amounts owed by group undertakings
468,809
206,256
Other debtors
85,167
6,087
Prepayments and accrued income
140,274
85,405
2,499,658
1,356,076
2022
2021
Amounts falling due after more than one year:
£
£
Other debtors
21,223
28,662
Total debtors
2,520,881
1,384,738
18
Creditors: amounts falling due within one year
2022
2021
as restated
£
£
Trade creditors
756,405
632,651
Corporation tax
265,605
101,160
Other taxation and social security
256,493
71,559
Other creditors
142,293
13,474
Accruals and deferred income
505,261
285,450
1,926,057
1,104,294
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 27 -
19
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
339,620
244,696
Revaluations
74,611
34,094
Short term timing differences
(4,728)
(4,293)
409,503
274,497
2022
Movements in the year:
£
Liability at 1 April 2021
274,497
Charge to profit or loss
135,006
Liability at 31 March 2022
409,503
20
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
99,652
76,921
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.
21
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
20,000
20,000
20,000
20,000
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
21
Share capital
(Continued)
- 28 -
2022
2021
2022
2021
Preference share capital
Number
Number
£
£
Issued and fully paid
Preference shares of £1 each
20,000
20,000
20,000
20,000
Preference shares classified as equity
20,000
20,000
Total equity share capital
40,000
40,000
22
Non-distributable profits reserve
2022
2021
£
£
At the beginning of the year
198,895
288,187
Non distributable profits in the year
78,483
-
Transfer of non-distributable profits to other reserves
-
(89,292)
At the end of the year
277,378
198,895
The non-distributable profits reserve relates to revaluations of investment properties.
Transfers of non-distributable profits relate to realised profits following the disposal of investment properties and / or the transfer of investment properties to/from tangible fixed assets.
23
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows:
2022
2021
£
£
Aggregate compensation
393,863
376,424
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 29 -
24
Ultimate controlling party
In the opinion of the Board of Directors, the ultimate controlling party are The Trustees of A J Murphy Deceased, of which the trustees, Mr J A Carmichael, Mr S L Hale, Mr B A McCluskie, Dr C J Fleming, and Mr C W R Nicholds are also directors of Murphy & Son Limited.
25
Prior year adjustment
The 2021 accounts previously included other operating income of £26,878. This excluded furlough grants of £534,541 which had previously been disclosed at net against the relevant wage costs within cost of sales, distribution expenses and administrative costs. There has been no change to profit in the 2021 figures.
The 2021 accounts previously included accrued dividends of £150,000. These have been reversed as they were not approved until the 2022 year. There has been no change in profit in the 2021 figures. The reserves in 2021 are higher by 150,000 and creditors due within one year have decreased by £150,000 respectively.
26
Cash generated from operations
2022
2021
£
£
Profit for the year after tax
1,411,076
370,142
Adjustments for:
Taxation charged
397,641
35,266
Investment income
(3,327)
(5,542)
Loss on disposal of tangible fixed assets
10,798
5,074
Fair value gain on investment properties
(119,000)
Depreciation and impairment of tangible fixed assets
290,928
543,052
Movements in working capital:
Increase in stocks
(744,392)
(241,572)
(Increase)/decrease in debtors
(1,136,143)
549,310
Increase/(decrease) in creditors
657,318
(445,891)
Cash generated from operations
764,899
809,839
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2022
- 30 -
27
Analysis of changes in net funds
1 April 2021
Cash flows
31 March 2022
£
£
£
Cash at bank and in hand
1,864,664
143,976
2,008,640
2022-03-31
2021-04-01
false
CCH Software
CCH Accounts Production 2022.100
J A Carmichael
S L Hale
B A McCluskie
Dr C J Fleming
C W R Nicholds
B Critchell
B Critchell
J J Oates
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