Quality Metal Products Limited - Limited company accounts 20.1

REGISTERED NUMBER: 08109449 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements

for the Year Ended 31st January 2020

for

QUALITY METAL PRODUCTS LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Income Statement

7

Other Comprehensive Income

8

Balance Sheet

9

Statement of Changes in Equity

10

Cash Flow Statement

11

Notes to the Cash Flow Statement

12

Notes to the Financial Statements

14

DIRECTORS:

P J Hargreaves

N G Higgitt

REGISTERED OFFICE:

Arbor House

Broadway North

Walsall

West Midlands

WS1 2AN

REGISTERED NUMBER:

08109449 (England and Wales)

AUDITORS:

Bakers

Statutory Auditor

Baker (Midlands) Limited)

Arbor House

Broadway North

Walsall

WS1 2AN

The directors present their strategic report for the year ended 31st January 2020.

The principal activity of the company during the year was the manufacture of industrial furniture.

REVIEW OF BUSINESS

The directors are of the opinion that the company has achieved its expected goals and that the entity's performance is

satisfactory. The directors consider the key performance indicators are those that communicate the financial

performance and strength of the company as a whole, being turnover, gross margin,net profit and net assets.

The turnover of the company has increased in the year from £7,130,562 for the year ended 31st January 2019 to

£7,468,174 in the current year, an increase of 4.7%. The increase related to balanced and managed growth.

The gross margin for the year is 37.00% (2019: 33.74%). Overall profit before tax increased to £290,331 from £179,162.

As as result of the profit the financial position also continues to be healthy, with the company's Balance Sheet showing

total net assets of £1,827,546 (2019: £1,609,945).

The company's principal financial instruments comprise bank balances, trade debtors, trade creditors, invoice finance

and loans to the business. The main purpose of these instruments is to finance day to day operations.

Liquidity risk is managed by maintaining a balance between cash in the current bank account and the funding flexibility

offered by the use of invoice discounting. The business manages the liquidity risk by ensuring there are sufficient funds

to meet upcoming payments.

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. The amounts presented

in the balance sheet are net of allowances for doubtful debtors.

Trade creditors are managed by ensuring sufficient funds are available to meet amounts due.

PRINCIPAL RISKS AND UNCERTAINTIES

As for many businesses of our size and nature the business environment in which we operate continues to be

challenging. The market in which we operate is highly competitive and often volatile and margins are continually under

pressure. However, as stated above, with our strong management team and continuing research into new production

methods, products and markets we consider that the company is in a strong position to maintain its leading position in

the market.

However, we remain aware that all plans and projections are subject to unforeseen national and international events

outside of our control, particularly the continued effects of Covid-19, but we are confident that we have the

management team in place with the expertise to adapt to the prevailing conditions.

ON BEHALF OF THE BOARD:

N G Higgitt - Director

19th November 2020

The directors present their report with the financial statements of the company for the year ended 31st January 2020.

DIVIDENDS

Interim dividends of £12,000 per share were paid during the year.

DIRECTORS

The directors shown below have held office during the whole of the period from 1st February 2019 to the date of this

report.

P J Hargreaves

N G Higgitt

Other changes in directors holding office are as follows:

M Wright ceased to be a director after 31st January 2020 but prior to the date of this report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

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

statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the

directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted

Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors

must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of

affairs of the company and of the profit or loss of the company for that period. In preparing these financial

statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the

company's transactions and disclose with reasonable accuracy at any time the financial position of the company and

enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible

for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of

fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies

Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to

have taken as a director in order to make himself aware of any relevant audit information and to establish that the

company's auditors are aware of that information.

ON BEHALF OF THE BOARD:

N G Higgitt - Director

19th November 2020

Opinion

We have audited the financial statements of Quality Metal Products Limited (the 'company') for the year ended

31st January 2020 which comprise the Income Statement, Other Comprehensive Income, Balance Sheet, Statement of

Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements,

including a summary of significant accounting policies. The financial reporting framework that has been applied in their

preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102

'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted

Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31st January 2020 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.

Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the

financial statements section of our report. We are independent of the company in accordance with the ethical

requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard,

and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the

audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

you where:

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

-

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

Other information

The directors are responsible for the other information. The other information comprises the information in the

Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the

Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise

explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in

doing so, consider whether the other information is materially inconsistent with the financial statements or our

knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material

inconsistencies or apparent material misstatements, we are required to determine whether there is a material

misstatement in the financial statements or a material misstatement of the other information. If, based on the work

we have performed, we conclude that there is a material misstatement of this other information, we are required to

report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

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

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

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the

audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to

you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are

responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view,

and for such internal control as the directors determine necessary to enable the preparation of financial statements

that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a

going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic

alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with

ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and

are considered material if, individually or in the aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial

Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the

Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those

matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent

permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's

members as a body, for our audit work, for this report, or for the opinions we have formed.

John Davis (Senior Statutory Auditor)

for and on behalf of Bakers

Statutory Auditor

Baker (Midlands) Limited)

Arbor House

Broadway North

Walsall

WS1 2AN

19th November 2020

TURNOVER

3

7,468,174

7,130,562

Cost of sales

4,705,273

4,725,037

GROSS PROFIT

2,762,901

2,405,525

Administrative expenses

2,521,878

2,265,398

241,023

140,127

Other operating income

102,150

95,195

OPERATING PROFIT

5

343,173

235,322

Interest payable and similar expenses

6

52,842

56,160

PROFIT BEFORE TAXATION

290,331

179,162

Tax on profit

7

36,730

15,720

PROFIT FOR THE FINANCIAL YEAR

253,601

163,442

PROFIT FOR THE YEAR

253,601

163,442

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

253,601

163,442

FIXED ASSETS

Intangible assets

9

-

-

Tangible assets

10

3,400,021

3,411,568

3,400,021

3,411,568

CURRENT ASSETS

Stocks

11

886,006

738,417

Debtors

12

1,448,961

1,390,718

Cash at bank and in hand

112,837

76,435

2,447,804

2,205,570

CREDITORS

Amounts falling due within one year

13

1,770,243

1,849,275

NET CURRENT ASSETS

677,561

356,295

TOTAL ASSETS LESS CURRENT LIABILITIES

4,077,582

3,767,863

CREDITORS

Amounts falling due after more than one year

14

(2,160,136

)

(2,077,018

)

PROVISIONS FOR LIABILITIES

18

(89,900

)

(80,900

)

NET ASSETS

1,827,546

1,609,945

CAPITAL AND RESERVES

Called up share capital

19

3

3

Revaluation reserve

20

22,010

29,347

Retained earnings

20

1,805,533

1,580,595

SHAREHOLDERS' FUNDS

1,827,546

1,609,945

The financial statements were approved by the Board of Directors and authorised for issue on 19th November 2020 and were signed on its behalf by:

N G Higgitt - Director

Called up

share

Retained

Revaluation

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1st February 2018

3

1,483,570

39,130

1,522,703

Changes in equity

Dividends

-

(76,200

)

-

(76,200

)

Total comprehensive income

-

173,225

(9,783

)

163,442

Balance at 31st January 2019

3

1,580,595

29,347

1,609,945

Changes in equity

Dividends

-

(36,000

)

-

(36,000

)

Total comprehensive income

-

260,938

(7,337

)

253,601

Balance at 31st January 2020

3

1,805,533

22,010

1,827,546

Cash flows from operating activities

Cash generated from operations

1

781,423

321,726

Interest paid

(37,297

)

(35,146

)

Interest element of hire purchase payments paid

(15,545

)

(21,014

)

Tax paid

(41,037

)

(40,935

)

Net cash from operating activities

687,544

224,631

Cash flows from investing activities

Purchase of tangible fixed assets

(54,385

)

(774,727

)

Government grants received

76,285

133,271

Net cash from investing activities

21,900

(641,456

)

Cash flows from financing activities

Loan repayments in year

(45,417

)

(45,643

)

Capital repayments on HP contracts

(129,147

)

(130,736

)

Increase in invoice discounting facility

(462,478

)

487,838

Equity dividends paid

(36,000

)

(76,200

)

Net cash from financing activities

(673,042

)

235,259

Increase/(decrease) in cash and cash equivalents

36,402

(181,566

)

Cash and cash equivalents at beginning of year

2

76,435

258,001

Cash and cash equivalents at end of year

2

112,837

76,435

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

2020

2019

£

£

Profit before taxation

290,331

179,162

Depreciation charges

279,932

264,740

Government grants

(35,407

)

(28,452

)

Finance costs

52,842

56,160

587,698

471,610

Increase in stocks

(147,589

)

(50,202

)

Decrease/(increase) in trade and other debtors

78,033

(41,555

)

Increase/(decrease) in trade and other creditors

263,281

(58,127

)

Cash generated from operations

781,423

321,726

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of

these Balance Sheet amounts:

Year ended 31st January 2020

31.1.20

1.2.19

£

£

Cash and cash equivalents

112,837

76,435

Year ended 31st January 2019

31.1.19

1.2.18

£

£

Cash and cash equivalents

76,435

258,001

3.	ANALYSIS OF CHANGES IN NET DEBT

Other

non-cash

At 1.2.19

Cash flow

changes

At 31.1.20

£

£

£

£

Net cash

Cash at bank

and in hand

76,435

36,402

112,837

76,435

36,402

112,837

Debt

Finance leases

(342,865

)

129,147

(214,000

)

(427,718

)

Debts falling due

within 1 year

(47,031

)

-

(1,113

)

(48,144

)

Debts falling due

after 1 year

(1,275,395

)

45,417

1,113

(1,228,865

)

(1,665,291

)

174,564

(214,000

)

(1,704,727

)

Total

(1,588,856

)

210,966

(214,000

)

(1,591,890

)

1.	STATUTORY INFORMATION

Quality Metal Products Limited is a private company, limited by shares , registered in England and Wales. The

company's registered number and registered office address can be found on the Company Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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

The financial statements are prepared in £ Sterling which is the functional currency of the company and

rounded to the nearest £1.

The significant accounting policies applied in the preparation of these financial statements are set out below.

These policies have been consistently applied to all years presented unless otherwise stated.

Significant judgements and estimates

The preparation of the financial statements requires management to make judgements, estimates and

assumptions that affect the amounts reported for assets and liabilities at the balance sheet date and the

amounts reported for revenues and expenses during the year. However the nature of estimation means that

actual outcomes could differ from those estimates.

Cash and cash equivalents

Cash comprise cash in hand and demand deposits. Cash equivalents are short-term, highly liquid investments

that mature in no more than three months from the date of acquisition and that are readily convertible to

known amounts of cash with an insignificant risk of change in value.

Impairment

Assets not measured at fair value are reviewed for any indication that the asset may be impaired at each

balance sheet date. If such indication exists, the recoverable amount of the asset, or the asset's cash generating

unit, is estimated and compared to the carrying amount. Where the carrying amount exceeds its recoverable

amount, an impairment loss is recognised in profit or loss unless the asset is carried at a revalued amount

where the impairment loss is a revaluation decrease.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates,

value added tax and other sales taxes.

Sale of goods

Turnover from the sale of goods is recognised when significant risks and rewards of ownership of the goods

have transferred to the buyer, the amount of turnover can be measured reliably, it is probable that the

economic benefits associated with the transaction will flow to the company and the costs incurred or to be

incurred in respect of the transaction can be measured reliably. This is usually on dispatch of the goods.

Rental income

Rental income arising from operating leases is accounted for on a straight line basis over the lease term.

Goodwill

Negative goodwill, being the difference between the fair value of assets acquired and the consideration paid on

the purchase of a business in 2012 was capitalised and amortised over its estimated useful life of five years.

Intangible assets

Intangible assets acquired separately from a business are capitalised at cost. Intangible assets acquired on

business combinations are capitalised separately from goodwill if the fair value can be measured reliably on

initial recognition.

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development

expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be

demonstrated.

Intangible assets are amortised on a straight line basis over their useful lives.

Tangible fixed assets

Tangible fixed assets are stated at historical cost or valuation less accumulated depreciation and any

accumulated impairment losses. Historical cost includes any expenditure that is directly attributable to bringing

the asset to the location and condition necessary for it to be capable of operating in the manner intended by

management.

Depreciation is provided at rates calculated to write off the cost, less estimated residual value, of each asset on

a systematic basis over its expected useful life or, if held under a finance lease, over the term of the lease,

whichever is shorter.

Depreciation is provided on the following basis:

Freehold property - 2% on cost

Plant & machinery - 20% reducing balance

Motor vehicles - 20% on cost

Freehold land is not depreciated.

The carrying values of tangible fixed assets are reviewed for impairment when events or changes in

circumstances indicate the carrying value may not be recoverable.

Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost includes

all costs of purchase, costs of conversion and other costs incurred in bringing stock to its present location and

condition. Cost is calculated using the first-in, first-out formula. Provision is made for damaged, obsolete and

slow-moving stock where appropriate.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to

the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or

substantively enacted by the balance sheet date.

Deferred tax

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

balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from

those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws

that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal

of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that

they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the

balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling

at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Hire purchase and leasing commitments

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those

held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance

leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest element of these obligations is charged to profit or loss over the relevant period. The capital

element of the future payments is treated as a liability.

Rentals paid under operating leases are charged to the profit and loss account on a straight line basis over the

period of the lease. Lease incentives are recognised over the lease term on a straight line basis.

Employee benefits

When employees have rendered service to the company, short-term employee benefits to which the

employees are entitled are recognised at the undiscounted amount expected to be paid in exchange for that

service.

The company operates a defined contribution plan for the benefit of its employees. Contributions are expensed

as they become payable.

Debts

The company's debts are factored with the company retaining the benefits and the risks of the debts. Separate

presentation has been included with the debts disclosed in current assets and the amounts due to or from the

factoring company shown in current assets or liabilities.

Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable

assurance that the company will comply with conditions attaching to them and the grants will be received using

the accrual model.