Norman Emerson Group Limited - Accounts to registrar (filleted) - small 18.2

REGISTERED NUMBER: NI007919 (Northern Ireland)

Norman Emerson Group Limited

Financial Statements

for the Period

1 January 2020 to 28 February 2021

Page

Company information

1

Statement of financial position

2

Notes to the financial statements

3

to

11

Directors:

Mr G N Emerson

Mr N C Emerson

Mr J S Ferguson

Mr C M Jordan

Mr P K Stone

Registered office:

118 Ardmore Road

Lurgan

Co Armagh

BT66 6QP

Registered number:

NI007919 (Northern Ireland)

Auditors:

Wylie Ruddell

Statutory Auditor

Chartered Accountants

Armagh Business Centre

2 Loughgall Road

Armagh

BT61 7NH

Solicitors:

Thompson Mitchell

12-14 Mandeville Street

Portadown

Co Armagh

BT62 3NZ

Fixed assets

Property, plant and equipment

4

4,750,453

3,083,094

Investments

5

52

52

4,750,505

3,083,146

Current assets

Inventories

6

488,406

359,270

Receivables

7

1,871,254

1,798,016

2,359,660

2,157,286

Payables

Amounts falling due within one year

8

(3,884,704

)

(3,927,149

)

Net current liabilities

(1,525,044

)

(1,769,863

)

Total assets less current liabilities

3,225,461

1,313,283

Payables

Amounts falling due after more than one year

9

(833,512

)

(1,057,622

)

Net assets

2,391,949

255,661

Capital and reserves

Called up share capital

10

200,005

200,005

Revaluation reserve

11

1,735,807

-

Retained earnings

456,137

55,656

Shareholders' funds

2,391,949

255,661

The financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.

In accordance with Section 444 of the Companies Act 2006, the Income statement has not been delivered.

The financial statements were approved by the Board of Directors and authorised for issue on 25 June 2021 and were signed on its behalf by:

Mr G N Emerson - Director

1.	Statutory information

Norman Emerson Group Limited is a private company, limited by shares , registered in Northern Ireland. The company's registered number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

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" including the provisions of Section 1A "Small Entities" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain assets.

Going Concern

The directors are pleased to report that the company has recorded a net profit before tax for the fourteen month period of £400,481, (2019: net loss before tax for the year of £147,069).

While the directors acknowledge that the unpredictable nature of the ongoing pandemic still presents many challenges and uncertainties going forward, they are nonetheless encouraged by the performance of the business since the re-opening and are confident that the company can trade profitably for the foreseeable future. The directors continually monitor the company's turnover and other key performance indicators and stand prepared to react to any change in the economic outlook for the sector.

Faced with the restrictions imposed during the period of lock down from March to April 2020, and the consequent impact on cash flows, the company deferred payment of aggregate tax, VAT and PAYE, with the agreement and support of HM Revenue and Customs. A Time to Pay arrangement was put in place in August 2020 for the taxes outstanding from the lock down period, and the company has paid all amounts falling due to HM Revenue and Customs since reopening mid May 2020.

The directors have prepared a cash flow forecast for the two years ending 28 February 2023. The directors acknowledge the existence of uncertainty about whether the forecast revenues can be achieved in full within the anticipated timeframe, however the directors are confident that the targets set for turnover are achievable given the sustained demand from customers since reopening. However, the board have identified specific areas where cost can be reduced in the event of a downturn to protect cashflow within the business.

In 2016 the company successfully agreed a term loan and an invoice discounting facility with Close Brothers Invoice Finance. These facilities have been renewed annually since and the directors are confident that the facilities will remain in place for the foreseeable future.

After making enquiries and considering the circumstances described above, the directors have a reasonable expectation that the cash flow forecast predicts that future sales and profitability will enable the company to have adequate resources to continue in operational existence for the foreseeable future. For these reasons, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Turnover

Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off the cost less estimated residual value of each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Long leasehold property

-

20% on cost and 2% on cost

Plant and machinery

-

10% on reducing balance and 5% on cost

Fixtures, fittings and equipment

-

20% on reducing balance

Motor vehicles

-

15% on reducing balance

Sand barges

-

6.67% on cost

Land and buildings freehold have not been depreciated on the basis that residual value is expected to be no less than current net book value.

Government grants

Grants that relate to a specific capital expenditure are treated as deferred income and credited to the Statement of Income and Retained Earnings over the related asset's useful economic life, until all performance conditions are met at which point the grant in total is credited to reserves. Grants that relate to revenue expenditure are credited to the Statement of Income and Retained Earnings over the period that the revenue expenditure relates to.

Stocks

Inventories are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Financial instruments

The company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments:

(i) Financial assets

Basic financial assets, including trade and other receivables, cash and and bank balances and amounts owed by related parties and are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Such assets are subsequently carried at amortised cost using the effective interest method.

At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. 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 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 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.

Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.

(ii) Financial liabilities

Basic financial liabilities, including trade and other payables, bank loans and overdrafts and amounts owed to related parties 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 receipts discounted at a market rate of interest. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts 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 payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

(iii) Offsetting

Financial assets and liabilities are offset and 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 lability simultaneously.

Taxation

Taxation for the period 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 statement of financial position date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position 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 period 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.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position 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 profit or loss on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

Receivables

Short term receivables are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are 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 insignificant risk of change in value.

Payables

Short term payables are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting. Dividends on shares recognised as liabilities are recognised as expenses and classified within interest payable.

Provisions for liabilities

Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation. Provisions are charged as an expense to the Statement of Income and Retained Earnings in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the Statement of Financial Position date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.

3.	Employees and directors

The average number of employees during the period was 61 (2019 - 56 ) .

4.	Property, plant and equipment

Land and

Long

buildings

leasehold

Plant and

freehold

property

machinery

£

£

£

Cost or valuation

At 1 January 2020

1,400,451

1,052,128

3,949,610

Additions

67,380

17,297

5,667

Disposals

(69,052

)

(378,894

)

-

Revaluations

1,551,221

-

-

At 28 February 2021

2,950,000

690,531

3,955,277

Depreciation

At 1 January 2020

252,406

751,557

3,084,114

Charge for period

-

8,726

127,479

Eliminated on disposal

(67,820

)

(377,354

)

-

Revaluation adjustments

(184,586

)

-

-

At 28 February 2021

-

382,929

3,211,593

Net book value

At 28 February 2021

2,950,000

307,602

743,684

At 31 December 2019

1,148,045

300,571

865,496

Fixtures,

fittings

and

Motor

equipment

vehicles

Sand barges

Totals

£

£

£

£

Cost or valuation

At 1 January 2020

286,278

1,850,682

475,436

9,014,585

Additions

-

140,330

3,455

234,129

Disposals

-

(143,299

)

-

(591,245

)

Revaluations

-

-

-

1,551,221

At 28 February 2021

286,278

1,847,713

478,891

10,208,690

Depreciation

At 1 January 2020

247,905

1,192,397

403,112

5,931,491

Charge for period

8,954

128,223

19,399

292,781

Eliminated on disposal

-

(136,275

)

-

(581,449

)

Revaluation adjustments

-

-

-

(184,586

)

At 28 February 2021

256,859

1,184,345

422,511

5,458,237

Net book value

At 28 February 2021

29,419

663,368

56,380

4,750,453

At 31 December 2019

38,373

658,285

72,324

3,083,094

Cost or valuation at 28 February 2021 is represented by:

Land and

Long

buildings

leasehold

Plant and

freehold

property

machinery

£

£

£

Valuation in 2021

1,551,221

-

-

Cost

1,398,779

690,531

3,955,277

2,950,000

690,531

3,955,277

Fixtures,

fittings

and

Motor

equipment

vehicles

Sand barges

Totals

£

£

£

£

Valuation in 2021

-

-

-

1,551,221

Cost

286,278

1,847,713

478,891

8,657,469

286,278

1,847,713

478,891

10,208,690

Freehold land and buildings were revalued on the basis of existing use by external valuers Savills and Robert Wilson Estate Agency group on 25 March 2020 and 7 June 2021 respectively. The resulting revaluation adjustment has been taken to the revaluation reserve. Had the revaluation not occurred, freehold land and buildings would have been included at the following amounts.

2021

2019 as restated

£

£

Cost

1,398,779

1,400,451

Accumulated depreciation based on cost

(193,678

)

(252,406

)

Net book value based on cost

1,205,101

1,148,045

The annual depreciation charge for the period based on cost would have been £9,091 (2019: £7,825)

Fixed assets, included in the above, which are held under hire purchase contracts are as follows:

Plant and

Motor

machinery

vehicles

Totals

£

£

£

Cost or valuation

At 1 January 2020

357,650

756,915

1,114,565

Additions

-

95,450

95,450

Reclassification/transfer

283,476

93,073

376,549

At 28 February 2021

641,126

945,438

1,586,564

Depreciation

At 1 January 2020

40,110

186,876

226,986

Charge for period

49,954

113,034

162,988

Reclassification/transfer

197,209

62,670

259,879

At 28 February 2021

287,273

362,580

649,853

Net book value

At 28 February 2021

353,853

582,858

936,711

At 31 December 2019

317,540

570,039

887,579

5.	Investments

Group and

participating

interests/joint

ventures

£

Cost

At 1 January 2020

and 28 February 2021

52

Net book value

At 28 February 2021

52

At 31 December 2019

52

6.	Inventories

2021

2019

as restated

£

£

Finished goods

488,406

359,270

7.

Receivables: amounts falling due within one year

2021

2019

as restated

£

£

Trade receivables

1,384,063

1,604,765

Amounts owed by group undertakings

4,639

42,867

Other receivables

408,779

67,386

Directors' loan accounts

1,883

-

Prepayments and accrued income

71,890

82,998

1,871,254

1,798,016

8.

Payables: amounts falling due within one year

2021

2019

as restated

£

£

Bank loans and overdrafts

326,568

315,434

Hire purchase contracts

222,722

186,979

Trade payables

1,560,249

1,765,328

Taxation and social security

645,354

323,437

Other payables

1,129,811

1,335,971

3,884,704

3,927,149

Bank loans and overdrafts provided by Close Brothers Invoice Finance are secured by the following:-

(a) A personal guarantee limited to £200,000 from George Emerson (Director).

(b) A Deed of Indemnity from George Emerson (Director).

(c) A Corporate Guarantee from Emerson Office Supplies Ltd together with supporting Debenture.

(d) An all assets debenture from Norman Emerson Group Limited

(e) A property charge on 85 Ardmore Road Lurgan, a sand quay and batching plant at 118 Ardmore Road Lurgan and 29 Auglish Road Tandragee.

9.

Payables: amounts falling due after more than one year

2021

2019

as restated

£

£

Bank loans

212,528

232,705

Hire purchase contracts

398,264

427,167

Other payables

222,720

397,750

833,512

1,057,622

Amounts falling due in more than five years:

Repayable by instalments

Bank loans

125,888

146,065

Other payables includes a secured loan of £50,000 (2019: £200,000) from a third party. Specific items of plant and machinery have been used as collateral.

10.	Called up share capital

Allotted, issued and fully paid:

Number:

Class:

Nominal

2021

2019

value:

as restated

£

£

200,005

Ordinary shares

1

200,005

200,005

11.

Reserves

Revaluation

reserve

£

Revaluation on freehold property

1,735,807

At 28 February 2021

1,735,807

12.	Disclosure under Section 444(5B) of the Companies Act 2006

The Report of the auditors was unqualified.

David Ruddell (Senior Statutory Auditor)

for and on behalf of Wylie Ruddell

13.	Contingent assets

The business disposed of a property on 27 February 2021. £255,000 of the purchase consideration is deferred and conditional on planning permission being obtained by the new owner.

14.	Directors' advances, credits and guarantees

As at 28 February 2021, £1,883 was owed by George Emerson (Managing Director) and Norman Emerson Jnr, Alan Emerson, Geoffrey Emerson and Kenneth Emerson (retired directors) (2019: £3,118 owed to the directors). The loan is interest free and repayable on demand.

15.	Related party disclosures

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group.

The Emerson Special Pension Fund

The trustees and members of The Emerson Special Pension Fund include George Emerson (Managing Director) and Norman Emerson Jnr, Alan Emerson, Geoffrey Emerson and Kenneth Emerson (retired directors). Rent payable to Emerson Special Pension Fund during the period totalled £16,148 (2019: £98,614). At 28 February 2021 the aggregate balance owed to Emerson Special Pension Fund was £59,840 (2019: £59,840).

Graeme and Geoffrey Emerson T/A Emerson Brothers

Graeme and Geoffrey Emerson T/A Emerson Brothers are considered to be a related party as they are the sons of Geoffrey Emerson Snr who is an employee and shareholder of Norman Emerson Group Limited. Emerson Brothers pay a contribution to salary of Geoffrey Emerson Snr of £3,000 per month. Other sales transactions with Emerson Brothers include service charges and sales of £18,401 (2019: £15,593). Emerson Brothers charged the company £134,879 (2019: £176,259) for plant repairs and maintenance during the period. Emerson Brothers also operate as an owner driver and charged the company £638,235 (2019: £673,448) during the period for haulage services. At 28 February 2021 the aggregate balance owed to Emerson Brothers was £259,851 (2019: £229,042).

16.	Post balance sheet events

A property included in the balance sheet at a valuation of £300,000 was agreed for sale on 24th February 2021 and is due to complete post year end.