ACCOUNTS - Final Accounts preparation
ACCOUNTS - Final Accounts preparation
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Registered number:
For the year ended
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Flowflex Components Limited
Company Information
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Flowflex Components Limited
Contents
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Flowflex Components Limited
Strategic Report
For the year ended 31 March 2021
The directors present the strategic report for the year ended 31 March 2021.
Flowflex manufactures and sells brass and copper plumbing fittings and innovation products to merchants ranging from large national chains to smaller independent distributors, as well as the specialist OEM market. Our products then go on to supply heating and plumbing installations in the commercial, domestic and DIY project markets.
Based in Buxton, Derbyshire, Flowflex is the main UK manufacturer in the sector and successfully competes in the global supply market ensuring quality, service and value to its customers. Flowflex distributes to UK and European customers and to the Middle East, where it also has an established network based in Dubai, UAE. Changes and continuing improvements to the business in manufacturing, procurement and commercially have enhanced resilience and made it well placed to deliver sales growth and profitability over the coming year. During the year to 31 March 2021, these developments have delivered performance improvements across the business and mitigated the impact of COVID 19: • Overall sales remained flat at £17M. Most markets saw reductions in the first few months of COVID, as customer branches closed temporarily, then recovered to levels expected before the pandemic. Prior to COVID, the directors had expected sales to exceed £19M and as a result of continuing focus on our service levels, product range and straight forward customer engagement, sales have recovered to that level • Trading margins recovered due to the stabilisation of global metal prices during the early part of the year and manufacturing efficiencies being delivered by the programme of automation investment. Raw material costs have increased in the latter part of the financial year • Due to reduced demand, manufacturing operations were shutdown fully during the early part of the year, triggering claims under the Coronavirus Job Retention Scheme, and recovered to full strength over the remainder of the year • Adequate working capital has been maintained through the COVID period with a combination of secured bank facilities and deferment of VAT under the HMRC scheme
The key risks faced by the business are as follows:
Product costs are driven by commodity prices for brass and copper. The volatility in these markets is dealt with through regular monitoring of purchase costs, supplier procurement and where necessary by adjustments to customer pricing structures. Although sterling is the functional currency of the business, cashflows are also made in US dollars and Euros driving a currency exposure where forecast currency cashflows are not balanced. In order to minimise the risk with these simple hedging is used. There is uncertainty while COVID remains a factor, the prospect of further lockdowns and impact on operations is being monitored carefully and necessary contingency actions are planned.
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Flowflex Components Limited
Strategic Report (continued)
For the year ended 31 March 2021
The key financial performance indicators for the past five years are as follows:-
This report was approved by the board and signed on its behalf.
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Flowflex Components Limited
Directors' Report
For the year ended 31 March 2021
The directors present their report and the financial statements for the year ended 31 March 2021.
The directors are responsible for preparing the strategic report, the directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙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 to 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.
The profit for the year, after taxation, amounted to £648,279 (2020 - £249,248).
Dividends of £100,000 were paid during the year (2020 - £100,000).
The directors do not recommend a final dividend.
The directors who served during the year were:
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Flowflex Components Limited
Directors' Report (continued)
For the year ended 31 March 2021
The directors expect future sales growth as a result of development in existing markets.
In order to improve manufacturing efficiency and capacity, the business is continuing a phased upgrade to the factory and warehouse through investment in automation and capacity. Research and development The company continues to carry out research and development into new innovative products and processes.
There have been no significant events affecting the company since the year end.
The auditors, Hurst Accountants Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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Flowflex Components Limited
Independent Auditors' Report to the Members of Flowflex Components Limited
We have audited the financial statements of Flowflex Components Limited (the 'company') for the year ended 31 March 2021, which comprise the statement of income and retained earnings, the statement of financial position and the related notes, 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).
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 United Kingdom, including the Financial Reporting Council'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.
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
∙the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
∙the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditors' report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
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Flowflex Components Limited
Independent Auditors' Report to the Members of Flowflex Components Limited (continued)
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the strategic report and the directors' report 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.
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 directors' report.
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Flowflex Components Limited
Independent Auditors' Report to the Members of Flowflex Components Limited (continued)
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 auditors' 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: Identifying and assessing potential risks related to irregularities In identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following: • The nature of the industry and sector in which the company operates; the control environment and business performance including key drivers for directors' remuneration, bonus levels and performance targets. • The outcome of enquiries of local management and parent company management, including whether management was aware of any instances of non-compliance with laws and regulations, and whether management had knowledge of any actual, suspected, or alleged fraud. • Supporting documentation relating to the Company's policies and procedures for: - Identifying, evaluating, and complying with laws and regulations - Detecting and responding to the risks of fraud • The internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations. • The outcome of discussions amongst the engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud. • The legal and regulatory framework in which the Company operates, particularly those laws and regulations which have a direct effect on the financial statements, such as the Companies Act 2006, pensions and tax legislation, or which had a fundamental effect on the operations of the Company, including General Data Protection requirements, and Anti-bribery and Corruption. Audit response to risks identified Our procedures to respond to the risks identified included the following: • Reviewing the financial statements disclosures and testing to supporting documentation to assess compliance with the provisions of those relevant laws and regulations which have a direct effect on the financial statements. • Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud. • Evaluation and testing of the operating effectiveness of management’s controls designed to prevent and detect irregularities. • Enquiring of management about any actual and potential litigation and claims. • Performing analytical procedures to identify any unusual or unexpected relationships which may indicate risks of material misstatement due to fraud.
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Flowflex Components Limited
Independent Auditors' Report to the Members of Flowflex Components Limited (continued)
We have also considered the risk of fraud through management override of controls by:
• Testing the appropriateness of journal entries and other adjustments. We have used data analytics software to identify accounting transactions which may pose a heightened risk of material misstatement, whether due to fraud or error. • Challenging assumptions made by management in their significant accounting estimates, and assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and • Evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. There are inherent limitations in the audit procedures described above, and the further removed non-compliance with laws and regulations are from the events and transactions reflected in the financial statements, the less likely we would become aware of them. 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.
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 auditors' report.
This report is made solely to the company's members 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 auditors' 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 for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditors
Lancashire Gate
21 Tiviot Dale
Cheshire
SK1 1TD
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Flowflex Components Limited
Statement of Income and Retained Earnings
For the year ended 31 March 2021
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Flowflex Components Limited
Registered number: 00530070
Statement of Financial Position
As at
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 11 to 23 form part of these financial statements.
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Flowflex Components Limited
Notes to the Financial Statements
For the year ended 31 March 2021
Flowflex Components Limited is a private company limited by share capital incorporated in England, number 00530070. The address of the registered office and principal place of business is Samuel Blaser Works, Tongue Lane Industrial Estate, Buxton, Derbyshire, SK17 7LR.
The nature of the company's operation and its principal activity is the assembly, manufacture and distribution of brass and copper fittings for the plumbing industry.
2.Accounting policies
The financial statements have been prepared under the historical cost convention and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the company's accounting policies (see note 3).
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Flowflex Holdings Limited as at 31 March 2021 and these financial statements may be obtained from Samuel Blaser Works, Tongue Lane Industrial Estate, Buxton, Derbyshire, SK17 7LR.
The directors have concluded with reasonable certainty that the company will be able to realise its assets and discharge its liabilities in the normal course of business for a period of at least 12 months from the date of the approval of these financial statements. These financial statements have therefore been prepared on a going concern basis.
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Flowflex Components Limited
Notes to the Financial Statements
For the year ended 31 March 2021
2.Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes 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.
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount.
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Flowflex Components Limited
Notes to the Financial Statements
For the year ended 31 March 2021
2.Accounting policies (continued)
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in the income statement.
The company only enters into basic financial instruments transactions that result in the recognition of financial assets and liabilities like trade and other accounts receivable and payable, loans from banks and other third parties and loans to and from related parties.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the profit and loss account. For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the company would receive for the asset if it were to be sold at the balance sheet date. Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is an 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. Grants of a revenue nature are recognised in the statement of income and retained earnings in the same period as the related expenditure.
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Flowflex Components Limited
Notes to the Financial Statements
For the year ended 31 March 2021
2.Accounting policies (continued)
Functional and presentation currency
The company's functional and presentational currency is Sterling. Transactions and balances Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions. At each period end foreign currency monetary items are translated using the closing rate. Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
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Flowflex Components Limited
Notes to the Financial Statements
For the year ended 31 March 2021
2.Accounting policies (continued)
Provision for obsolete and slow moving stocks The company reviews its stocks to assess loss on account of obsolescence on a regular basis. In determining whether provision for obsolescence should be recorded in the profit or loss, the company makes judgements as to whether there is any observable data indicating that there is any future saleability of the product and the estimated net realisable value for such product. Accordingly, provision for impairment is made where the net realisable value is less than the cost based on best estimates by the management. The provision for obsolescence of stock is based on the ageing and historical sales pattern. At the year end, stock held by the company totalled £5,762,641 (2020 - £4,572,823). Should these estimates vary, the income statement and statement of financial position of the following years could be significantly impacted.
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Flowflex Components Limited
Notes to the Financial Statements
For the year ended 31 March 2021
The whole of the turnover is attributable to the principal activity of the company.
A geographical analysis of turnover is as follows:
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Flowflex Components Limited
Notes to the Financial Statements
For the year ended 31 March 2021
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Flowflex Components Limited
Notes to the Financial Statements
For the year ended 31 March 2021
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Flowflex Components Limited
Notes to the Financial Statements
For the year ended 31 March 2021
12.Taxation (continued)
The UK Government announced their plan to increase the main rate of Corporation Tax to 25% from April 2023 at the 2021 budget.
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Flowflex Components Limited
Notes to the Financial Statements
For the year ended 31 March 2021
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Flowflex Components Limited
Notes to the Financial Statements
For the year ended 31 March 2021
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Flowflex Components Limited
Notes to the Financial Statements
For the year ended 31 March 2021
Profit and loss account
VAT
The company is included in a group registration for VAT purposes and is therefore jointly and severally liable for all other group companies’ VAT liabilities. Guarantees There is a contingent liability relating to a composite bank guarantee given by the company to the group's bankers in respect of other companies within the group amounting at the balance sheet date to £1,370,439 (2020 - £1,009,233).
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Flowflex Components Limited
Notes to the Financial Statements
For the year ended 31 March 2021
The company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £133,076 (2020 - £69,315). Contributions totalling £29,111 (2020 - £21,210) were payable to the fund at the balance sheet date and are included in creditors.
The immediate and ultimate parent is Flowflex Holdings Limited, company number 02107935, registered in England and Wales. The company is under the ultimate control of T A Dickinson who owns 100% of the share capital of Flowflex Holdings Limited.
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