Midwest Commodities Limited Group accounts (Group and Company)

Midwest Commodities Limited Group accounts (Group and Company)

MIDWEST COMMODITIES LIMITED - Company Information

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COMPANY REGISTRATION NUMBER: 11514565
Midwest Commodities Limited
Financial Statements
31 July 2021
Midwest Commodities Limited
Financial Statements
Year ended 31 July 2021
Contents
Page
Officers and professional advisers
1
Strategic report
2
Directors' report
4
Independent auditor's report to the members
6
Consolidated statement of comprehensive income
10
Consolidated statement of financial position
11
Company statement of financial position
12
Consolidated statement of changes in equity
13
Company statement of changes in equity
14
Consolidated statement of cash flows
15
Notes to the financial statements
16
Midwest Commodities Limited
Officers and Professional Advisers
The board of directors
Muhammad Imran
Hitenkumar Shantilal Doshi
Amjad Zak Imam
Martin Brian Tobias-Gibbins
Registered office
70 Gracechurch Street
London
England
EC3V 0HR
Auditor
Peer Roberts Ltd
Chartered accountants & statutory auditor
The Pavilion
Rosslyn Crescent
Harrow
Middlesex
HA1 2SZ
Bankers
Zenith Bank (UK) Limited
39, Cornhill
London
UK
EC3V 3ND
ICICI Bank
One Thomas More Square
London
E1W 1YN
Midwest Commodities Limited
Strategic Report
Year ended 31 July 2021
Business Review The turnover of the company is £27.4 million compared to the previous period's turnover of £30.4 million. The margins have dropped from 1.31% to 0.9% due to competition in the market and the management is more focused on volume increases. The company achieved net profit before tax of just £144,000 compared to a profit of £259,000 in the previous period. The directors consider that the profit achieved on ordinary activities before taxation to be satisfactory. The trading results for the year and the company's financial position at the end of the year are shown in the attached financial statements. The company is in a good position to take advantage of business opportunities and the directors consider the state of affairs to be satisfactory. Current trading and future developments The company continues to make progress across all elements of its business. Key performance indicators The directors consider that the following key performance indicators are appropriate in terms of the assessment of the company's progress: - Growth in revenue - Achieving positive profit before tax - Securing new business opportunities for expansion - Financial arrangements for working capital and commodity financing - Diversifying and sourcing of raw materials and equipment Principal risks and uncertainties The company is subject to a number of risks, principally external, some of which could have a serious impact on the performance of our business. The risks that are particularly important at the current time are:- -The company operates with thin margins, sourcing raw materials from new suppliers will have an impact on profitability. -Selling to new customers increases the risk of default impacting the company financially. -Financial risk - e.g. impact of dependency on banks for working capital requirements. These risks are identified and managed through a regular dialogue and internal controls. Wherever possible the risks are closely monitored and appropriate safeguards put in place to minimise the risks. Impact of COVID-19 Since March 2020, the spread of COVID-19 has severely impacted many businesses which are being forced to cease or limit operations for long or indefinite period of time. Measures taken to contain the spread of the virus, including travel bans, quarantines, social distancing and closures of non-essential services have triggered significant disruptions to the businesses resulting in economic slowdown. We are closely monitoring the coronavirus situation and following Government guidelines. We are prepared to take action to deal with this situation as it changes. We have considered the potential impact of COVID-19 in our risk analysis.
This report was approved by the board of directors on 29 November 2021 and signed on behalf of the board by:
Muhammad Imran
Director
Registered office:
70 Gracechurch Street
London
England
EC3V 0HR
Midwest Commodities Limited
Directors' Report
Year ended 31 July 2021
The directors present their report and the financial statements of the group for the year ended 31 July 2021 .
Principal activities
The principal activity of the company and its subsidiary during the year was wholesale of Ferrous and Non Ferrous Metal & Ore, Polymers, Coal & Coke and other minerals, manufacture of plastic packing goods.
Directors
The directors who served the company during the year were as follows:
Muhammad Imran
Hitenkumar Shantilal Doshi
Amjad Zak Imam
(Appointed 22 October 2020)
Martin Brian Tobias-Gibbins
(Appointed 22 October 2020)
Sajiv Kumar Damodaran Nair
(Resigned 12 November 2020)
Pallikulangara Rajan Varghese
(Resigned 12 November 2020)
Dividends
The directors do not recommend the payment of a dividend.
Future developments
The company is expanding its business to other European countries.
Directors' responsibilities statement
The directors are responsible for preparing the strategic report, 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 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 group and the company and the profit or loss of the group for that period. In preparing these financial statements, the directors are required to: - select suitable accounting policies and then apply them consistently; - make judgments 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. Auditor
Each of the persons who is a director at the date of approval of this report confirms that:
- so far as they are aware, there is no relevant audit information of which the group and the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the group and the company's auditor is aware of that information.
This report was approved by the board of directors on 29 November 2021 and signed on behalf of the board by:
Muhammad Imran
Director
Registered office:
70 Gracechurch Street
London
England
EC3V 0HR
Midwest Commodities Limited
Independent Auditor's Report to the Members of Midwest Commodities Limited
Year ended 31 July 2021
Opinion
We have audited the financial statements of Midwest Commodities Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 July 2021 which comprise the consolidated statement of comprehensive income, consolidated statement of financial position, company statement of financial position, consolidated statement of changes in equity, company statement of changes in equity, consolidated statement of cash flows 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 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 group's and of the parent company's affairs as at 31 July 2021 and of the group's profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; - 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 auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 group's or the parent 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.
Other information
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. 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 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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent 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. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: - adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or - the parent company financial statements are not in agreement with the accounting records and returns; or - certain disclosures of directors' remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, 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 group's and the parent 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 group or the parent 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: - Enquiry of management and those charged with governance around actual and potential litigation and cliams; - Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias. - Reviewing minutes of meetings of those charged with governance; - Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. 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/auditors responsibilities. This description forms part of our auditor's report. As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group's internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. - Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group's or the parent company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. - Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Use of our report
This report is made solely to the company's members, as a body, in accordance with chapter 3 of part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Dinesh Shah FCA
(Senior Statutory Auditor)
For and on behalf of
Peer Roberts Ltd
Chartered accountants & statutory auditor
The Pavilion
Rosslyn Crescent
Harrow
Middlesex
HA1 2SZ
30 November 2021
Midwest Commodities Limited
Consolidated Statement of Comprehensive Income
Year ended 31 July 2021
2021
2020
Note
£
£
Turnover
4
27,443,492
30,379,640
Cost of sales
27,188,183
29,981,342
-------------
-------------
Gross profit
255,309
398,298
Administrative expenses
136,429
149,378
Other operating income
5
24,259
10,483
---------
---------
Operating profit
6
143,139
259,403
---------
---------
Profit before taxation
143,139
259,403
Tax on profit
10
27,529
49,063
---------
---------
Profit for the financial year and total comprehensive income
115,610
210,340
---------
---------
All the activities of the group are from continuing operations.
Midwest Commodities Limited
Consolidated Statement of Financial Position
31 July 2021
2021
2020
Note
£
£
Fixed assets
Tangible assets
11
7,179,757
–
Current assets
Stocks
12
564,022
2,942,939
Debtors
13
10,336,533
6,552,150
Cash at bank and in hand
883,551
295,073
-------------
------------
11,784,106
9,790,162
Creditors: amounts falling due within one year
14
10,638,501
1,621,038
-------------
------------
Net current assets
1,145,605
8,169,124
------------
------------
Total assets less current liabilities
8,325,362
8,169,124
Creditors: amounts falling due after more than one year
15
40,628
–
------------
------------
Net assets
8,284,734
8,169,124
------------
------------
Capital and reserves
Called up share capital
18
7,959,962
7,959,962
Profit and loss account
324,772
209,162
------------
------------
Shareholders funds
8,284,734
8,169,124
------------
------------
These financial statements were approved by the board of directors and authorised for issue on 29 November 2021 , and are signed on behalf of the board by:
Muhammad Imran
Director
Company registration number: 11514565
Midwest Commodities Limited
Company Statement of Financial Position
31 July 2021
2021
2020
Note
£
£
Current assets
Stocks
12
–
2,942,939
Debtors
13
9,564,761
6,552,150
Cash at bank and in hand
811,448
295,073
-------------
------------
10,376,209
9,790,162
Creditors: amounts falling due within one year
14
10,339,156
1,621,038
-------------
------------
Net current assets
37,053
8,169,124
--------
------------
Total assets less current liabilities
37,053
8,169,124
Creditors: amounts falling due after more than one year
15
( 7,533,559)
–
------------
------------
Net assets
7,570,612
8,169,124
------------
------------
Capital and reserves
Called up share capital
18
7,244,090
7,959,962
Profit and loss account
326,522
209,162
------------
------------
Shareholders funds
7,570,612
8,169,124
------------
------------
The profit for the financial year of the parent company was £ 117,360 (2020: £ 210,340 ).
These financial statements were approved by the board of directors and authorised for issue on 29 November 2021 , and are signed on behalf of the board by:
Muhammad Imran
Director
Company registration number: 11514565
Midwest Commodities Limited
Consolidated Statement of Changes in Equity
Year ended 31 July 2021
Called up share capital
Profit and loss account
Total
£
£
£
At 1 August 2019
1,979,102
( 1,178)
1,977,924
Profit for the year
210,340
210,340
------------
---------
------------
Total comprehensive income for the year
–
210,340
210,340
Issue of shares
5,980,860
–
5,980,860
------------
---------
------------
Total investments by and distributions to owners
5,980,860
–
5,980,860
At 31 July 2020
7,959,962
209,162
8,169,124
Profit for the year
115,610
115,610
------------
---------
------------
Total comprehensive income for the year
–
115,610
115,610
------------
---------
------------
At 31 July 2021
7,959,962
324,772
8,284,734
------------
---------
------------
Midwest Commodities Limited
Company Statement of Changes in Equity
Year ended 31 July 2021
Called up share capital
Profit and loss account
Total
£
£
£
At 1 August 2019
1,979,102
( 1,178)
1,977,924
Profit for the year
210,340
210,340
------------
---------
------------
Total comprehensive income for the year
–
210,340
210,340
Issue of shares
5,980,860
–
5,980,860
------------
---------
------------
Total investments by and distributions to owners
5,980,860
–
5,980,860
At 31 July 2020
7,959,962
209,162
8,169,124
Profit for the year
117,360
117,360
------------
---------
------------
Total comprehensive income for the year
–
117,360
117,360
Issue of shares
( 715,872)
–
( 715,872)
---------
----
---------
Total investments by and distributions to owners
( 715,872)
–
( 715,872)
------------
---------
------------
At 31 July 2021
7,244,090
326,522
7,570,612
------------
---------
------------
Midwest Commodities Limited
Consolidated Statement of Cash Flows
Year ended 31 July 2021
2021
2020
£
£
Cash flows from operating activities
Profit for the financial year
115,610
210,340
Adjustments for:
Government grant income
( 24,259)
–
Tax on profit
27,529
49,063
Accrued expenses
36,297
850
Changes in:
Stocks
2,378,917
( 2,942,939)
Trade and other debtors
( 3,784,383)
( 3,893,387)
Trade and other creditors
8,585,390
1,230,513
------------
------------
Cash generated from operations
7,335,101
( 5,345,560)
Tax paid
( 49,063)
–
------------
------------
Net cash from/(used in) operating activities
7,286,038
( 5,345,560)
------------
------------
Cash flows from investing activities
Purchase of tangible assets
( 7,179,757)
–
------------
------------
Net cash used in investing activities
( 7,179,757)
–
------------
------------
Cash flows from financing activities
Proceeds from issue of ordinary shares
–
5,980,860
Proceeds from loans from group undertakings
394,428
( 381,936)
Government grant income
24,259
–
Payments of finance lease liabilities
63,510
–
------------
------------
Net cash from financing activities
482,197
5,598,924
------------
------------
Net increase in cash and cash equivalents
588,478
253,364
Cash and cash equivalents at beginning of year
295,073
41,709
---------
---------
Cash and cash equivalents at end of year
883,551
295,073
---------
---------
Midwest Commodities Limited
Notes to the Financial Statements
Year ended 31 July 2021
1. General information
The company is a private company limited by shares, registered in England and Wales. The address of the registered office is 70 Gracechurch Street, London, EC3V 0HR, England.
2. Statement of compliance
These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.
3. Accounting policies
Basis of preparation
The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through profit or loss.
The financial statements are prepared in sterling, which is the functional currency of the entity.
Disclosure exemptions
The parent company satisfies the criteria of being a qualifying entity as defined in FRS 102. As such, advantage has been taken of the following reduced disclosures available under FRS 102:
(a) Disclosures in respect of each class of share capital have not been presented.
(b) No cash flow statement has been presented for the company.
(c) Disclosures in respect of financial instruments have not been presented.
(d) No disclosure has been given for the aggregate remuneration of key management personnel.
Consolidation
The financial statements consolidate the financial statements of Midwest Commodities Limited and all of its subsidiary undertakings.
The results of subsidiaries acquired or disposed of during the year are included from or to the date that control passes.
The parent company has applied the exemption contained in section 408 of the Companies Act 2006 and has not presented its individual profit and loss account.
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Revenue recognition
Turnover is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of discounts and Value Added Tax. Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on despatch of the goods); the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably.
Income tax
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Foreign currencies
Foreign currency transactions are initially recorded in the functional currency, by applying the spot exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date, with any gains or losses being taken to the profit and loss account.
Tangible assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. An increase in the carrying amount of an asset as a result of a revaluation, is recognised in other comprehensive income and accumulated in equity, except to the extent it reverses a revaluation decrease of the same asset previously recognised in profit or loss. A decrease in the carrying amount of an asset as a result of revaluation, is recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity in respect of that asset. Where a revaluation decrease exceeds the accumulated revaluation gains accumulated in equity in respect of that asset, the excess shall be recognised in profit or loss.
Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets. For impairment testing of goodwill, the goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the company are assigned to those units.
Stocks
Stocks are measured 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 the stock to its present location and condition.
Finance leases and hire purchase contracts
Assets held under finance leases and hire purchase contracts are recognised in the statement of financial position as assets and liabilities at the lower of the fair value of the assets and the present value of the minimum lease payments, which is determined at the inception of the lease term. Any initial direct costs of the lease are added to the amount recognised as an asset. Lease payments are apportioned between the finance charges and reduction of the outstanding lease liability using the effective interest method. Finance charges are allocated to each period so as to produce a constant rate of interest on the remaining balance of the liability.
Government grants
Government grants are recognised at the fair value of the asset received or receivable. Grants are not recognised until there is reasonable assurance that the company will comply with the conditions attaching to them and the grants will be received. Government grants are recognised using the accrual model and the performance model. Under the accrual model, government grants relating to revenue are recognised on a systematic basis over the periods in which the company recognises the related costs for which the grant is intended to compensate. Grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs are recognised in income in the period in which it becomes receivable. Grants relating to assets are recognised in income on a systematic basis over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred income and not deducted from the carrying amount of the asset. Under the performance model, where the grant does not impose specified future performance-related conditions on the recipient, it is recognised in income when the grant proceeds are received or receivable. Where the grant does impose specified future performance-related conditions on the recipient, it is recognised in income only when the performance-related conditions have been met. Where grants received are prior to satisfying the revenue recognition criteria, they are recognised as a liability.
Financial instruments
A financial asset or a financial liability is recognised only when the company becomes a party to the contractual provisions of the instrument. Basic financial instruments are initially recognised at the transaction price, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Debt instruments are subsequently measured at amortised cost. Where investments in non-convertible preference shares and non-puttable ordinary shares or preference shares are publicly traded or their fair value can otherwise be measured reliably, the investment is subsequently measured at fair value with changes in fair value recognised in profit or loss. All other such investments are subsequently measured at cost less impairment. Other financial instruments, including derivatives, are initially recognised at fair value, unless payment for an asset is deferred beyond normal business terms or financed at a rate of interest that is not a market rate, in which case the asset is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Other financial instruments are subsequently measured at fair value, with any changes recognised in profit or loss, with the exception of hedging instruments in a designated hedging relationship.
Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss immediately. For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets are either assessed individually or grouped on the basis of similar credit risk characteristics. Any reversals of impairment are recognised in profit or loss immediately, to the extent that the reversal does not result in a carrying amount of the financial asset that exceeds what the carrying amount would have been had the impairment not previously been recognised.
4. Turnover
Turnover arises from:
2021
2020
£
£
Sale of goods
27,443,492
30,379,640
-------------
-------------
The whole of the turnover is attributable to the principal activity of the group wholly undertaken in the United Kingdom.
5. Other operating income
2021
2020
£
£
Government grant income
24,259
–
Other operating income
–
10,483
--------
--------
24,259
10,483
--------
--------
6. Operating profit
Operating profit or loss is stated after charging:
2021
2020
£
£
Foreign exchange differences
103
2,194
----
-------
7. Auditor's remuneration
2021
2020
£
£
Fees payable for the audit of the financial statements
6,250
1,200
-------
-------
8. Staff costs
The average number of persons employed by the group during the year, including the directors, amounted to:
2021
2020
No.
No.
Production staff
1
1
----
----
The aggregate payroll costs incurred during the year, relating to the above, were:
2021
2020
£
£
Wages and salaries
38,000
36,000
Social security costs
1,367
3,971
--------
--------
39,367
39,971
--------
--------
9. Directors' remuneration
The directors' aggregate remuneration in respect of qualifying services was:
2021
2020
£
£
Remuneration
38,000
36,000
--------
--------
10. Tax on profit
Major components of tax expense
2021
2020
£
£
Current tax:
UK current tax expense
27,529
49,063
Tax on profit
27,529
49,063
--------
--------
Reconciliation of tax expense
The tax assessed on the profit on ordinary activities for the year is the same as (2020: lower than) the standard rate of corporation tax in the UK of 19 % (2020: 19 %).
2021
2020
£
£
Profit on ordinary activities before taxation
143,139
259,403
---------
---------
Profit on ordinary activities by rate of tax
27,529
49,287
Utilisation of tax losses
–
( 224)
---------
---------
Tax on profit
27,529
49,063
---------
---------
11. Tangible assets
Group
Freehold property
Plant and machinery
Fixtures and fittings
Total
£
£
£
£
Cost
At 1 August 2020
–
–
–
–
Additions
1,112,087
6,010,094
57,576
7,179,757
------------
------------
--------
------------
At 31 July 2021
1,112,087
6,010,094
57,576
7,179,757
------------
------------
--------
------------
Depreciation
At 1 August 2020 and 31 July 2021
–
–
–
–
------------
------------
--------
------------
Carrying amount
At 31 July 2021
1,112,087
6,010,094
57,576
7,179,757
------------
------------
--------
------------
At 31 July 2020
–
–
–
–
------------
------------
--------
------------
The company has no tangible assets.
12. Stocks
Group
Company
2021
2020
2021
2020
£
£
£
£
Raw materials and consumables
564,022
–
–
–
Non-resale stock - desc in a/cs
–
2,942,939
–
2,942,939
---------
------------
----
------------
564,022
2,942,939
–
2,942,939
---------
------------
----
------------
13. Debtors
Group
Company
2021
2020
2021
2020
£
£
£
£
Trade debtors
9,257,758
5,841,892
9,257,758
5,841,892
Other debtors - desc in a/cs
–
582,367
–
582,367
Other debtors
1,078,775
127,891
307,003
127,891
-------------
------------
------------
------------
10,336,533
6,552,150
9,564,761
6,552,150
-------------
------------
------------
------------
14. Creditors: amounts falling due within one year
Group
Company
2021
2020
2021
2020
£
£
£
£
Trade creditors
9,893,069
1,211,723
9,639,598
1,211,723
Amounts owed to group undertakings
636,636
242,208
636,636
242,208
Accruals and deferred income
38,797
2,500
8,500
2,500
Corporation tax
27,529
49,063
27,529
49,063
Social security and other taxes
16,563
970
986
970
Obligations under finance leases and hire purchase contracts
22,882
–
22,882
–
Other creditors - desc in a/cs
–
107,041
–
107,041
Other creditors
3,025
7,533
3,025
7,533
-------------
------------
-------------
------------
10,638,501
1,621,038
10,339,156
1,621,038
-------------
------------
-------------
------------
15. Creditors: amounts falling due after more than one year
Group
Company
2021
2020
2021
2020
£
£
£
£
Amounts owed to group undertakings
–
–
( 7,574,187)
–
Obligations under finance leases and hire purchase contracts
40,628
–
40,628
–
--------
----
------------
----
40,628
–
( 7,533,559)
–
--------
----
------------
----
16. Finance leases and hire purchase contracts
The total future minimum lease payments under finance leases and hire purchase contracts are as follows:
Group
Company
2021
2020
2021
2020
£
£
£
£
Not later than 1 year
22,882
–
22,882
–
Later than 1 year and not later than 5 years
40,628
–
40,628
–
--------
----
--------
----
63,510
–
63,510
–
--------
----
--------
----
17. Government grants
The amounts recognised in the financial statements for government grants are as follows:
Group
Company
2021
2020
2021
2020
£
£
£
£
Recognised in other operating income:
Government grants recognised directly in income
24,259
–
24,259
–
--------
----
--------
----
18. Called up share capital
Issued, called up and fully paid
2021
2020
No.
£
No.
£
Ordinary shares of £ 0.79164 each
2,500,000
1,979,100
2,500,000
1,979,100
Ordinary shares of £ 1 each
2
2
2
2
Ordinary shares of £ 0.797448 each
7,500,000
5,980,860
7,500,000
5,980,860
-------------
------------
-------------
------------
10,000,002
7,959,962
10,000,002
7,959,962
-------------
------------
-------------
------------
19. Analysis of changes in net debt
At 1 Aug 2020
Cash flows
At 31 Jul 2021
£
£
£
Cash at bank and in hand
295,073
588,478
883,551
Debt due within one year
(242,208)
(417,310)
(659,518)
Debt due after one year
–
(40,628)
(40,628)
---------
---------
---------
52,865
130,540
183,405
---------
---------
---------
20. Controlling party
During the year, the company was controlled jointly by the directors.