Springmasters Limited Group accounts (Group and Company)

Springmasters Limited Group accounts (Group and Company)

SPRINGMASTERS LIMITED - Company Information

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COMPANY REGISTRATION NUMBER: 00897155
Springmasters Limited
Financial Statements
31 May 2021
Springmasters Limited
Financial Statements
Year ended 31 May 2021
Contents
Page
Strategic report
1
Directors' report
2
Independent auditor's report to the members
4
Consolidated statement of comprehensive income
8
Consolidated statement of financial position
9
Company statement of financial position
10
Consolidated statement of changes in equity
11
Company statement of changes in equity
12
Consolidated statement of cash flows
13
Notes to the financial statements
14
Springmasters Limited
Strategic Report
Year ended 31 May 2021
During the year under review the parent company's principal activity continued to be spring presswork. In a year of continued uncertainty caused by Covid 19 and Brexit, the group's turnover decreased slightly to £7,501,477 (2020 - £7,505,711) however operating profit increased to £1,772,168 (2020 - £971,754). Listed investments have increased in value during the year by £751,063 (2020 - £33.991). The principal activity of the group's 100% subsidiary during the year continued to be the distribution of disc springs. The turnover reduced to £1,301,311 (2020 - £1,383,466) and the profit before tax to £226,608 (2020 - £260,316).
The principal risks and uncertainties faced by the group are brought about by a) the delays in the transporting of materials from abroad, together with increased costs, following the UK's exit from the European Union, and b) the effect of the Covid 19 pandemic. The directors have implemented working practices to minimise the effect of Covid 19 and these are continuing. The actions taken have insured that relationships with customers and suppliers within the EU remains good. The directors believe that the group is financially sound and should be able to overcome any problems.
We consider that our key financial performance indicators are those that communicate the financial performance and strength of the group as a whole these being turnover, net profit and retained profits: Turnover decreased to £7,501,477 from £7,505,711. Net profit before taxation increased to £1,847,105 from £1,089,974. Net profit after taxation increased to £1,496,830 from £871,431.
This report was approved by the board of directors on 9 February 2022 and signed on behalf of the board by:
I R Whitehead Director
Registered office:
Arthur Street
Redditch
Worcs
B98 8JY
Springmasters Limited
Directors' Report
Year ended 31 May 2021
The directors present their report and the financial statements of the group for the year ended 31 May 2021 .
Directors
The directors who served the company during the year were as follows:
E Whitehead
I R Whitehead
S D Shaw
J Hewitt
(Resigned 30 November 2020)
Dividends
Particulars of recommended dividends are detailed in note 13 to the financial statements.
Events after the end of the reporting period
Particulars of events after the reporting date are detailed in note 31 to the financial statements.
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. The auditor is deemed to have been re-appointed in accordance with section 487 of the Companies Act 2006.
This report was approved by the board of directors on 9 February 2022 and signed on behalf of the board by:
I R Whitehead Director
Registered office:
Arthur Street
Redditch
Worcs
B98 8JY
Springmasters Limited
Independent Auditor's Report to the Members of Springmasters Limited
Year ended 31 May 2021
Opinion
We have audited the financial statements of Springmasters Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 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 May 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
Except for the matter described in the basis for qualified opinion section of our report, in the light of our 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 and the Directors' Report. Arising solely from the limitation on the scope of our work relating to inventory, referred to above: - we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and - we were unable to determine whether adequate accounting records have been kept. 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: - 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 the returns; or - certain disclosures of directors remuneration specified by law are not made.
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: Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows: - The partner ensured that the audit team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations; - We identified the laws and regulations applicable to the group through discussions with directors, and from our commercial knowledge and years of experience of the spring manufacturing and supply sector. We determined that the following laws and regulations may have a direct material effect on the financial statements or the operations of the group, including the Companies Act 2006, taxation legislation and data protection, anti-bribery, employment, environmental and health and safety legislation; and - We assessed the extent of compliance with the laws and regulations identified above making enquiries of directors and reviewing legal and other correspondence. The audit team remained alert to any instances of non-compliance throughout the audit. - We assessed the susceptibility of the group's financial statements to material misstatement, including obtaining an understanding of how fraud might occur. Audit procedures performed by the engagement team included: - Considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; - Making enquiries of directors as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; - Performed analytical procedures to identify any unusual or unexpected relationships; - Tested journal entries to identify unusual transactions and investigated the rationale behind significant or unusual transactions; and - Assessed whether assumptions and judgements made by directors in its accounting estimates were indicative of potential bias. There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion. 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.
Michael Holder
(Senior Statutory Auditor)
For and on behalf of
Rigbey Harrison
Chartered accountants & statutory auditor
4 Church Green East,
Redditch,
Worcs,
B98 8BT
9 February 2022
Springmasters Limited
Consolidated Statement of Comprehensive Income
Year ended 31 May 2021
2021
2020
Note
£
£
Turnover
4
7,501,477
7,505,711
Cost of sales
3,721,399
3,847,099
------------
------------
Gross profit
3,780,078
3,658,612
Distribution costs
195,494
187,425
Administrative expenses
2,779,079
2,948,652
Other operating income
5
966,663
449,219
------------
------------
Operating profit
6
1,772,168
971,754
Income from other fixed asset investments
9
4,817
5,755
Other interest receivable and similar income
10
75,120
117,465
Interest payable and similar expenses
11
5,000
5,000
------------
------------
Profit before taxation
1,847,105
1,089,974
Tax on profit
12
350,275
218,543
------------
------------
Profit for the financial year and total comprehensive income
1,496,830
871,431
------------
------------
All the activities of the group are from continuing operations.
Springmasters Limited
Consolidated Statement of Financial Position
31 May 2021
2021
2020
Note
£
£
Fixed assets
Tangible assets
14
3,587,737
3,343,292
Investments
15
4,297,932
3,278,172
------------
------------
7,885,669
6,621,464
Current assets
Stocks
16
839,462
828,934
Debtors
17
2,051,546
1,805,381
Investments
18
3,299,996
3,739,574
Cash at bank and in hand
3,972,406
3,365,862
-------------
------------
10,163,410
9,739,751
Creditors: amounts falling due within one year
19
3,208,754
3,147,208
-------------
------------
Net current assets
6,954,656
6,592,543
-------------
-------------
Total assets less current liabilities
14,840,325
13,214,007
Provisions
Taxation including deferred tax
20
599,661
470,173
-------------
-------------
Net assets
14,240,664
12,743,834
-------------
-------------
Capital and reserves
Called up share capital
26
6,311
6,311
Revaluation reserve
27
509,266
504,321
Capital redemption reserve
27
3,689
3,689
Profit and loss account
27
13,721,398
12,229,513
-------------
-------------
Shareholders funds
14,240,664
12,743,834
-------------
-------------
These financial statements were approved by the board of directors and authorised for issue on 9 February 2022 , and are signed on behalf of the board by:
I R Whitehead Director
Company registration number: 00897155
Springmasters Limited
Company Statement of Financial Position
31 May 2021
2021
2020
Note
£
£
Fixed assets
Tangible assets
14
3,582,352
3,336,112
Investments
15
4,462,407
3,442,647
------------
------------
8,044,759
6,778,759
Current assets
Stocks
16
839,462
828,934
Debtors
17
1,745,639
1,573,817
Investments
18
3,299,996
3,739,574
Cash at bank and in hand
3,938,559
3,318,124
------------
------------
9,823,656
9,460,449
Creditors: amounts falling due within one year
19
4,012,010
3,825,613
------------
------------
Net current assets
5,811,646
5,634,836
-------------
-------------
Total assets less current liabilities
13,856,405
12,413,595
Provisions
Taxation including deferred tax
20
599,986
470,452
-------------
-------------
Net assets
13,256,419
11,943,143
-------------
-------------
Capital and reserves
Called up share capital
26
6,311
6,311
Revaluation reserve
27
509,266
504,321
Capital redemption reserve
27
3,689
3,689
Profit and loss account
27
12,737,153
11,428,822
-------------
-------------
Shareholders funds
13,256,419
11,943,143
-------------
-------------
The profit for the financial year of the parent company was £ 1,313,276 (2020: £ 3,660,576 ).
These financial statements were approved by the board of directors and authorised for issue on 9 February 2022 , and are signed on behalf of the board by:
I R Whitehead Director
Company registration number: 00897155
Springmasters Limited
Consolidated Statement of Changes in Equity
Year ended 31 May 2021
Called up share capital
Revaluation reserve
Capital redemption reserve
Profit and loss account
Total
£
£
£
£
£
At 1 June 2019
6,311
290,511
3,689
12,066,176
12,366,687
Profit for the year
871,431
871,431
Other comprehensive income for the year:
Reclassification from revaluation reserve to profit and loss account
–
213,810
–
( 213,810)
–
-------
---------
-------
-------------
-------------
Total comprehensive income for the year
–
213,810
–
657,621
871,431
Dividends paid and payable
13
–
–
–
( 494,284)
( 494,284)
-------
---------
-------
-------------
-------------
Total investments by and distributions to owners
–
–
–
( 494,284)
( 494,284)
At 31 May 2020
6,311
504,321
3,689
12,229,513
12,743,834
Profit for the year
1,496,830
1,496,830
Other comprehensive income for the year:
Reclassification from revaluation reserve to profit and loss account
–
4,945
–
( 4,945)
–
-------
---------
-------
-------------
-------------
Total comprehensive income for the year
–
4,945
–
1,491,885
1,496,830
-------
---------
-------
-------------
-------------
At 31 May 2021
6,311
509,266
3,689
13,721,398
14,240,664
-------
---------
-------
-------------
-------------
Springmasters Limited
Company Statement of Changes in Equity
Year ended 31 May 2021
Called up share capital
Revaluation reserve
Capital redemption reserve
Profit and loss account
Total
£
£
£
£
£
At 1 June 2019
6,311
290,511
3,689
8,476,340
8,776,851
Profit for the year
3,660,576
3,660,576
Other comprehensive income for the year:
Reclassification from revaluation reserve to profit and loss account
–
213,810
–
( 213,810)
–
-------
---------
-------
------------
------------
Total comprehensive income for the year
–
213,810
–
3,446,766
3,660,576
Dividends paid and payable
13
–
–
–
( 494,284)
( 494,284)
-------
---------
-------
------------
------------
Total investments by and distributions to owners
–
–
–
( 494,284)
( 494,284)
At 31 May 2020
6,311
504,321
3,689
11,428,822
11,943,143
Profit for the year
1,313,276
1,313,276
Other comprehensive income for the year:
Reclassification from revaluation reserve to profit and loss account
–
4,945
–
( 4,945)
–
-------
---------
-------
-------------
-------------
Total comprehensive income for the year
–
4,945
–
1,308,331
1,313,276
-------
---------
-------
-------------
-------------
At 31 May 2021
6,311
509,266
3,689
12,737,153
13,256,419
-------
---------
-------
-------------
-------------
Springmasters Limited
Consolidated Statement of Cash Flows
Year ended 31 May 2021
2021
2020
£
£
Cash flows from operating activities
Profit for the financial year
1,496,830
871,431
Adjustments for:
Depreciation of tangible assets
216,101
217,425
Fair value adjustment of investment property
(8,692)
(266,550)
Government grant income
( 162,560)
( 111,338)
Income from other fixed asset investments
( 4,817)
( 5,755)
Other interest receivable and similar income
( 75,120)
( 117,465)
Interest payable and similar expenses
5,000
5,000
Loss on disposal of tangible assets
12,103
–
Tax on profit
350,275
218,543
Fair value adjustment for listed investments
(751,063)
(33,991)
Other movement - investments
–
85,289
Loss on disposal of investments
(6,787)
4,544
Changes in:
Stocks
( 10,528)
139,108
Trade and other debtors
( 271,958)
125,000
Trade and other creditors
( 14,546)
( 16,132)
------------
------------
Cash generated from operations
774,238
1,115,109
Interest paid
( 5,000)
( 5,000)
Interest received
100,913
103,266
Tax paid
( 144,694)
( 211,516)
---------
------------
Net cash from operating activities
725,457
1,001,859
---------
------------
Cash flows from investing activities
Purchase of tangible assets
( 463,958)
( 249,649)
Purchases of other investments
( 299,892)
( 82,595)
Proceeds from sale of other investments
477,560
618,551
Dividends received
4,817
5,755
---------
------------
Net cash (used in)/from investing activities
( 281,473)
292,062
---------
------------
Cash flows from financing activities
Government grant income
162,560
111,338
Dividends paid
–
( 494,284)
---------
------------
Net cash from/(used in) financing activities
162,560
( 382,946)
---------
------------
Net increase in cash and cash equivalents
606,544
910,975
Cash and cash equivalents at beginning of year
3,365,862
2,454,887
------------
------------
Cash and cash equivalents at end of year
3,972,406
3,365,862
------------
------------
Springmasters Limited
Notes to the Financial Statements
Year ended 31 May 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 Arthur Street, Redditch, Worcs, B98 8JY.
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 consolidated financial statements incorporate the financial statements of the company and all group undertakings. As a consolidated profit and loss account is published, a separate profit and loss account for the parent company is omitted from the group financial statements by virtue of section 408 of the Companies Act 2006.
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 for assets and liabilities as 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. The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements: Valuation of investment properties Stock provision
Revenue recognition
Turnover is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods supplied stated net of discounts and of Value Added Tax. Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods 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.
Tax
Current tax represents the amount of tax payable or receivable in respect of the 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.
Operating leases
Lease payments are recognised as an expense over the lease term on a straight-line basis. The aggregate benefit of lease incentives is recognised as a reduction to expense over the lease term, on a straight-line basis. Lease income is recognised in profit or loss on a straight line basis over the lease term.
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.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Buildings
-
2% straight line
Equipment
-
5 - 10 years straight line or 15% or 25% reducing balance
Fixtures and fittings
-
15% or 25% reducing balance
Motor vehicles
-
25% reducing balance
An amount equal to the excess of the annual depreciation charge on revalued assets over the original cost depreciation charge on those assets is transferred annually from the revaluation reserve to retained earnings.
Investment property
Investment properties are measured at fair value at each reporting date with changes in fair value recognised in profit or loss.
Investments
Listed investments are measured at fair value with changes in fair value being recognised in profit or loss.
Investments in subsidiaries are accounted for at cost less impairment.
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.
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.
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.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably.
Financial instruments
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into, either as financial assets, financial liabilities or equity interests. An equity instrument is any contract that evidences a residual interest in the assets of the entity after deducting all of its financial liabilities. Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the profit and loss account in administrative expenses.
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 recognised as an expense in the period in which the related service is provided.
4. Turnover
Turnover arises from:
2021
2020
£
£
Sale of goods
7,501,477
7,505,711
------------
------------
The turnover is attributable to the one principal activity of the group. An analysis of turnover by the geographical markets that substantially differ from each other is given below:
2021
2020
£
£
United Kingdom
6,372,860
6,256,543
Overseas
1,128,617
1,249,168
------------
------------
7,501,477
7,505,711
------------
------------
5. Other operating income
2021
2020
£
£
Rental income
44,348
37,340
Government grant income
162,560
111,338
Fair value adjustment for listed investments
751,063
33,991
Fair value adjustment for investment properties
8,692
266,550
---------
---------
966,663
449,219
---------
---------
6. Operating profit
Operating profit or loss is stated after charging/crediting:
2021
2020
£
£
Depreciation of tangible assets
216,101
217,425
Loss on disposal of tangible assets
12,103
–
Impairment of trade debtors
(1,898)
(708)
Operating lease rentals
1,920
4,608
Foreign exchange differences
( 11,699)
21,928
Fees payable for the audit of the financial statements
37,000
32,150
(Profit)/loss on fair value movement of investments
( 751,063)
( 33,991)
---------
---------
7. 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
64
73
Distribution staff
27
29
Administrative staff
7
7
Management staff
4
4
----
----
102
113
----
----
The aggregate payroll costs incurred during the year, relating to the above, were:
2021
2020
£
£
Wages and salaries
3,242,708
3,435,873
Social security costs
322,586
343,470
Other pension costs
125,464
136,747
------------
------------
3,690,758
3,916,090
------------
------------
8. Directors' remuneration
The directors' aggregate remuneration in respect of qualifying services was:
2021
2020
£
£
Remuneration
794,845
857,338
Company contributions to defined contribution pension plans
5,510
5,490
---------
---------
800,355
862,828
---------
---------
The number of directors who accrued benefits under company pension plans was as follows:
2021
2020
No.
No.
Defined contribution plans
1
1
----
----
Remuneration of the highest paid director in respect of qualifying services:
2021
2020
£
£
Aggregate remuneration
370,067
414,937
---------
---------
9. Income from other fixed asset investments
2021
2020
£
£
Income from other fixed asset investments
4,817
5,755
-------
-------
10. Other interest receivable and similar income
2021
2020
£
£
Interest on cash and cash equivalents
75,070
117,403
Other interest receivable and similar income
50
62
--------
---------
75,120
117,465
--------
---------
11. Interest payable and similar expenses
2021
2020
£
£
Other interest payable and similar charges
5,000
5,000
-------
-------
12. Tax on profit
Major components of tax expense
2021
2020
£
£
Current tax:
UK current tax expense
220,787
144,694
Deferred tax:
Origination and reversal of timing differences
129,488
73,849
---------
---------
Tax on profit
350,275
218,543
---------
---------
Throughout the year the corporation tax rate was 19%. The government proposes to keep the corporation tax rate at 19% from 1 April 2022.
Reconciliation of tax expense
The tax assessed on the profit on ordinary activities for the year is lower than (2020: higher than) the standard rate of corporation tax in the UK of 19 % (2020: 19 %).
2021
2020
£
£
Profit on ordinary activities before taxation
1,847,105
1,089,974
------------
------------
Profit on ordinary activities by rate of tax
350,950
207,095
Effect of expenses not deductible for tax purposes
–
17
Effect of capital allowances and depreciation
1,530
1,538
Effect of revenue exempt from tax
( 915)
( 1,092)
Effect of disposal of investments
( 1,290)
10,985
------------
------------
Tax on profit
350,275
218,543
------------
------------
13. Dividends
2021
2020
£
£
Dividends paid during the year (excluding those for which a liability existed at the end of the prior year )
–
494,284
----
---------
14. Tangible assets
Group
Freehold Property
Equipment
Fixtures and Fittings
Motor Vehicles
Investment Property
Total
£
£
£
£
£
£
Cost/Valuation
At 1 Jun 2020
574,162
6,113,299
25,289
264,158
1,808,250
8,785,158
Additions
–
102,650
–
–
361,308
463,958
Disposals
–
( 255,546)
–
( 61,218)
–
( 316,764)
Revaluations
–
–
–
–
8,692
8,692
---------
------------
--------
---------
------------
------------
At 31 May 2021
574,162
5,960,403
25,289
202,940
2,178,250
8,941,044
---------
------------
--------
---------
------------
------------
Depreciation
At 1 Jun 2020
162,410
5,049,568
24,045
205,843
–
5,441,866
Charge for the year
8,062
196,298
187
11,554
–
216,101
Disposals
–
( 255,545)
–
( 49,115)
–
( 304,660)
---------
------------
--------
---------
------------
------------
At 31 May 2021
170,472
4,990,321
24,232
168,282
–
5,353,307
---------
------------
--------
---------
------------
------------
Carrying amount
At 31 May 2021
403,690
970,082
1,057
34,658
2,178,250
3,587,737
---------
------------
--------
---------
------------
------------
At 31 May 2020
411,752
1,063,731
1,244
58,315
1,808,250
3,343,292
---------
------------
--------
---------
------------
------------
Company
Freehold Property
Equipment
Fixtures and Fittings
Motor Vehicles
Investment Property
Total
£
£
£
£
£
£
Cost/Valuation
At 1 Jun 2020
574,162
6,113,299
9,892
241,464
1,808,250
8,747,067
Additions
–
102,650
–
–
361,308
463,958
Disposals
–
( 255,546)
–
( 61,218)
–
( 316,764)
Revaluations
–
–
–
–
8,692
8,692
---------
------------
-------
---------
------------
------------
At 31 May 2021
574,162
5,960,403
9,892
180,246
2,178,250
8,902,953
---------
------------
-------
---------
------------
------------
Depreciation
At 1 Jun 2020
162,410
5,049,568
8,648
190,329
–
5,410,955
Charge for the year
8,062
196,298
187
9,759
–
214,306
Disposals
–
( 255,545)
–
( 49,115)
–
( 304,660)
---------
------------
-------
---------
------------
------------
At 31 May 2021
170,472
4,990,321
8,835
150,973
–
5,320,601
---------
------------
-------
---------
------------
------------
Carrying amount
At 31 May 2021
403,690
970,082
1,057
29,273
2,178,250
3,582,352
---------
------------
-------
---------
------------
------------
At 31 May 2020
411,752
1,063,731
1,244
51,135
1,808,250
3,336,112
---------
------------
-------
---------
------------
------------
Investment properties were subject to valuation by the directors who are not professionally qualified valuers. The historical cost of investment properties held at fair value is £1,622,249 (2020 - £1,260,941).
Freehold property includes land with a value of £186,707 (2020 - £186,707) which is not depreciated.
Tangible assets held at valuation
Certain freehold land and buildings included above were previously recognised using an existing use open market value basis. These valuations have not been updated and were used as deemed cost on transition to FRS 102. These assets are being depreciated from their valuation date of 31st May 1984 and 31st May 1992 and have a net book value of £273,230 (2020 - £276,854).
In respect of tangible assets held at valuation, aggregate cost, depreciation and comparable carrying amount that would have been recognised if the assets had been carried under the historical cost model are as follows:
Group and company
£
At 31 May 2021
Aggregate cost
231,107
Aggregate depreciation
(44,279)
---------
Carrying value
186,828
---------
At 31 May 2020
Aggregate cost
231,107
Aggregate depreciation
(42,752)
---------
Carrying value
188,355
---------
15. Investments
Group
Listed investments
£
Cost/Valuation
At 1 June 2020
3,278,172
Additions
299,892
Disposals
( 31,195)
Revaluations
751,063
------------
At 31 May 2021
4,297,932
------------
Impairment
At 1 June 2020 and 31 May 2021
–
------------
Carrying amount
At 31 May 2021
4,297,932
------------
At 31 May 2020
3,278,172
------------
Company
Shares in group undertakings
Listed investments
Total
£
£
£
Cost/Valuation
At 1 June 2020
164,475
3,278,172
3,442,647
Additions
–
299,892
299,892
Disposals
–
( 31,195)
( 31,195)
Revaluations
–
751,063
751,063
---------
------------
------------
At 31 May 2021
164,475
4,297,932
4,462,407
---------
------------
------------
Impairment
At 1 June 2020 and 31 May 2021
–
–
–
---------
------------
------------
Carrying amount
At 31 May 2021
164,475
4,297,932
4,462,407
---------
------------
------------
At 31 May 2020
164,475
3,278,172
3,442,647
---------
------------
------------
Listed investments
The fair value of listed investments is determined by reference to the quoted market price in an active market at the balance sheet date.
Interests in subsidiaries are measured at cost less impairment on the basis that they represent shares in entities that are not publicly traded and the fair value cannot otherwise be measured reliably.
Interests in subsidiaries
Details of the investments in which the group and the parent company have an interest of 20% or more are as follows:
Class of share
Percentage of shares held
Subsidiary undertakings
Belleville Springs Limited
Ordinary
100
The Valley Spring Company Limited
Ordinary
100
16. Stocks
Group
Company
2021
2020
2021
2020
£
£
£
£
Raw materials and consumables
344,000
323,172
344,000
323,172
Work in progress
15,380
20,585
15,380
20,585
Finished goods and goods for resale
480,082
485,177
480,082
485,177
---------
---------
---------
---------
839,462
828,934
839,462
828,934
---------
---------
---------
---------
17. Debtors
Group
Company
2021
2020
2021
2020
£
£
£
£
Trade debtors
1,567,248
1,235,205
1,267,372
1,011,240
Prepayments and accrued income
264,822
244,691
258,791
237,092
Other debtors
219,476
325,485
219,476
325,485
------------
------------
------------
------------
2,051,546
1,805,381
1,745,639
1,573,817
------------
------------
------------
------------
18. Investments
Group
Company
2021
2020
2021
2020
£
£
£
£
Other investments
3,299,996
3,739,574
3,299,996
3,739,574
------------
------------
------------
------------
These investments are bank term deposits.
19. Creditors: amounts falling due within one year
Group
Company
2021
2020
2021
2020
£
£
£
£
Trade creditors
440,550
297,508
439,615
297,507
Amounts owed to group undertakings
–
–
880,303
759,042
Accruals and deferred income
213,870
220,316
204,695
210,195
Corporation tax
220,787
144,694
177,686
95,140
Social security and other taxes
808,889
752,459
805,801
750,226
Directors current accounts
363,039
452,842
363,039
452,842
Other creditors
1,161,619
1,279,389
1,140,871
1,260,661
------------
------------
------------
------------
3,208,754
3,147,208
4,012,010
3,825,613
------------
------------
------------
------------
There is an unlimited multilateral guarantee given by the group companies, held by the bank. Amounts owed to group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
20. Provisions
Group
Deferred tax (note 21)
£
At 1 June 2020
470,173
Origination and reversal of timing differences
( 14,865)
Revaluation of investments
142,702
Revaluation of investment properties
1,651
---------
At 31 May 2021
599,661
---------
Company
Deferred tax (note 21)
£
At 1 June 2020
470,452
Origination and reversal of timing differences
( 14,819)
Revaluation of investments
142,702
Revaluation of investment properties
1,651
---------
At 31 May 2021
599,986
---------
21. Deferred tax
The deferred tax included in the statement of financial position is as follows:
Group
Company
2021
2020
2021
2020
£
£
£
£
Included in provisions (note 20)
599,661
470,173
599,986
470,452
---------
---------
---------
---------
The deferred tax account consists of the tax effect of timing differences in respect of:
Group
Company
2021
2020
2021
2020
£
£
£
£
Accelerated capital allowances
156,209
171,074
156,534
171,353
Revaluation of tangible assets
27,494
27,494
27,494
27,494
Fair value adjustment of investment property
105,639
103,988
105,639
103,988
Other revaluations
310,319
167,617
310,319
167,617
---------
---------
---------
---------
599,661
470,173
599,986
470,452
---------
---------
---------
---------
The amount of the reversal of deferred tax expected to occur next year is £71,903 (2020 - £30,732), relating to the reversal of existing timing differences on tangible fixed assets. There is no expiry date on timing differences.
22. Employee benefits
Defined contribution plans
The amount recognised in profit or loss as an expense in relation to defined contribution plans was £ 125,464 (2020: £ 136,747 ).
23. Financial risk management
The group has exposures to one main area of risk:
Customer credit exposure
The group may offer credit terms to its customers which allow payment of the debt after delivery of the goods or services. The group is at risk to the extent that a customer may be unable to pay the debt on the specified due date. This risk is mitigated by the strong on-going customer relationships.
24. 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
162,560
111,338
162,560
111,338
---------
---------
---------
---------
25. Financial instruments
The carrying amount for each category of financial instrument is as follows:
Financial assets measured at fair value through profit or loss
Group
Company
2021
2020
2021
2020
£
£
£
£
Financial assets measured at fair value through profit or loss
4,297,932
3,278,172
4,297,932
3,278,172
------------
------------
------------
------------
The change in fair value recognised in the profit for the year is a profit of £751,063 (2020 - £33,991). Financial assets measured at fair value comprise of listed investments and are determined by reference to the quoted market price in an active market at the balance sheet date.
26. Called up share capital
Issued, called up and fully paid
2021
2020
No.
£
No.
£
Ordinary shares of £ 1 each
6,311
6,311
6,311
6,311
-------
-------
-------
-------
27. Reserves
Revaluation reserve - This reserve records the value of asset revaluations and fair value movements on assets recognised in other comprehensive income. Capital redemption reserve - This reserve records the nominal value of shares repurchased by the company . Profit and loss account - This reserve records retained earnings and accumulated losses.
28. Analysis of changes in net debt
At 1 Jun 2020
Cash flows
At 31 May 2021
£
£
£
Cash at bank and in hand
3,365,862
606,544
3,972,406
Current asset investments
3,739,574
(439,578)
3,299,996
------------
---------
------------
7,105,436
166,966
7,272,402
------------
---------
------------
29. Operating leases
The total future minimum lease payments under non-cancellable operating leases are as follows:
Group
Company
2021
2020
2021
2020
£
£
£
£
Not later than 1 year
–
2,304
–
2,304
----
-------
----
-------
30. Other financial commitments
Contractual commitments for the acquisition of tangible fixed assets contracted for but not provided in the financial statements amounted to £ 280,114 (2020 - £ 79,598 ).
31. Events after the end of the reporting period
The business remains a Covid 19 secure site which is evidenced by the fact that no employees have caught Covid. The group implemented measures in the early stages of the pandemic to ensure it could continue production to fulfil customer orders. As with other businesses the group has experienced increases in the cost of all materials but has successfully negotiated increases in prices with its customers. It is expected that as a consequence of this that the profit before tax for the year ended 31 May 2022 will not reduce, compared to the previous year.
Springmasters Limited
Notes to the Financial Statements (continued)
Year ended 31 May 2021
32. Related party transactions
Group
Included in creditors is £363,039 (2020 - £452,842) owed to directors of the company and £1,051,277 (2020 - £1,199,880) owed to shareholders of the group.
Company
Included in creditors is £363,039 (2020 - £452,842) owed to directors of the company and £1,051,277 (2020 - £1,199,880) owed to shareholders of the company.