Brian_Yeardley_Continenta - Accounts

The directors present the strategic report and financial statements for the year ended 31 December 2020.

The principal activity of the company continues to be that of UK and international haulage.

This principal activity is split into two divisions, firstly, the general cargo (GC) division and secondly, the live events division (TRUCKINGBY - TBY) moving musical equipment for some of the biggest artists and bands in the world.

The TBY division has shown consistent, above inflation growth, in recent years and significant investment in this area of the business was made to facilitate the anticipated continuation of that growth in 2020 and beyond.

The GC business has also shown significant growth and Brian Yeardley Continental Limited is one of the larger UK operators that continues to venture into Europe in the aftermath of Brexit. During the year the company undertook to diversify its offering and to increase its share of the UK domestic haulage market. The company offers its clients a quality assured service of full loads and groupage in the UK and to all European Countries with daily departures from both depots.

The principal risk the business currently faces is in respect of Covid-19, which is covered extensively in both the development and performance section and the events since the year end and going concern section below.

Concerns continue to linger regarding Brexit and the lack of clarity around its full effect on the live events logistics sector. The company has a Brexit strategy team that is tasked with developing and implementing strategy in relation to Brexit and to quickly react upon any new procedures or regulations to ensure the business can continue to operate effectively and offer its customers a quality service. The company continues to forge strong relationships within the supply chain both in the UK and Europe and the directors are confident that this coupled with its robust approach to strategy and planning will ensure it is well placed to react to any post-Brexit challenges that lie ahead.

There is competition within the general cargo and live events sectors both in the UK and Europe. The directors therefore continuously monitor the market and its competition to ensure it offers its customers the highest levels of service at the most competitive prices.

The company’s activities expose it to limited financial risk of changes in foreign currency exchange rates, specifically that between GBP and EUR’s. The company continually reviews the market and associated factors in ascertaining the level of risk present. The company does invoice customers in foreign currency to hedge these exposures. With the exception of foreign currency exchange, the company does not actively use financial instruments as part of its financial risk management.

The company is exposed to credit risk and cash flow risk associated with selling on credit and manages this through its robust credit control procedures and the use of well known, industry leading, credit referencing software.

As discussed in more detail in the next section, the company entered into a Company Voluntary Arrangement (CVA) in November 2020. This arrangement places certain restrictions and conditions upon which the company is allowed to continue to trade, in particularly those related to the recovery of the TBY division. Given the inherent uncertainty around the Covid-19 pandemic and its future impact on this area the directors consider this a principal risk.

The company is committed to investing in its employees, broadening diversity and places great emphasis on nurturing and developing the skills of its employees through in-house and external training, updates and webinars. The company greatly values the involvement of its employees and has continued to keep them informed on matters affecting them as employees and on the various factors affecting the performance of the company in addition to providing channels for employees to feedback their own thoughts and ideas.

The company is equally committed to reducing its environmental footprint taking responsibility for monitoring its drivers and ensuring they are operating in accordance with prevailing laws and regulations, with continued investment in fleet technology to obtain high quality accreditations and efficiencies.

During the early part of 2020 the company was impacted by a sudden drop in the demand for road haulage services and by the total cessation of live-action events brought about as a result of the Covid-19 pandemic. This had a direct impact on the financial performance of the company in particular during periods of enforced national lockdowns.

The Covid-19 pandemic has had a dramatic effect on the live events business with artists and organisations postponing tours and events on an unprecedented global scale. The TBY division suffered a near total loss of its anticipated 2020 revenue and the GC business, whose customers are primarily large European manufacturers, experienced significant disruption as Europe entered into lockdown and manufacturers suspended operations.

Due to the high level of fixed costs that the company had, including its fleet of tractor units and trailers, of which a significant number were on hire purchase agreements, the company undertook a significant cost review and reduction exercise to limit the impact on financial performance as much as possible.

The company took advantage of the UK Government’s VAT deferral and employee furlough schemes, but it was unsuccessful in obtaining a Government backed Coronavirus Business Interruption Loan (CBIL), which would have greatly supported the business throughout the remainder of 2020.

As a consequence, and despite considerable efforts by the directors and senior managers, the company entered into a Company Voluntary Arrangement effective from 25 November 2020, with the overwhelming support of the vast majority of its creditors. The agreement provides that creditors will receive a minimum payment of 28p in the £, these are to be paid by the company in quarterly instalments over the period to 30 January 2025 equal to 5% of the TBY division's revenue from the previous quarter. Therefore should the live events industry recover more swiftly, and the company exceeds its forecasts, creditors may receive a higher contribution. As part of the CVA the company also returned a number of financed vehicles to their respective hire purchase providers.

This secured the immediate future of the company despite the continuing challenges present of operating during a period of great uncertainty and has allowed time and space for the directors' cost reductions and restructuring to take full effect.

The primary performance indicators used by the business are turnover, turnover growth, operating profit, operating profit margin and distributable reserves. These show;

            2020        2019

Turnover            10,582k        18,224k

Turnover Growth        -41.9%        11.3%

Operating profit        789,979        210,488

Operating profit margin    7.5%        1.2%

Distributable reserves    917,542        25,895

The company also measures KPI’s according to destination country, subcontractor use compared to own fleet, fuel usage, efficiency and other associated factors. The disclosure of these more detailed KPI’s is not required.

Whilst it is extremely unfortunate, entering into the CVA has saved jobs and given the company a stable platform on which to continue to operate its business. The business has been streamlined by reducing its costs and its working capital requirements. The CVA also enabled the company to restructure its balance sheet and remove historical debt that had become unserviceable.

Going into 2021 the business has successfully diversified its general cargo business, turnover from UK based work has increased over 250% in 2021 to £3.5m (2020: £1.0m) and is now 28% of the GC division's revenue (2020: 11%). This shows the resilience and determination of the GC business and team throughout 2021 but also that the strategy to pursue and grow the UK side of the GC operation was justified and has succeeded in reducing the over-reliance on EU work.

2021 has remained a challenging year for live events, whilst the GC operation built up a resilience to disruption caused by Covid-19, the Live Events Division was still at the mercy of the pandemic and exposed to the numerous lockdowns and restrictions that occurred throughout the year both in the UK and Europe.

Despite this continued disruption, during the periods of no lockdowns and when restrictions were eased we saw a number of significant events and tours occur particularly towards the back-end of the year that showed confidence was returning within the sector and gave cause for optimism heading into 2022.

2022 has started more positive still in the events sector, having successfully negotiated the autumn/winter period without further or increased restrictions, there has been a significant increase in the number of tours and dates scheduled in for 2022. We are therefore cautiously optimistic that 2022 will continue to demonstrate that the sector is continuing the slow recovery we saw towards the end of 2021.

Due to the successful working capital and debt restructuring, the business is now more resilient to changes in both of its key operating sectors, by reducing its fleet size and achieving a lower fixed-cost base, the business is quickly and more fluidly able to re-distribute its assets between sectors in order to operate more efficiently and is no longer over-reliant on any one particular revenue stream.

The company utilises an invoice discounting facility as the primary source of working capital funding and the directors have no reason to believe that this facility will be withdrawn during the next 12 months.

The directors have prepared budgets and considered the cash flow requirement of the company for a period in excess of twelve months from the date of the approval of these financial statements. The forecasts have been prepared on a conservative basis with particular sensitivity around the recovery of the live events division, new contract wins, the fulfilling of existing contracts and related cash receipts. The timing and amounts of these are subjective and impact the future cash flows of the business. These projections indicate that the current financing facilities are adequate for the foreseeable future.

The directors therefore consider that the company is a going concern and continue to adopt the going concern basis in preparing these accounts.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 December 2020.

The principal activity of the company continues to be that of UK and international haulage.

The results for the year are set out on page 10.

Ordinary interim dividends were paid amounting to £23,200. The directors do not recommend payment of a final dividend.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Azets Audit Services Limited were appointed auditor to the company following their acquisition of the trade of Garbutt & Elliott Audit Limited on 1 December 2021 and in accordance with s487(2) of the Companies Act 2006 they are deemed reappointed annually.

The directors are responsible for preparing the annual 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 company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

•     select suitable accounting policies and then apply them consistently;

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

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We have audited the financial statements of Brian Yeardley Continental Limited (the 'company') for the year ended 31 December 2020 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including 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 company's affairs as at 31 December 2020 and of its profit for the year then ended;

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

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to note 1.2 in the financial statements, which indicates that the company has been significantly affected by the Covid-19 pandemic and as a consequence entered into a Company Voluntary Arrangement (CVA) during the year.

As stated in note 1.2, the above events or conditions, along with matters as set forth in note 1.2, indicate that a material uncertainty exists that may cast significant doubt on the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

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 contained within the annual report. 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. 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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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 our audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

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

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

•     certain disclosures of remuneration specified by law are not made; or

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

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 company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

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.

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, through discussion with the directors and other management, and from inspection of the company's regulatory and legal correspondence. We discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance during the audit.

The company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation), distributable profits legislation, pensions legislation, taxation legislation and further laws and regulations that could indirectly affect the financial statements, comprising employment, environmental and health and safety legislation and, in the current climate, covid regulations. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and other management and inspection of regulatory and legal correspondence, if any. These procedures did not identify any potentially material actual or suspected non-compliance.

To identify risks of material misstatement due to fraud we considered the opportunities and incentives and pressures that may exist within the company to commit fraud. Our risk assessment procedures included enquiry of the director to understand the high level policies and procedures in place to prevent and detect fraud and considering performance targets and incentive schemes in place for management. We communicated identified fraud risks throughout our team and remained alert to any indications of fraud during the audit.

As a result of these procedures we identified the greatest potential for fraud in the following areas:

- revenue recognition and in particular the risk that revenue is recorded in the wrong period; and

- subjective accounting estimates.

These risks arise due to a potential desire to present stronger results which may assist the company to secure additional finance and enable management to benefit from enhanced incentives. As required by auditing standards we also identified and addressed the risk of management override of controls.

We performed the following procedures to address the risks of fraud identified:

- identifying and testing high risk journal entries through vouching the entries to supporting documentation;

- assessing significant accounting estimates for bias; and

- testing the timing and recognition of income and, in particular, that it was appropriately recognised or deferred.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it.

In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

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.

The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

Brian Yeardley Continental Limited is a private company limited by shares incorporated in England and Wales. The registered office is Strand House, Wakefield Road, Featherstone, Pontefract, WF7 5BP.

These financial statements have been prepared in accordance with The Financial Reporting Standard applicable in the UK and Republic of Ireland (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £1.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of certain financial instruments at fair value. The principal accounting policies adopted are set out below.

The covid-19 pandemic has had a dramatic effect on the events and exhibitions business (TruckingBY) with artists postponing tours and events being postponed or cancelled globally. The TruckingBY division suffered from a near total loss of its expected revenue for 2020 and is not expected to begin to recover until 2021 and into 2022. In addition, the general cargo (GC) business, whose customers are primarily large European manufacturers, experienced disruption as Europe entered into lockdown and manufacturers suspended operations. This required the company to take action to reduce its cost base and utilise the Coronavirus Job Retention Scheme whilst it evaluated its options.true

Having taken advice and evaluated its options, the company entered negotiations in respect of a Company Voluntary Arrangement (CVA). The CVA was approved by the company’s creditors and took effect from 25 November 2020. The agreement estimates that total payments of £1.1m could be made against liabilities of c.£3.1m in quarterly instalments over the period to 30 January 2025, representing a rate of 28p in the £. The contributions paid by the company are calculated as a percentage of the revenue generated by the TruckingBY business. Therefore, should the events industry recover more swiftly, and the company exceed its forecasts, creditors may receive a higher contribution, of up to 35p in £. As part of the CVA, the company returned a number of financed vehicles to its hire purchase finance providers.

Whilst this is extremely unfortunate, the swift action has saved jobs and allowed the company a stable platform on which to continue to operate its business. The business has been streamlined by reducing its costs and its working capital requirements. The CVA has also enabled the company to restructure its balance sheet and remove historic debt which had become unserviceable. The company is now focussed on diversifying its general cargo business to increase its share of the UK market and convert a number of new opportunities in its TruckingBY business into committed contracts to kickstart a recovery in the business.

The company has recently entered into a new invoice discounting facility to be provided by Close Brothers. Close Brothers are aware of the CVA and are supportive of management’s visions for the company. Accordingly, management have no reason to believe that this facility would be terminated during the 12 months following the date of approval of these financial statements.

The directors have prepared budgets and considered the cash flow requirement of the company for a period in excess of twelve months from the date of the approval of these financial statements. The forecasts have been prepared on a conservative basis with particular sensitivity around the recovery of the live events division, new contract wins, the fulfilling of existing contracts and related cash receipts. The timing and amounts of these are subjective and impact the future cash flows of the business. These projections indicate that the current financing facilities are adequate for the foreseeable future.

The United Kingdom (UK) left the European Union (EU) on 31 January 2020 and the transition period, during which the UK had to comply with all EU rules and laws, expired on 31 December 2020. The trade agreement that was entered into between the UK and EU has resulted in a number of implications for the UK road haulage industry, particularly with regards to the right of UK registered vehicles and drivers to operate within Europe (known as cabotage). Nonetheless, the directors remain confident of navigating the outcome and continuing to offer our services.

The cash flow forecasts noted above are prepared on a basis that these changes to the trading relationship will have a minimal impact to the cash flows of the company.

Based on the above, the directors consider that the company will be a going concern for a period of at least 12 months from the date of approval of these financial statements and have therefore prepared the financial statements on a going concern basis.

However, the Covid-19 related risks and the requirement to adhere to the conditions of the CVA identified above represent a material uncertainty that may cast significant doubt on the company's ability to continue as a going concern and, therefore, to continue realising its assets and discharging its liabilities in the normal course of business. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.

Turnover represents amounts receivable for goods and services. Income is recognised on delivery of a customer's goods to their destination and is net of VAT and trade discounts.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values on a straight line basis over their estimated useful lives as follows:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Stocks are comprised of fuel held on site and within vehicles at the year end, and is recognised at cost.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities, including creditors and bank loans are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and 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. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

The depreciation policy has been set according to management's experience of the useful lives and residual values of a typical asset in each category, something which is reviewed annually. It is not considered practical to use a per unit basis to allocate depreciation without undue cost and therefore amounts are charged annually. The depreciation charged during the year was £879,669 (2019 - £925,577) which the directors feel is a fair reflection of the benefits derived from the consumption of the tangible fixed assets in use during the period.

Outstanding trade debtor balances are reviewed on a line by line basis by management to identify possible amounts where a provision is required. Management closely manage the collection of trade debtors and are therefore able to identify balances where there is uncertainty about its recoverability, and determine what provision is required (if any).

An analysis of the company's turnover is as follows:

The turnover analysis above reflects where the company's customer is based rather than whether the goods being shipped are exports from or imports to the UK.

As a result of the CVA, the company has amended the liabilities owing to creditors within the CVA to the amounts agreed to be paid under the terms of the CVA.

A contingent liability for the balance remains, as documented at note 20.

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

The actual credit for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Trade debtors have been pledged as security against £866,365 (2019 - £1,471,495) of borrowings under an invoice discounting arrangement.

Bank overdrafts include £866,365 (2019 - £1,471,495) advanced under an invoice discounting facility which is secured against the trade debtors against which advances have been made.

Finance lease payments represent rentals payable by the company for certain vehicles. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

Finance lease obligations are secured against the assets to which they relate.

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

The company operates defined contribution pension schemes for all qualifying employees. The assets of the schemes are held separately from those of the company in independently administered funds.

Should the company fail to comply with the terms of the Company Voluntary Arrangement (CVA) or carry out any act or omission which, in the opinion of the supervisor, renders the continuance of the CVA unworkable, additional liabilities of an estimated £2,005,380 shall fall due.

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

The company leases land and property from the Solo Pension Scheme, a small self-administered pension scheme of which Mr B Yeardley, a shareholder and director, is a member. Rent is payable by the company to the scheme which in the year amounted to £135,056 (2019 - £121,477).

The company leases land from the Hopper Pension Fund, a small self-administered pension scheme of which Mr K & Mrs S Hopper, shareholders and directors, are members. Rent is payable by the company to the scheme which in the year amounted to £27,944 (2019 - £25,858).

Dividends totalling £23,200 (2019 - £84,600) were paid in the year in respect of shares held by the company's directors.

The company has no ultimate controlling party.

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2019 - 6).

The purchase of fixed assets amounting to £108,640 (2019 - £1,871,687) was funded by finance leases, which represent major non cash transactions.