Radnor Hills Mineral Water Company Ltd - Limited company accounts 17.3

REGISTERED NUMBER: 03258542 (England and Wales)

Strategic Report, Report of the Directors and

Audited Financial Statements

for the Year Ended 31 May 2017

for

Radnor Hills Mineral Water Company Ltd

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Statement of Income and Retained Earnings

7

Balance Sheet

8

Cash Flow Statement

9

Notes to the Cash Flow Statement

10

Notes to the Financial Statements

11

DIRECTORS:

W W Watkins

J G Rogers-Coltman

REGISTERED OFFICE:

Heartsease

Knighton

Powys

LD7 1LU

REGISTERED NUMBER:

03258542 (England and Wales)

AUDITORS:

Caerwyn Jones

Chartered Accountants and Statutory Auditor

Emstrey House

Shrewsbury Business Park

Shrewsbury

Shropshire

SY2 6LG

BANKERS:

Barclays Bank Plc

44-46 Castle Street

Shrewsbury

Shropshire

SY1 2BU

The directors present their strategic report for the year ended 31 May 2017.

REVIEW OF BUSINESS

The company's principal activity is the manufacture and wholesaling of mineral water and soft drink

products together with hotel management.

The directors report on another highly satisfactory year with the company reporting an increase in turnover

of 18.88% on the corresponding period last year. This growth has been achieved through the sale of more

branded goods into the food sector. Whilst turnover has increased, the gross margin has fallen this year as

expected and is primarily as a result of an increase in wages in preparation to sustain the growth of the

company. The company also continues to invest heavily in product development and promotion

contributing to the fall in gross margin.

This year has seen continued significant investment in plant and machinery and ancillary buildings designed

to support and further ensure the company's growth.

PRINCIPAL RISKS AND UNCERTAINTIES

There are risks and uncertainties which could impact on the company's performance in the longer term. To

reduce such risks the directors have carried out a risk assessment to identify, manage and mitigate business

risk. The directors have concluded that identifying longer term risks are best addressed by continuing the

company's strategy of a continued review of its product range. This will allow the company flexibility to

respond to new trends within the industry and the customer demand for good quality products. The future

prosperity of the business will also be protected by the recruitment , retention and reward of a high calibre

management team.

ON BEHALF OF THE BOARD:

W W Watkins - Director

14 February 2018

The directors present their report with the financial statements of the company for the year ended 31 May 2017.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of the manufacture and

wholesaling of mineral and soft drink products together with hotel management.

DIVIDENDS

No dividends will be distributed for the year ended 31 May 2017.

FUTURE DEVELOPMENTS

The company has continued to invest extensively after the year end in both plant and site facilities. This

ensures the company is able to continue to meet demand.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 June 2016 to the date of

this report.

W W Watkins

J G Rogers-Coltman

FINANCIAL INSTRUMENTS

The exposure to financial risk is not material for the assessment of the assets, liabilities, financial position

and profit or loss of the company.

POLITICAL DONATIONS AND EXPENDITURE

During the year the company contributed £10,000 to the conservative party.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the

Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the

steps that he ought to have taken as a director in order to make himself aware of any relevant audit

information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Caerwyn Jones, will be proposed for re-appointment at the forthcoming Annual General

Meeting.

ON BEHALF OF THE BOARD:

W W Watkins - Director

14 February 2018

We have audited the financial statements of Radnor Hills Mineral Water Company Ltd for the year ended

31 May 2017 on pages seven to twenty one. The financial reporting framework that has been applied in

their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally

Accepted Accounting Practice), including Financial Reporting Standard 102 'The Financial Reporting

Standard applicable in the UK and Republic of Ireland'.

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 a Report of the Auditors 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.

Respective responsibilities of directors and auditors

As explained more fully in the Statement of Directors' Responsibilities set out on page three, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements

sufficient to give reasonable assurance that the financial statements are free from material misstatement,

whether caused by fraud or error. This includes an assessment of: whether the accounting policies are

appropriate to the company's circumstances and have been consistently applied and adequately disclosed;

the reasonableness of significant accounting estimates made by the directors; and the overall presentation

of the financial statements. In addition, we read all the financial and non-financial information in the

Strategic Report and the Report of the Directors to identify material inconsistencies with the audited

financial statements and to identify any information that is apparently materially incorrect based on, or

materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we

become aware of any apparent material misstatements or inconsistencies we consider the implications for

our report.

Opinion on financial statements

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 May 2017 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.

Opinion on other matter 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 Report of the Directors for the financial year for which the financial statements

are prepared is consistent with the financial statements, and has been prepared in accordance with

applicable legal requirements. In the light of the knowledge and understanding of the company and its

environment, we have not identified any material misstatements in the Strategic Report or the Report of

the Directors.

Matters on which we are required to report by exception

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 directors' remuneration specified by law are not made; or

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

I A Painter (Senior Statutory Auditor)

for and on behalf of Caerwyn Jones

Chartered Accountants and Statutory Auditor

Emstrey House

Shrewsbury Business Park

Shrewsbury

Shropshire

SY2 6LG

14 February 2018

TURNOVER

3

40,208,874

33,824,249

Cost of sales

32,064,694

24,193,209

GROSS PROFIT

8,144,180

9,631,040

Administrative expenses

3,712,205

3,314,137

4,431,975

6,316,903

Other operating income

86,375

156,236

OPERATING PROFIT

5

4,518,350

6,473,139

Interest receivable and similar income

10,267

9,245

4,528,617

6,482,384

Interest payable and similar expenses

7

77,852

86,605

PROFIT BEFORE TAXATION

4,450,765

6,395,779

Tax on profit

8

880,060

1,233,815

PROFIT FOR THE FINANCIAL YEAR

3,570,705

5,161,964

Retained earnings at beginning of year

15,708,275

11,436,311

Dividends

9

-

(890,000

)

RETAINED EARNINGS AT END OF YEAR

19,278,980

15,708,275

FIXED ASSETS

Intangible assets

10

28,046

21,163

Tangible assets

11

10,285,670

8,869,830

10,313,716

8,890,993

CURRENT ASSETS

Stocks

12

1,727,915

1,300,865

Debtors

13

8,092,870

7,915,506

Cash at bank and in hand

6,496,036

6,040,766

16,316,821

15,257,137

CREDITORS

Amounts falling due within one year

14

7,027,818

7,891,751

NET CURRENT ASSETS

9,289,003

7,365,386

TOTAL ASSETS LESS CURRENT LIABILITIES

19,602,719

16,256,379

CREDITORS

Amounts falling due after more than one year

15

(33,521

)

(373,037

)

PROVISIONS FOR LIABILITIES

17

(290,133

)

(174,982

)

NET ASSETS

19,279,065

15,708,360

CAPITAL AND RESERVES

Called up share capital

18

85

85

Retained earnings

19

19,278,980

15,708,275

SHAREHOLDERS' FUNDS

19,279,065

15,708,360

The financial statements were approved by the Board of Directors on 14 February 2018 and were signed on its behalf by:

W W Watkins - Director

Cash flows from operating activities

Cash generated from operations

1

6,333,205

7,134,044

Interest paid

(6,021

)

(2,600

)

Interest element of hire purchase payments paid

(71,831

)

(84,005

)

Government grants

32,644

-

Tax paid

(1,533,064

)

(803,336

)

-

15,662

Net cash from operating activities

4,754,933

6,259,765

Cash flows from investing activities

Purchase of intangible fixed assets

(15,130

)

-

Purchase of tangible fixed assets

(3,253,027

)

(3,021,881

)

Sale of tangible fixed assets

69,176

6,537

Interest received

10,267

9,245

Net cash from investing activities

(3,188,714

)

(3,006,099

)

Cash flows from financing activities

Capital repayments in year

(1,109,244

)

(73,500

)

Amount introduced by directors

2,270,366

1,715,317

Amount withdrawn by directors

(2,272,071

)

(1,715,135

)

Equity dividends paid

-

(890,000

)

Net cash from financing activities

(1,110,949

)

(963,318

)

Increase in cash and cash equivalents

455,270

2,290,348

Cash and cash equivalents at beginning of year

2

6,040,766

3,750,418

Cash and cash equivalents at end of year

2

6,496,036

6,040,766

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2017

2016

£

£

Profit before taxation

4,450,765

6,395,779

Depreciation charges

1,773,315

1,722,409

Loss/(profit) on disposal of fixed assets

2,943

(722

)

Government grants

(32,644

)

(16,250

)

Finance costs

77,852

86,605

Finance income

(10,267

)

(9,245

)

6,261,964

8,178,576

Increase in stocks

(427,050

)

(159,085

)

Increase in trade and other debtors

(369,653

)

(1,475,461

)

Increase in trade and other creditors

867,944

590,014

Cash generated from operations

6,333,205

7,134,044

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in

respect of these Balance Sheet amounts:

Year ended 31 May 2017

31.5.17

1.6.16

£

£

Cash and cash equivalents

6,496,036

6,040,766

Year ended 31 May 2016

31.5.16

1.6.15

£

£

Cash and cash equivalents

6,040,766

3,750,418

1.	STATUTORY INFORMATION

Radnor Hills Mineral Water Company Ltd is a private company, limited by shares , registered in

England and Wales. The company's registered number and registered office address can be found on

the Company Information page.

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

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Turnover

Turnover is measured at the fair value of the consideration received or receivable, excluding

discounts, rebates, value added tax and other sales taxes.

Intangible assets

Amortisation is calculated to write off the cost of an asset, less its estimated residual value, over the

useful life of that asset as follows:

Debenture

-

written off in equal annual instalments over its estimated useful economic life

Computer software

-

written off in equal annual instalments over its estimated useful economic life

If there is an indication that there has been a significant change in amortisation rate, useful life or

residual value of an intangible asset, the amortisation is revised prospectively to reflect the new

estimates.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Freehold property

-

2% on cost

Long leasehold

-

20% on reducing balance

Plant and machinery

-

25% on cost and 25% on reducing balance

Fixtures and fittings

-

33% on cost and 20% on reducing balance

Motor vehicles

-

25% on cost

The Lion f & f

-

25% on reducing balance

Government grants

Government grants are recognised at the fair value of the asset received or receivable. Grants are

not recognised until there is reasonable assurance that the company will comply with the conditions

attaching to them and the grants will be received.

Government grants are recognised using the accrual model and the performance model

Under the accrual model, government grants relating to revenue are recognised on a systematic

basis over the periods in which the company recognises the related costs for which the grant is

intended to compensate. Grants that are receivable as compensation for expenses or losses already

incurred or for the purpose of giving immediate financial support to the entity with no future related

costs are recognised in income in the period in which it becomes receivable.

Grants relating to assets are recognised in income on a systematic basis over the expected useful life

of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred

income and not deducted from the carrying amount of the asset.

Under the performance model, where the grant does not impose specified future performance

related conditions on the recipient, it is recognised in income when the grant proceeds are received

or receivable. Where the grant does impose specified future performance related conditions on the

recipient, it is recognised in income only when the performance related conditions have been met.

Where grants are received prior to satisfying the revenue recognition criteria, they are recognised as

a liability.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for

obsolete and slow moving items.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Income

Statement, except to the extent that it relates to items recognised in other comprehensive income

or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been

enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed

at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods

different from those in which they are recognised in financial statements. Deferred tax is measured

using tax rates and laws that have been enacted or substantively enacted by the year end and that

are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is

probable that they will be recovered against the reversal of deferred tax liabilities or other future

taxable profits.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling

at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate

of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving

at the operating result.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the

period of the lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the

company's pension scheme are charged to profit or loss in the period to which they relate.

3.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business is given below:

2017

2016

£

£

Sale of goods

40,208,874

33,824,249

40,208,874

33,824,249

An analysis of turnover by geographical market is given below:

2017

2016

£

£

United Kingdom

39,988,140

33,625,265

Europe

220,734

198,984

40,208,874

33,824,249

4.	EMPLOYEES AND DIRECTORS

2017

2016

£

£

Wages and salaries

5,736,000

4,513,202

Social security costs

346,781

282,476

Other pension costs

127,882

126,411

6,210,663

4,922,089

The average monthly number of employees during the year was as follows:

2017

2016

Administration

42

32

Production

91

72

Hotel administration

25

22

158

126

2017

2016

£

£

Directors' remuneration

7,084

25,647

Directors' pension contributions to money purchase schemes

9,999

39,996

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

1

1

5.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

2017

2016

£

£

Hire of plant and machinery

205,479

116,830

Other operating leases

541,928

516,758

Depreciation - owned assets

1,765,068

1,718,114

Loss/(profit) on disposal of fixed assets

2,943

(722

)

Other amortisation

8,247

3,707

6.	AUDITORS' REMUNERATION

2017

2016

£

£

Fees payable to the company's auditors for the audit of the company's financial statements

16,570

20,840

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

2017

2016

£

£

Interest payable

6,021

2,600

Hire purchase

71,831

84,005

77,852

86,605

8.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

2017

2016

£

£

Current tax:

UK corporation tax

771,582

1,133,591

Adjustments in respect of

previous periods

(6,673

)

-

Total current tax

764,909

1,133,591

Deferred tax

115,151

100,224

Tax on profit

880,060

1,233,815

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The

difference is explained below:

2017

2016

£

£

Profit before tax

4,450,765

6,395,779

Profit multiplied by the standard rate of corporation tax in the UK of 19.830% (2016 - 20%)

882,587

1,279,156

Effects of:

Expenses not deductible for tax purposes

2,832

1,476

Depreciation in excess of capital allowances

1,314

151,098

Adjustments to tax charge in respect of previous periods

(6,673

)

(197,915

)

Total tax charge

880,060

1,233,815