Company Registration No. 01112362 (England and Wales)
BLACKBURN CHEMICALS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2020
BLACKBURN CHEMICALS LIMITED
COMPANY INFORMATION
Directors
G Lamb
S Lamb
Dr J Bratt
A Holt
J Covill
Dr P Cooper
N Lord
A Whalley
Secretary
N Grundy
Company number
01112362
Registered office
Cunliffe Road
Whitebirk Industrial Estate
Blackburn
Lancashire
BB1 5SX
Auditor
Pierce C A Limited
Mentor House
Ainsworth Street
Blackburn
Lancashire
BB1 6AY
Business address
Cunliffe Road
Whitebirk Industrial Estate
Blackburn
Lancashire
BB1 5SX
Bankers
Natwest Bank Plc
35 King William Street
Blackburn
Lancashire
BB1 7DJ
Solicitors
Woodcocks Haworth & Nuttall
Solicitors
1a Strawberry Bank
Blackburn
Lancashire
BB2 6AS
BLACKBURN CHEMICALS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 5
Independent auditor's report
6 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 21
BLACKBURN CHEMICALS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2020
- 1 -
The directors present the strategic report for the year ended 31 May 2020.
Fair review of the business
Despite continuing global economic uncertainties and the Coronavirus pandemic emerging in early 2020 turnover has increased by £3.75m (7.97%) in the year to 31 May 2020.
The Board is confident that despite the pandemic turnover levels can be maintained in the short term and that future growth can be achieved with continued improvements in market share and in the range of products being developed and supplied.
In addition to growing turnover in the year gross margins have increased from 40.03% in 2019 to 41.37% in 2020.
To maintain its product range and competitiveness significant investment continues to be made in research and development each year and this continues to remain a priority for the company and its future plans.
The company has achieved a very healthy pre-tax profit representing 17.95% (2019 - 15.72%) of turnover.
The directors are pleased with the performance in the year.
Principal risks and uncertainties
The company operates in a global economy and the outcome and uncertainty surrounding Brexit negotiations, the fast approaching exit from the EU, and the fluctuation of the pound against world currencies continues to lead to some potential risks and uncertainties for the future which are no different to any other industry operating in the global economy.
Foreign currency exchange is regularly reviewed and monitored but the company does not forward purchase currency currently. The risk in currency fluctuation is managed monthly and the fact that the company sells and purchases goods in foreign currencies enables them to take advantage of the weak pound for exports with a converse off-set impact on purchases of foreign goods.
Raw material supply can be challenging at times, but the company manages this risk by continuing to develop alternative product for raw material usage and thus reduces the risk and dependency on some key raw materials by being able to widen its choice of raw materials used in its products. The company regularly reviews stock levels and has been doing so especially of late due to the upcoming departure from the EU, but at present there is no indication of any stock difficulties.
The Coronavirus pandemic has had limited impact on the financial performance or trade to date as most customers, operating in key industries globally, have traded throughout the period. Demand for the company’s products remains very strong.
The company has the ability to react quickly as a family owned and managed business to any such risks and uncertainties and with the added comfort that it can use the strength of its liquidity and resources to counter any such risks.
Operating in a fast changing and sometimes volatile world market is managed by operating in several key industry sectors worldwide such as food, paper and the surface coating industry. These sectors will always have a demand for the company’s products and across a wide geographic area and with differing political and economic requirements. The company remains flexible to such needs and requirements to enable it to respond quickly where possible.
BLACKBURN CHEMICALS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
- 2 -
Development and performance
The company continues to perform well as a major player in its market place, as set out in the Fair Review and Performance of the Business, and has identified that there are still significant areas for growth in the industries and sectors in which it operates both in the UK and globally.
New and improved products continue to be developed by investment in research and development and by responding to customer and market needs and demands.
Key performance indicators
The company measures its performance by reference to:
Turnover grew 7.97% by comparison to the prior year.
Gross profit margin has increased in the current year, which together with the increase in turnover, added £2.2m to gross profit in monetary terms when comparing to the prior year.
Pre-tax profits have increased significantly by £1.7m due mainly to the increased turnover and better gross margin.
Staff retention remains excellent and the company has a loyal and skilled work force.
Key performance indicators illustrate how the company has performed well in the year and the Board are very pleased with the performance achieved.
..............................
J Covill
Director
.........................
BLACKBURN CHEMICALS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2020
- 3 -
The directors present their report and financial statements for the year ended 31 May 2020.
Principal activities
The principal activity of the company continued to be that of the manufacture of speciality chemicals.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
G Lamb
S Lamb
Dr J Bratt
A Holt
J Covill
Dr P Cooper
N Lord
A Whalley
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £4,000,000. The directors do not recommend payment of a final dividend.
Research and development
The company continues to invest in Research and Development.
Future developments
The company continues to hold its UK market share and is looking to continue to expand its European and Worldwide turnover and market share.
Auditor
In accordance with the company's articles, a resolution proposing that Pierce C A Limited be reappointed as auditor of the company will be put at a General Meeting.
BLACKBURN CHEMICALS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
- 4 -
Energy and carbon report
Methodology
Below is a brief outline of the methodology used to produce the various figures and identified opportunities for Blackburn Chemicals Ltd.
Data Collection
Data was collected across the company as follows:
Utility Data
: from energy suppliers in the form of HH data or NHH consumption summary reports.
Transport
: from expense reports
Other Fuels:
from delivery invoices during the financial year.
Carbon Conversion
Government conversion factors for company reporting of greenhouse gas emissions were utilised to perform the carbon conversion and these can be found here:
https://www.gov.uk/government/collections/government-conversion-factors-for-company-reporting
The conversion factor spreadsheets provided the values used for the conversions, and step by step guidance on how to use them. A new set of conversion factors are published each year, together with a methodology paper explaining how the conversion factors are derived, and a paper explaining the major changes in the latest year’s factors. All of which can be found at the link above.
Blackburn Chemicals Data (2019/20)
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Total Production (Tonnes)
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Carbon Intensity, kWh/Tonne
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Energy Intensity
The Energy intensity metric utilised this year for Blackburn Chemicals Ltd is kWh/Tonne of Product.
Identified opportunities
A number of audits have been conducted during the year, which identified opportunities and made recommendations to improve energy efficiency across the site. As 67% of site energy relates to gas consumption, this has been the main focus of available resources.
Selected opportunities identified to improve gas efficiency include:
-
Optimising reaction temperatures
-
Optimising Steam Generator(s)
-
Optimising Thermal Oil Units
-
Optimising heated/bulk Raw Material storage temperatures
-
Investigating installing Economisers
-
Improvements to insulation/lagging
-
Reviewing the use of Steam Bags for heating Raw Materials IBCs
-
Improving Metering
-
Reviewing Hot Water Heating options
-
Behavioural Changes
BLACKBURN CHEMICALS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
- 5 -
Statement of directors' responsibilities
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;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and 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 of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
J Covill
Director
18 December 2020
BLACKBURN CHEMICALS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF BLACKBURN CHEMICALS LIMITED
- 6 -
Opinion
We have audited the financial statements of Blackburn Chemicals Limited (the 'company') for the year ended 31 May 2020 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, 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 company's affairs as at 31 May 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.
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.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
-
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue
.
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
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' r
eport 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.
BLACKBURN CHEMICALS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF BLACKBURN CHEMICALS LIMITED
- 7 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the strategic report and the directors'
r
eport
.
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.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, 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.
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.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s 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.
Simon Diggle (Senior Statutory Auditor)
for and on behalf of Pierce C A Limited
22 December 2020
Statutory Auditor
Mentor House
Ainsworth Street
Blackburn
Lancashire
BB1 6AY
BLACKBURN CHEMICALS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2020
- 8 -
2020
2019
Notes
£
£
Turnover
3
50,899,389
47,141,277
Cost of sales
(29,838,043)
(28,269,489)
Gross profit
21,061,346
18,871,788
Distribution costs
(4,765,385)
(4,052,347)
Administrative expenses
(7,162,363)
(7,421,736)
Other operating (expenses)/income
(318)
9,054
Operating profit
4
9,133,280
7,406,759
Interest receivable and similar income
8
7,732
4,709
Profit before taxation
9,141,012
7,411,468
Tax on profit
9
(1,617,176)
(1,321,614)
Profit for the financial year
7,523,836
6,089,854
The profit and loss account has been prepared on the basis that all operations are continuing operations.
BLACKBURN CHEMICALS LIMITED
BALANCE SHEET
- 9 -
2020
2019
Notes
£
£
£
£
Fixed assets
Tangible assets
11
87,513
122,054
Investments
12
200
200
87,713
122,254
Current assets
Stocks
14
7,885,940
9,058,153
Debtors
15
14,105,088
11,385,744
Cash at bank and in hand
1,360,367
1,005,523
23,351,395
21,449,420
Creditors: amounts falling due within one year
16
(5,481,718)
(7,126,037)
Net current assets
17,869,677
14,323,383
Total assets less current liabilities
17,957,390
14,445,637
Provisions for liabilities
19,051
6,968
Net assets
17,976,441
14,452,605
Capital and reserves
Called up share capital
19
3,154
3,154
Capital redemption reserve
1,846
1,846
Profit and loss reserves
17,971,441
14,447,605
Total equity
17,976,441
14,452,605
The financial statements were approved by the board of directors and authorised for issue on 18 December 2020 and are signed on its behalf by:
J Covill
Director
Company Registration No. 01112362
BLACKBURN CHEMICALS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2020
- 10 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 June 2018
3,154
1,846
16,157,751
16,162,751
Year ended 31 May 2019:
Profit and total comprehensive income for the year
-
-
6,089,854
6,089,854
Dividends
10
-
-
(7,800,000)
(7,800,000)
Balance at 31 May 2019
3,154
1,846
14,447,605
14,452,605
Year ended 31 May 2020:
Profit and total comprehensive income for the year
-
-
7,523,836
7,523,836
Dividends
10
-
-
(4,000,000)
(4,000,000)
Balance at 31 May 2020
3,154
1,846
17,971,441
17,976,441
BLACKBURN CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2020
- 11 -
1
Accounting policies
Company information
Blackburn Chemicals Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Cunliffe Road, Whitebirk Industrial Estate, Blackburn, Lancashire, BB1 5SX.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “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.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company has taken advantage of the exemption under section
400
of the
Companies Act 2006 not to prepare consolidated accounts
.
The financial statements present information about the company as an individual entity and not about its group
.
Blackburn Chemicals Limited is a wholly owned subsidiary of Blackburn Chemicals (Holdings) Limited and the results of Blackburn Chemicals Limited are included in the consolidated financial statements of Blackburn Chemicals (Holdings) Limited which are available from the registered office.
1.2
Going concern
The directors are not aware of any material uncertainties affecting the company and consider that the company will have sufficient resources to continue trading for the foreseeable future. As a result the directors have continued to adopt the going concern basis in preparing the financial statements.
true
Whilst the directors have adopted the going concern basis set out above, the impact of the worldwide Coronavirus pandemic, Covid-19, on all businesses represents an uncertainty and the true impact of this pandemic will only become apparent over time.
The directors have given due consideration to the impact of the pandemic on the company and consider that it will have adequate resources to manage that impact.
1.3
Turnover
Turnover represents amounts receivable for goods and services
provided
net of VAT and trade discounts. Goods that are despatched and
insured
in transit are treated as sales in the accounts.
Sales made to customers overseas are recorded at the date the insured goods are despatched from the company's premises, as the risks and rewards of ownership are deemed to be transferred.
1.4
Tangible fixed assets
Tangible fixed assets
are measured at cost, net of depreciation.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Motor vehicles
25% Straight line
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
.
BLACKBURN CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
1
Accounting policies
(Continued)
- 12 -
1.5
Fixed asset investments
Interests in subsidiaries
are measured at cost less any accumulated impairment losses.
The investments are assessed for impairment at each reporting date
and
any
impairment
losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company
. Control is
the power to govern the financial and operating policies of
the
entity so as to obtain benefits from its activities.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of replacement cost and cost, adjusted where applicable for any loss of service potential.
1.7
Cash and cash equivalents
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.
1.8
Financial instruments
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
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
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.
BLACKBURN CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
1
Accounting policies
(Continued)
- 13 -
Impairment of financial assets
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.
Derecognition of financial assets
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.
Classification of financial liabilities
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from
fellow group companies and preference shares that are classified as debt, 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
paymen
ts 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. A
m
ounts 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.
Other financial liabilities
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
s
ubsequently 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.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value th
r
ough profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
BLACKBURN CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
1
Accounting policies
(Continued)
- 14 -
1.9
Equity instruments
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.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current 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
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.
1.11
Employee benefits
The cost of any unused holiday entitlement is recognised in the period in which the employees' services are received.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
1.14
Foreign exchange
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.
1.15
Consumable equipment on customer premises
The company supplies a number of its customers with equipment to enable it to process the company's products. Once installed there is no ongoing economic value to the company and hence the cost is written off to cost of sales in the period in which it is incurred.
BLACKBURN CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
- 15 -
2
Judgements and key sources of estimation uncertainty
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.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2020
2019
£
£
Turnover
Sales of chemicals
50,899,389
47,141,277
Other significant revenue
Interest income
7,732
4,709
In the opinion of the directors it would be seriously prejudicial to the company to disclose turnover by geographical market and they have therefore not done so.
4
Operating profit
2020
2019
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
3,151
(37,581)
Depreciation of owned tangible fixed assets
46,828
48,845
Profit on disposal of tangible fixed assets
(4,837)
(3,602)
Operating lease charges
240,000
233,049
5
Auditor's remuneration
2020
2019
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
12,750
12,500
For other services
All other non-audit services
30,677
48,299
BLACKBURN CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
- 16 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2020
2019
Number
Number
Management & Administration
10
10
Production
62
62
Total
72
72
Their aggregate remuneration comprised:
2020
2019
£
£
Wages and salaries
3,083,968
3,146,347
Social security costs
269,514
270,558
Pension costs
139,746
127,590
3,493,228
3,544,495
7
Directors' remuneration
2020
2019
£
£
Remuneration for qualifying services
411,391
582,064
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 5 (2019 - 5).
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2020
2019
£
£
Remuneration for qualifying services
166,907
156,713
BLACKBURN CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
- 17 -
8
Interest receivable and similar income
2020
2019
£
£
Interest income
Interest on bank deposits
6,592
3,915
Other interest income
1,140
794
Total income
7,732
4,709
9
Taxation
2020
2019
£
£
Current tax
UK corporation tax on profits for the current period
1,638,073
1,279,417
Adjustments in respect of prior periods
(8,814)
30,381
Total current tax
1,629,259
1,309,798
Deferred tax
Origination and reversal of timing differences
(12,083)
11,816
Total tax charge
1,617,176
1,321,614
The actual charge 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:
2020
2019
£
£
Profit before taxation
9,141,012
7,411,468
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2019: 19.00%)
1,736,792
1,408,179
Tax effect of expenses that are not deductible in determining taxable profit
24,369
286
Adjustments in respect of prior years
(8,814)
30,381
Group relief
(901)
(590)
Permanent capital allowances in excess of depreciation
(15,710)
683
Research and development tax credit
(118,560)
(117,325)
Taxation charge for the year
1,617,176
1,321,614
BLACKBURN CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
- 18 -
10
Dividends
2020
2019
£
£
Interim paid
4,000,000
7,800,000
11
Tangible fixed assets
Motor vehicles
£
Cost
At 1 June 2019
253,696
Additions
22,000
Disposals
(40,870)
At 31 May 2020
234,826
Depreciation and impairment
At 1 June 2019
131,642
Depreciation charged in the year
46,828
Eliminated in respect of disposals
(31,157)
At 31 May 2020
147,313
Carrying amount
At 31 May 2020
87,513
At 31 May 2019
122,054
12
Fixed asset investments
2020
2019
Notes
£
£
Investments in subsidiaries
13
200
200
Movements in fixed asset investments
Shares in group undertakings
£
Cost or valuation
At 1 June 2019 & 31 May 2020
200
Carrying amount
At 31 May 2020
200
At 31 May 2019
200
BLACKBURN CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
- 19 -
13
Subsidiaries
Details of the company's subsidiaries at 31 May 2020 are as follows:
Name of undertaking and country of
Nature of business
Class of
% Held
incorporation or residency
shareholding
Direct
Key Chemicals Limited
Cunliffe Road, Whitebirk Industrial Estate, Blackburn, Lancashire, BB1 5SX
Dormant company
Ordinary
100.00
Silect Chemicals Limited
As above
Dormant company
Ordinary
100.00
14
Stocks
2020
2019
£
£
Raw materials and consumables
5,911,435
7,012,769
Finished goods and goods for resale
1,974,505
2,045,384
7,885,940
9,058,153
15
Debtors
2020
2019
Amounts falling due within one year:
£
£
Trade debtors
11,797,768
10,609,210
Corporation tax recoverable
277,314
-
Amounts owed by group undertakings
1,286,512
-
Other debtors
654,822
657,419
Prepayments and accrued income
88,672
119,115
14,105,088
11,385,744
BLACKBURN CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
- 20 -
16
Creditors: amounts falling due within one year
2020
2019
£
£
Other borrowings
467,466
554,369
Trade creditors
4,620,757
3,391,032
Amounts due to group undertakings
-
2,033,263
Corporation tax
-
547,917
Other taxation and social security
74,323
175,961
Other creditors
78,003
49,511
Accruals and deferred income
241,169
373,984
5,481,718
7,126,037
17
Deferred taxation
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:
Asset
Asset
2020
2019
Balances:
£
£
Deaccelerated capital allowances
(19,051)
(6,968)
2020
Movements in the year:
£
Liability/(Asset) at 1 June 2019
(6,968)
Credit to profit or loss
(12,083)
Liability/(Asset) at 31 May 2020
(19,051)
The deferred tax asset set out above is expected to reverse within the foreseeable future and relates to deaccelerated capital allowances that are expected to mature within the same period.
18
Retirement benefit schemes
2020
2019
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
139,746
127,590
The company operates
two
defined contribution pension scheme
s
.
The assets of the schemes are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the funds.
BLACKBURN CHEMICALS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2020
- 21 -
19
Share capital
2020
2019
£
£
Ordinary share capital
Issued and fully paid
3,154 Ordinary shares of £1 each
3,154
3,154
20
Operating lease commitments
Lessee
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:
2020
2019
£
£
Within one year
307,417
69,097
Between two and five years
1,220,196
262,696
In over five years
11,178,661
9,088,495
12,706,274
9,420,288
The company has a 150 year lease over the land on the north side of Cunliffe Road expiring on 25 March 2164. Rent is currently charged at £64,000 per annum on this.
21
Events after the reporting date
On
16
June 20
20
the company declared a
dividend of £
7
,
5
00,000
.
22
Ultimate controlling party
The company is a wholly owned subsidiary of Blackburn Chemicals (Holdings) Limited, a company under
the direct control of George Lamb and various George Lamb family trusts. The ultimate control rests with
the trustees of the trusts which include George Lamb.
2020-05-31
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