Company Registration No. 01419058 (England and Wales)
NORTH YORKSHIRE TIMBER COMPANY LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
NORTH YORKSHIRE TIMBER COMPANY LIMITED
COMPANY INFORMATION
Directors
R T Barclay
V P Bellas
N P Kershaw
N A McGill
R Timmens
R G Myatt
(Appointed 27 January 2020)
J M Chilton
(Appointed 28 July 2020)
Company number
01419058
Registered office
Standard House
Thurston Road
Northallerton Business Park
Northallerton
North Yorkshire
DL6 2NA
Auditor
BHP LLP
2 Rutland Park
Sheffield
S10 2PD
Bankers
PNC Financial Services UK Ltd
PNC House
34/36 Perrymount Road
Haywards Heath
West Sussex
RH16 3DN
Solicitors
Addleshaw Goddard LLP
19 Canning Street
Edinburgh
EH3 8EH
NORTH YORKSHIRE TIMBER COMPANY LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 5
Statement of comprehensive income
6
Balance sheet
7
Statement of changes in equity
8
Notes to the financial statements
9 - 22
NORTH YORKSHIRE TIMBER COMPANY LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
- 1 -
The directors present the strategic report for the year ended 31 December 2019.
Fair review of the business
The Company is primarily engaged in the fabrication and retail of timber and building products.
The business continues to remain customer-focussed, delivering service and product innovation to support its growth plans across its target market segments. Its broad range of products, market sectors and customers should ensure that it is not over-reliant on one market. The Company is well placed to service the growth opportunities that exist in the housing, RM&I and commercial sectors. The company continues to invest in production capacity to support growth plans and to deliver value add product solutions to our customers.
North Yorkshire Timber Company Limited is a subsidiary of National Timber Group Midco Limited. Through the continued growth and development of all subsidiaries, including North Yorkshire Timber Company Limited, the Group aims to increase its overall capability and presence across the UK, and to become the recognised industry specialist in the timber and sheet products sector.
Principal risks and uncertainties
The Company’s operations expose it to a variety of financial risks as discussed below. The Company has a risk management programme that seeks to limit the adverse effect of such risks on financial performance.
The principal risks and uncertainties affecting the Company include the following:
Price risk
The Company is exposed to commodity price risk as a result of its operations. However, given the size of the Company’s operation, the cost of managing the exposure to commodity price risk exceed the potential benefits. The directors will revisit the appropriateness of this policy should the Company’s operation change in size or nature.
Credit risk
The Company has implemented a policy that requires credit checks on potential customers before sales are made, in line with the terms of its credit insurance. The amount of exposure to any individual counterparty is subject to a limit, which is assessed regularly by the board.
Liquidity risk
The Company maintains short-term debt finance that is designed to ensure the Company has sufficient funds for its operations.
Development and performance
In 2019, full year revenues were £21.0m. Gross margin increased by 240bps to 36.5%, benefitting from product mix. Excluding one-off exceptional income, operating profit increased by £0.5m, resulting from the increased gross margin and a leaner cost base.
The current financial year started well before Covid-19 severely impacted sales in April and May. From there, trading recovered strongly and by the summer 2020 was at comparable levels to the same period in 2019. This recovery is helping to ensure that the business performance remains solid in 2020. Action plans are also underway in the second half of 2020 to enable the delivery of further growth in 2021.
R G Myatt
Director
22 December 2020
NORTH YORKSHIRE TIMBER COMPANY LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2019.
Principal activities
The principal activity of the company continued to be that of the fabrication and retail of timber and building products.
Results and dividends
The results for the year are set out on page 6.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
R T Barclay
V P Bellas
J A G Douglas
(Resigned 27 January 2020)
N P Kershaw
N A McGill
R Timmens
S Whiteford
(Resigned 30 June 2020)
R G Myatt
(Appointed 27 January 2020)
J M Chilton
(Appointed 28 July 2020)
Auditor
BHP LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
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
R G Myatt
Director
22 December 2020
NORTH YORKSHIRE TIMBER COMPANY LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2019
- 3 -
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.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF NORTH YORKSHIRE TIMBER COMPANY LIMITED
- 4 -
Opinion
We have audited the financial statements of North Yorkshire Timber Company Limited (the 'company') for the year ended 31 December 2019 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 December 2019 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 other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of 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.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NORTH YORKSHIRE TIMBER COMPANY LIMITED
- 5 -
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: https://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.
Paul Winwood (Senior Statutory Auditor)
For and on behalf of BHP LLP
22 December 2020
Chartered Accountants
Statutory Auditor
2 Rutland Park
Sheffield
S10 2PD
NORTH YORKSHIRE TIMBER COMPANY LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
- 6 -
2019
2018
Notes
£
£
Turnover
3
21,034,188
21,537,191
Cost of sales
(13,349,457)
(14,183,520)
Gross profit
7,684,731
7,353,671
Administrative expenses
(6,621,809)
(6,823,561)
Other operating income
-
40,500
Exceptional items
4
127,680
697,052
Operating profit
5
1,190,602
1,267,662
Interest payable and similar expenses
8
(69,238)
(71,741)
Profit before taxation
1,121,364
1,195,921
Tax on profit
9
92,722
(152,612)
Profit for the financial year
1,214,086
1,043,309
The profit and loss account has been prepared on the basis that all operations are continuing operations.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2019
31 December 2019
- 7 -
2019
2018
Notes
£
£
£
£
Fixed assets
Tangible assets
11
2,470,240
4,684,504
Investments
12
1,520
1,520
2,471,760
4,686,024
Current assets
Stocks
13
2,659,027
2,980,821
Debtors
14
4,523,177
3,346,215
Cash at bank and in hand
283,744
50,775
7,465,948
6,377,811
Creditors: amounts falling due within one year
15
(4,038,742)
(5,404,971)
Net current assets
3,427,206
972,840
Total assets less current liabilities
5,898,966
5,658,864
Creditors: amounts falling due after more than one year
16
-
(870,773)
Provisions for liabilities
Deferred tax liability
19
130,000
233,211
(130,000)
(233,211)
Net assets
5,768,966
4,554,880
Capital and reserves
Called up share capital
21
100,000
100,000
Revaluation reserve
87,702
694,891
Capital redemption reserve
50,000
50,000
Profit and loss reserves
5,531,264
3,709,989
Total equity
5,768,966
4,554,880
The financial statements were approved by the board of directors and authorised for issue on 22 December 2020 and are signed on its behalf by:
R G Myatt
Director
Company Registration No. 01419058
NORTH YORKSHIRE TIMBER COMPANY LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
- 8 -
Share capital
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 January 2018
100,000
694,891
50,000
3,222,180
4,067,071
Year ended 31 December 2018:
Profit and total comprehensive income for the year
-
-
-
1,043,309
1,043,309
Dividends
10
-
-
-
(555,500)
(555,500)
Balance at 31 December 2018
100,000
694,891
50,000
3,709,989
4,554,880
Year ended 31 December 2019:
Profit and total comprehensive income for the year
-
-
-
1,214,086
1,214,086
Transfers
-
(607,189)
-
607,189
-
Balance at 31 December 2019
100,000
87,702
50,000
5,531,264
5,768,966
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
- 9 -
1
Accounting policies
Company information
North Yorkshire Timber Company Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Standard House, Thurston Road, Northallerton Business Park, Northallerton, North Yorkshire, DL6 2NA.
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.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares
publicly available consolidated financial statements
, including this company,
which are
intended to give a true and fair view of the assets, liabilities,
financial position and profit or loss
of the group
.
T
he company has
therefore
taken advantage of
e
xemptions from the following disclosure requirements:
-
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
-
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’
:
Interest
income/expense and net gains/losses for each category of financial instrument;
basis
of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income
;
-
Section 26 ‘Share based Payment’
:
Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements
;
-
Section 33 ‘Related Party Disclosures’
:
Compensation for key management personnel
.
The financial statements of the company are consolidated in the financial statements of
National Timber Group Topco Limited.
These consolidated financial statements are available from
Companies House.
1.2
Going concern
As part of their assessment of the going concern basis of preparation, the Directors have considered the impact of the Covid-19 pandemic on the Company's trade, workforce and the wider markets. Detailed modelling has been undertaken to assess the effects on financial performance, liquidity and covenant compliance under a range of scenarios with stress testing performed to assess the resilience of the business.
true
During the pandemic, the Directors have been in regular discussion with the company's bankers in relation to business performance and ongoing facilities. Trading volumes rebounded sharply following lockdown restrictions being lifted with the business returning to profitability as it exited June.
Taking into account the scenario modelling, current trading performance and discussions with investors, including bankers, the Directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 10 -
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer
(usually on dispatch of the goods)
, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Tangible fixed assets
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 over their useful lives on the following bases:
Freehold property
2% on revaluation
Short leasehold
Straight line over 20 years
Plant and equipment
15% reducing balance
Fixtures and fittings
20% reducing balance
Computers
25% reducing balance
Motor vehicles
25% reducing balance
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
.
1.5
Impairment of fixed assets
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). Where it is not possible to estimate the recoverable amount of an individual asset, the company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
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.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
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.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 11 -
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.
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
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.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 12 -
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.
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.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 13 -
1.11
Employee benefits
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.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
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 lease
s
asset are consumed.
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.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 14 -
2
Judgements and key sources of estimation uncertainty
In the application of the Company’s accounting policies, as described above, the Directors are required to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities at the year end date, and the amounts reported for revenues and expenses during the period.
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, and in future period should it affect these.
The significant estimates and assumptions which are currently applicable are outlined below.
Impairment of fixed assets
The Company tests tangible fixed assets and investments annually for impairment, or more frequently if there are indications that an impairment may be required.
In determining whether no
n
-current assets are impaired, the value of use of the cash generating unit is reviewed. The key estimates made in the value in use calculation are those regarding discount rates, sales growth rates and direct costs to reflect the operational gearing of the business. Reviews are performed by forecasting cashflows based upon the budget and latest forecasts, which anticipates sales growth based on industry growth expectation and management experience.
Useful economic lives of tangible fixed assets
The annual depreciation charge for tangible fixed assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values of all asset categories are reviewed on an annual basis to ensure appropriate changes are made for depreciations.
Stock provision
Stocks are stated at the lower of cost and net realisable value. The Directors will assess the requirement for any provision for obsolete stock or value deterioration as based on historical transactions, stock utilisation patterns, regular inspection and counting of physical items.
Retrospective rebates
A number of rebate receivable and payable agreements are non-coterminous with the Company’s financial year, requiring estimation over the level of future purchases and sales. At the balance sheet date the Directors estimate the amount of rebate that will become due to and payable by the Company under these agreements based upon historical experience, current trading patterns and the latest internal and external forecasts.
3
Turnover and other revenue
All turnover arose within the United Kingdom.
4
Exceptional items
2019
2018
£
£
Compulsory purchase order income
-
(327,181)
Income from compulsory A1 road widening
-
(369,871)
Profit on the sale of freehold properties
(175,319)
-
Restructuring costs
47,639
-
(127,680)
(697,052)
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 15 -
5
Operating profit
2019
2018
Operating profit for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
16,800
20,000
Depreciation of owned tangible fixed assets
168,777
187,338
Depreciation of tangible fixed assets held under finance leases
7,902
27,245
(Profit)/loss on disposal of tangible fixed assets
9,117
Operating lease charges
189,627
212,327
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2019
2018
Number
Number
Machinists, Yard & Drivers
102
107
Sales / Design
52
52
Office / Administration
25
26
Directors
3
3
Total
182
188
Their aggregate remuneration comprised:
2019
2018
£
£
Wages and salaries
4,455,939
4,535,068
Social security costs
363,283
372,314
Pension costs
112,169
69,178
4,931,391
4,976,560
7
Directors' remuneration
2019
2018
£
£
Remuneration for qualifying services
252,264
310,000
Company pension contributions to defined contribution schemes
13,377
17,097
265,641
327,097
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2018 - 3).
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
7
Directors' remuneration
(Continued)
- 16 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2019
2018
£
£
Remuneration for qualifying services
107,500
105,000
Company pension contributions to defined contribution schemes
7,079
6,706
8
Interest payable and similar expenses
2019
2018
£
£
Interest on bank overdrafts and loans
66,762
67,177
Interest on finance leases and hire purchase contracts
2,476
4,564
69,238
71,741
9
Taxation
2019
2018
£
£
Current tax
UK corporation tax on profits for the current period
18,495
272,172
Adjustments in respect of prior periods
(8,006)
(65,825)
Total current tax
10,489
206,347
Deferred tax
Origination and reversal of timing differences
(103,211)
(23,530)
Changes in tax rates
-
(30,205)
Total deferred tax
(103,211)
(53,735)
Total tax (credit)/charge
(92,722)
152,612
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
9
Taxation
(Continued)
- 17 -
The actual (credit)/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:
2019
2018
£
£
Profit before taxation
1,121,364
1,195,921
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%)
213,059
227,225
Tax effect of expenses that are not deductible in determining taxable profit
2,114
8,200
Gains not taxable
(67,405)
-
Change in unrecognised deferred tax assets
(1,873)
-
Adjustments in respect of prior years
(8,006)
(65,825)
Effect of change in corporation tax rate
11,922
(27,437)
Group relief
(219,566)
-
Permanent capital allowances in excess of depreciation
(22,967)
-
-
10,449
Taxation (credit)/charge for the year
(92,722)
152,612
10
Dividends
2019
2018
£
£
Interim paid
-
555,500
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 18 -
11
Tangible fixed assets
Freehold property
Short leasehold
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
£
Cost or valuation
At 1 January 2019
4,114,993
223,173
1,017,476
953,039
653,577
283,278
7,245,536
Additions
-
18,799
194,607
-
68,802
-
282,208
Disposals
(2,489,993)
-
-
-
-
-
(2,489,993)
At 31 December 2019
1,625,000
241,972
1,212,083
953,039
722,379
283,278
5,037,751
Depreciation and impairment
At 1 January 2019
219,996
133,558
689,788
765,206
527,824
224,660
2,561,032
Depreciation charged in the year
47,204
12,597
68,845
42,508
4,040
1,485
176,679
Eliminated in respect of disposals
(170,200)
-
-
-
-
-
(170,200)
At 31 December 2019
97,000
146,155
758,633
807,714
531,864
226,145
2,567,511
Carrying amount
At 31 December 2019
1,528,000
95,817
453,450
145,325
190,515
57,133
2,470,240
At 31 December 2018
3,894,997
89,615
327,688
187,833
125,753
58,618
4,684,504
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
11
Tangible fixed assets
(Continued)
- 19 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2019
2018
£
£
Plant and equipment
44,778
52,680
Motor vehicles
-
31,339
Computers
-
22,505
44,778
106,524
Freehold property was last revalued in 2014 by Sanderson Weatherall LLP. In the opinion of the directors, taking account of local market conditions, the valuation remains appropriate.
Freehold property is carried at valuation.
If
freehold property
w
as
measured using the cost model, the carrying amounts
would
have been approximately £1,449,659 (2018 - £3,544,624), being cost £1,519,598 (2018 - £3,616,963) and depreciation £69,939 (2018 - £72,339).
12
Fixed asset investments
2019
2018
£
£
Unlisted investments
1,520
1,520
The company's investment in its dormant subsidiary, Joseph Thompson & Co., Limited, has previously been impaired in full.
The company's unlisted investment represents a minority interest in National Merchant Buying Society, and the directors are of the opinion that the amount recognised is a an appropriate reflection of fair value.
13
Stocks
2019
2018
£
£
Finished goods and goods for resale
2,659,027
2,980,821
14
Debtors
2019
2018
Amounts falling due within one year:
£
£
Trade debtors
2,644,786
2,708,573
Amounts owed by group undertakings
951,137
-
Prepayments and accrued income
927,254
637,642
4,523,177
3,346,215
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 20 -
15
Creditors: amounts falling due within one year
2019
2018
Notes
£
£
Obligations under finance leases
18
19,897
22,993
Invoice discount facility
17
448,933
1,233,404
Trade creditors
2,431,319
3,216,311
Amounts owed to group undertakings
223,198
-
Corporation tax
222,605
272,172
Other taxation and social security
420,462
372,449
Other creditors
15,290
-
Accruals and deferred income
257,038
287,642
4,038,742
5,404,971
16
Creditors: amounts falling due after more than one year
2019
2018
Notes
£
£
Obligations under finance leases
18
-
14,317
Amounts owed to group undertakings
-
856,456
-
870,773
17
Loans and overdrafts
2019
2018
£
£
Invoice finance facility
448,933
1,233,404
Payable within one year
448,933
1,233,404
The invoice finance facility is secured by a floating charge on all assets of the company.
18
Finance lease obligations
2019
2018
Future minimum lease payments due under finance leases:
£
£
Within one year
19,897
22,993
In two to five years
-
14,317
19,897
37,310
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 21 -
19
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2019
2018
Balances:
£
£
Accelerated capital allowances
113,000
87,089
Revaluations
18,000
145,845
Short term timing differences
(1,000)
277
130,000
233,211
2019
Movements in the year:
£
Liability at 1 January 2019
233,211
Credit to profit or loss
(103,211)
Liability at 31 December 2019
130,000
20
Retirement benefit schemes
2019
2018
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
112,169
69,178
The company operates
two
defined contribution pension scheme
s
for all qualifying employees.
The assets of the schemes are held separately from those of the company in independently administered funds.
21
Share capital
2019
2018
2019
2018
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100,000
100,000
100,000
100,000
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 22 -
22
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:
2019
2018
£
£
Within one year
453,370
210,002
Between two and five years
1,465,616
598,233
In over five years
1,296,875
440,417
3,215,861
1,248,652
23
Events after the reporting date
The impact of Covid-19 could not have been reasonably anticipated at 31 December 2019. The Directors therefore consider the impact of the Covid-19 pandemic on the business to be a non-adjusting post-balance sheet event in the preparation of the financial statements.
24
Related party transactions
The company has taken advantage of the exemption provided by FRS 102 from the requirement to report transactions with other group companies that are 100% subsidiaries of the parent company National Timber Group Topco Limited.
25
Ultimate controlling party
The company's ultimate parent company is National Timber Group Topco Limited, a company registered in England and Wales.
The ultimate controlling party is Cairngorm Capital Partners II LP, a fund managed by Cairngorm Capital Partners LLP, a partnership registered in England and Wales.
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