Company registration number 01419058 (England and Wales)
NORTH YORKSHIRE TIMBER COMPANY LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NORTH YORKSHIRE TIMBER COMPANY LIMITED
COMPANY INFORMATION
Directors
R T Barclay
V P Bellas
N P Kershaw
R Timmens
R G Myatt
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
Santander UK plc
Bootle Centre
Bridle Road
Bootle
L30 4GB
Solicitors
Addleshaw Goddard LLP
19 Canning Street
Edinburgh
EH3 8EH
NORTH YORKSHIRE TIMBER COMPANY LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4
Directors' responsibilities statement
5
Independent auditor's report
6 - 9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Notes to the financial statements
13 - 23
NORTH YORKSHIRE TIMBER COMPANY LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The directors present the strategic report for the year ended 31 December 2022.
Fair review of the business
The Company is primarily engaged in the fabrication and retail of timber and timber related products.
The business continues to remain customer-focused, 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 (repairs, maintenance and improvement) 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 TopCo Limited. The Group’s strategy is to create the UK’s leading provider of sustainable timber solutions, growing by continuing to drive specialist volumes through the Group’s existing infrastructure, opening new trading sites, and continuing to make accretive acquisitions.
Development and performance
In 2022, full year revenues were £37.5m, up £5.4m on a strong 2021 result, which benefited from exceptional market conditions as the economy rebounded from COVID. As 2022 progressed, demand softened in the merchanting side of the business, with RMI and commercial end markets particularly impacted as a result of the rising cost of living and falling real wages impacting consumer confidence. Over this period, total sales were also impacted by a correction in timber prices, particularly in the softwood category. Despite these challenges in merchanting, demand for the specialist timber products, on which the Company is focused, remained robust and delivered record performance.
The Company delivered a gross margin of 29.7%, which was 330bps lower than 2021, being impacted by an increasingly competitive market environment which saw a shift in mix away from higher margin sales. The Company continued to develop its strong pricing disciplines across the branch network and benefitted from its established procurement strategy, partially offsetting the market pricing pressures.
The Company’s operating costs % of sales decreased by 100bps in 2022 to 26.0%, with the business benefitting from the operational gearing impact of higher sales. Despite being tightly controlled, total costs increased by £1.1m, being affected by the rising levels of inflation cause by external geo-political factors and the Company’s continued investment to drive future growth.
Overall the Company delivered an operating profit, before exceptional charges, of £1.3m, £0.5m behind prior year.
Following the significant growth of the wider National Timber Group over recent years, the opportunity was taken to simplify the Group’s corporate structure during the year. As part of this simplification exercise, on 31 December 2022, the Company immediate parent, NYT (Holdings) Limited, was acquired by fellow Group company, National Timber Group England Limited. On this same date, National Timber Group England acquired, at book value, the trade, assets and liabilities of the Company.
Post balance sheet events
As part of the corporate simplification exercise noted above, on 22 February 2023 a special resolution was passed to reduce the Company’s share capital from £100,000 to £1. The capital reduction, which also included the cancellation of the £50,000 capital redemption reserve, resulted in the transfer of £149,999 to retained profits. Immediately following this, North Yorkshire Timber Limited paid all remaining distributable to its immediate parent NYT (Holding) Limited, reducing net assets to £1.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
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:
Macro-economic uncertainties
The business operates in an environment impacted by an increasingly complex set of external factors. Economic uncertainties, including the ongoing cost of living crisis and inflation, and geopolitical factors combine to create an unpredictable trading environment, which could negatively impact performance. The Company continually monitors external economic lead indicators and liaises with external parties, including key stakeholders, in order to ensure that forecasts and Board decisions are based on the latest market outlook.
Price risk
The Company is exposed to commodity price risk as a result of its operations. Commodity prices are continually monitored and proactively managed at both an operational management level and through the procurement function to ensure that selling prices are quickly adjusted to mitigate the risk to earnings.
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 reassessed regularly by the Board.
Section 172 statement
In accordance with section 172 of the Companies Act 2006, each of our directors acts in the way he considers, in good faith would promote the success of the company for the benefit of its members as a whole. The directors have taken into consideration, amongst other matters:
• the likely consequences of any decisions in the long-term;
• the interests of the Company’s employees;
• the need to foster the Company’s business relationships with suppliers, customers and others;
• the impact of the Company’s operations on the community and environment;
• the desirability of the Company maintaining a reputation for high standards of business conduct; and
• the need to act fairly between members of the company.
The Board acknowledges that every decision it makes will not necessarily result in a positive outcome for all of the Group’s stakeholders. By considering the Company’s purpose, vision and values, together with its strategic priorities and having a process in place for decision making the Board does however, aim to make sure that its decisions are consistent.
Stakeholder engagement
The Board believes that considering our stakeholders in key business decisions is not only the right thing to do but is fundamental to our ability to drive value creation. The Board seeks to understand the respective interest of such stakeholder groups through various methods, including direct engagement by Board members; receiving of reports and updates from members of management who engage with such groups; and coverage in our Board papers of relevant stakeholder interests with regards to proposed courses of action. The directors consider the following to be the Company’s key stakeholders:
NORTH YORKSHIRE TIMBER COMPANY LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
Employees
The strength of our business is built on the hard work and dedication of our employees. The Board recognises that the implementation of an effective people strategy and strong culture underpin the effective delivery of the company strategy.
Employees are kept informed of performance and strategy through regular presentations and updates from members of the Board. These updates are further supported by newsletters and management briefings. The directors attend key business meetings throughout the year, including weekly trading meetings. An anonymous employee whistleblowing line is also in place, allowing employees to raise any concerns in confidence.
Key focus of the Board includes employee health and well-being, personal development, pay and benefits.
Customers
The profitability of the business is underpinned by providing effective partnerships with customers to understand their needs and requirements. In recognition of this a core principle of the business is to be customer centric, building relationships and engaging at a local and national level, providing a high level of service through the expert knowledge of our employees and ensuring a quality product.
The Board receives regular updates on customer opinions, behaviour and feedback, including analysis of the Net Promoter Score. The insight received is used to inform decision making, understand customer needs and views in order to improve our offer and service for them.
Suppliers
The Board recognises that relationships with suppliers are important to the Group’s long-term success and is briefed on supplier feedback and issues on a regular basis. The Board seeks to balance the benefit of maintaining these strong relationships along with the need to obtain value for money for our investors and desired quality and service levels for our customers. Engagement with suppliers is primarily through our Group procurement function. Key areas of focus include innovation, product development, health and safety and sustainability.
Communities
The Board supports the initiatives with regards to reducing the adverse impacts on the environment and engages with the communities in which we operate. Key areas of focus include how we can support local causes and issues, create opportunities to recruit and develop local people and help to look after the environment. We partner with local charities at a site level to raise awareness and funds. The key issues and themes across local communities are reported back to the Board.
Government and regulations
We engage with the government and regulators through a range of industry consultations, forums, and meetings to communicate our views to policy makers relevant to our business. Key areas of focus are compliance with laws and regulations, health and safety and product safety. The Board is updated on legal and regulatory developments and takes these into account when considering future actions.
Investors
The Group relies on our shareholders and providers of debt funding as essential sources of capital to further our business objectives. Investor involvement in the decision making process includes representation on the company Board. The company has open dialogue with all investors through regular meetings which cover a wide range of topics including financial performance, strategy, outlook and governance.
R G Myatt
Director
8 September 2023
NORTH YORKSHIRE TIMBER COMPANY LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -
The directors present their annual report and financial statements for the year ended 31 December 2022.
Principal activities
The principal activity of the company during the year continued to be that of the fabrication and retail of timber and timber related products. As part of the Group’s corporate simplification exercise, at 31 December 2022 the trade, assets and liabilities were acquired by fellow Group company, Arnold Laver & Company Limited. Following the hive-up the intention is to wind up the company.
Results and dividends
The results for the year are set out on page 10.
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
N P Kershaw
N A McGill
(Resigned 7 March 2023)
R Timmens
R G Myatt
J M Chilton
(Resigned 7 March 2023)
Auditor
The auditor, BHP LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
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
8 September 2023
NORTH YORKSHIRE TIMBER COMPANY LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 5 -
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
- 6 -
Opinion
We have audited the financial statements of North Yorkshire Timber Company Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 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 2022 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.
Emphasis of matter - financial statements prepared other than on a going concern basis
We draw attention to note 1.2 in the financial statements, which indicates that the financial statements have been prepared on a basis other than that of a going concern. Our opinion is not modified in respect of this matter.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NORTH YORKSHIRE TIMBER COMPANY 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 identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NORTH YORKSHIRE TIMBER COMPANY LIMITED
- 8 -
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
To address the risk of fraud through management bias and override of controls, we:
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NORTH YORKSHIRE TIMBER COMPANY LIMITED
- 9 -
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
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
8 September 2023
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 2022
- 10 -
2022
2021
Notes
£
£
Turnover
2
37,489,144
32,077,844
Cost of sales
(26,355,184)
(21,501,228)
Gross profit
11,133,960
10,576,616
Administrative expenses
(9,754,435)
(8,695,294)
Other operating income
23,362
Exceptional items
3
(3,406)
997,441
Operating profit
4
1,376,119
2,902,125
Interest payable and similar expenses
7
(60,035)
(112,157)
Profit before taxation
1,316,084
2,789,968
Tax on profit
8
118,375
(476,701)
Profit for the financial year
1,434,459
2,313,267
NORTH YORKSHIRE TIMBER COMPANY LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2022
31 December 2022
- 11 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
9
875,066
Investments
10
1,520
876,586
Current assets
Stocks
11
-
4,815,232
Debtors
12
10,571,665
12,116,329
Cash at bank and in hand
510,796
10,571,665
17,442,357
Creditors: amounts falling due within one year
13
(9,027,737)
Net current assets
10,571,665
8,414,620
Total assets less current liabilities
10,571,665
9,291,206
Provisions for liabilities
Deferred tax liability
15
154,000
-
(154,000)
Net assets
10,571,665
9,137,206
Capital and reserves
Called up share capital
17
100,000
100,000
Capital redemption reserve
50,000
50,000
Profit and loss reserves
10,421,665
8,987,206
Total equity
10,571,665
9,137,206
The financial statements were approved by the board of directors and authorised for issue on 8 September 2023 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 2022
- 12 -
Share capital
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
£
£
£
£
£
Balance at 1 January 2021
100,000
51
50,000
6,673,888
6,823,939
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
-
-
2,313,267
2,313,267
Transfers
-
(51)
-
51
-
Balance at 31 December 2021
100,000
50,000
8,987,206
9,137,206
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
-
1,434,459
1,434,459
Balance at 31 December 2022
100,000
50,000
10,421,665
10,571,665
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 13 -
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 amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies 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. The company has therefore taken advantage of exemptions 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
Following the transfer of the trade, assets and liabilities of the business to fellow Group subsidiary, Arnold Laver & Company Limited at 31 December 2022 and subsequent capital reduction and distribution of reserves, the directors intention is to commence the wind up of the Company within 12 months. As such the directors have prepared the accounts on a basis other than a going concern basis.true
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.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
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:
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.
Interest in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals impairment losses are recognised immediately in 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.
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.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
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.
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 payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 16 -
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 subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
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 through 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.
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.
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 17 -
1.13
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.14
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
2
Turnover and other revenue
All turnover arose within the United Kingdom.
2022
2021
£
£
Turnover analysed by class of business
Sale of timber products
37,489,144
32,077,844
2022
2021
£
£
Other significant revenue
Grants received
-
23,362
3
Exceptional items
2022
2021
£
£
Profit on the sale of freehold properties
-
(997,441)
Restructuring costs
3,406
-
3,406
(997,441)
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
-
(23,362)
Fees payable to the company's auditor for the audit of the company's financial statements
21,600
23,000
Depreciation of owned tangible fixed assets
158,728
164,344
Operating lease charges
584,668
531,457
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Machinists, Yard & Drivers
86
109
Sales / Design
77
51
Office / Administration
43
25
Directors
3
3
Total
209
188
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
6,414,258
5,525,615
Social security costs
577,577
480,708
Pension costs
123,797
96,543
7,115,632
6,102,866
6
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
398,708
283,784
Company pension contributions to defined contribution schemes
14,638
13,556
413,346
297,340
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2020 - 3).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2022
2021
£
£
Remuneration for qualifying services
129,500
128,171
Company pension contributions to defined contribution schemes
7,624
7,256
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 19 -
7
Interest payable and similar expenses
2022
2021
£
£
Interest on bank overdrafts and loans
60,035
112,157
8
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
35,625
412,212
Adjustments in respect of prior periods
(5,511)
Total current tax
35,625
406,701
Deferred tax
Origination and reversal of timing differences
(154,000)
70,000
Total tax (credit)/charge
(118,375)
476,701
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:
2022
2021
£
£
Profit before taxation
1,316,084
2,789,968
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
250,056
530,094
Tax effect of expenses that are not deductible in determining taxable profit
3,492
6,480
Change in unrecognised deferred tax assets
(29)
(44)
Adjustments in respect of prior years
(5,511)
Group relief
(192,235)
Other non-reversing timing differences
(309)
Readjustment of deferred tax for changes in tax rates
(36,953)
36,953
Fixed asset differences
(10,273)
(182,767)
Chargeable gains/(losses)
91,496
Other tax adjustments
(132,124)
Taxation (credit)/charge for the year
(118,375)
476,701
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
9
Tangible fixed assets
Short leasehold
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 January 2022
261,870
1,385,444
992,411
734,083
293,348
3,667,156
Additions
137,431
111,253
595
9,166
258,445
Transfers
(399,301)
(1,496,697)
(993,006)
(743,249)
(293,348)
(3,925,601)
At 31 December 2022
Depreciation and impairment
At 1 January 2022
167,384
883,544
871,322
617,231
252,609
2,792,090
Depreciation charged in the year
9,586
84,444
24,413
30,100
10,185
158,728
Transfers
(176,970)
(967,988)
(895,735)
(647,331)
(262,794)
(2,950,818)
At 31 December 2022
Carrying amount
At 31 December 2022
At 31 December 2021
94,486
501,900
121,089
116,852
40,739
875,066
10
Fixed asset investments
2022
2021
£
£
Unlisted investments
1,520
The company's investment in its dormant subsidiary, Joseph Thompson & Co., Limited, has previously been impaired in full.
Movements in fixed asset investments
Investments
£
Cost or valuation
At 1 January 2022
1,520
Disposals
(1,520)
At 31 December 2022
-
Carrying amount
At 31 December 2022
-
At 31 December 2021
1,520
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
11
Stocks
2022
2021
£
£
Finished goods and goods for resale
4,815,232
12
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
3,560,502
Amounts owed by group undertakings
10,571,665
6,892,268
Other debtors
16,513
Prepayments and accrued income
1,647,046
10,571,665
12,116,329
13
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Invoice discount facility
14
2,001,734
Trade creditors
3,512,252
Amounts owed to group undertakings
1,412,631
Corporation tax
412,212
Other taxation and social security
774,163
Other creditors
135,142
Accruals and deferred income
779,603
9,027,737
On 7th April 2022, following the Group's refinancing the invoice finance facility was repaid in full.
14
Loans and overdrafts
2022
2021
£
£
Other loans
2,001,734
Payable within one year
2,001,734
NORTH YORKSHIRE TIMBER COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
-
173,000
Revaluations
-
(18,000)
Short term timing differences
-
(1,000)
-
154,000
2022
Movements in the year:
£
Liability at 1 January 2022
154,000
Credit to profit or loss
(154,000)
Liability at 31 December 2022
-
16
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
123,797
96,543
The company operates two defined contribution pension schemes for all qualifying employees. The assets of the schemes are held separately from those of the company in independently administered funds.
17
Share capital
2022
2021
2022
2021
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 2022
- 23 -
18
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:
2022
2021
£
£
Within one year
621,918
Between two and five years
2,254,268
In over five years
2,873,542
5,749,728
19
Capital commitments
Amounts contracted for but not provided in the financial statements:
2022
2021
£
£
Acquisition of tangible fixed assets
-
53,900
20
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.
21
Ultimate controlling party
The company's immediate parent company is NYT (Holdings) Limited.
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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