Company Registration No. 01733820 (England and Wales)
ACORN INDUSTRIAL SERVICES LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
ACORN INDUSTRIAL SERVICES LIMITED
COMPANY INFORMATION
Directors
M Povey
P D Spillings
B Helgesson
I Sjolin
G P Stacey
S Stenström
Secretary
M Povey
Company number
01733820
Registered office
Unit A
Denby Way
Hellaby Industrial Estate
Rotherham
South Yorkshire
S66 8HR
Independent auditors
PricewaterhouseCoopers LLP
Central Square
29 Wellington Street
Leeds
LS1 4DL
Bankers
Handelsbanken
7th Floor
3 St Paul's Place
129 Norfolk Street
Sheffield
S1 2JE
Solicitors
Keebles LLP
Commercial House
Commercial Street
Sheffield
South Yorkshire
S1 2AT
ACORN INDUSTRIAL SERVICES LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditors' report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 21
ACORN INDUSTRIAL SERVICES 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
Acorn Industrial Services Limited are a technical distributor of Industrial Power Transmission products and services.
We supply customers in the Distribution, OEM and MRO markets with IPT products and services including Bearings, Belt and Chain Drives, Linear Systems, Couplings, Drives and IPT Consumables.
During the year the company grew turnover by 8% and maintained a healthy operating profit margin of 9%. Cash at bank at the financial year end was £2.0m (2018: £1.3m). Net Current Assets are now £14.4m (2018: £12.3m) and the net assets of the company are £14.9m (2018: £12.8m).
Acorn Industrial Services Limited is part of the Power Transmission Solutions business group within Axel Johnson International. The Power Transmission Solutions companies provide secure and reliable mechanical power transmission components and related services to European manufacturers in a wide range of industries.
As anticipated 2019 was challenging, Brexit caused much uncertainty in the market. Despite this, we continued to grow across all customer segments and consolidate our market position as a Specialised Technical Distributor.
The directors recognise that the outlook for 2020 remains challenging. Further economic uncertainty and price pressure from both customers and suppliers will all contribute to another challenging year.
We will continue to invest in all operational areas of the business including IT systems and Warehousing to keep Acorn at the forefront logistically. We will increase our offer and range of items available whilst maintaining working capital levels to deliver long term sustainable growth.
ACORN INDUSTRIAL SERVICES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 2 -
Principal risks and uncertainties
COVID-19
Covid-19 is a major source of uncertainty for the economy and the markets in which we operate. We have taken steps to mitigate any risks to customers, suppliers, employees and the liquidity of the business. During the year we have managed to keep all areas of the business fully operational. Where possible staff have been able to work from home. Additional safety measures have been put in place at all places of work to reduce the risk of infection. The second quarter of 2020 saw a reduction in activity of approx 15%, there have since been positive signs of recovery. We will continue to monitor the situation closely throughout 2020 and beyond.
Interest Rate Risk
The company finances its operations through a mixture of retained profits, inter-company accounts and bank borrowings. The company’s exposure to interest rate fluctuations on its borrowings is managed on a group basis by the use of both fixed and floating facilities.
Liquidity Risk
The company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and invest cash assets safely and profitably. Primarily this is achieved through inter-company accounts and bank overdraft facilities.
Currency Risk
The company is exposed to currency risk as it trades in currencies other than British pounds, including Euros and US dollars. The company seeks to manage currency risk by matching sales and purchases in foreign currencies and the use of foreign currency bank accounts.
Key performance indicators
M Povey
Director
17 November 2020
ACORN INDUSTRIAL SERVICES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2019
- 3 -
The directors present their annual report and audited financial statements for the year ended 31 December 2019.
Principal activities
The principal activity of the company is the distribution of bearings and power transmission & linear motion products.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
M Povey
P D Spillings
B Helgesson
I Sjolin
G P Stacey
S Stenström
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid
(2018: none)
. The directors do not recommend payment of a final dividend.
Since the COVID-19 pandemic in the first quarter of 2020 there has been widespread disruption in the UK and consequently for the Company. As the pandemic began after the year end this event has been classified as a non-adjusting post balance sheet event. It is not possible at this time for the Company to estimate the full financial effect of the outbreak.
As part of the going concern assessment, the Directors have considered the Company’s principal risk areas, including the potential impact of the COVID-19 pandemic, that they consider material to the assessment of going concern. The Directors have performed stress testing over the Company's forecasts. Having completed this assessment, the Directors believe that preparing the financial statements on the going concern basis is appropriate and that the Company will have adequate resources and liquidity to continue in operational existence for the foreseeable future.
The Company's financial risk management policies/ future developments are noted in the Strategic Report on pages 1 to 2.
Independent auditors
In accordance with section 485 of the Companies Act 2006, a resolution proposing that PricewaterhouseCoopers LLP be reappointed as auditor of the company will be put at a General Meeting.
ACORN INDUSTRIAL SERVICES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 4 -
Statement of directors' responsibilities
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, 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 the financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
state whether applicable United Kingdom Accounting Standards, comprising FRS 102, have been followed, subject to any material departures disclosed and explained in the financial statements;
-
make judgements and accounting estimates that are reasonable and prudent; and
-
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 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.
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.
Statement of disclosure to auditors
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
auditors are 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 auditors are aware of that information.
On behalf of the board
M Povey
Director
17 November 2020
ACORN INDUSTRIAL SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT
TO THE MEMBERS OF ACORN INDUSTRIAL SERVICES LIMITED
- 5 -
Report on the audit of the financial statements
Opinion
In our opinion, Acorn Industrial Services Limited’s 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 (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law); and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Financial Statements (the “Annual Report”), which comprise: the balance sheet as at 31 December 2019; the statement of comprehensive income, the statement of changes in equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which 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.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the company’s ability to continue as a going concern.
ACORN INDUSTRIAL SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF ACORN INDUSTRIAL SERVICES LIMITED
- 6 -
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance 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 an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of 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 based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK) require us also to report certain opinions and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report for the year ended 31 December 2019 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic Report and Directors’ Report.
Responsibilities for the financial statements and the audit
Responsibilities of directors for the financial statements
As explained more fully in the Statement of directors' responsibilities, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they 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.
Auditors' 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 auditors’ 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 FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
ACORN INDUSTRIAL SERVICES LIMITED
INDEPENDENT AUDITORS' REPORT (CONTINUED)
TO THE MEMBERS OF ACORN INDUSTRIAL SERVICES LIMITED
- 7 -
Use of this report
This report, including the opinions, has been prepared for and only for the company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
-
we have not received all the information and explanations we require for our audit; or
-
adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or
-
certain disclosures of directors’ remuneration specified by law are not made; or
-
the company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Rachel Greveson (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
17 November 2020
Chartered Accountants and Statutory Auditors
Leeds
ACORN INDUSTRIAL SERVICES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
- 8 -
2019
2018
Notes
£
£
Turnover
3
29,401,518
27,348,296
Cost of sales
(19,930,418)
(18,795,157)
Gross profit
9,471,100
8,553,139
Distribution costs
(665,715)
(728,362)
Administrative expenses
(6,128,008)
(5,389,633)
Operating profit
4
2,677,377
2,435,144
Interest receivable and similar income
8
8,455
-
Interest payable and similar expenses
9
(13,052)
(8,229)
Profit before taxation
2,672,780
2,426,915
Tax on profit
10
(535,858)
(482,637)
Profit for the financial year
2,136,922
1,944,278
Total comprehensive income for the year
2,136,922
1,944,278
The Statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
ACORN INDUSTRIAL SERVICES LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2019
31 December 2019
- 9 -
2019
2018
Notes
£
£
£
£
Fixed assets
Tangible assets
11
531,322
507,701
Current assets
Stocks
12
4,864,871
4,881,814
Debtors
13
11,009,312
10,810,756
Cash at bank and in hand
1,964,479
1,338,654
17,838,662
17,031,224
Creditors: amounts falling due within one year
14
(3,423,464)
(4,723,027)
Net current assets
14,415,198
12,308,197
Total assets less current liabilities
14,946,520
12,815,898
Provisions for liabilities
15
(43,000)
(49,300)
Net assets
14,903,520
12,766,598
Capital and reserves
Called up share capital
18
100
100
Capital redemption reserve
105
105
Profit and loss account
14,903,315
12,766,393
Total equity
14,903,520
12,766,598
The financial statements on page 8 to 21 were approved by the board of directors and authorised for issue on
17 November 2020
17 November 2020
and are signed on its behalf by:
M Povey
Director
Company Registration No. 01733820
ACORN INDUSTRIAL SERVICES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
- 10 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
£
£
£
£
Balance at 1 January 2018
100
105
10,822,115
10,822,320
Year ended 31 December 2018:
Profit and total comprehensive income for the year
-
-
1,944,278
1,944,278
Balance at 31 December 2018
100
105
12,766,393
12,766,598
Year ended 31 December 2019:
Profit and total comprehensive income for the year
-
-
2,136,922
2,136,922
Balance at 31 December 2019
100
105
14,903,315
14,903,520
ACORN INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
- 11 -
1
Accounting policies
Company information
Acorn Industrial Services Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Unit A, Denby Way, Hellaby Industrial Estate, Rotherham, South Yorkshire, S66 8HR.
1.1
Accounting convention
The financial statements have been prepared on the historical cost convention. The principal accounting policies adopted are set out below.
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 £.
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.
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
;
-
Section 33 ‘Related Party Disclosures’
:
Compensation for key management personnel
.
The financial statements of the company are consolidated in the financial statements of
Acorn Industrial Services Group Limited
. These consolidated financial statements are available from its registered office, Unit A Denby Way, Hellaby, Rotherham, South Yorkshire, S66 8HR
.
The company has taken the FRS 102 exemption to prepare a cash flow statement on the basis that it is a
subsidiary undertaking
where 90% or more acting rights are controlled within the group and
consolidated
financial statements
incorporating the entity are
publicly available.
1.2
Going concern
Since the COVID-19 pandemic in the first quarter of 2020 there has been widespread disruption in the UK and consequently for the Company. As the pandemic began after the year end this event has been classified as a non-adjusting post balance sheet event. It is not possible at this time for the Company to estimate the full financial effect of the outbreak.
true
As part of the going concern assessment, the Directors have considered the Company’s principal risk areas, including the potential impact of the COVID-19 pandemic, that they consider material to the assessment of going concern. The Directors have performed stress testing over the Company's forecasts. Having completed this assessment, the Directors believe that preparing the financial statements on the going concern basis is appropriate and that the Company will have adequate resources and liquidity to continue in operational existence for the foreseeable future.
ACORN INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 12 -
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:
Land and buildings Freehold
4% straight line
Fixtures, fittings & equipment
15% reducing balance
Computer equipment
3 years straight line
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
and intangible 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.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
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.
ACORN INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 13 -
1.7
Cash at bank and in hand
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks
and
other short-term liquid investments with original maturities of three months or less
.
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 statement of financial position when the company becomes party to the contractual provisions of the instrument.
Basic financial assets
Basic financial assets, which include trade and other receivables 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.
Impairment of financial assets
Financial assets
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.
The impairment loss 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 and loans from
fellow group companies
,
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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
ACORN INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 14 -
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
1.11
Employee benefits
The 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.
1.12
Retirement benefits
The company operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the year they are payable.
ACORN INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
1
Accounting policies
(Continued)
- 15 -
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 lease
s
asset are consumed.
1.14
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the profit and loss account for the period.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Stock Provision
When calculating the stock provision, management considers the nature and condition of the stock, as well as applying assumptions around anticipated saleability of finished goods.
3
Turnover
An analysis of the company's turnover is as follows:
2019
2018
£
£
Turnover
Distribution of bearings and power transmission & linear motion products
29,401,518
27,348,296
Turnover analysed by geographical market
2019
2018
£
£
UK
24,469,886
22,074,016
Rest of Europe
3,585,311
3,809,634
Rest of World
1,346,321
1,464,646
29,401,518
27,348,296
ACORN INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 16 -
4
Operating profit
2019
2018
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
27,782
(54,106)
Depreciation of owned tangible fixed assets
81,161
76,314
Profit on disposal of tangible fixed assets
(10,461)
-
Amortisation of intangible assets
-
34,962
Cost of stocks recognised as an expense
19,460,667
18,363,667
Operating lease charges
456,944
418,951
Exchange differences recognised in profit or loss during the year, except for those arising on financial instruments measured at fair value through profit or loss, amounted to £27,782 (2018 - £54,106).
5
Auditors' remuneration
2019
2018
Fees payable to the company's auditors:
£
£
For audit services
Audit of the financial statements of the company
29,600
25,000
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2019
2018
Number
Number
Production staff
21
24
Distribution staff
64
67
Administrative staff
37
24
122
115
Their aggregate remuneration comprised:
2019
2018
£
£
Wages and salaries
3,549,677
3,168,587
Social security costs
358,264
283,168
Other pension costs
116,954
73,357
4,024,895
3,525,112
ACORN INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 17 -
7
Directors' remuneration
2019
2018
£
£
Remuneration for qualifying services
325,416
225,275
Remuneration disclosed above include the following amounts paid to the highest paid director:
2019
2018
£
£
Remuneration for qualifying services
125,000
100,000
8
Interest receivable and similar income
2019
2018
£
£
Interest income
Interest on bank deposits
8,455
-
9
Interest payable and similar expenses
2019
2018
£
£
Interest on bank overdrafts and loans
10,625
8,229
Interest on corporation tax
2,427
-
13,052
8,229
10
Taxation
2019
2018
£
£
Current tax
UK corporation tax on profits for the current period
509,401
482,637
Adjustments in respect of prior periods
32,757
-
Total current tax
542,158
482,637
Deferred tax
Origination and reversal of timing differences
(6,300)
-
Total tax charge
535,858
482,637
ACORN INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
10
Taxation
(Continued)
- 18 -
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2019
2018
£
£
Profit before taxation
2,672,780
2,426,915
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2018: 19.00%)
507,828
461,114
Tax effect of expenses that are not deductible in determining taxable profit
6,532
4,606
Change in unrecognised deferred tax assets
(12,004)
12,252
Adjustments in respect of prior years
32,757
-
Depreciation on assets not qualifying for tax allowances
1,416
8,309
Other permanent differences
-
(3,521)
Effect of change in deferred tax rates
(671)
(123)
Taxation charge for the year
535,858
482,637
11
Tangible assets
Land and buildings Freehold
Fixtures, fittings & equipment
Computer equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2019
195,212
788,483
680,022
41,623
1,705,340
Additions
-
80,647
32,424
-
113,071
Disposals
-
-
-
(26,580)
(26,580)
At 31 December 2019
195,212
869,130
712,446
15,043
1,791,831
Depreciation and impairment
At 1 January 2019
1,008
525,785
648,678
22,168
1,197,639
Depreciation charged in the year
1,008
44,197
32,242
3,714
81,161
Eliminated in respect of disposals
-
-
-
(18,291)
(18,291)
At 31 December 2019
2,016
569,982
680,920
7,591
1,260,509
Carrying amount
At 31 December 2019
193,196
299,148
31,526
7,452
531,322
At 31 December 2018
194,204
262,698
31,344
19,455
507,701
ACORN INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 19 -
12
Stocks
2019
2018
£
£
Finished goods and goods for resale
4,864,871
4,881,814
Stocks are stated after recording provisions totalling £602,221 in relation to old and slow moving stock (2018: £582,977).
13
Debtors
2019
2018
Amounts falling due within one year:
£
£
Trade debtors
5,927,914
5,933,262
Amounts owed by group undertakings
4,963,565
4,738,566
Prepayments and accrued income
117,833
138,928
11,009,312
10,810,756
Amounts owed by group companies are unsecured, interest free and repayable on demand.
Trade debtors includes a bad debt provision of £nil (2018: £5,503).
14
Creditors: amounts falling due within one year
2019
2018
£
£
Trade creditors
2,760,750
4,356,611
Amounts owed to group undertakings
-
200
Corporation tax
165,401
199,687
Other taxation and social security
407,084
149,393
Other creditors
-
10,000
Accruals and deferred income
90,229
7,136
3,423,464
4,723,027
Amounts owed to group companies are unsecured, interest free and repayable on demand.
15
Provisions for liabilities
2019
2018
Notes
£
£
Deferred tax liabilities
16
43,000
49,300
43,000
49,300
ACORN INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 20 -
16
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
43,000
49,300
2019
Movements in the year:
£
Liability at 1 January 2019
49,300
Credit to profit
(6,300)
Liability at 31 December 2019
43,000
17
Retirement benefit schemes
2019
2018
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
116,954
73,357
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
18
Called up share capital
2019
2018
£
£
Ordinary share capital
Issued and fully paid
100 Ordinary shares of £1 each
100
100
100
100
19
Financial commitments, guarantees and contingent liabilities
The company has a bond with
Handelsbanken
in favour of HMRC totalling £
25,000 (2018: £4,000).
ACORN INDUSTRIAL SERVICES LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2019
- 21 -
20
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2019
2018
£
£
Within one year
383,460
425,000
Between two and five years
882,604
1,010,000
In over five years
160,889
339,000
1,426,953
1,774,000
21
Events after the reporting date
Since the COVID-19 pandemic in the first quarter of 2020 there has been widespread disruption in the UK and consequently for the Company. As the pandemic began after the year end this event has been classified as a non-adjusting post balance sheet event. It is not possible at this time for the Company to estimate the full financial effect of the outbreak. The assessment on the ability of the Company to operate as a going concern is disclosed in the accounting policies.
22
Related party transactions
No guarantees have been given or received.
The company has taken advantage of the provision available in FRS 102 exempting disclosure of related party transactions with and between wholly-owned group companies.
During the year, the company occupied properties owned by the directors' pension scheme and paid rent on a commercial basis of £203,000 (2018: £182,000).
23
Ultimate controlling party
The company is controlled by Acorn Industrial Services Group Limited, a company registered in England and Wales.
The ultimate controlling party is Axel Johnson AB, a company registered in Sweden.
Acorn Industrial Services Group Limited prepares group financial statements, which is the smallest group to consolidate these financial statements and copies can be obtained from the Company Secretary at
Unit A
,
Denby Way
,
Hellaby Industrial Estate
,
Rotherham
,
South Yorkshire
,
S66 8HR
.
Acorn Industrial Services Group Limited is controlled by Axel Johnson AB by virtue of that company holding 100% of the share capital in Acorn Industrial Services Group Limited.
Axel Johnson AB prepares group financial statements, which is the largest group
to consolidate these financial statements and copies can be obtained from the Company Secretary at Axel
Johnson AB, Villagation 6, PO Box 5174, SE-102, 44, Stockholm, Sweden.
2019-12-31
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