Company Registration No. 07022309 (England and Wales)
NORTHWOOD TISSUE (DISLEY) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
NORTHWOOD TISSUE (DISLEY) LIMITED
COMPANY INFORMATION
Directors
Mr P Fecher
Mr M Fecher
Mr A Fecher
Mr P King
Mr C Davies
Mr D Harries
Secretary
Mr P E King
Company number
07022309
Registered office
Waterside
Disley
Stockport
SK12 2HW
Auditor
Crossley Financial Accounting Limited
Star House
Star Hill
Rochester
Kent
NORTHWOOD TISSUE (DISLEY) LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Statement of financial position
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 26
NORTHWOOD TISSUE (DISLEY) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
- 1 -
The directors present the strategic report for the year ended 31 December 2020.
During the year under review, the company’s principal trading activity has continued to be the manufacture of paper tissue and towel parent reels. Following an acquisition in 2019 the Northwood AfH Group* now operates 3 recycled paper mills with the capacity to service the internal parent reel requirements of the Groups converting operations.
Fair review of the business
After a promising start to 2020 the business was hit by the Covid-19 pandemic that sent the country into a series of lockdowns from March 2020. The converting companies in the Group have a significant exposure to hospitality and facilities management sectors of the economy and these were badly affected with restaurants closed, travel curtailed and office workers being based at home. The direct consequences of this were (1) furlough of operational staff at various periods during the year (2) reduced production volumes across the year to ~92% of budget (3) production of pure tissue instead of recycled for both internal and external sales.
Supply of parent reels to associated companies reduced to 69% of production volume in the year from >99% in 2019 and 96% in 2018. The reported gross profit percentage has improved to 9.0% in 2020, up from ~8.0% in each of the previous 4 years. The reported operating profit of £492k in 2020 compares with the prior year of £367k.
Principal risks and uncertainties
The company does not operate in a high‑risk environment and the nature of the vertically integrated supply chain that the company works within, along with related companies who are either suppliers or customers, ensures that there is not an over‑reliance on any specific external supplier or customer. The nature of commercial markets means that where sales are made outside the Group, there is a focus on the credit management controls required to minimise the risk of bad debts and to ensure the smooth flow of product. The company continues to comply with all relevant environmental and industry legislation and this is facilitated through continued membership of the CPI. The company has been accredited with the Ecolabel standard meaning that Ecolabel certified products can be manufactured at the company’s related converting plants using base sheet supplied by the business.
NORTHWOOD TISSUE (DISLEY) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 2 -
Key performance indicators
Mr P King
Director
NORTHWOOD TISSUE (DISLEY) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2020
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2020.
Results and dividends
The results for the year are set out on page 8.
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:
Mr P Fecher
Mr M Fecher
Mr A Fecher
Mr P King
Mr C Davies
Mr D Harries
Auditor
The auditor, Crossley Financial Accounting Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
NORTHWOOD TISSUE (DISLEY) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 4 -
On behalf of the board
Mr P King
Director
30 September 2021
NORTHWOOD TISSUE (DISLEY) LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF NORTHWOOD TISSUE (DISLEY) LIMITED
- 5 -
Opinion
We have audited the financial statements of Northwood Tissue (Disley) Limited (the 'company') for the year ended 31 December 2020 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows 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 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 2020 and of its profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor's
responsibilities for the audit of the financial statements
section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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.
NORTHWOOD TISSUE (DISLEY) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NORTHWOOD TISSUE (DISLEY) LIMITED
- 6 -
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.
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.
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
.
Risks
Based on our understanding of the company and industry, we identified that the principle risks of non-compliance with laws and regulations related to compliance with
health and safety regulations in regards to operation of machinery
and environmental management and we considered the extent to which non-compliance might have a material effect on the financial statements of the company.
We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006.
In addition, we considered provisions of other laws and regulations that do not have a direct impact on the financial statements but compliance with which may be fundamental to the company’s ability to operate or to avoid a material penalty. These include data protection and employment.
NORTHWOOD TISSUE (DISLEY) LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NORTHWOOD TISSUE (DISLEY) LIMITED
- 7 -
We evaluated managements incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to revenue recognition, posting inappropriate journals entries to increase turnover or reduce expenditure, and management bias in accounting estimates and judgemental areas of the financial statements such as
stock valuation, useful lives of assets and pricing of stock purchases and sales between group and other related companies
.
Audit response
Audit procedures performed by the engagement team included:
-
Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulations and fraud, and review of the reports made by management
-
Understanding of management’s internal controls designed to prevent and detect irregularities.
-
Reviewing relevant meeting minutes
-
Review of tax compliance
-
Designing audit procedures to incorporate unpredictability around the nature, timing or extent of testing of expenses
-
Testing transactions entered into outside the normal course of business
-
Substantive tests of detail of revenue and expenditure
-
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risk of material misstatement due to fraud
-
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations
-
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment, by for example, forgery, or intentional misrepresentation, or though collusion.
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.
S Meah FCCA (Senior Statutory Auditor)
For and on behalf of Crossley Financial Accounting Limited
30 September 2021
Chartered Accountants
Statutory Auditor
Star House
Star Hill
Rochester
Kent
NORTHWOOD TISSUE (DISLEY) LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
- 8 -
2020
2019
Notes
£
£
Turnover
3
17,525,504
17,721,310
Cost of sales
(15,956,920)
(16,302,496)
Gross profit
1,568,584
1,418,814
Administrative expenses
(1,092,134)
(1,022,887)
Other operating income
15,936
Exceptional items
4
(28,535)
Operating profit
5
492,386
367,392
Interest receivable and similar income
9
64
Interest payable and similar expenses
10
(95,045)
(92,283)
Profit before taxation
397,341
275,173
Tax on profit
11
(194,297)
(205,794)
Profit for the financial year
203,044
69,379
Other comprehensive income
Tax relating to other comprehensive income
76,547
(31,085)
Total comprehensive income for the year
279,591
38,294
The income statement has been prepared on the basis that all operations are continuing operations.
NORTHWOOD TISSUE (DISLEY) LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2020
31 December 2020
- 9 -
2020
2019
Notes
£
£
£
£
Fixed assets
Tangible assets
12
7,499,045
7,607,658
Current assets
Stocks
13
1,126,936
1,072,609
Debtors
14
10,594,795
10,135,054
Cash at bank and in hand
401,794
70,251
12,123,525
11,277,914
Creditors: amounts falling due within one year
15
(6,579,263)
(7,087,839)
Net current assets
5,544,262
4,190,075
Total assets less current liabilities
13,043,307
11,797,733
Creditors: amounts falling due after more than one year
16
(3,390,415)
(2,468,469)
Provisions for liabilities
Provisions
18
625,010
625,010
Deferred tax liability
19
1,066,888
1,022,851
(1,691,898)
(1,647,861)
Net assets
7,960,994
7,681,403
Capital and reserves
Called up share capital
21
100
100
Share premium account
99,900
99,900
Revaluation reserve
2,028,011
2,238,025
Profit and loss reserves
5,832,983
5,343,378
Total equity
7,960,994
7,681,403
The financial statements were approved by the board of directors and authorised for issue on 30 September 2021 and are signed on its behalf by:
Mr C Davies
Director
Company Registration No. 07022309
NORTHWOOD TISSUE (DISLEY) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
- 10 -
Share capital
Share premium account
Revaluation reserve
Profit and loss reserves
Total
£
£
£
£
£
Balance at 1 January 2019
100
99,900
2,551,574
4,991,535
7,643,109
Year ended 31 December 2019:
Profit for the year
-
-
-
69,379
69,379
Other comprehensive income:
Deferred tax movement
-
-
(31,085)
(31,085)
Total comprehensive income for the year
(31,085)
69,379
38,294
Transfer to/from profit and loss account
-
(282,464)
282,464
-
Balance at 31 December 2019
100
99,900
2,238,025
5,343,378
7,681,403
Year ended 31 December 2020:
Profit for the year
-
-
-
203,044
203,044
Other comprehensive income:
Deferred tax movement
-
-
76,547
76,547
Total comprehensive income for the year
76,547
203,044
279,591
Transfer to/from profit and loss account
-
(286,561)
286,561
-
Balance at 31 December 2020
100
99,900
2,028,011
5,832,983
7,960,994
NORTHWOOD TISSUE (DISLEY) LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
- 11 -
2020
2019
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
25
748,119
(12,736)
Interest paid
(95,045)
(92,283)
Income taxes paid
(80,675)
(64)
Net cash inflow/(outflow) from operating activities
572,399
(105,083)
Investing activities
Purchase of tangible fixed assets
(223,815)
(579,255)
Proceeds on disposal of tangible fixed assets
7,500
Interest received
64
Net cash used in investing activities
(223,815)
(571,691)
Financing activities
Repayment of borrowings
(13,583)
705,096
Net cash (used in)/generated from financing activities
(13,583)
705,096
Net increase in cash and cash equivalents
335,001
28,322
Cash and cash equivalents at beginning of year
66,793
38,471
Cash and cash equivalents at end of year
401,794
66,793
Relating to:
Cash at bank and in hand
401,794
70,251
Bank overdrafts included in creditors payable within one year
(3,458)
NORTHWOOD TISSUE (DISLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
- 12 -
1
Accounting policies
Company information
Northwood Tissue (Disley) Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
Waterside, Disley, Stockport, SK12 2HW.
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. The principal accounting policies adopted are set out below.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
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.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
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:
Plant and equipment
25 years straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
NORTHWOOD TISSUE (DISLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 13 -
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.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
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.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
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
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.
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.
NORTHWOOD TISSUE (DISLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 14 -
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.
NORTHWOOD TISSUE (DISLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 15 -
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.
1.8
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 income statement 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.
NORTHWOOD TISSUE (DISLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 16 -
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.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.9
Provisions
Provisions are recognised when the
company
has a legal or constructive present obligation as a result of a past event, it is probable that the
company
will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation.
Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision i
s
measured at present value
,
the unwinding of the discount is recognised as a finance cost in profit or loss in the period
in which
it arises.
1.10
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.11
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.
1.12
Government grants
Government grants are recognised at the fair value of the asset receive
d
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.
1.13
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation
in the period
are included in profit or loss.
NORTHWOOD TISSUE (DISLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
1
Accounting policies
(Continued)
- 17 -
1.14
The company discounts its trade debts. The accounting policy is to include a gross asset for trade
debtors due within one year and to record the returnable element of the proceeds under creditors due
within one year. Discount fees are charged to the profit and loss account when payable. Bad debts
are bourne by the company and charged to the profit and loss account when reasonably foreseeable.
2
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and
assumptions in applying the Company's accounting policies to determine the reported amounts of assets,
liabilities, income and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under the circumstances. Actual
results may differ from these estimates. These estimates and underlying assumptions are reviewed on an ongoing basis.
Judq
e
ments
Critical judgments, apart from those involving estimations that are applied in the preparation of the
consolidated financial statements are discussed below;
Leases
Management exercises judgment in determining the classification of leases as finance or operating leases
at the inception of the lease. Management considers the likelihood of exercising the break clauses or
extension options in determining the lease term. Where the lease term constitutes substantially all the
economic life of the asset, or where the present value
of minimum lease payments amount to substantially
all of the fair value of the property, the lease is classified as a finance lease. All other leases are classified
as operating leases.
Estimates
The key assumptions about the future and other key sources of estimation uncertainty at the reporting
period end that may have a significant risk of causing material adjustment to the carrying amount of
assets and liabilities within the next financial year are discussed below;
Depreciation of property, plant and equipment
Depreciation is provided so as to write down the assets to their residual values over their estimated useful
lives. The selection of these residual values and estimated lives requires the exercise of management
judgment.
lmpairment of assets
Where there are indicators of impairment, management performs an impairment test. Recoverable
amounts for cash-generating units are the higher of fair value less costs of disposal, and value in use.
3
Turnover and other revenue
2020
2019
£
£
Other significant revenue
Interest income
-
64
Grants received
15,936
NORTHWOOD TISSUE (DISLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
3
Turnover and other revenue
(Continued)
- 18 -
2020
2019
£
£
Turnover analysed by geographical market
United Kingdom
17,289,745
17,482,916
Europe
235,759
238,394
17,525,504
17,721,310
4
Exceptional item
2020
2019
£
£
Expenditure
Exceptional costs - redundancy
-
28,535
5
Operating profit
2020
2019
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
424
374
Government grants
(15,936)
Depreciation of owned tangible fixed assets
332,428
325,386
(Profit)/loss on disposal of tangible fixed assets
24,774
Operating lease charges
13,570
18,364
6
Auditor's remuneration
2020
2019
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
14,700
15,050
NORTHWOOD TISSUE (DISLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 19 -
7
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2020
2019
Number
Number
Direct staff
27
26
Indirect staff
22
17
Administration staff
9
5
Directors
1
5
Total
59
53
Their aggregate remuneration comprised:
2020
2019
£
£
Wages and salaries
2,300,225
2,079,542
Social security costs
232,642
211,251
Pension costs
109,949
92,546
2,642,816
2,383,339
8
Directors' remuneration
2020
2019
£
£
Remuneration for qualifying services
169,322
148,252
Company pension contributions to defined contribution schemes
23,639
21,987
192,961
170,239
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2019 - 1).
9
Interest receivable and similar income
2020
2019
£
£
Interest income
Other interest income
64
NORTHWOOD TISSUE (DISLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 20 -
10
Interest payable and similar expenses
2020
2019
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
95,045
92,283
11
Taxation
2020
2019
£
£
Current tax
UK corporation tax on profits for the current period
78,914
47,443
Adjustments in respect of prior periods
(5,201)
(267)
Total current tax
73,713
47,176
Deferred tax
Origination and reversal of timing differences
120,584
158,618
Total tax charge
194,297
205,794
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2020
2019
£
£
Profit before taxation
397,341
275,173
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2019: 19.00%)
75,495
52,283
Tax effect of expenses that are not deductible in determining taxable profit
9,951
91,408
Adjustments in respect of prior years
(267)
Permanent capital allowances in excess of depreciation
(6,532)
(96,248)
Under/(over) provided in prior years
(5,201)
Deferred tax adjustment
120,584
158,618
Taxation charge for the year
194,297
205,794
In addition to the amount charged to the income statement, the following amounts relating to tax have been recognised directly in other comprehensive income:
2020
2019
£
£
Deferred tax arising on:
Revaluation of plant and machinery
(76,547)
31,085
NORTHWOOD TISSUE (DISLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 21 -
12
Tangible fixed assets
Assets under construction
Plant and equipment
Total
£
£
£
Cost
At 1 January 2020
125,140
9,432,494
9,557,634
Additions
223,815
223,815
Transfers
(125,140)
125,140
At 31 December 2020
9,781,449
9,781,449
Depreciation and impairment
At 1 January 2020
1,949,976
1,949,976
Depreciation charged in the year
332,428
332,428
At 31 December 2020
2,282,404
2,282,404
Carrying amount
At 31 December 2020
7,499,045
7,499,045
At 31 December 2019
125,140
7,482,518
7,607,658
13
Stocks
2020
2019
£
£
Raw materials and consumables
732,355
699,826
Finished goods and goods for resale
394,581
372,783
1,126,936
1,072,609
14
Debtors
2020
2019
Amounts falling due within one year:
£
£
Trade debtors
1,936,564
5,188,766
Corporation tax recoverable
48,634
10,201
Other debtors
8,076,749
4,585,773
Prepayments and accrued income
532,848
350,314
10,594,795
10,135,054
NORTHWOOD TISSUE (DISLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 22 -
15
Creditors: amounts falling due within one year
2020
2019
Notes
£
£
Bank loans and overdrafts
17
3,458
Other borrowings
17
871,188
1,806,717
Trade creditors
2,256,778
3,390,064
Corporation tax
78,914
47,443
Other taxation and social security
1,012,730
279,975
Other creditors
1,259,387
109,917
Accruals and deferred income
1,100,266
1,450,265
6,579,263
7,087,839
16
Creditors: amounts falling due after more than one year
2020
2019
Notes
£
£
Other borrowings
17
3,390,415
2,468,469
17
Loans and overdrafts
2020
2019
£
£
Bank overdrafts
3,458
Other loans
4,261,603
4,275,186
4,261,603
4,278,644
Payable within one year
871,188
1,810,175
Payable after one year
3,390,415
2,468,469
As security for the
o
ther loans
of
£
Nil
(201
9
- £
888,562
) RBS Invoice Finance Limited hold a general debenture dated 15 September 2016 and an all asset debenture dated 6 July 2012 over the company.
A Chattel Mortgage dated 9 July 2012 over the company's plant and machinery is held by Lombard as security for the
other
loan
amounting to
£
4,126,603
(201
9
- £
3,386,624
). A general debenture dated 4 July 2012 is also held by Lombard over the abovementioned loan. The debenture is a fixed and floating charge over property and assets. The loan is repayable in monthly instalments at a fixed rate of interest.
A general debenture dated 27 June 2012 is held by National Westminster Bank Plc. The debenture is a fixed and floating charge over property and assets.
A general debenture dated 8 January 2010 is held by Northwood Paper Sales Limited. The debenture is a fixed and floating charge over property and assets.
NORTHWOOD TISSUE (DISLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 23 -
18
Provisions for liabilities
2020
2019
£
£
Dilapidation provision
250,010
250,010
Land remediation
375,000
375,000
625,010
625,010
Movements on provisions:
Dilapidation provision
Land remediation
Total
£
£
£
At 1 January 2020 and 31 December 2020
250,010
375,000
625,010
19
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2020
2019
Balances:
£
£
Accelerated capital allowances
578,923
458,341
Revaluations
487,965
564,510
1,066,888
1,022,851
2020
Movements in the year:
£
Liability at 1 January 2020
1,022,851
Charge to profit or loss
44,037
Liability at 31 December 2020
1,066,888
20
Retirement benefit schemes
2020
2019
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
109,949
92,546
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.
NORTHWOOD TISSUE (DISLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 24 -
21
Share capital
2020
2019
2020
2019
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
100
100
100
100
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:
2020
2019
£
£
Within one year
251,363
252,141
Between two and five years
87,059
154,869
338,422
407,010
23
Capital commitments
Amounts contracted for but not provided in the financial statements:
2020
2019
£
£
Acquisition of tangible fixed assets
-
30,236
NORTHWOOD TISSUE (DISLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 25 -
24
Related party transactions
Remuneration of key management personnel
Key management personnel include all directors who together have authority and responsibility for planning, directing and controlling the activities of the company. The total compensation paid to key management personnel for services provided to the group was
as follows:
2020
2019
£
£
Aggregate compensation
192,961
170,239
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Sales
Purchases
2020
2019
2020
2019
£
£
£
£
Entities with control, joint control or significant influence over the company
17,499,442
18,523,954
11,641,171
12,369,646
During the year under review, the following transactions took place with entities over which the entity has significant influence over;
Sales of goods and other recharges of £
17,658,414
(201
9
- £
18,523,954
);
The balance due at the year end is £
1,866,951
(201
9
- £
3,228,142
) and is included in trade debtors.
Costs of purchases and other recharges of £
11,997,509
(201
9
- £
12,369,646
);
The balance due at the year end is £
1,194,524
(201
9
- £1,
881,540)
and is included in trade creditors.
Rent of £250,000 (201
9
- £250,000) was paid.
Loans of £
3,609,293
(201
9
- £
825,832
) were made;
Loans of £910,000 (2019 - £nil) were received;
Repayments of £
nil
(201
9
- £1,
138,000
) were received;
Repayments of £
nil
(201
9
- £
nil
) were made;
As at 31 December 20
20
£
7,038,479
(201
9
- £4,
339,186
) was due from the entities.
NORTHWOOD TISSUE (DISLEY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2020
- 26 -
25
Cash generated from/(absorbed by) operations
2020
2019
£
£
Profit for the year after tax
203,044
69,379
Adjustments for:
Taxation charged
194,297
205,794
Finance costs
95,045
92,283
Investment income
(64)
(Gain)/loss on disposal of tangible fixed assets
24,774
Depreciation and impairment of tangible fixed assets
332,428
325,386
Increase in provisions
375,000
Movements in working capital:
(Increase)/decrease in stocks
(54,327)
120,600
Increase in debtors
(421,308)
(3,383,328)
Increase in creditors
398,940
2,157,440
Cash generated from/(absorbed by) operations
748,119
(12,736)
26
Analysis of changes in net debt
1 January 2020
Cash flows
31 December 2020
£
£
£
Cash at bank and in hand
70,251
331,543
401,794
Bank overdrafts
(3,458)
3,458
66,793
335,001
401,794
Borrowings excluding overdrafts
(4,275,186)
13,583
(4,261,603)
(4,208,393)
348,584
(3,859,809)
2020-12-31
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CCH Software
CCH Accounts Production 2021.200
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