The directors present the strategic report for the year ended 31 December 2020.
The Group is principally engaged in the processing and recycling of scrap metal.
Overall Strategy
The Group’s ongoing aim is to continue to achieve maximum metal recovery from processing operations and reduce material going to landfill.
Business Review
In the opinion of the directors, the Group continued to trade at a reasonable level during the year in difficult market conditions. Margins were tight and reduced turnover, coupled with proportionally increased costs, led to difficult trading conditions during the year. Despite the Group being shut for periods of the year due to Government enforced lockdowns, the Group traded profitably. The Group effectively managed cashflow through the use of the Job Retention Scheme.
The directors continue to update the Group’s processing equipment and invested £489,936 (2019: £688,461) in capital expenditure during the year.
A provision has been recognised in respect of the estimated settlement of historical Corporation Tax, PAYE and NIC matters. Settlement is expected within 12 months from the date of authorising the financial statements. However, there is a degree of uncertainty over the timing and amount of settlement until such time as a final settlement is negotiated. Recognising this provision has taken us from a profitable position at the year-end, to reporting a loss of £2.5million.
Financial Key Performance Indicators
|
2020 (before provision) |
2020 |
2019 |
|
£ |
£ |
£ |
Turnover |
48,367,916 |
48,367,916 |
58,701,342 |
Operating Profit / (Loss) |
138,906 |
( 1,480,128 ) |
( 1 90,476) |
Cash in Hand |
9,163,493 |
9,163,493 |
12,678,732 |
Total Net Assets |
21,107,454 |
18,556,736 |
21,534,064 |
In addition to financial indicators, the directors monitor on an ongoing basis, health and safety and environmental issues.
The major risks facing the Group are changes to commodity prices which are monitored closely by management.
Financial Risk Management Objectives and Policies
The Group’s operations expose it to a variety of financial risks as described in more detail below. In order to manage the Group’s exposure to these risks, the Group enters into a number of derivative transactions, including forward currency contracts.
All transactions in derivatives are undertaken to manage the risks arising from underlying business activities.
The directors review and agree policies for managing each of these financial risks and they are summarised below. These policies have remained unchanged from previous years.
Price Risk
The Group is exposed to commodity price risk as a result of its operations. However, given the size of the Group’s operations, the cost of managing exposure to commodity price risk exceeds the potential benefits.
Credit Risk
The principal credit risk that arises is from trade debtors. The Group implements a policy that requires credit checks on potential customers before sales are made. The amount of exposure to any individual counterparty is subject to a limit, which is reassessed regularly by the directors.
Liquidity Risk
The Group seek to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely.
Exchange Risk
The Group is exposed to an element of exchange risk as a result of their operations and transactions out with the United Kingdom.
Section 172 statement
As directors of the Company, we have and continue to act in a way that we consider, in good faith, to be most likely to promote the continuing success of the Company for the benefit of its shareholders, and in doing so had regard, amongst other matters, to:
The likely consequences of decisions in the long-term;
The interests of the Company’s employees;
The importance of the business relationships with the Company’s customers, users, suppliers and others;
The impact of the Company’s operations on the community and the environment;
The importance of maintaining strong controls around customer data and client funds;
The desirability for the Company to maintain a reputation for high standards of business conduct; and
The need to act fairly for all shareholders of the Company.
Shareholders
In order to protect the funds of the shareholders the operational strategy and financial matters are regularly reviewed and discussed with the ultimate shareholders.
Customers
We need customers to sustain our business and provide opportunities to get a return for the shareholders and keep the workforce employed.
We aim to give our customers a high level of service and are in regular contact by phone and email to keep the supply and sale of material flowing smoothly.
Workforce
Our workforce are key to providing support to our suppliers and customers. We are active in training and motivating our workforce to retain the high level of service that we pride ourselves in. Health and safety is of paramount importance to our business and is constantly reviewed.
Suppliers
We try to give our suppliers a high level of efficient service to ensure quick turnaround times. We are in constant contact with our suppliers by phone, email and personal contact to ensure a smooth and steady flow of material.
Environment
We are committed to supporting the communities that we work in and being environmentally responsible. To this end, the Company holds a Pollution, Prevention and Control (PPC) permit with SEPA. The objective of this permit is to promote the effective use of resources to avoid the unnecessary generation of waste and pollution, with a focus on sustainability and compliance with environmental standards and targets.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2020.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 11.
Ordinary dividends were paid amounting to £506,685 (2019: £506,685). The directors do not recommend payment of a further dividend.
The auditor, Johnston Carmichael LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Large UK companies are required to report publicly o n their global energy use and carbon emissions within the Directors' Report. This requirement has been implemented by the Department for Business, Energy and Industrial Strategy (BEIS). Our reporting scope is John R. Adam & Sons Limited as emissions data is not required to be presented for any subsidiaries which would not be obliged to report individually according to the thresholds.
The environmental impact of our operations
The Directors recognise that we have a responsibility to the environment and endeavour to be as environmentally friendly as possible in our business activities. We as a recycling company separate paper and plastic waste and food waste and separate as much as possible from any waste that goes to landfill. We are regularly visited by SEPA and hold a PPC permit and Waste Carriers Licence.
Energy Use and Greenhouse Gas Emissions
Scope 1 emissions are direct emissions from sources that are owned or controlled by the company (e.g. vehicles). Scope 2 emissions are indirect emissions from sources that are owned or controlled by the company (e.g. electricity).
Scope 1 energy use and emissions from mobile combustion, transport and site fuel use - 264,767 kWh, 1,050,354 tonnes COe.
Scope 2 energy use and emissions from electricity - 2,817,579 kWh, 656,890 tonnes COe.
Total energy use and greenhouse gas emissions - 3,082,346 kWh, 1,707,244 tonnes COe.
Methodology
To calculate the footprint, data was collated from across the company and from our suppliers to identify the amount of energy used in our operations. The company uses the most robust and accurate data source available for each component of its energy use and carbon emission calculations. Conversion factors are taken from UK Government conversions factors 2020.
Greenhouse gas (GHG) emissions are calculated in line with GHG Reporting Protocol - Corporate standards and reported in line with the UK Government's Guidance on Streamlined Energy and Carbon Reporting and mandatory GHG reporting guidance.
We have audited the financial statements of John R. Adam & Sons (Holdings) Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2020 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
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 group 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.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit :
the information given in the strategic report and the directors' 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.
In the light of the knowledge and understanding of the group and the parent 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 in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company 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.
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 group's and the parent 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.
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 .
Extent to which the audit is considered capable of detecting irregularities, including fraud
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.
We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group , focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:
UK GAAP
Companies Act 2006
VAT and Corporation T ax l egislation
Health & safety related legislation
SEPA legislation
We gained an understanding of how the Group is complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of submitted returns and board meeting minutes.
We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. In areas of the financial statements where the risks were considered to be higher, we performed procedures to address each identified risk.
The following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:
Reviewing minutes of meetings of those charged with governance;
Reviewing the level of and reasoning behind the company’s procurement of legal and professional services;
Performing audit work procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing judgements made by management in their calculation of accounting estimates for potential management bias.
Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, recognising that 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 intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed 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 are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https:// www.frc.org.uk/Our-Work/Audit/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Auditors -responsibilities-for-audit/Description-of-auditors-responsibilities-for-audit.aspx. 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.
As permitted by s408 Companies Act 2006, the c ompany has not presented its own profit and loss account and related notes. The c ompany’s profit for the year was £500,000 (2019 - £500,000 profit).
John R Adam & Sons (Holdings) Limited (“the company”) is a private limited company domiciled and incorporated in Scotland . The registered office is Riverside Berth, George V Dock, Renfrew Road, Glasgow, G51 4SD.
The group consists of John R. Adam & Sons (Holdings) Limited and all of its subsidiaries , and its general activities are that of a scrap metal merchant.
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.
The Directors have prepared the financial statements on a going concern basis following a detailed assessment of the Group’s liquidity and ability to navigate the uncertainty created by COVID-19 on the UK economy. The Directors have effectively managed their cashflow by utilising the Government furlough scheme. The Directors have prepared detailed trading projections to the end of December 2022 based on current trading conditions and applied sensitivities to key assumptions. The sensitivities include the impact of a sustained and enforced downturn in demand. These projections , the Group's cash reserves and the recovery in demand post lockdown provide the Directors with a reasonable expectation that the Company has significant funding in place to allow the Company to continue as a going concern for a minimum period of 12 months from the date of authorising the financial statements. In making this assessment, the Directors acknowledge that forecasts are by nature forward looking and therefore may vary from actual results. The Directors will closely monitor the business and marketplace and react to any changes in a timely manner.
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 trade discounts, VAT and other sales related taxes. Revenue is recognised on despatch of goods over the weighbridge for domestic sales and on discharge of vessels at ports for exports. Adjustments relating to price and weight differences are accrued against turnover.
Investment properties are revalued annually at their fair value in accordance with FRS 102 less any subsequent accumulated depreciation and impairment losses. No depreciation is provided on investment properties which is a departure from the requirements of the Companies Act 2006. In the opinion of the directors these properties are held primarily for investment and not consumption and so their current value is of more significance than any measure of consumption and to depreciate them would not give a true and fair view.
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 recognised in the profit and loss account .
Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Investment properties are recognised initially at cost.
Subsequent to initial recognition:
i. investment properties whose fair value can be measured reliably without undue cost or effort are held at fair value. Any gains or losses arising from changes in the fair value are recognised in profit or loss in the period that they arise;and
ii. no depreciation is provided in respect of investment properties applying the fair value model.
Equity in vest ments are measured at fair value through profit or loss , except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably , which are recognised at cost less impairment until a reliable measure of fair value becomes available.
I n the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group 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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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 the statement of comprehensive income , 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 the statement of comprehensive income , 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.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, 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 m ethod. Financial assets classified as receivable within one year are not amortised.
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. 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 the statement of comprehensive income.
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 the statement of comprehensive income.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 group after deducting all of its liabilities.
Basic financial liabilities, including creditors and loans from fellow group companies are initially recognised at transaction price. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 statement of comprehensive income , 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 if, and only if, there is 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.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets .
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to income 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 asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
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.
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 statement of comprehensive income for the period.
In the application of the group’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.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Significant judgement and estimates of management are involved in the valuation and quantity of year end stock. Due to the nature of scrap metal and the price volatility, the valuation of such items at the year end is based on the management's judgements and past experience.
Significant judgement and estimates of management are required in the valuation of the year end weighbridge accrual. Accrued weighbridge tickets are held for 5 years. Although due care is applied to this process, there is an element of subjectivity involved.
In order to form their judgements, the directors have sought expert opinions with regard to the contingent liabilities as set out in note 24.
Grants received above represent amounts received by the Group under the Government's coronavirus Job Retention Scheme.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge based on the profit or loss and the standard rate of tax as follows:
The fair value of the investment property has been arrived at on the basis of a valuation carried out at 13 January 2020 by CBRE, who are not connected with the company. The valuation was made on an open market value basis. T he directors did not consider there to be an uplift and the valuation remained the best estimate at December 2020.
Investment properties are rented out under an operating lease. The future minimum lease payments under this operating lease are:
- £105,000 due within 1 year
- £640,000 due between 1 and 5 years
- £1,937,500 due after 5 years
In light of current circumstances, the Directors have agreed a payment holiday. This commenced May 2020 and ran until March 2021.
Details of the company's subsidiaries at 31 December 2020 are as follows:
The registered office for all companies listed above is Riverside Berth, King George V Dock, Renfrew Road, Glasgow, G51 4SD.
Trade debtors above is stated net of provision for impairment of £nil (2019: £71,874).
A provision has been recognised in respect of the estimated settlement of historical Corporation Tax, PAYE and NIC matters. Settlement is expected within 12 months from the date of authorising the financial statements. However, there is a degree of uncertainty over the timing and amount of settlement until such time as a final settlement is negotiated.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The revaluation reserve represents the excess of the fair value of investment properties over their depreciated historic cost, less a provision for deferred taxation.
Profit and loss reserves are the cumulative profits and losses incurred by the group since incorporation and not distributed to the shareholders.
Capital Redemption Reserves
This represents the purchase of own shares.
Other Reserves
This relates to the acquisition of John R. Adam & Sons (Holdings) Ltd group on 1 September 2004 which was accounted for under the merger accounting policies.
The following disclosure relates to the subsidiary undertaking John R. Adam & Sons Limited.
Based on the advice of leading tax counsel, the company is currently disputing an Assessment from HMRC with regard to VAT matters. The balance of VAT payable in the event that HMRC are successful is £1m with interest and penalties attaching estimated at £0.5m.
The company remains involved in challenging an enquiry by HMRC regarding the tax treatment of payments made under a Growth Securities Ownership Plan. Management’s estimate of the company’s potential liability in the event that HMRC are successful ranges from £0.8m to £2.1m after allowing for reimbursement, including tax repayable from HMRC.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The group has taken advantage of the exemption available in respect of Section 33.1a of FRS 102, which exempts them from disclosing transactions with other group companies which are wholly owned subsidiaries.