Company registration number NI007111 (Northern Ireland)
N.K. COATINGS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
N.K. COATINGS LIMITED
COMPANY INFORMATION
Directors
Mr A Davidson
Mr F Maginn
Mr P Harvey
Ms S Davidson
Ms H Rice
Mr S Ferguson
Secretary
Mr S Ferguson
Company number
NI007111
Registered office
4 Michelin Road
Mallusk
Co Antrim
BT36 4PT
Auditor
GMcG BELFAST
Chartered Accountants & Statutory Auditor
Alfred House
19 Alfred Street
Belfast
BT2 8EQ
Business address
4 Michelin Road
Mallusk
Co Antrim
BT36 4PT
Bankers
Danske Bank
21-23 High Street
Carrickfergus
Co Antrim
BT38 7AL
Solicitors
Millar McCall Wylie
Eastleigh House
396 Upper Newtownards Road
Belfast
BT4 3EY
N.K. COATINGS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Notes to the financial statements
13 - 25
N.K. COATINGS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 APRIL 2023
- 1 -
The directors present the strategic report for the year ended 30 April 2023.
Business review
The principal activities of the company during the year were that of galvanising steel products and providing other anti-corrosive treatments.
The directors aim to present a balanced and comprehensive review of the development and performance of the company during the year and its position as at 30 April 2023. This review is consistent with the size and nature of the business and is written in the context of the risks and uncertainties it faces.
The directors are pleased with the company results for the year. At the beginning of the year, the trade and assets of the powder coating division of the company transferred to another group company as part of a restructure of the company. The directors continue to identify opportunities to increase turnover in the galvanising division of the business and continue to monitor and reduce costs where possible. The directors anticipate higher volumes of trade in relation to the company's continuing activities, and are hopeful of maintaining market share.
Principal risks and uncertainties
The key risks and uncertainties affecting the company are considered to relate to competition from other businesses, employee retention, product availability and the general downturn in customer spending due to the current economic climate.
In these circumstances, the directors work closely with suppliers, customers, staff and financial institutions to carefully manage the business.
Financial key performance indicators
The directors consider that the key performance indicators are those that communicate the financial performance and strength of the company as a whole, these being turnover, gross margin, operating profit and net assets.
There has been an increase in turnover of 13.5% in the year from £8.85m to £10.05m while the gross profit margin has increased from 35.6% in 2022 to 40% in 2023, mainly as the result of an increase in turnover without a corresponding increase in costs.
The company had an operating profit for the year of £1.19m compared to an operating profit of £500k in 2022.
The net assets have increased from £3.79m in 2022 to £4.0m in 2023; this after a dividend payment of £200k during the year.
Mr A Davidson
Director
17 October 2023
N.K. COATINGS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 APRIL 2023
- 2 -
The directors present their annual report and financial statements for the year ended 30 April 2023.
Results and dividends
The results for the year are set out on page 10.
Ordinary dividends were paid amounting to £700,000. 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 A Davidson
Mr F Maginn
Mr P Harvey
Ms S Davidson
Ms H Rice
Mr S Ferguson
Auditor
The auditor, GMcG BELFAST, 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;
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.
N.K. COATINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 3 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr A Davidson
Director
17 October 2023
N.K. COATINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF N.K. COATINGS LIMITED
- 4 -
Opinion
We have audited the financial statements of N.K. Coatings Limited (the 'company') for the year ended 30 April 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 30 April 2023 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.
N.K. COATINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF N.K. COATINGS LIMITED
- 5 -
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
N.K. COATINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF N.K. COATINGS LIMITED
- 6 -
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
N.K. COATINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF N.K. COATINGS LIMITED
- 7 -
Extent to which the audit was considered capable of detecting irregularities, including fraud
We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.
In identifying and assessing potential risks of material misstatement in respect of irregularities, including fraud and non-compliances with laws and regulations, we considered the following:
The nature of the industry and sector, control environment and business performance, including the company’s remuneration policies for directors, bonus levels and performance targets, if any;
Results of our enquiries of management about their own identification and assessment of the risks of irregularities;
Any matters we identified having obtained and reviewed the company’s documentation of their policies and procedures relating to:
Identifying, evaluating and complying with laws and regulations and whether they were aware of any instance of non-compliance;
Detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; and
The internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
The matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the company for fraud and identified the greatest potential for fraud in revenue recognition. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the company operates in, 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 key laws and regulations we considered in this context included the Companies Act 2006, and local tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company’s ability to operate or to avoid a material penalty.
N.K. COATINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF N.K. COATINGS LIMITED
- 8 -
Audit response to risks identified
Our procedures to respond to the risks identified included the following:
Reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
Enquiring of management concerning actual and potential litigation and claims;
Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
Reading minutes of meetings of those charged with governance and reviewing correspondence with tax authorities; and
In addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. In addition, as with any audit, there remains a higher risk of non-detection of irregularities, as they may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
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.
N.K. COATINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF N.K. COATINGS LIMITED
- 9 -
The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
Mrs Susan Dunlop FCA (Senior Statutory Auditor)
For and on behalf of GMcG BELFAST
17 October 2023
Chartered Accountants
Statutory Auditor
Chartered Accountants & Statutory Auditor
Alfred House
19 Alfred Street
Belfast
BT2 8EQ
N.K. COATINGS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2023
- 10 -
Continuing
Discontinued
30 April
Continuing
Discontinued
30 April
operations
operations
2023
operations
operations
2022
Notes
£
£
£
£
£
£
Turnover
3
10,048,222
-
10,048,222
8,270,082
580,923
8,851,005
Cost of sales
(6,057,443)
(6,057,443)
(5,258,702)
(437,595)
(5,696,297)
Administrative expenses
(2,808,118)
(2,808,118)
(2,583,821)
(170,566)
(2,754,387)
Other operating income
7,913
7,913
75,118
25,000
100,118
Operating profit
4
1,190,574
-
1,190,574
502,677
(2,238)
500,439
Interest receivable and similar income
7
949
949
36
36
Interest payable and similar expenses
8
(96,305)
(96,305)
(75,302)
(3,000)
(78,302)
Profit before taxation
1,095,218
1,095,218
427,411
(5,238)
422,173
Tax on profit
9
(192,837)
(192,837)
(109,628)
(109,628)
Profit for the financial year
902,381
-
902,381
317,783
(5,238)
312,545
N.K. COATINGS LIMITED
BALANCE SHEET
AS AT 30 APRIL 2023
30 April 2023
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
12
3,413,734
2,999,921
Current assets
Stocks
13
1,370,547
1,438,284
Debtors
14
2,952,651
2,902,012
Cash at bank and in hand
752,610
509,279
5,075,808
4,849,575
Creditors: amounts falling due within one year
15
(2,741,534)
(2,313,782)
Net current assets
2,334,274
2,535,793
Total assets less current liabilities
5,748,008
5,535,714
Creditors: amounts falling due after more than one year
16
(1,303,344)
(1,344,931)
Provisions for liabilities
Deferred tax liability
19
449,306
397,806
(449,306)
(397,806)
Net assets
3,995,358
3,792,977
Capital and reserves
Called up share capital
21
65,200
65,200
Profit and loss reserves
23
3,930,158
3,727,777
Total equity
3,995,358
3,792,977
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true
The financial statements were approved by the board of directors and authorised for issue on 17 October 2023 and are signed on its behalf by:
Mr A Davidson
Mr P Harvey
Director
Director
Company registration number NI007111 (Northern Ireland)
N.K. COATINGS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2023
- 12 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 May 2021
65,200
3,815,232
3,880,432
Year ended 30 April 2022:
Profit and total comprehensive income
-
312,545
312,545
Dividends
11
-
(400,000)
(400,000)
Balance at 30 April 2022
65,200
3,727,777
3,792,977
Year ended 30 April 2023:
Profit and total comprehensive income
-
902,381
902,381
Dividends
11
-
(700,000)
(700,000)
Balance at 30 April 2023
65,200
3,930,158
3,995,358
N.K. COATINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
- 13 -
1
Accounting policies
Company information
N.K. Coatings Limited is a private company limited by shares incorporated in Northern Ireland. The registered office is 4 Michelin Road, Mallusk, Co Antrim, BT36 4PT.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: The disclosure requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b), 11.48(c), 12.26, 12.27, 12.29(a), 12.29(b), and 12.29A;
Section 26 ‘Share based Payment’: Share based payment arrangements required under FRS 102 paragraphs 26.18(b), 26.19 to 26.21 and 26.23;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of N.K. Holdings Limited. These consolidated financial statements are available from its registered office at 40 Trailcock Road, Carrickfergus, BT38 7NU.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the 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.
N.K. COATINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies (Continued)
- 14 -
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
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:
Leasehold improvements
10% per annum straight line
Plant and equipment
10% - 25% per annum straight line
Fixtures and fittings
16.66% per annum straight line
Motor vehicles
25% per annum striaight 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.
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.
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
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
N.K. COATINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies (Continued)
- 15 -
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
N.K. COATINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies (Continued)
- 16 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
N.K. COATINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies (Continued)
- 17 -
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 profit and loss account, 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.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.14
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
N.K. COATINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies (Continued)
- 18 -
1.15
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.
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.
Key sources of estimation uncertainty
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.
Fixed assets
The annual depreciation charge on fixed assets depends primarily on the estimated lives of each type of asset and estimates of residual values. The directors regularly review these asset lives and change them as necessary to reflect current thinking on remaining lives in light of prospective economic utilisation and physical condition of the assets concerned. Changes in asset lives can have a significant impact on depreciation and amortisation charges for the period. Detail of the useful lives is included in the accounting policies.
Stocks
At each balance sheet date the company's stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The assessment of the selling price of such stock involves some estimation uncertainty.
Debtors
Short term debtors are measured at transaction price, less any impairment. Impairment of such debtors involves some estimation uncertainty.
Taxation
Judgements are made in relation to the calculation of certain aspects of the year end tax provisions and the respective tax charge. The management used external professional advice to support the year end provisions.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Galvanising and anti-corrosive treatments
10,048,222
8,851,005
N.K. COATINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
3
Turnover and other revenue (Continued)
- 19 -
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
9,929,728
8,722,340
Republic of Ireland
118,494
128,665
10,048,222
8,851,005
2023
2022
£
£
Other revenue
Interest income
949
36
Grants received
-
100,000
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses
14,427
7,413
Government grants
-
(100,000)
Fees payable to the company's auditor for the audit of the company's financial statements
14,905
15,000
Depreciation of owned tangible fixed assets
428,586
358,565
Depreciation of tangible fixed assets held under finance leases
173,961
183,144
Loss on disposal of tangible fixed assets
32,348
2,025
Operating lease charges
175,000
230,000
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Number of production staff
76
86
Number of administration staff
19
15
Number of directors
6
6
Total
101
107
N.K. COATINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
5
Employees (Continued)
- 20 -
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
2,700,988
2,748,760
Social security costs
246,577
235,076
Pension costs
53,972
54,524
3,001,537
3,038,360
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
409,414
329,189
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
262,140
157,612
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
949
36
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
61,113
50,586
Interest on finance leases and hire purchase contracts
35,192
27,716
96,305
78,302
N.K. COATINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 21 -
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
154,016
107,546
Adjustments in respect of prior periods
(12,679)
(60,635)
Total current tax
141,337
46,911
Deferred tax
Origination and reversal of timing differences
46,595
62,717
Adjustment in respect of prior periods
4,905
Total deferred tax
51,500
62,717
Total tax charge
192,837
109,628
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:
2023
2022
£
£
Profit before taxation
1,095,218
422,173
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
273,805
80,213
Tax effect of expenses that are not deductible in determining taxable profit
(29,679)
(5,424)
Adjustments in respect of prior years
(7,774)
(60,635)
Effect of change in corporation tax rate
(43,515)
95,474
Taxation charge for the year
192,837
109,628
10
Discontinued operations
At the beginning of the year, the trade and assets of the powder coating division were transferred from the company to a fellow subsidiary company at net book value. The company continues to provide galvanising services after the year end.
11
Dividends
2023
2022
£
£
Interim paid
700,000
400,000
N.K. COATINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 22 -
12
Tangible fixed assets
Leasehold improvements
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 May 2022
551,340
4,866,127
211,342
255,316
5,884,125
Additions
446,478
675,375
1,662
1,123,515
Disposals
(165,453)
(48,000)
(213,453)
At 30 April 2023
997,818
5,376,049
213,004
207,316
6,794,187
Depreciation and impairment
At 1 May 2022
127,656
2,588,219
80,563
87,766
2,884,204
Depreciation charged in the year
78,363
440,667
30,846
52,671
602,547
Eliminated in respect of disposals
(99,298)
(7,000)
(106,298)
At 30 April 2023
206,019
2,929,588
111,409
133,437
3,380,453
Carrying amount
At 30 April 2023
791,799
2,446,461
101,595
73,879
3,413,734
At 30 April 2022
423,684
2,277,908
130,779
167,550
2,999,921
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Plant and equipment
544,332
484,155
Motor vehicles
1,667
67,870
545,999
552,025
13
Stocks
2023
2022
£
£
Raw materials and consumables
1,370,547
1,438,284
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
2,281,926
2,413,609
Amounts owed by group undertakings
409,698
242,539
Other debtors
67,855
84,154
Prepayments and accrued income
193,172
161,710
2,952,651
2,902,012
N.K. COATINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 23 -
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
17
166,791
145,969
Obligations under finance leases
18
213,026
213,007
Trade creditors
712,895
919,100
Amounts owed to group undertakings
854,566
168,595
Corporation tax
20,501
120,710
Other taxation and social security
306,395
271,706
Other creditors
27,223
33,743
Accruals and deferred income
440,137
440,952
2,741,534
2,313,782
16
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
17
1,082,361
1,108,679
Obligations under finance leases
18
220,983
236,252
1,303,344
1,344,931
Amounts included above which fall due after five years are as follows:
Payable by instalments
48,609
-
17
Loans and overdrafts
2023
2022
£
£
Bank loans
1,249,152
1,254,648
Payable within one year
166,791
145,969
Payable after one year
1,082,361
1,108,679
Bank loans are secured by a floating charge over the assets and undertakings of the company and a fixed charge over the book debts of the company.
Bank loans includes three loans repayable by monthly and quarterly instalments at interest rates of 2.96% and 7.25%. £140,511 is repayable over 5 years.
N.K. COATINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 24 -
18
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
213,026
213,007
In two to five years
220,983
236,252
434,009
449,259
Obligations under finance leases are secured on the assets to which they relate.
19
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
455,820
399,473
Other timing differences
(6,514)
(1,667)
449,306
397,806
2023
Movements in the year:
£
Liability at 1 May 2022
397,806
Charge to profit or loss
51,500
Liability at 30 April 2023
449,306
20
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
53,972
54,524
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.
N.K. COATINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 25 -
21
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
65,200
65,200
65,200
65,200
22
Contingencies
The company has given an unlimited guarantee in respect of the bank borrowings of N.K. Holdings Limited, the parent company. As at 30 April 2023 N.K Holdings Limited bank borrowings are £314,146.
23
Profit and loss reserves
The profit and loss account represents the retained earnings of the company.
24
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:
2023
2022
£
£
Within one year
233,042
233,042
Between two and five years
923,296
926,338
In over five years
38,333
268,333
1,194,671
1,427,713
25
Related party transactions
Transactions with related parties
As the company is a wholly owned subsidiary, the directors have taken advantage of the exemption from disclosing related party transactions with other wholly owned group companies, in accordance with FRS 102.
No other transactions with related parties were undertaken that are required to be disclosed under FRS 102.
26
Directors' transactions
At the year end £40,000 (2022 - £40,000) was due to the company from a director. No interest is charged on the outstanding balance and it is considered to be repayable on demand.
27
Ultimate controlling party
N.K. Holdings Limited, a company incorporated in Northern Ireland, is considered by the directors as being the company's controlling party and ultimate parent company.
N.K. Holdings Limited has included the results of N.K. Coatings Limited in its group financial statements, copies of which are available from its registered office at 40 Trailcock Road, Carrickfergus, BT38 7NU.
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