Company registration number 04122236 (England and Wales)
INDEPENDENT FORGINGS & ALLOYS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
INDEPENDENT FORGINGS & ALLOYS LIMITED
COMPANY INFORMATION
Directors
M Burnham
A McGuinness
C Syson
M Naylor
G Davies
A Wade
A Savile
M Tomlinson
Secretary
C Syson
Company number
04122236
Registered office
Victoria Forge
Livesey Street
Sheffield
S6 2BL
Auditor
BHP LLP
2 Rutland Park
Sheffield
South Yorkshire
S10 2PD
INDEPENDENT FORGINGS & ALLOYS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 23
INDEPENDENT FORGINGS & ALLOYS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 1 -
The directors present the strategic report for the year ended 31 March 2023.
Review of the business
· Turnover £34.8m (2022: £24.9m)
· Gross profit £7.5m (2022: £5.1m)
· Gross margin 21.7% (2022: 20.5%)
· Operating profit £2.9m (2022: £2.3m)
Another strong trading year which confirms the company’s strategic decision in 2016 to focus on the aerospace & defence sectors. Strategic aerospace inventory in titanium and nickel alloys has supported the company in winning global business from OEMs with faster turnaround than the general industry lead times.
The resulting increase in gross profit has been partially offset by a £1.6m increase in administrative expenses, including additional staff to support the growth of the business.
The company continues to invest in property improvements and plant and machinery with £1.8m of fixed asset additions in the year.
Stock has increased by £4.9m due to the growth in the business and the increased cost of raw materials. Creditors due within one year increased by £5.8m mainly due to a £2.6m increase in other creditors due to use of invoice discount facility and £2.4m increase in accruals and deferred income due to increased energy costs and stock received not yet invoiced by suppliers.
Principal risks and uncertainties
The ongoing recruitment and retention of employees is a yearly area of concern. However, we have been successful in implementing an apprenticeship program to mitigate this. The company is also a major user of energy and as such are open to major fluctuations in prices. We constantly monitor the forward pricing data and fix costs at manageable levels which are built into the business model. Raw material supply is an industry wide uncertainty which we have addressed by placing long term contracts for our strategic materials.
Future developments
The aerospace and defence sectors will support the next 5-year substantial growth with aerospace civil and defence programmes.
The onsite integration of the closed die precision forge and machining to the existing open die, ring rolling capabilities now makes IFA a unique offering to the market in being able to manufacture finished components from ingot on one site.
Research and development activities
As a company we continually strive to improve our product offering to the customer and this often involves new processes and / or ways of making components or achieving very tight quality and technical specifications.
INDEPENDENT FORGINGS & ALLOYS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 2 -
Financial instruments
Financial risk management objectives and policies
The company uses various financial instruments including loans, cash and various items, such as trade debtors and trade creditors that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the company's operations.
The main risks arising from the company's financial instruments are credit, liquidity, and cash flow risk. The directors review and agree policies for managing each of these risks and they are summarised below.
Market risk encompasses two types of risk, being currency risk and fair value interest rate risk. The company's policies for managing fair value interest rate risk are considered with those for managing cash flow interest rate risk and are set out in the subsection entitled 'interest rate risk' below.
Credit risk
The company's principal financial assets are cash and trade debtors. The credit risk associated with cash is limited as the counterparties have high credit ratings assigned by international credit-rating agencies. The principal credit risk arises therefore from its trade debtors. In order to manage credit risk the directors set limits for customers by purchasing credit insurance for the majority of its debtors. Credit limits are reviewed by the credit controller on a regular basis in conjunction with debt ageing and collection history.
Liquidity risk
In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the company uses a mixture of long-term and short-term debt finance.
Cash flow risk
The company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. In as far as possible assets held in foreign currency are matched to an appropriate level of creditors in the same currency. The company's exposure to interest rate fluctuations on its borrowings is limited as the majority of the borrowings are on fixed/capped interest rates.
C Syson
Director
8 November 2023
INDEPENDENT FORGINGS & ALLOYS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 March 2023.
Principal activities
The principal activity of the company continued to be that of engaging in the manufacture of high integrity forged products to the premium quality assured markets.
Results and dividends
The results for the year are set out on page 8.
Ordinary dividends were paid amounting to £1,170,000. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
M Burnham
A McGuinness
C Syson
M Naylor
G Davies
A Wade
A Savile
M Tomlinson
Auditor
The auditor, BHP LLP, are 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.
Strategic Report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments, research and development, and financial instruments.
INDEPENDENT FORGINGS & ALLOYS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 4 -
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.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
C Syson
Director
8 November 2023
INDEPENDENT FORGINGS & ALLOYS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF INDEPENDENT FORGINGS & ALLOYS LIMITED
- 5 -
Opinion
We have audited the financial statements of Independent Forgings & Alloys Limited (the 'company') for the year ended 31 March 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 31 March 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.
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.
INDEPENDENT FORGINGS & ALLOYS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF INDEPENDENT FORGINGS & ALLOYS LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the forged product manufacturing and supply sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, employment and health and safety legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
INDEPENDENT FORGINGS & ALLOYS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF INDEPENDENT FORGINGS & ALLOYS LIMITED
- 7 -
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates in the accounts were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance; and
enquiring of management as to actual and potential litigation and claims.
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.
Daniel Varley
Senior Statutory Auditor
For and on behalf of BHP LLP
8 November 2023
Chartered Accountants
Statutory Auditor
2 Rutland Park
Sheffield
South Yorkshire
S10 2PD
INDEPENDENT FORGINGS & ALLOYS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
34,757,916
24,880,155
Cost of sales
(27,227,056)
(19,789,337)
Gross profit
7,530,860
5,090,818
Administrative expenses
(4,667,216)
(3,025,668)
Other operating income
248,370
Operating profit
4
2,863,644
2,313,520
Interest payable and similar expenses
7
(310,625)
(134,498)
Profit before taxation
2,553,019
2,179,022
Tax on profit
8
(160,500)
(388,660)
Profit for the financial year
2,392,519
1,790,362
The profit and loss account has been prepared on the basis that all operations are continuing operations.
INDEPENDENT FORGINGS & ALLOYS LIMITED
BALANCE SHEET
AS AT
31 MARCH 2023
31 March 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
7,784,396
6,756,057
Current assets
Stocks
11
13,677,234
8,791,225
Debtors
12
10,499,901
10,063,327
Cash at bank and in hand
805,815
158,890
24,982,950
19,013,442
Creditors: amounts falling due within one year
13
(12,708,490)
(6,874,996)
Net current assets
12,274,460
12,138,446
Total assets less current liabilities
20,058,856
18,894,503
Creditors: amounts falling due after more than one year
14
(3,224,608)
(3,443,274)
Provisions for liabilities
Deferred tax liability
17
1,123,000
962,500
(1,123,000)
(962,500)
Net assets
15,711,248
14,488,729
Capital and reserves
Called up share capital
19
74,318
74,318
Share premium account
21,667
21,667
Capital redemption reserve
63,274
63,274
Profit and loss reserves
15,551,989
14,329,470
Total equity
15,711,248
14,488,729
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 8 November 2023 and are signed on its behalf by:
A McGuinness
Director
Company registration number 04122236 (England and Wales)
INDEPENDENT FORGINGS & ALLOYS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
- 10 -
Share capital
Share premium account
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 April 2021
74,318
21,667
63,274
13,049,108
13,208,367
Year ended 31 March 2022:
Profit and total comprehensive income
-
-
-
1,790,362
1,790,362
Dividends
9
-
-
-
(510,000)
(510,000)
Balance at 31 March 2022
74,318
21,667
63,274
14,329,470
14,488,729
Year ended 31 March 2023:
Profit and total comprehensive income
-
-
-
2,392,519
2,392,519
Dividends
9
-
-
-
(1,170,000)
(1,170,000)
Balance at 31 March 2023
74,318
21,667
63,274
15,551,989
15,711,248
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
- 11 -
1
Accounting policies
Company information
Independent Forgings & Alloys Limited is a private company limited by shares incorporated in England and Wales. The registered office is Victoria Forge, Livesey Street, Sheffield, S6 2BL.
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: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of IFA Group Limited. These consolidated financial statements are available from its registered office.
1.2
Going concern
These financial statements are prepared on the going concern basis. After reviewing the company's forecasts and projections, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. The company therefore continues to adopt the going concern basis in preparing its financial statements.true
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
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.
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 12 -
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Land, buildings and improvements
2-20% straight line (land not depreciated)
Plant and machinery
5-10% straight line
Fixtures, fittings & equipment
20-33% 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.
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.
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 at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks and other short-term liquid investments with original maturities of three months or less.
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 13 -
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.
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 14 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future 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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 15 -
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.
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.
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 16 -
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.
Useful economic lives of tangible fixed assets
The annual depreciation charge for tangible fixed assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values of all asset categories are reviewed on an annual basis to ensure appropriate changes are made for depreciation rates.
There have been no changes to the estimated useful economic lives of assets during the year. As at 31 March 2023, tangible fixed assets had a net book value of £7,784,396. The depreciation charge for the year was £757,740.
Valuation of work in progress
The work in progress is valued based on the cost of raw materials and an element of labour and overhead costs. The labour and overhead costs are allocated to work in progress throughout the period based on timesheet hours which factor in the cost of processing and machining. At the year end, the total labour and overheads costs are compared to the timesheet hours posted to work in progress and the subsequent over or under recovery rate is used to adjust the year end value of work in progress. This adjustment ensures the value of work in progress at year end accurately reflects the actual rate of overhead recovery during the year.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Supply of products
26,914,403
20,772,522
Processing and hirework
5,775,567
3,061,360
Sale of scrap and other
2,067,946
1,046,273
34,757,916
24,880,155
2023
2022
£
£
Turnover analysed by geographical market
UK
12,045,667
9,233,873
Europe
18,930,001
12,955,965
Rest of World
3,782,248
2,690,317
34,757,916
24,880,155
2023
2022
£
£
Other revenue
Grants received
-
247,970
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 17 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
320,802
(71,816)
Government grants
-
(247,970)
Fees payable to the company's auditor for the audit of the company's financial statements
4,098
14,335
Depreciation of owned tangible fixed assets
670,655
552,139
Depreciation of tangible fixed assets held under finance leases
87,085
82,992
(Profit)/loss on disposal of tangible fixed assets
-
29,151
Operating lease charges
16,859
45,750
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Production
180
157
Selling & distribution
32
13
Administration
11
15
Total
223
185
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
8,708,965
6,554,221
Social security costs
857,343
635,876
Pension costs
445,500
366,580
10,011,808
7,556,677
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
1,063,817
861,843
Company pension contributions to defined contribution schemes
118,691
98,636
1,182,508
960,479
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 8 (2022 - 8).
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
6
Directors' remuneration
(Continued)
- 18 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
255,335
250,508
Company pension contributions to defined contribution schemes
26,871
26,871
7
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
161,256
114,644
Other interest on financial liabilities
149,369
19,854
310,625
134,498
8
Taxation
2023
2022
£
£
Current tax
Adjustments in respect of prior periods
59,160
Deferred tax
Origination and reversal of timing differences
160,500
329,500
Total tax charge
160,500
388,660
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
8
Taxation
(Continued)
- 19 -
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
2,553,019
2,179,022
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
485,074
414,014
Tax effect of expenses that are not deductible in determining taxable profit
1,127
1,388
Change in unrecognised deferred tax assets
276
195
Adjustments in respect of prior years
59,160
Group relief
(354,481)
Other permanent differences
(9,950)
5,020
Remeasurement of deferred tax for changes in tax rates
38,454
231,015
Additional deduction for R&D expenditure
(322,132)
Taxation charge for the year
160,500
388,660
9
Dividends
2023
2022
£
£
Final paid
1,170,000
510,000
10
Tangible fixed assets
Land, buildings and improvements
Plant and machinery
Fixtures, fittings & equipment
Total
£
£
£
£
Cost
At 1 April 2022
4,944,873
12,883,255
610,452
18,438,580
Additions
646,541
967,545
171,993
1,786,079
At 31 March 2023
5,591,414
13,850,800
782,445
20,224,659
Depreciation and impairment
At 1 April 2022
1,652,673
9,614,374
415,476
11,682,523
Depreciation charged in the year
88,308
558,014
111,418
757,740
At 31 March 2023
1,740,981
10,172,388
526,894
12,440,263
Carrying amount
At 31 March 2023
3,850,433
3,678,412
255,551
7,784,396
At 31 March 2022
3,292,200
3,268,881
194,976
6,756,057
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
10
Tangible fixed assets
(Continued)
- 20 -
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 machinery
671,429
428,610
Buildings
8,102
11,048
679,531
439,658
11
Stocks
2023
2022
£
£
Raw materials and consumables
4,775,808
3,474,258
Work in progress
8,901,426
5,316,967
13,677,234
8,791,225
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
8,415,295
6,073,517
Amounts owed by group undertakings
601,990
413,494
Other debtors
1,158,916
3,259,930
Prepayments and accrued income
323,700
316,386
10,499,901
10,063,327
13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
15
258,333
258,333
Obligations under finance leases
16
208,752
139,044
Trade creditors
3,722,851
3,687,840
Amounts owed to group undertakings
1,170,000
510,000
Corporation tax
37,642
36,874
Other taxation and social security
224,285
190,393
Other creditors
2,876,888
249,846
Accruals and deferred income
4,209,739
1,802,666
12,708,490
6,874,996
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
13
Creditors: amounts falling due within one year
(Continued)
- 21 -
Included in other creditors due in less than one year are amounts of £2,560,882 (2022: £nil) in relating to invoice financing facilities.
14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
15
2,861,928
3,129,379
Obligations under finance leases
16
362,680
313,895
3,224,608
3,443,274
15
Loans and overdrafts
2023
2022
£
£
Bank loans
3,120,261
3,387,712
Payable within one year
258,333
258,333
Payable after one year
2,861,928
3,129,379
The bank borrowings of the company are secured by charges over the land and buildings owned by the company.
16
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
210,206
139,044
In two to five years
361,226
313,895
571,432
452,939
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The lease creditor is secured against the assets to which the lease agreement relates.
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 22 -
17
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2023
2022
Balances:
£
£
ACAs
1,133,000
969,000
Short term timing differences
(10,000)
(6,500)
1,123,000
962,500
2023
Movements in the year:
£
Liability at 1 April 2022
962,500
Charge to profit or loss
160,500
Liability at 31 March 2023
1,123,000
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
445,500
366,580
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.
19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
74,318
74,318
74,318
74,318
All Ordinary shares hold equal voting rights and entitlement to dividends.
20
Financial commitments, guarantees and contingent liabilities
There is a cross guarantee and debenture in place between the company, IFA Group Limited, IFA Metals International Limited and IFATech Limited.
The company has a guarantee given by Export Credits Guarantee department for £1,960,000 dated 6 January 2023.
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 23 -
21
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
2,078
104,954
Between two and five years
155,308
2,078
260,262
22
Related party transactions
Entities under common control
M Burnham, a director of the company is also a director of 4Ren6 Limited. During the year the company made purchases from 4Ren6 Limited with a total value of £46,200 (2022: £26,400). At the year end a balance of £nil
(2022: £nil) was due to the company.
M Burnham, a director of the company is also a director of Iidea Limited. During the year the company made purchases from Iidea Limited with a total value of £1,020 (2022: £16,753). At the year end a balance of £nil (2022: £nil) was due from the company to Iidea Limited.
J Smith, a director of the ultimate parent undertaking, IFA Group Limited received £61,439 in respect of business consultancy services provided to the company.
During the year, the company paid rent of £16,859 (2022: £78,500) to a retirement benefit scheme set up to benefit the directors.
Bank loans of £3,120,261 (2022: £3,387,712) and invoice finance facilities of £2,560,882 (2022: nil) are secured by fixed and floating charges.
At the year end there is a cross guarantee and debenture in place between the company, IFA Group Limited and IFA Metals International Limited.
23
Directors' transactions
Description
% Rate
Opening balance
Amounts advanced
Amounts repaid
Closing balance
£
£
£
£
G Davies
-
(50)
1,598
-
1,548
A McGuiness
-
144,706
-
(310)
144,396
C Syson
-
1,718
40
(1,718)
40
146,374
1,638
(2,028)
145,984
24
Ultimate controlling party
The ultimate parent company is IFA Group Limited. Copies of IFA Group Limited financial statements can be obtained from Companies House.
2023-03-312022-04-01falseCCH SoftwareCCH Accounts Production 2023.300M BurnhamA McGuinnessM NaylorG DaviesA WadeA SavileM TomlinsonM TomlinsonC Sysonfalse041222362022-04-012023-03-3104122236bus:Director12022-04-012023-03-3104122236bus:Director22022-04-012023-03-3104122236bus:CompanySecretaryDirector12022-04-012023-03-3104122236bus:Director32022-04-012023-03-3104122236bus:Director42022-04-012023-03-3104122236bus:Director52022-04-012023-03-3104122236bus:Director62022-04-012023-03-3104122236bus:Director72022-04-012023-03-3104122236bus:CompanySecretary12022-04-012023-03-3104122236bus:Director82022-04-012023-03-3104122236bus:RegisteredOffice2022-04-012023-03-31041222362023-03-31041222362021-04-012022-03-3104122236core:RetainedEarningsAccumulatedLosses2021-04-012022-03-3104122236core:RetainedEarningsAccumulatedLosses2022-04-012023-03-31041222362022-03-3104122236core:LandBuildingscore:OwnedOrFreeholdAssets2023-03-3104122236core:PlantMachinery2023-03-3104122236core:FurnitureFittings2023-03-3104122236core:LandBuildingscore:OwnedOrFreeholdAssets2022-03-3104122236core:PlantMachinery2022-03-3104122236core:FurnitureFittings2022-03-3104122236core:CurrentFinancialInstrumentscore:WithinOneYear2023-03-3104122236core:CurrentFinancialInstrumentscore:WithinOneYear2022-03-3104122236core:Non-currentFinancialInstrumentscore:AfterOneYear2023-03-3104122236core:Non-currentFinancialInstrumentscore:AfterOneYear2022-03-3104122236core:CurrentFinancialInstruments2023-03-3104122236core:CurrentFinancialInstruments2022-03-3104122236core:Non-currentFinancialInstruments2023-03-3104122236core:Non-currentFinancialInstruments2022-03-3104122236core:ShareCapital2023-03-3104122236core:ShareCapital2022-03-3104122236core:SharePremium2023-03-3104122236core:SharePremium2022-03-3104122236core:CapitalRedemptionReserve2023-03-3104122236core:CapitalRedemptionReserve2022-03-3104122236core:RetainedEarningsAccumulatedLosses2023-03-3104122236core:RetainedEarningsAccumulatedLosses2022-03-3104122236core:ShareCapital2021-03-3104122236core:SharePremium2021-03-3104122236core:CapitalRedemptionReserve2021-03-3104122236core:RetainedEarningsAccumulatedLosses2021-03-3104122236core:LandBuildingscore:OwnedOrFreeholdAssets2022-04-012023-03-3104122236core:PlantMachinery2022-04-012023-03-3104122236core:FurnitureFittings2022-04-012023-03-3104122236core:UKTax2022-04-012023-03-3104122236core:UKTax2021-04-012022-03-310412223612022-04-012023-03-310412223612021-04-012022-03-310412223622022-04-012023-03-310412223622021-04-012022-03-310412223632022-04-012023-03-310412223632021-04-012022-03-3104122236core:LandBuildingscore:OwnedOrFreeholdAssets2022-03-3104122236core:PlantMachinery2022-03-3104122236core:FurnitureFittings2022-03-31041222362022-03-3104122236core:ComputerEquipment2023-03-3104122236core:ComputerEquipment2022-03-3104122236core:WithinOneYear2023-03-3104122236core:WithinOneYear2022-03-3104122236core:BetweenTwoFiveYears2023-03-3104122236core:BetweenTwoFiveYears2022-03-3104122236bus:PrivateLimitedCompanyLtd2022-04-012023-03-3104122236bus:FRS1022022-04-012023-03-3104122236bus:Audited2022-04-012023-03-3104122236bus:FullAccounts2022-04-012023-03-31xbrli:purexbrli:sharesiso4217:GBP