Company registration number 00106442 (England and Wales)
MURPHY & SON LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
MURPHY & SON LIMITED
COMPANY INFORMATION
Directors
J A Carmichael
S L Hale
B A McCluskie
Dr C J Fleming
C W R Nicholds
J J Oates
(Appointed 20 April 2022)
B Critchell
(Appointed 19 April 2022)
Secretary
J J Oates
Company number
00106442
Registered office
Alpine Street
Old Basford
Nottingham
NG6 0HQ
Auditor
UHY Hacker Young
14 Park Row
Nottingham
NG1 6GR
Bankers
Barclays Bank PLC
Basildon 9
Leicester
LE87 2BB
Solicitors
Nelsons Solicitors
Pennine House
8 Stanford Street
Nottingham
NG1 7BQ
MURPHY & SON LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Statement of comprehensive income
9
Balance sheet
10 - 11
Statement of changes in equity
12
Statement of cash flows
13
Notes to the financial statements
14 - 31
MURPHY & SON LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 1 -
The directors present the strategic report for the year ended 31 March 2023.
Fair review of the business
The year under review has seen some very encouraging growth in turnover for both the core business and exports. An increase in staff numbers back to pre-pandemic levels has underpinned our ability to grow the business both at home and abroad. We have also continued to invest in the site to ensure we are food grade compliant and maintain our BRC rating.
Turnover for the year under review amounted to £14.45m (2022: £13.85m) with the company achieving gross profit of £5.70m (2022: £5.70m) and profit before tax of £1.15m (2022 £1.81m).
We will be proposing a final dividend of £265,000 at the Annual General Meeting, this will be shown within the accounts to 31 March 2024 by virtue of the date at which the dividend will be paid.
Principal risks and uncertainties
Maintaining and sourcing adequate stock levels remains a number one objective. Supply chain issues continue to occupy a lot of effort for many raw materials, but maintaining high stock levels has served us well in retaining customer loyalty and potential growth.
At the same time reviewing margins which are under persistent inflationary and supply chain pressures, this is an ongoing and constant challenge.
We are managing the decline in the Catomance contribution, a business we bought 2011 whose product range has become increasingly difficult to service.
Monitoring the overheads to ensure growth of the company remains in line with our net profits expectations. We have seen a reduction in net profit this financial year more in line with our pre-pandemic percentages. This is linked to staffing increases and site investment.
Future
We remain optimistic about our ability to grow sales, which brings us full circle to the same issues that we highlighted a year ago. Namely operational and storage pressure on the existing site for production and warehousing. We need to upgrade our production facilities, create 1,000 additional spaces, whilst aiming to improve our carbon footprint and meet the Nottingham City Councils target of carbon neutrality by 2028. We are spending an increasing amount of time and effort focusing on this matter and we hope to be in position to make decision in this financial year.
Key performance indicators
This has been a most satisfactory year as we have grown our market position in the brewing sector after the ravages of the pandemic which saw many small brewers and hostelries close. We are confident that we have the right strategy for growth and ongoing success. We have set robust KPI’s, across the company, to include single digit growth (within the established UK market) and double digit growth across the rest of the world including EU and the USA via our sister company. The company considers turnover, gross profit and profit before tax (see above figures) as its key performance indicators and monitors these on a monthly basis.
MURPHY & SON LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 2 -
J A Carmichael
Director
18 September 2023
MURPHY & SON 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 consulting and manufacturing chemists.
Results and dividends
The results for the year are set out on page 9.
Dividends for the year are as follows:
| |
| | |
| Interim dividend re FY2023 | |
| |
| | |
| Interim dividend re FY2023 | |
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
J A Carmichael
S L Hale
B A McCluskie
Dr C J Fleming
C W R Nicholds
J J Oates
(Appointed 20 April 2022)
B Critchell
(Appointed 19 April 2022)
Auditor
UHY Hacker Young were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
MURPHY & SON LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 4 -
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.
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
J A Carmichael
Director
18 September 2023
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MURPHY & SON LIMITED
- 5 -
Opinion
We have audited the financial statements of Murphy & Son 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, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including 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.
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MURPHY & SON LIMITED
- 6 -
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.
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.
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MURPHY & SON LIMITED
- 7 -
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.
Based on our understanding of the company and the industry in which it operates, we identified that the principal risks of non-compliance with laws and regulations related to UK tax legislation, employment and health and safety regulation, anti-bribery, corruption and fraud, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to inflated revenue and profit. Audit procedures performed included: review of revenue either side of the year end to ensure appropriate, walkthroughs of revenue and purchase systems, review of the financial statement disclosures to underlying supporting documentation, enquiries of management, and testing of journals and evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MURPHY & SON LIMITED
- 8 -
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.
James Simmonds (Senior Statutory Auditor)
For and on behalf of UHY Hacker Young
18 September 2023
Chartered Accountants
Statutory Auditor
MURPHY & SON LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
14,451,803
13,853,500
Cost of sales
(8,749,449)
(8,149,127)
Gross profit
5,702,354
5,704,373
Distribution costs
(1,602,639)
(1,372,308)
Administrative expenses
(3,046,223)
(2,697,413)
Other operating income
85,765
51,738
Operating profit
4
1,139,257
1,686,390
Interest receivable and similar income
7
18,351
3,327
Interest payable and similar expenses
8
(4,372)
Fair value gains and losses on investment properties
13
-
119,000
Profit before taxation
1,153,236
1,808,717
Tax on profit
9
(134,021)
(397,641)
Profit for the financial year
1,019,215
1,411,076
The profit and loss account has been prepared on the basis that all operations are continuing operations.
MURPHY & SON LIMITED
BALANCE SHEET
AS AT 31 MARCH 2023
31 March 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
12
3,815,698
3,838,694
Investment properties
13
562,079
689,000
Investments
14
200
200
4,377,977
4,527,894
Current assets
Stocks
16
3,392,622
2,652,741
Debtors
17
2,717,955
2,520,881
Cash at bank and in hand
2,051,428
2,008,640
8,162,005
7,182,262
Creditors: amounts falling due within one year
18
(1,981,120)
(1,926,057)
Net current assets
6,180,885
5,256,205
Total assets less current liabilities
10,558,862
9,784,099
Creditors: amounts falling due after more than one year
19
(73,826)
Provisions for liabilities
Deferred tax liability
21
441,225
409,503
(441,225)
(409,503)
Net assets
10,043,811
9,374,596
Capital and reserves
Called up share capital
23
40,000
40,000
Revaluation reserve
137,264
140,248
Non-distributable profits reserve
24
205,602
277,378
Distributable profit and loss reserves
9,660,945
8,916,970
Total equity
10,043,811
9,374,596
MURPHY & SON LIMITED
BALANCE SHEET (CONTINUED)
AS AT 31 MARCH 2023
31 March 2023
- 11 -
The financial statements were approved by the board of directors and authorised for issue on 18 September 2023 and are signed on its behalf by:
J A Carmichael
S L Hale
Director
Director
Company Registration No. 00106442
MURPHY & SON LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
- 12 -
Share capital
Revaluation reserve
Non-distri-butable profits
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 April 2021
40,000
143,232
198,895
7,786,393
8,168,520
Year ended 31 March 2022:
Profit and total comprehensive income for the year
-
-
78,483
1,332,593
1,411,076
Dividends
10
-
-
-
(205,000)
(205,000)
Transfers
-
(2,984)
-
2,984
-
Balance at 31 March 2022
40,000
140,248
277,378
8,916,970
9,374,596
Year ended 31 March 2023:
Profit and total comprehensive income for the year
-
-
(71,776)
1,090,991
1,019,215
Dividends
10
-
-
-
(350,000)
(350,000)
Transfers
-
(2,984)
-
2,984
-
Balance at 31 March 2023
40,000
137,264
205,602
9,660,945
10,043,811
MURPHY & SON LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
- 13 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
29
791,014
764,899
Interest paid
(4,372)
Income taxes paid
(232,193)
(98,190)
Net cash inflow from operating activities
554,449
666,709
Investing activities
Purchase of tangible fixed assets
(446,471)
(350,106)
Proceeds from disposal of tangible fixed assets
62,221
29,046
Proceeds from disposal of investment property
111,720
Interest received
18,351
3,327
Net cash used in investing activities
(254,179)
(317,733)
Financing activities
Payment of finance leases obligations
92,518
Dividends paid
(350,000)
(205,000)
Net cash used in financing activities
(257,482)
(205,000)
Net increase in cash and cash equivalents
42,788
143,976
Cash and cash equivalents at beginning of year
2,008,640
1,864,664
Cash and cash equivalents at end of year
2,051,428
2,008,640
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
- 14 -
1
Accounting policies
Company information
Murphy & Son Limited is a private company limited by shares incorporated in England and Wales. The registered office is Alpine Street, Old Basford, Nottingham, NG6 0HQ.
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, modified to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.
Murphy & Son Limited is a wholly owned subsidiary of Murphy & Son International Limited and the results of Murphy & Son Limited are included in the consolidated financial statements of Murphy & Son International Limited which are available from Alpine Street, Old Basford, Nottingham, NG6 0HQ.
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.
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. Revenue for the provision of professional services is recognised by reference to when the services were provided.
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 15 -
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and has been fully amortised.
1.5
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:
Freehold land and buildings
10% to 2% on cost
Plant and equipment
20% and 10% on cost
Fixtures and fittings
33%, 20% and 10% on cost
Laboratory apparatus
20% and 10% on cost
Motor vehicles
25% on reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
Assets in the course of construction are not depreciated.
1.6
Investment properties
Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.
1.7
Fixed asset investments
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.8
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 16 -
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 is estimated to be less than its carrying amount, the carrying amount of the asset 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 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 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.
1.9
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.
1.10
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.
1.11
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. Financial assets classified as receivable within one year are not amortised.
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 17 -
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.
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.
Basic financial liabilities
Basic financial liabilities, including creditors and loans from fellow group companies, are initially recognised at transaction price. Financial liabilities classified as payable within one year are not amortised.
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. Trade creditors are recognised initially at transaction price.
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.
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 18 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.12
Equity instruments
Share capital issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on shares are recognised as liabilities once they are no longer at the discretion of the company.
1.13
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.
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.
1.14
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.
1.15
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 19 -
1.16
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.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
1.17
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.
1.18
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.
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 20 -
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.
Investment property valuation
The investment properties have historically been revalued based on a starting valuation from 2017 plus estimated uplifts with reference to RPI increases and specific factors relating to the valuation of the properties over the years. The directors are satisfied that the current valuation within the financial statements represents market value based on identifying market conditions, exploratory conversations with real estate professionals and consideration of similar properties in the same localities.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by geographical market
UK
11,811,860
11,619,490
Rest of World
2,639,943
2,234,010
14,451,803
13,853,500
2023
2022
£
£
Other operating income
Grants received
-
21,744
Rental income arising from investment properties
18,454
21,894
Sundry income
11,483
8,100
29,937
51,738
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 21 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(41,068)
19,888
Government grants
-
(21,744)
Fees payable to the company's auditor for the audit of the company's financial statements
20,000
18,150
Depreciation of owned tangible fixed assets
393,732
290,928
Loss on disposal of tangible fixed assets
13,514
10,798
Loss on disposal of investment property
15,201
Operating lease charges
29,429
-
Fees payable to the company's auditor for non-audit services in the current year amounted to £6,735 (2022: £8,435).
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Directors
5
5
Production, distribution and office
62
53
Total
67
58
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
2,997,057
2,686,644
Pension costs
111,324
99,652
3,108,381
2,786,296
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 22 -
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
723,835
405,042
Company pension contributions to defined contribution schemes
63,008
47,863
786,843
452,905
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2022 - 2).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
275,617
239,124
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
16,383
464
Other interest income
1,968
2,863
Total income
18,351
3,327
Investment income includes the following:
Interest on financial assets not measured at fair value through profit or loss
16,383
464
8
Interest payable and similar expenses
2023
2022
£
£
Other finance costs:
Interest on finance leases and hire purchase contracts
4,372
-
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 23 -
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
135,598
263,866
Adjustments in respect of prior periods
(33,299)
(1,231)
Total current tax
102,299
262,635
Deferred tax
Origination and reversal of timing differences
31,722
135,006
Total tax charge
134,021
397,641
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
1,153,236
1,808,717
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
219,115
343,656
Tax effect of expenses that are not deductible in determining taxable profit
6,569
1,825
Gains not taxable
(8,357)
Adjustments in respect of prior years
(33,299)
(1,231)
Permanent capital allowances in excess of depreciation
7,058
Research and development tax credit
(67,925)
(46,930)
Other non-reversing timing differences
4,251
(5,019)
Fixed asset differences
7,101
Change in rates of deferred tax
6,566
98,282
Taxation charge for the year
134,021
397,641
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 24 -
10
Dividends
2023
2022
2023
2022
Per share
Per share
Total
Total
£
£
£
£
Ordinary shares
Final paid re FY2022
8.75
5.13
150,000
75,000
Interim paid re FY2023
8.75
5.13
25,000
27,500
17.50
10.26
175,000
102,500
Preference shares
Final paid re FY2022
8.75
5.13
150,000
75,000
Interim paid re FY2023
8.75
5.13
25,000
27,500
17.50
10.26
175,000
102,500
Total dividends
Final paid re FY2022
300,000
150,000
Interim paid re FY2023
50,000
55,000
350,000
205,000
11
Intangible fixed assets
Goodwill
£
Cost
At 1 April 2022 and 31 March 2023
1,670,969
Amortisation and impairment
At 1 April 2022 and 31 March 2023
1,670,969
Carrying amount
At 31 March 2023
At 31 March 2022
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 25 -
12
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Laboratory apparatus
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 April 2022
4,189,951
3,024,562
536,053
473,307
432,378
8,656,251
Additions
27,073
261,677
8,036
8,433
141,252
446,471
Disposals
(180,675)
(180,675)
At 31 March 2023
4,217,024
3,286,239
544,089
481,740
392,955
8,922,047
Depreciation and impairment
At 1 April 2022
1,661,541
2,201,939
399,531
328,512
226,034
4,817,557
Depreciation charged in the year
110,566
177,413
24,623
15,772
65,358
393,732
Eliminated in respect of disposals
(104,940)
(104,940)
At 31 March 2023
1,772,107
2,379,352
424,154
344,284
186,452
5,106,349
Carrying amount
At 31 March 2023
2,444,917
906,887
119,935
137,456
206,503
3,815,698
At 31 March 2022
2,528,410
822,623
136,522
144,795
206,344
3,838,694
13
Investment property
2023
£
Fair value
At 1 April 2022
689,000
Disposals
(126,921)
At 31 March 2023
562,079
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
13
Investment property
(Continued)
- 26 -
Investment property comprises two properties based in the Nottingham area and one property based in the Wheathampstead area.
The fair value of the investment properties have been arrived at on the basis of a previous valuation carried out in June 2017 by FHP Property Consultants and the Directors in respect of properties based in the Nottingham area and a valuation carried out in April 2017 by Cassidy & Tate in respect of the property in the Wheathampstead area, both Chartered Surveyors are not connected with the company. The valuation was made on an open market value basis by reference to market evidence of transaction prices for similar properties.
The need for a revaluation in 2023 has been considered by the directors by reviewing RPI since the last professional valuation and discussions with agents for a professional valuation due to take place in 2024.
14
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
15
200
200
15
Subsidiaries
Details of the company's subsidiaries at 31 March 2023 are as follows:
Micro-Audit Limited
Registered office: Alpine Street, Nottingham, Nottinghamshire, NG6 0HQ
Nature of business: Non-trading
Class of shares: Ordinary
Direct share holding (%): 100.00
16
Stocks
2023
2022
£
£
Raw materials and consumables
3,392,622
2,652,741
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 27 -
17
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
2,026,021
1,805,408
Amounts owed by group undertakings
481,363
468,809
Other debtors
25,664
85,167
Prepayments and accrued income
171,124
140,274
2,704,172
2,499,658
2023
2022
Amounts falling due after more than one year:
£
£
Other debtors
13,783
21,223
Total debtors
2,717,955
2,520,881
18
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
20
18,692
Trade creditors
918,653
756,405
Corporation tax
135,711
265,605
Other taxation and social security
211,799
256,493
Other creditors
119,225
142,293
Accruals and deferred income
577,040
505,261
1,981,120
1,926,057
19
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
20
73,826
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 28 -
20
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
18,692
In two to five years
73,826
92,518
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.
21
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
384,248
339,620
Revaluations
61,846
74,611
Short term timing differences
(4,869)
(4,728)
441,225
409,503
2023
Movements in the year:
£
Liability at 1 April 2022
409,503
Charge to profit or loss
31,722
Liability at 31 March 2023
441,225
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 29 -
22
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
111,324
99,652
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.
23
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
20,000
20,000
20,000
20,000
2023
2022
2023
2022
Preference share capital
Number
Number
£
£
Issued and fully paid
Preference shares of £1 each
20,000
20,000
20,000
20,000
Preference shares classified as equity
20,000
20,000
Total equity share capital
40,000
40,000
24
Non-distributable profits reserve
2023
2022
£
£
At the beginning of the year
277,378
198,895
Non distributable profits in the year
(71,776)
78,483
At the end of the year
205,602
277,378
The non-distributable profits reserve relates to revaluations of investment properties.
Transfers of non-distributable profits relate to realised profits following the disposal of investment properties and / or the transfer of investment properties to/from tangible fixed assets.
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 30 -
25
Capital commitments
Amounts contracted for but not provided in the financial statements:
2023
2022
£
£
Acquisition of tangible fixed assets
167,501
-
26
Events after the reporting date
On 5th May 2023, investment properties 8 & 8a Church Street were sold by the entity for proceeds totalling £179,600 . The historic cost within the accounts for these properties was £29,313 with a revalued cost of £139,009.
27
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows:
2023
2022
£
£
Aggregate compensation
711,109
393,863
28
Ultimate controlling party
In the opinion of the Board of Directors, the ultimate controlling party are The Trustees of A J Murphy Deceased, of which the trustees, Mr J A Carmichael, Mr S L Hale, Mr B A McCluskie, Dr C J Fleming, and Mr C W R Nicholds are also directors of Murphy & Son Limited.
MURPHY & SON LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 31 -
29
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
1,019,215
1,411,076
Adjustments for:
Taxation charged
134,021
397,641
Finance costs
4,372
Investment income
(18,351)
(3,327)
Loss on disposal of tangible fixed assets
13,514
10,798
Loss on disposal of investment property
15,201
Fair value gain on investment properties
-
(119,000)
Depreciation and impairment of tangible fixed assets
393,732
290,928
Movements in working capital:
Increase in stocks
(739,881)
(744,392)
Increase in debtors
(197,074)
(1,136,143)
Increase in creditors
166,265
657,318
Cash generated from operations
791,014
764,899
30
Analysis of changes in net funds
1 April 2022
Cash flows
31 March 2023
£
£
£
Cash at bank and in hand
2,008,640
42,788
2,051,428
Obligations under finance leases
-
(92,518)
(92,518)
2,008,640
(49,730)
1,958,910
2023-03-312022-04-01falseCCH SoftwareCCH Accounts Production 2023.200J A CarmichaelS L HaleB A McCluskieDr C J FlemingC W R NicholdsB CritchellB CritchellJ J Oates001064422022-04-012023-03-3100106442bus:Director12022-04-012023-03-3100106442bus:Director22022-04-012023-03-3100106442bus:Director32022-04-012023-03-3100106442bus:Director42022-04-012023-03-3100106442bus:Director52022-04-012023-03-3100106442bus:CompanySecretaryDirector12022-04-012023-03-3100106442bus:Director62022-04-012023-03-3100106442bus:CompanySecretary12022-04-012023-03-3100106442bus:Director72022-04-012023-03-3100106442bus:RegisteredOffice2022-04-012023-03-3100106442bus:Agent12022-04-012023-03-31001064422023-03-31001064422021-04-012022-03-3100106442core:RetainedEarningsAccumulatedLosses2021-04-012022-03-3100106442core:RetainedEarningsAccumulatedLosses2022-04-012023-03-31001064422022-03-3100106442core:LandBuildingscore:OwnedOrFreeholdAssets2023-03-3100106442core:PlantMachinery2023-03-3100106442core:FurnitureFittings2023-03-3100106442core:ComputerEquipment2023-03-3100106442core:MotorVehicles2023-03-3100106442core:LandBuildingscore:OwnedOrFreeholdAssets2022-03-3100106442core:PlantMachinery2022-03-3100106442core:FurnitureFittings2022-03-3100106442core:ComputerEquipment2022-03-3100106442core:MotorVehicles2022-03-3100106442core:CurrentFinancialInstrumentscore:WithinOneYear2023-03-3100106442core:CurrentFinancialInstrumentscore:WithinOneYear2022-03-3100106442core:Non-currentFinancialInstrumentscore:AfterOneYear2023-03-3100106442core:Non-currentFinancialInstrumentscore:AfterOneYear2022-03-3100106442core:CurrentFinancialInstruments2023-03-3100106442core:CurrentFinancialInstruments2022-03-3100106442core:ShareCapital2023-03-3100106442core:ShareCapital2022-03-3100106442core:RevaluationReserve2023-03-3100106442core:RevaluationReserve2022-03-3100106442core:FurtherSpecificReserve1ComponentTotalEquity2023-03-3100106442core:FurtherSpecificReserve1ComponentTotalEquity2022-03-3100106442core:RetainedEarningsAccumulatedLosses2023-03-3100106442core:RetainedEarningsAccumulatedLosses2022-03-3100106442core:ShareCapital2021-03-3100106442core:RevaluationReserve2021-03-3100106442core:FurtherSpecificReserve1ComponentTotalEquity2021-03-3100106442core:RetainedEarningsAccumulatedLosses2021-03-3100106442core:RevaluationReserve2021-04-012022-03-3100106442core:RevaluationReserve2022-04-012023-03-31001064422022-03-31001064422021-03-3100106442core:Goodwill2022-04-012023-03-3100106442core:LandBuildingscore:OwnedOrFreeholdAssets2022-04-012023-03-3100106442core:PlantMachinery2022-04-012023-03-3100106442core:FurnitureFittings2022-04-012023-03-3100106442core:ComputerEquipment2022-04-012023-03-3100106442core:MotorVehicles2022-04-012023-03-3100106442core:UKTax2022-04-012023-03-3100106442core:UKTax2021-04-012022-03-310010644212022-04-012023-03-310010644212021-04-012022-03-310010644222022-04-012023-03-310010644222021-04-012022-03-310010644232022-04-012023-03-310010644232021-04-012022-03-3100106442bus:OrdinaryShareClass12022-04-012023-03-3100106442bus:OrdinaryShareClass12021-04-012022-03-3100106442bus:OrdinaryShareClass22021-04-012022-03-3100106442core:Goodwill2022-03-3100106442core:Goodwill2023-03-3100106442core:Goodwill2022-03-3100106442core:LandBuildingscore:OwnedOrFreeholdAssets2022-03-3100106442core:PlantMachinery2022-03-3100106442core:FurnitureFittings2022-03-3100106442core:ComputerEquipment2022-03-3100106442core:MotorVehicles2022-03-3100106442core:Non-currentFinancialInstruments2023-03-3100106442core:Non-currentFinancialInstruments2022-03-3100106442core:WithinOneYear2023-03-3100106442core:WithinOneYear2022-03-3100106442core:BetweenTwoFiveYears2023-03-3100106442core:BetweenTwoFiveYears2022-03-3100106442bus:PrivateLimitedCompanyLtd2022-04-012023-03-3100106442bus:FRS1022022-04-012023-03-3100106442bus:Audited2022-04-012023-03-3100106442bus:FullAccounts2022-04-012023-03-31xbrli:purexbrli:sharesiso4217:GBP