Company registration number NI010849 (Northern Ireland)
ABBEY UPHOLSTERERS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
ABBEY UPHOLSTERERS LIMITED
COMPANY INFORMATION
Directors
Mr George Devlin
Mr Paul Devlin
Secretary
Mr George Devlin (Jnr)
Company number
NI010849
Registered office
1 Meadowbank Road,
Trooperslane Industrial Estate,
Carrickfergus,
County Antrim,
BT38 8YF
Auditor
FPM Accountants Limited
Dromalane Mill
The Quays
Newry
Co. Down
Northern Ireland
BT35 8QS
Bankers
AIB Business Banking
92 Ann Street
Belfast
Co. Antrim
Northern Ireland
BT1 3AY
AIB
University Road
Belfast
Co. Antrim
Northern Ireland
BT7 1NN
ABBEY UPHOLSTERERS 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 - 29
ABBEY UPHOLSTERERS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The directors present the strategic report for the year ended 31 December 2022.
Principal activity and review of business
The principal activity of the company continued to be that of furniture manufacturers and upholsterers.
There has been no significant change in these activities during the year.
Turnover has increased by 107% to £8.4m (2021: £4.1m). Overall, a net profit before tax of £1.5m was achieved for the year ended 31 December 2022 compared to a net loss before tax of £114k reported for the year ended 31 December 2021. On 10th April 2021 the registered office of Abbey Upholsterers Limited was seriously damaged by fire. During 2021 and 2022 the directors and management of the company have been working alongside the insurance company to assess the extent of the loss. In November 2022 an insurance claim totalling £4.6m was agreed with the final payment included in the results for the 2022 year end. The company asset base remains strong, with net assets of £4.1m at 31 December 2022 (2021: £2.6m). The company's directors are satisfied with the company's performance in the year and the emphasis going forward continues to be on securing turnover that will result in sustainable profitability and cash flow.
Principal risks and uncertainties
The management of the business and the execution of the company's strategy are subject to a number of risks. The key business risks relate to competition, quality of performance and raw material costs.
The company's operations expose it to a variety of financial risks that include the effects of changes in debt market prices, credit risks, liquidity risk and interest rate risk. The board reviews and agrees policies for the prudent management of these risks as follows:
Liquidity Risk
The company actively maintains a mixture of long-term and short-term debt finance that is designed to ensure that the company has sufficient available funds for operations and planned expansions.
lnterest rate cash flow risk
The company has significant interest bearing liabilities. The Directors are aware that a change in interest rates will have a significant! impact on the financial! performance of the business, and keeps the terms of its loan providers under regular review.
Price risk
The company is exposed to commodity price risk as a result of its operations. However given the size of the company's operations, the costs of managing exposure to commodity price risk exceed any potential benefits. The directors will revisit the appropriateness of this policy should the company's operations change in size and nature. The company has no exposure to equity securities price risk as it holds no listed or other equity investments.
Credit risk
The company's credit risk is primarily attributable to its trade debtors, which is minimised by the number of long established customers and its emphasis on good credit management.
ABBEY UPHOLSTERERS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
Key performance indicators
The company's key performance indicators are as follows:
2022 2021
Increase/(Decrease) in sales 107.2% (42.7)%
Gross profit margin 19.5% (28.7)%
Shareholders' Equity £4.1m £2.6m
Non financial performance indicators
Environment
The company, recognises its responsibility to carry out its operations whilst minimising environmental impacts. The directors continued aim is lo comply with all applicable environmental legislation, prevent pollution and reduce waste wherever possible.
Health & Safety
The company is committed to achieving the highest practicable standards in health and safety management and strives to make its factory and offices safe environments for employees and customers alike.
Human Resources
The company's most important resource is its people, their knowledge and experience is crucial to meeting customer requirements. Retention of key staff is critical.
Mr Paul Devlin
Director
27 March 2024
ABBEY UPHOLSTERERS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2022.
Principal activities
The principal activity of the company continued to be that of furniture manufacturers and upholsterers.
Results and dividends
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr George Devlin
Mr Paul Devlin
Auditor
FPM Accountants Limited 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.
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.
ABBEY UPHOLSTERERS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 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.
On behalf of the board
Mr Paul Devlin
Director
27 March 2024
ABBEY UPHOLSTERERS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ABBEY UPHOLSTERERS LIMITED
- 5 -
Opinion
We have audited the financial statements of Abbey Upholsterers Limited (the 'company') for the year ended 31 December 2022 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 December 2022 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.
ABBEY UPHOLSTERERS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ABBEY UPHOLSTERERS 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.
ABBEY UPHOLSTERERS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ABBEY UPHOLSTERERS LIMITED
- 7 -
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.
Our procedures to respond to those risk identified included, but were not limited to:
- Enquiry of management, those charged with governance and the entity’s solicitors (or in-house legal team) around actual and potential litigation and claims.
- Enquiry of entity staff in tax and compliance functions to identify any instances of non-compliance with laws and regulations.
- Reviewing minutes of meetings of those charged with governance.
- Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
- Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business.
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.
ABBEY UPHOLSTERERS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF ABBEY UPHOLSTERERS LIMITED
- 8 -
The purpose of our audit work and to whom we owe our responsibilities
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.
Feargal P. McCormack (Senior Statutory Auditor)
For and on behalf of FPM Accountants Limited
Chartered Accountants
Statutory Auditors
Dromalane Mill
The Quays
Newry
Co. Down
Northern Ireland
BT35 8QS
27 March 2024
ABBEY UPHOLSTERERS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
2022
2021
Notes
£
£
Turnover
3
8,379,746
4,045,309
Cost of sales
(6,744,695)
(5,204,525)
Gross profit/(loss)
1,635,051
(1,159,216)
Distribution costs
(304,708)
(413,384)
Administrative expenses
(1,329,965)
(988,705)
Other operating income
57,684
618,088
Exceptional item
4
2,750,000
1,880,500
Exceptional item
4
(1,225,168)
Operating profit/(loss)
5
1,582,894
(62,717)
Interest payable and similar expenses
8
(75,490)
(51,712)
Profit/(loss) before taxation
1,507,404
(114,429)
Tax on profit/(loss)
9
(27,413)
112,722
Profit/(loss) for the financial year
1,479,991
(1,707)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
ABBEY UPHOLSTERERS LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 10 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
11
4,664,811
3,260,894
Investment properties
12
240,000
240,000
Investments
13
1
1
4,904,812
3,500,895
Current assets
Stocks
15
1,781,196
1,215,109
Debtors
16
2,137,087
1,293,262
Cash at bank and in hand
285,808
340,520
4,204,091
2,848,891
Creditors: amounts falling due within one year
17
(3,017,097)
(1,851,545)
Net current assets
1,186,994
997,346
Total assets less current liabilities
6,091,806
4,498,241
Creditors: amounts falling due after more than one year
18
(1,818,036)
(1,735,811)
Provisions for liabilities
Deferred tax liability
21
211,669
180,320
(211,669)
(180,320)
Net assets
4,062,101
2,582,110
Capital and reserves
Called up share capital
23
12,500
12,500
Profit and loss reserves
4,049,601
2,569,610
Total equity
4,062,101
2,582,110
ABBEY UPHOLSTERERS LIMITED
BALANCE SHEET (CONTINUED)
AS AT
31 DECEMBER 2022
31 December 2022
- 11 -
The financial statements were approved by the board of directors and authorised for issue on 27 March 2024 and are signed on its behalf by:
Mr Paul Devlin
Director
Company Registration No. NI010849
ABBEY UPHOLSTERERS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 12 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2021
12,500
2,640,452
2,652,952
Year ended 31 December 2021:
Loss and total comprehensive income for the year
-
(1,707)
(1,707)
Dividends
10
-
(69,135)
(69,135)
Balance at 31 December 2021
12,500
2,569,610
2,582,110
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
1,479,991
1,479,991
Balance at 31 December 2022
12,500
4,049,601
4,062,101
ABBEY UPHOLSTERERS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 13 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
24
2,877,858
465,095
Interest paid
(75,490)
(52,240)
Income taxes (paid)/refunded
(98,604)
2,319
Net cash inflow from operating activities
2,703,764
415,174
Investing activities
Purchase of tangible fixed assets
(2,332,085)
(732,469)
Proceeds on disposal of tangible fixed assets
27,000
Interest received
528
Net cash used in investing activities
(2,332,085)
(704,941)
Financing activities
Repayment of borrowings
(50,000)
Repayment of bank loans
(350,919)
16,160
Payment of finance leases obligations
(75,472)
Dividends paid
(69,135)
Net cash used in financing activities
(426,391)
(102,975)
Net decrease in cash and cash equivalents
(54,712)
(392,742)
Cash and cash equivalents at beginning of year
340,520
733,262
Cash and cash equivalents at end of year
285,808
340,520
ABBEY UPHOLSTERERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 14 -
1
Accounting policies
Company information
Abbey Upholsterers Limited is a private company limited by shares incorporated in Northern Ireland. The registered office is .
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 the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
ABBEY UPHOLSTERERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
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
Nil
Plant and equipment
6.67%-10% Reduing balance
Fixtures and fittings
10%-25% Reducing balance
Motor vehicles
20% 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.
1.5
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.
1.6
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities 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.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The company considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Entities in which the company has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
1.7
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.
ABBEY UPHOLSTERERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
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 (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.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.9
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.
1.10
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.
ABBEY UPHOLSTERERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 17 -
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.
ABBEY UPHOLSTERERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 18 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
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.
1.12
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.
ABBEY UPHOLSTERERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 19 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.13
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.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
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.
ABBEY UPHOLSTERERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 20 -
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.
1.16
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.
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.
3
Turnover and other revenue
2022
2021
£
£
Turnover analysed by class of business
Furniture manufacture and upholstery
8,379,746
4,045,309
2022
2021
£
£
Other revenue
Grants received
5,519
581,102
ABBEY UPHOLSTERERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
4
Exceptional items
2022
2021
£
£
Expenditure
Exceptional items - Other operating income
(2,750,000)
(1,880,500)
Exceptional items - Impairment of fixed assets
1,225,168
-
(1,524,832)
(1,880,500)
On 10th April 2021 the premises of Abbey Upholsterers Limited, was seriously damaged by a fire. The company received £2,750,000 (2021: £1,880,500) from their insurers.
During the year an impairment of £1,225,168 was included in the financial statements in respect of impairment of the building damaged by the fire.
5
Operating profit/(loss)
2022
2021
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Exchange losses
15,298
2,414
Government grants
(5,519)
(581,102)
Fees payable to the company's auditor for the audit of the company's financial statements
8,150
11,500
Depreciation of owned tangible fixed assets
174,588
185,243
Depreciation of tangible fixed assets held under finance leases
16,667
-
Impairment of owned tangible fixed assets
1,225,168
Profit on disposal of tangible fixed assets
-
(18,912)
Operating lease charges
179,540
56,360
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Sales and distribution
11
11
Administration
2
2
Production
86
81
Total
99
94
ABBEY UPHOLSTERERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
6
Employees
(Continued)
- 22 -
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
2,592,373
2,324,482
Social security costs
310,022
199,271
Pension costs
50,402
45,594
2,952,797
2,569,347
7
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
16,550
30,660
8
Interest payable and similar expenses
2022
2021
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
65,571
50,104
Other interest on financial liabilities
1,608
65,571
51,712
Other finance costs:
Interest on finance leases and hire purchase contracts
7,700
-
Other interest
2,219
75,490
51,712
9
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
(3,936)
(222,878)
ABBEY UPHOLSTERERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
9
Taxation
2022
2021
£
£
(Continued)
- 23 -
Deferred tax
Origination and reversal of timing differences
31,349
110,156
Total tax charge/(credit)
27,413
(112,722)
The actual charge/(credit) for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
2022
2021
£
£
Profit/(loss) before taxation
1,507,404
(114,429)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
286,407
(21,742)
Tax effect of expenses that are not deductible in determining taxable profit
1,483
48
Tax effect of income not taxable in determining taxable profit
(3,593)
Change in unrecognised deferred tax assets
(17,631)
Adjustments in respect of prior years
(3,936)
5,550
Permanent capital allowances in excess of depreciation
(270,259)
(106,562)
Research and development tax credit
(96,579)
Deferred tax
31,349
110,156
Taxation charge/(credit) for the year
27,413
(112,722)
10
Dividends
2022
2021
£
£
Final paid
69,135
ABBEY UPHOLSTERERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 24 -
11
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost or valuation
At 1 January 2022
2,200,000
2,096,346
188,838
466,481
4,951,665
Additions
2,675,168
25,096
1,769
118,307
2,820,340
At 31 December 2022
4,875,168
2,121,442
190,607
584,788
7,772,005
Depreciation and impairment
At 1 January 2022
1,181,868
134,476
374,427
1,690,771
Depreciation charged in the year
126,492
18,723
46,040
191,255
Impairment losses
1,225,168
1,225,168
At 31 December 2022
1,225,168
1,308,360
153,199
420,467
3,107,194
Carrying amount
At 31 December 2022
3,650,000
813,082
37,408
164,321
4,664,811
At 31 December 2021
2,200,000
914,478
54,362
92,054
3,260,894
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2022
2021
£
£
Plant and equipment
216,666
Motor vehicles
78,362
295,028
-
More information on impairment movements in the year is given in note 23
Land and buildings with a carrying amount of £3,650,000 were revalued by Osborne King, independent valuers not connected with the company on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties.
The following assets are carried at valuation. If the assets were measured using the cost model, the carrying amounts would be as follows:
ABBEY UPHOLSTERERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
11
Tangible fixed assets
(Continued)
- 25 -
2022
2021
£
£
Cost
8,281,052
5,605,884
Accumulated depreciation
(1,318,546)
(1,152,929)
Carrying value
6,962,506
4,452,955
12
Investment property
2022
£
Fair value
At 1 January 2022 and 31 December 2022
240,000
13
Fixed asset investments
2022
2021
Notes
£
£
Investments in subsidiaries
14
1
1
14
Subsidiaries
Details of the company's subsidiaries at 31 December 2022 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Abbeyville Developments Limited
N Ireland
Ordinary
100.00
15
Stocks
2022
2021
£
£
Materials and work in progress
1,781,196
1,215,109
ABBEY UPHOLSTERERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 26 -
16
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
1,771,009
1,071,973
Corporation tax recoverable
231,505
128,965
Other debtors
110,290
40,237
Prepayments and accrued income
24,283
52,087
2,137,087
1,293,262
17
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Bank loans
19
298,055
404,412
Obligations under finance leases
20
85,996
Trade creditors
2,257,885
1,139,109
Taxation and social security
84,793
96,597
Other creditors
193,725
73,419
Accruals and deferred income
96,643
138,008
3,017,097
1,851,545
18
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Bank loans and overdrafts
19
1,491,249
1,735,811
Obligations under finance leases
20
326,787
1,818,036
1,735,811
ABBEY UPHOLSTERERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 27 -
19
Loans and overdrafts
2022
2021
£
£
Bank loans
1,789,304
2,140,223
Payable within one year
298,055
404,412
Payable after one year
1,491,249
1,735,811
Bank loans are secured by a fixed and floating charge over the assets of the company and an assignment over the keyman insurance in respect of P Devlin.
20
Finance lease obligations
2022
2021
Future minimum lease payments due under finance leases:
£
£
Within one year
85,996
In two to five years
326,787
412,783
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 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
21
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
211,669
180,320
ABBEY UPHOLSTERERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
21
Deferred taxation
(Continued)
- 28 -
2022
Movements in the year:
£
Liability at 1 January 2022
180,320
Charge to profit or loss
31,349
Liability at 31 December 2022
211,669
The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
22
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
50,402
45,594
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
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
12,500
12,500
12,500
12,500
ABBEY UPHOLSTERERS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 29 -
24
Cash generated from operations
2022
2021
£
£
Profit/(loss) for the year after tax
1,479,991
(1,707)
Adjustments for:
Taxation charged/(credited)
27,413
(112,722)
Finance costs
75,490
52,240
Investment income
(528)
Gain on disposal of tangible fixed assets
-
(18,912)
Depreciation and impairment of tangible fixed assets
1,416,423
185,243
Movements in working capital:
Increase in stocks
(566,087)
(418,038)
(Increase)/decrease in debtors
(741,285)
9,063
Increase in creditors
1,185,913
770,456
Cash generated from operations
2,877,858
465,095
Difference
(1,225,168)
(1,293,754)
Per cash flow statement page
1,652,690
(828,659)
25
Analysis of changes in net debt
1 January 2022
Cash flows
31 December 2022
£
£
£
Cash at bank and in hand
340,520
(54,712)
285,808
Borrowings excluding overdrafts
(2,140,223)
350,919
(1,789,304)
Obligations under finance leases
-
(412,783)
(412,783)
(1,799,703)
(116,576)
(1,916,279)
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