Company registration number 00572373 (England and Wales)
MARLA TUBE FITTINGS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
MARLA TUBE FITTINGS LIMITED
COMPANY INFORMATION
Directors
Mr S J Preedy
Mr L C Barnes
Secretary
Mr L C Barnes
Company number
00572373
Registered office
Kinwarton Farm Road
Arden Forest Industrial Estate
Alcester
Warwickshire
B49 6EN
Auditor
Shaw Gibbs (Audit) Limited
264 Banbury Road
Oxford
OX2 7DY
Business address
Kinwarton Farm Road
Arden Forest Industrial Estate
Alcester
Warwickshire
B49 6EN
Bankers
Barclays Bank Plc
PO Box 3333
One Snow Hill
Snow Hill Queenway
Birmingham
B3 2WN
Solicitors
Wragge Lawrence Graham & Co
55 Colmore Row
Birmingham
B3 2AS
MARLA TUBE FITTINGS LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 8
Profit and loss account
9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Notes to the financial statements
13 - 24
MARLA TUBE FITTINGS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 1 -
The directors present the strategic report for the year ended 31 October 2023.
Review of the business
During the year turnover has increased from £36.0m to £43m, an increase of 19.6%. The increase is attributable to fluctuations in the level of activity in international petrochemical projects which are predominantly driven by oil prices.
At the same time, due to general price and currency fluctuations gross margin has reduced from 24.0% to 23.0%.
Overall, the company has achieved an operating profit of £4.3m compared to £2.8m in the previous year.
In the 2024 financial year the company has continued to trade profitably.
The directors believe that the company's strong liquidity will enable it to take advantage of trading opportunities as the market improves and as the company continues to look for growth opportunities, both organic and by acquisition of suitable target companies. The policy of maintaining strong liquidity has also enabled the company to participate in a number of global contracts with major multinationals, which has resulted in significant export sales, which would not otherwise have been achieved. It has also enabled the company to continue its policy of continual investment in fixed assets and stock ranges.
Principal risks and uncertainties
The management of the business and the execution of the company's strategy are subject to a number of key risks. The key business risks and uncertainties affecting the company are considered to relate to the strong competition within the field, resulting in pressure on margins. Risks are reviewed by the directors and appropriate processes are put in place to monitor and mitigate them
Key performance indicators
Given the straightforward nature of the business, the directors are of the opinion that analysis using other KPI's is not necessary for an understanding of the development, performance or position of the business. The company's activities are closely monitored by the directors with the assistance of monthly internal management accounts and supporting reports.
MARLA TUBE FITTINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 2 -
Stakeholder engagement
The directors are aware of the need to act in the best interests of the company when making strategic and operational decisions.
The likely consequences of any decision in the long term
The Directors understand the business and the evolving environment in which it operates and the strategy set by the Board is intended to strengthen the company’s position as a leading supplier in its markets while keeping safety and social responsibility fundamental to its business approach.
The interests of the company’s employees
The Directors recognise that employees are fundamental and core to our business and delivery of our strategic ambitions. The success of our business depends on attracting, retaining and motivating employees. From ensuring that we remain a responsible employer, from pay and benefits to our health, safety and workplace environment, the Directors factor the implications of decisions on employees and the wider workforce, where relevant and feasible.
The need to foster the company’s business relationships with suppliers, customers and others
Delivering our strategy requires strong mutually beneficial relationships with suppliers and customers.
Externally, the company has strong relationships with a number of key suppliers, many of these relationships have been in place for ten years or more. Regular communications take place with these suppliers to ensure that relationships are optimised.
We communicate with our customers in many ways and channel feedback via line management. Regular meetings are held between executive directors, senior employees and managers and our major customers, again to ensure that relationships are optimised.
The impact of the company’s operations on the community and the environment
We are aware of our impact on the environment which is reviewed and referred to in our carbon reporting statement the required disclosure of which is included in the accounts of the parent company MTF Holding Holding Limited.
The desirability of the company maintaining a reputation for high standards of business conduct
The Board periodically reviews and approves clear frameworks, such as its Modern Slavery Statement, to ensure that its high standards are maintained both within the businesses and the business relationships we maintain. This, complemented by the ways the Board is informed and monitors compliance with relevant governance standards help assure its decisions are taken in ways that promote high standards of business conduct.
The need to act fairly as between members of the company
After considering all relevant factors, the Directors consider which course of action best enables delivery of our strategy through the long-term, taking into consideration the impact on stakeholders. In doing so, the Directors act fairly as between the Company’s members but are not required to balance the Company’s interest with those of other stakeholders, and this can sometimes mean that certain stakeholder interests may not be fully aligned.
MARLA TUBE FITTINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 3 -
Mr L C Barnes
Director
29 July 2024
MARLA TUBE FITTINGS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 4 -
The directors present their annual report and financial statements for the year ended 31 October 2023.
Principal activities
The principal activity of the company continued to be that of manufacturing, processing and factoring tube fittings.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £2,500,000. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr S J Preedy
Mr L C Barnes
Auditor
In accordance with the company's articles, a resolution proposing that Shaw Gibbs (Audit) Limited be reappointed as auditor of the company will be put at a General Meeting.
Energy and carbon report
The required disclosure is included in the accounts of the parent company MTF Holding Limited.
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;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
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.
MARLA TUBE FITTINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 5 -
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 L C Barnes
Director
29 July 2024
MARLA TUBE FITTINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MARLA TUBE FITTINGS LIMITED
- 6 -
Opinion
We have audited the financial statements of Marla Tube Fittings Limited (the 'company') for the year ended 31 October 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 October 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
MARLA TUBE FITTINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MARLA TUBE FITTINGS LIMITED
- 7 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
MARLA TUBE FITTINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF MARLA TUBE FITTINGS LIMITED
- 8 -
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
At the planning stage of the audit we gain an understanding of the laws and regulations which apply to the company and how the management seek to comply with those laws’ regulations. This helps us to plan appropriate risk assessments.
During the audit we focus on relevant risk areas and review the compliance with the laws and regulations by making relevant enquiries and undertaking corroboration, for example by reviewing Board Minutes and other documentation.
We assess the risk of material misstatement in the financial statements including as a result of fraud and undertake procedures including:
Reviewing the controls set in place by management;
Making enquiries of management as to whether they consider fraud or other irregularity may have taken place, or where such opportunity might exist;
Challenging management assumptions with regard to accounting estimates;
Identifying and testing journal entries, particularly those which appear to be unusual by size or nature.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Mr Stephen Howard Neal
Senior Statutory Auditor
For and on behalf of Shaw Gibbs (Audit) Limited
29 July 2024
Chartered Certified Accountants
Statutory Auditor
264 Banbury Road
Oxford
OX2 7DY
MARLA TUBE FITTINGS LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
43,011,331
35,969,342
Cost of sales
(33,125,836)
(27,341,663)
Gross profit
9,885,495
8,627,679
Administrative expenses
(5,537,441)
(5,788,283)
Operating profit
4
4,348,054
2,839,396
Interest receivable and similar income
7
303,849
46,749
Interest payable and similar expenses
8
(14,196)
(7,610)
Gains(losses) on investments
9
289,398
(668,722)
Profit before taxation
4,927,105
2,209,813
Tax on profit
10
(1,182,184)
(302,762)
Profit for the financial year
3,744,921
1,907,051
The profit and loss account has been prepared on the basis that all operations are continuing operations.
MARLA TUBE FITTINGS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2023
- 10 -
2023
2022
£
£
Profit for the year
3,744,921
1,907,051
Other comprehensive income
-
-
Total comprehensive income for the year
3,744,921
1,907,051
MARLA TUBE FITTINGS LIMITED
BALANCE SHEET
AS AT
31 OCTOBER 2023
31 October 2023
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
12
5,160,294
5,449,251
Investments
13
769
769
5,161,063
5,450,020
Current assets
Stocks
15
18,080,144
18,353,557
Debtors
16
22,425,575
20,546,557
Investments
17
5,688,659
5,399,262
Cash at bank and in hand
6,206,887
6,945,186
52,401,265
51,244,562
Creditors: amounts falling due within one year
18
(6,666,456)
(6,990,687)
Net current assets
45,734,809
44,253,875
Total assets less current liabilities
50,895,872
49,703,895
Provisions for liabilities
Deferred tax liability
19
47,642
100,586
(47,642)
(100,586)
Net assets
50,848,230
49,603,309
Capital and reserves
Called up share capital
21
108,918
108,918
Share premium account
288,070
288,070
Capital redemption reserve
4,682
4,682
Profit and loss reserves
50,446,560
49,201,639
Total equity
50,848,230
49,603,309
The financial statements were approved by the board of directors and authorised for issue on 29 July 2024 and are signed on its behalf by:
Mr L C Barnes
Director
Company registration number 00572373 (England and Wales)
MARLA TUBE FITTINGS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2023
- 12 -
Share capital
Share premium account
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 November 2021
108,918
288,070
4,682
48,794,588
49,196,258
Year ended 31 October 2022:
Profit and total comprehensive income
-
-
-
1,907,051
1,907,051
Dividends
11
-
-
-
(1,500,000)
(1,500,000)
Balance at 31 October 2022
108,918
288,070
4,682
49,201,639
49,603,309
Year ended 31 October 2023:
Profit and total comprehensive income
-
-
-
3,744,921
3,744,921
Dividends
11
-
-
-
(2,500,000)
(2,500,000)
Balance at 31 October 2023
108,918
288,070
4,682
50,446,560
50,848,230
MARLA TUBE FITTINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
- 13 -
1
Accounting policies
Company information
Marla Tube Fittings Limited is a private company limited by shares incorporated in England and Wales. The registered office is Kinwarton Farm Road, Arden Forest Industrial Estate, Alcester, Warwickshire, B49 6EN.
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 current asset investments at fair value. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 4 ‘Statement of Financial Position’ – Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of MTF Holding Limited. These consolidated financial statements are available from its registered office, 4 Castlecourt 2, Castlegate Way, Dudley, West Midlands DY1 4RH.
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
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
MARLA TUBE FITTINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 14 -
Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life, as follows:
Land and buildings Freehold
2% straight line
Land and buildings Leasehold
straight line over the term of the lease
Plant and machinery
15% reducing balance/25-33 1/3% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
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.
1.6
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.7
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.
MARLA TUBE FITTINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 15 -
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.
1.8
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.
1.9
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
MARLA TUBE FITTINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 16 -
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.
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.
1.10
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.
1.11
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.
MARLA TUBE FITTINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 17 -
Deferred tax
Deferred taxation is provided on income and expenditure dealt with for taxation purposes in periods different from thoses for accounts purposes to the extent that the reduction in the tax charge cannot be expected with reasonable probability to continue for the forseeable future. The provision is computed under the liability method and is stated at the rate of corporation tax expected to apply when the tax becomes payable.
1.12
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.15
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
MARLA TUBE FITTINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 18 -
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Stock
Inventories are valued at the lower of cost and estimated selling price less costs to complete and sell. Net realisable value includes, where necessary, provisions for slow moving and obsolete stocks. Calculation of these provisions requires judgements to be made, which include forecast consumer demand, the promotional, competitive and economic environment and inventory loss trends resulting in the application of a consistent annual formula.
Bad debt provision
A bad debt provision is set up when the likelihood of recovering the debt is diminished. The level of provision will be based on any current repayment plan entered into and which is being adhered to by the debtor, together with an estimate of the likelihood of the amounts due being fully recovered.
Useful economic lives of non-current assets
The useful economic lives of non-current assets have been derived from the judgement of the Directors, using their best estimate of write-down period.
3
Turnover and other revenue
2023
2022
£
£
Other revenue
Interest income
303,849
46,749
No further analysis of turnover is provided as the directors believe that this may be prejudicial to the best interests of the company.
All turnover relates to the sale of goods.
MARLA TUBE FITTINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 19 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
82,049
(212,262)
Fees payable to the company's auditor for the audit of the company's financial statements
58,400
53,200
Depreciation of owned tangible fixed assets
420,528
417,480
Loss on disposal of tangible fixed assets
14,528
17,368
Operating lease charges
135,325
258,638
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Sales
24
22
Administration
25
24
Works
18
18
Total
67
64
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,858,769
3,247,985
Social security costs
368,260
346,604
Pension costs
264,172
145,640
4,491,201
3,740,229
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
294,607
279,669
Company pension contributions to defined contribution schemes
1,321
1,321
295,928
280,990
MARLA TUBE FITTINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
6
Directors' remuneration
(Continued)
- 20 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
214,539
203,874
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
303,849
46,749
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
14,196
7,610
9
Gains (losses) on investments
2023
2022
£
£
Fair value gains/(losses) on financial instruments
Change in value of financial assets held at fair value through profit or loss
289,398
(668,722)
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
1,235,128
262,502
Deferred tax
Origination and reversal of timing differences
(52,944)
40,260
Total tax charge
1,182,184
302,762
MARLA TUBE FITTINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
10
Taxation
(Continued)
- 21 -
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
4,927,105
2,209,813
Expected tax charge based on the standard rate of corporation tax in the UK of 22.52% (2022: 19.00%)
1,109,584
419,864
Tax effect of expenses that are not deductible in determining taxable profit
43,647
14,407
Group relief
(140,170)
Permanent capital allowances in excess of depreciation
(1,626)
(30,954)
Depreciation on assets not qualifying for tax allowances
35,836
29,953
Adjustment to deferred tax in respect of anticipated rate change
(5,257)
9,662
Taxation charge for the year
1,182,184
302,762
11
Dividends
2023
2022
£
£
Final paid
2,500,000
1,500,000
12
Tangible fixed assets
Land and buildings Freehold
Land and buildings Leasehold
Plant and machinery
Total
£
£
£
£
Cost
At 1 November 2022
6,235,397
883,361
2,549,207
9,667,965
Additions
13,675
132,425
146,100
Disposals
(113,315)
(113,315)
At 31 October 2023
6,235,397
897,036
2,568,317
9,700,750
Depreciation and impairment
At 1 November 2022
2,171,802
259,752
1,787,160
4,218,714
Depreciation charged in the year
123,077
36,069
261,382
420,528
Eliminated in respect of disposals
(98,786)
(98,786)
At 31 October 2023
2,294,879
295,821
1,949,756
4,540,456
Carrying amount
At 31 October 2023
3,940,518
601,215
618,561
5,160,294
At 31 October 2022
4,063,595
623,609
762,047
5,449,251
MARLA TUBE FITTINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
12
Tangible fixed assets
(Continued)
- 22 -
Freehold land and buildings includes £381,581 (2022 £381,581) in respect of land and buildings on which no depreciation is provided.
13
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
14
769
769
14
Subsidiaries
Details of the company's subsidiaries at 31 October 2023 are as follows:
Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
Marla (Alcester) Limited
England & Wales
Dormant
Ordinary
100.00
Pressure Fittings Limited
England & Wales
Dormant
Ordinary
100.00
15
Stocks
2023
2022
£
£
Finished goods and goods for resale
18,080,144
18,353,557
16
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
8,715,939
5,848,172
Corporation tax recoverable
345,779
Amounts owed by group undertakings
12,842,136
12,540,309
Other debtors
274,863
Prepayments and accrued income
867,500
1,537,434
22,425,575
20,546,557
17
Current asset investments
2023
2022
£
£
Listed investments
4,507,592
4,062,432
Unlisted investments
817,271
831,474
Short term deposits
363,796
505,356
5,688,659
5,399,262
MARLA TUBE FITTINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 23 -
18
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
2,761,570
3,359,393
Amounts owed to group undertakings
2,189,069
2,625,846
Corporation tax
294,227
Other taxation and social security
328,286
228,084
Other creditors
243,506
44,930
Accruals and deferred income
849,798
732,434
6,666,456
6,990,687
19
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
101,768
126,033
Other items
(54,126)
(25,447)
47,642
100,586
2023
Movements in the year:
£
Liability at 1 November 2022
100,586
Credit to profit or loss
(52,944)
Liability at 31 October 2023
47,642
20
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
264,172
145,640
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.
MARLA TUBE FITTINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 24 -
21
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
108,918
108,918
108,918
108,918
22
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
119,037
119,037
Between two and five years
651,719
555,756
In over five years
1,827,500
2,042,500
2,598,256
2,717,293
23
Related party transactions
Transactions with related parties
During the year, the company paid consultancy and accountancy fees of £11,457 (2022 £9,945) to CKCA Limited, a firm of Chartered Accountants, a business in which L C Barnes (a director of the company) is a director.
Related party transactions with other group companies have not been disclosed as per FRS102 Section 33.1A.
No guarantees have been given or received.
24
Ultimate controlling party
The ultimate parent company is MTF Holding Limited, a company registered in England and Wales. Group financial statements are available from that company's registered office which is c/o CKCA Limited, No4 Castle Court 2, Castlegate Way, Dudley, West Midlands, DY1 4RH.
The ultimate controlling party is S J Preedy a director of the company.
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