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Registered number: 07395898









SCRAPCO METAL RECYCLING LIMITED









ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

 
SCRAPCO METAL RECYCLING LIMITED
 
 
COMPANY INFORMATION


Directors
R G Hunn 
K Frost 
D Hunn 




Registered number
07395898



Registered office
Suite D, The Business Centre
Faringdon Avenue

Romford

Essex

RM3 8EN




Independent auditors
Clay Ratnage Daffin & Co Limited
Chartered Accountants & Statutory Auditors

Suite D, The Business Centre

Faringdon Avenue

Romford

Essex

RM3 8EN




Bankers
Barclays Bank PLC
40-41 High Street

Chelmsford

Essex

CM1 1BE




Solicitors
Tees Law
Cathedral Place

Brentwood

Essex

CM14 4ES





 
SCRAPCO METAL RECYCLING LIMITED
 

CONTENTS



Page
Strategic report
 
1 - 2
Directors' report
 
3 - 4
Independent auditors' report
 
5 - 8
Statement of comprehensive income
 
9
Balance sheet
 
10
Statement of changes in equity
 
11
Notes to the financial statements
 
12 - 25

 
SCRAPCO METAL RECYCLING LIMITED
 
 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

Introduction
 
The company's principal activity was that of recycling metal waste, scrap and skip hire.

Business review
 
Having had regard to Section 417 of the Companies Act 2006 the directors consider the profit on ordinary activities to be in accordance with their expectations, after taking into account general trading conditions prevailing during the year under review.
The turnover of the company reduced by some £3.5m to £21,378,231 compared to the previous year.  Gross profit margins have decreased by some 2% to 28.5%. The reduced turnover is due to the fall in metal prices during the year compared to a volatile year for prices in 2022.
The directors are continually mindful of the volatility of prices and the need to invest in plant and diversify the activities of the company where practicable. The directors have invested some £1.1m in new plant to ensure the company remains competitive.
The company has continued to develop the skip hire business which has reported a fall in revenue of £300k to £2m.
Overall the 2023 results are in line with expectation. The directors expect 2024 to show reduced turnover, but similar margins, as a result of the reduction in metal prices and a cooling off of the market.  The directors are aware of the challenges as when prices are high they can fall sharply and have plans in place to mitigate the effect of this.
 

Principal risks and uncertainties
 
The directors regularly review issues, risks and uncertainties that face the company in order to plan ways to mitigate risk.
The commodity prices, particularly when moving on a downward trend, present an ongoing challenge for the company to ensure they do not pay too much for material, while at the same time offering prices at a level sufficient to attract sellers. Stock holding during such times can lead to stock losses if prices work against the company.  
Material which is recycled is mostly destined for the emerging export markets. Economic buoyancy in those locations determine demand and consequently price.
The company operates in a high value capital intensive industry. Individual items of plant can cost £3/4 million or more. Investment on such scale will be necessary for the company to retain its competitive edge and operate efficiently.
The company operates in an industry which is highly regulated by various Government agencies and compliance with increasing regulation always presents a risk in addition to escalating costs.

Financial key performance indicators
 
The gross profit of the company for the current year is 28.5% compared to 30.6% in the prior year. The current ratio is at 1.10 (2022 - 0.94) and quick ratio is at 0.87 (2022 - 0.64). The average stockholding period was 26 days (2022 - 23 days) and has fixed asset turnover at 8 (2022 - 9).

Page 1

 
SCRAPCO METAL RECYCLING LIMITED
 

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023


This report was approved by the board on 26 July 2024 and signed on its behalf.







D Hunn
Director
Page 2

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023

The directors present their report and the financial statements for the year ended 31 December 2023.

Directors' responsibilities statement

The directors are responsible for preparing the Strategic report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the company's financial statements and then apply them consistently;

make judgments 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 to enable them to ensure that the financial statements comply with the Companies Act 2006They 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.

Results and dividends

The profit for the year, after taxation, amounted to £697,433 (2022 -  £1,975,974).

During the year the directors recommended the payment of dividends totalling £157,300 (2022 - £125,700). The directors do not recommend the payment of a further dividend. 

Directors

The directors who served during the year were:

R G Hunn 
K Frost 
D Hunn 

Future developments

The directors are not aware of any future developments which would have a significant effect on the company, other than as noted in the strategic report. 

Page 3

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the company's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the company's auditors are aware of that information.

Post balance sheet events

There have been no significant events affecting the company since the year end.

Auditors

The auditorsClay Ratnage Daffin & Co Limitedwill be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board on 26 July 2024 and signed on its behalf.
 





D Hunn
Director

Page 4

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SCRAPCO METAL RECYCLING LIMITED
 

Opinion


We have audited the financial statements of Scrapco Metal Recycling Limited (the 'company') for the year ended 31 December 2023, which comprise the Statement of comprehensive income, the Balance sheet, the Statement of changes in equity and the related notes, including a summary of significant accounting policiesThe 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 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.


Basis for opinion


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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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.


Other information


The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The directors are responsible for the other information contained within the Annual ReportOur 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.


Page 5

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SCRAPCO METAL RECYCLING LIMITED (CONTINUED)


Opinion on other matters prescribed by the Companies Act 2006
 

In our opinion, based on the work undertaken in the course of the 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 directors' 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 set out on page 3, 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.


Page 6

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SCRAPCO METAL RECYCLING LIMITED (CONTINUED)


Auditors' 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 Auditors' 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.


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:
To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
• Obtaining an understanding of the legal and regulatory frameworks applicable to the company and the sector in    which they operate.
• Obtained an understanding of how the company are complying with those legal and regulatory frameworks by    making enquiries to the management of the company’s accounting department, and management itself.
• The susceptibility of the company’s financial statements to material misstatement caused by fraud or other     irregularities were assessed with the following procedures:
 o Identifying and assessing the design effectiveness of controls which management have in place to prevent     and detect fraud
 o Understanding how those charged with governance considered and addressed the potential for override of     controls and management biases
 o Identifying and testing journal entries, in particular any journal entries posted with unusual account      combinations
 o Assessing the extent of compliance with the relevant laws and regulations
 o Assessing the extent to which pressures existed which may have increased the risk of fraudulent revenue     recognition
Potential fraud risks that had been identified throughout the planning and commencement of the audit were communicated to the audit team. 
The inherent limitations of audit present an unavoidable risk that we, the auditors, may not have detected some material misstatements within the financial statements despite proper planning and performance of our duties as auditors. Equally, there remains a risk of the non-detection of fraud which could involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. The audit procedures carried out are designed to detect material misstatements within the financial statements, and as such we take no responsibility for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.


A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' report.


Page 7

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SCRAPCO METAL RECYCLING LIMITED (CONTINUED)





Dean Osborne (Senior statutory auditor)
  
for and on behalf of
Clay Ratnage Daffin & Co Limited
 
Chartered Accountants
Statutory Auditors
  
Suite D, The Business Centre
Faringdon Avenue
Romford
Essex
RM3 8EN

26 July 2024
Page 8

 
SCRAPCO METAL RECYCLING LIMITED
 
 
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023

2023
2022
Note
£
£

  

Turnover
 4 
21,378,231
24,914,504

Cost of sales
  
(15,290,940)
(17,288,738)

Gross profit
  
6,087,291
7,625,766

Administrative expenses
  
(5,166,896)
(5,088,658)

Other operating income
 5 
1,430
6,585

Operating profit
 6 
921,825
2,543,693

Interest receivable and similar income
 10 
25,492
4,007

Interest payable and similar expenses
 12 
(37,839)
(18,413)

Profit before tax
  
909,478
2,529,287

Tax on profit
 11 
(212,045)
(553,313)

Profit for the financial year
  
697,433
1,975,974

There were no recognised gains and losses for 2023 or 2022 other than those included in the statement of comprehensive income.

There was no other comprehensive income for 2023 (2022:£NIL).

The notes on pages 12 to 25 form part of these financial statements.
Page 9

 
SCRAPCO METAL RECYCLING LIMITED
REGISTERED NUMBER: 07395898

BALANCE SHEET
AS AT 31 DECEMBER 2023

2023
2022
Note
£
£

Fixed assets
  

Tangible assets
 14 
2,814,735
2,689,952

Current assets
  

Stocks
 15 
894,526
1,234,375

Debtors: amounts falling due within one year
 16 
2,375,105
1,779,144

Cash at bank and in hand
 17 
1,054,384
876,639

  
4,324,015
3,890,158

Creditors: amounts falling due within one year
 18 
(3,968,920)
(4,137,607)

Net current assets/(liabilities)
  
 
 
355,095
 
 
(247,449)

Total assets less current liabilities
  
3,169,830
2,442,503

Creditors: amounts falling due after more than one year
 19 
(91,479)
-

Provisions for liabilities
  

Deferred tax
 21 
(487,844)
(392,129)

Net assets
  
2,590,507
2,050,374


Capital and reserves
  

Called up share capital 
 22 
100
100

Profit and loss account
 23 
2,590,407
2,050,274

  
2,590,507
2,050,374


The financial statements were approved and authorised for issue by the board and were signed on its behalf on 26 July 2024.




D Hunn
Director

The notes on pages 12 to 25 form part of these financial statements.
Page 10

 
SCRAPCO METAL RECYCLING LIMITED
 

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023


Called up share capital
Profit and loss account
Total equity

£
£
£

At 1 January 2023
100
2,050,274
2,050,374



Profit for the year
-
697,433
697,433

Dividends: Equity capital
-
(157,300)
(157,300)


At 31 December 2023
100
2,590,407
2,590,507


The notes on pages 12 to 25 form part of these financial statements.


STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022


Called up share capital
Profit and loss account
Total equity

£
£
£

At 1 January 2022
100
200,000
200,100



Profit for the year
-
1,975,974
1,975,974

Dividends: Equity capital
-
(125,700)
(125,700)


At 31 December 2022
100
2,050,274
2,050,374


The notes on pages 12 to 25 form part of these financial statements.

Page 11

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

1.


General information

Scrapco Metal Recycling Limited is a private company limited by shares, incorported in England, United Kingdom. The address of the registered office is Suite D, The Business Centre, Faringdon Avenue, Romford, RM3 8EN. The principal place of business is 2a Landau Way, Erith, DA8 2LF.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The financial information in the accounts is rounded to the nearest £1.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the company's accounting policies (see note 3).

The following principal accounting policies have been applied:

 
2.2

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
the requirements of Section 7 Statement of Cash Flows;
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d).

This information is included in the consolidated financial statements of Hunn Group Limited as at 31 December 2023 and these financial statements may be obtained from the registered office.

 
2.3

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
the company has transferred the significant risks and rewards of ownership to the buyer;
the company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the company will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Page 12

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.4

Operating leases: the company as lessor

Rentals received under operating leases are charged to profit and loss on a straight line basis over the period of the lease.

 
2.5

Operating leases: the company as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

 
2.6

Interest income

Interest income is recognised in profit or loss using the effective interest method.

 
2.7

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 
2.8

Borrowing costs

All borrowing costs are recognised in profit or loss in the year in which they are incurred.

 
2.9

Pensions

Defined contribution pension plan

The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the company in independently administered funds.

Page 13

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.10

Current and deferred taxation

The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the company operates and generates income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

 
2.11

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.

Page 14

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)


2.11
Tangible fixed assets (continued)

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, on a reducing balance basis.

Depreciation is provided on the following basis:

Plant and machinery
-
25%
reducing balance
Motor vehicles
-
25%
reducing balance
Furniture, fittings and equipment
-
25%
reducing balance
Property
-
15 years straight line

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

 
2.12

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the selling price less margin to account for the cost of processing materials as well as the purchase price.

 
2.13

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

 
2.14

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

 
2.15

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 
2.16

Provisions for liabilities

Provisions are recognised when an event has taken place that gives rise to a legal or constructive obligation, a transfer of economic benefits is probable and a reliable estimate can be made.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
 
Increases in provisions are generally charged as an expense to profit or loss.

Page 15

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

2.Accounting policies (continued)

 
2.17

Financial instruments

The company has elected to apply the provisions of Section 11 “Basic Financial Instruments” 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.

 
2.18

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.


3.


Judgments in applying accounting policies and key sources of estimation uncertainty

The directors have made key assumptions on the depreciation rate of fixed assets and amortisation period of goodwill. They have also estimated the closing stock value at the year end of £894,526 (2022 - £1,234,375).


4.


Turnover

The whole of the turnover is attributable to the company's principal activity.

Analysis of turnover by country of destination:

2023
2022
£
£

United Kingdom
16,516,953
19,754,954

Rest of Europe
78,155
104,635

Rest of the world
4,783,123
5,054,915

21,378,231
24,914,504



5.


Other operating income

2023
2022
£
£

Plant hire
1,430
6,585


Page 16

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

6.


Operating profit

The operating profit is stated after charging:

2023
2022
£
£

Other operating lease rentals
18,225
16,488


7.


Auditors' remuneration

2023
2022
£
£

Fees payable to the company's auditors for the audit of the company's financial statements
14,500
13,700


The company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the consolidated accounts of the parent company.


8.


Employees

Staff costs, including directors' remuneration, were as follows:


2023
2022
£
£

Wages and salaries
1,752,009
1,730,411

Social security costs
151,313
158,340

Cost of defined contribution scheme
33,203
33,188

1,936,525
1,921,939


The average monthly number of employees, including the directors, during the year was as follows:


        2023
        2022
            No.
            No.







Directors
3
3



Administration
6
6



Staff
48
55

57
64

Page 17

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

9.


Directors' remuneration

2023
2022
£
£

Directors' emoluments
14,266
11,083



10.


Interest receivable

2023
2022
£
£


Other interest receivable
25,492
4,007

Page 18

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

11.


Taxation


2023
2022
£
£

Corporation tax


Current tax on profits for the year
116,330
438,380


Deferred tax


Origination and reversal of timing differences
95,715
114,933


Taxation on profit on ordinary activities
212,045
553,313

Factors affecting tax charge for the year

The tax assessed for the year is lower than (2022 - higher than) the standard rate of corporation tax in the UK of 25% (2022 - 19%). The differences are explained below:

2023
2022
£
£


Profit on ordinary activities before tax
909,478
2,529,287


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2022 - 19%)
227,370
480,565

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
110
5,032

Capital allowances for the year in excess of depreciation
(108,874)
(47,192)

Increase/(decrease) in pension fund creditor leading to an increase/(decrease) in tax
42
(25)

Deferred tax timing differences leading to an increase in taxation
95,715
114,933

Capital gains
4,999
-

Changes in tax rate in the year leading to a decrease in the tax charge
(7,317)
-

Total tax charge for the year
212,045
553,313


Factors that may affect future tax charges

There were no factors that may affect future tax charges.

Page 19

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

12.


Interest payable and similar expenses

2023
2022
£
£


Bank interest payable
25,959
7,855

Finance leases and hire purchase contracts
11,880
10,558

37,839
18,413


13.


Dividends

2023
2022
£
£


Dividends paid
157,300
125,700

Page 20

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

14.


Tangible fixed assets





Plant and machinery
Motor vehicles
Furniture, fittings and equipment
Property
Total

£
£
£
£
£



Cost or valuation


At 1 January 2023
6,505,278
1,647,201
304,736
180,614
8,637,829


Additions
660,511
428,839
17,966
-
1,107,316


Disposals
(32,500)
(106,500)
-
-
(139,000)



At 31 December 2023

7,133,289
1,969,540
322,702
180,614
9,606,145



Depreciation



At 1 January 2023
4,647,157
1,020,462
227,237
53,021
5,947,877


Charge for the year on owned assets
543,856
249,071
23,878
12,041
828,846


Charge for the year on financed assets
83,000
-
-
-
83,000


Disposals
(21,133)
(47,180)
-
-
(68,313)



At 31 December 2023

5,252,880
1,222,353
251,115
65,062
6,791,410



Net book value




At 31 December 2023
1,880,409
747,187
71,587
115,552
2,814,735



At 31 December 2022
1,858,121
626,739
77,499
127,593
2,689,952

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:


2023
2022
£
£



Plant and machinery
249,000
290,812

Page 21

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

15.


Stocks

2023
2022
£
£

Raw materials and consumables
894,526
1,234,375



16.


Debtors

2023
2022
£
£


Trade debtors
572,012
735,014

Amounts owed by group undertakings
1,587,166
837,637

Amounts owed by joint ventures and associated undertakings
2,985
2,985

Other debtors
72,841
98,122

Prepayments and accrued income
140,101
105,386

2,375,105
1,779,144



17.


Cash and cash equivalents

2023
2022
£
£

Cash at bank and in hand
1,054,384
876,639

Less: bank overdrafts
(75,374)
(397,987)

979,010
478,652


Page 22

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

18.


Creditors: Amounts falling due within one year

2023
2022
£
£

Bank overdrafts
75,374
397,987

Trade creditors
344,677
453,933

Corporation tax
77,330
158,379

Other taxation and social security
858,943
420,371

Obligations under finance lease and hire purchase contracts
147,521
208,735

Other creditors
2,432,300
2,462,802

Accruals and deferred income
32,775
35,400

3,968,920
4,137,607


The company facility is secured by way of debenture. There is also a personal guarantee given by Mr R G Hunn, a director and shareholder, to the value of £600,000 for the benefit of the bank.


19.


Creditors: Amounts falling due after more than one year

2023
2022
£
£

Net obligations under finance leases and hire purchase contracts
91,479
-



20.


Hire purchase and finance leases


Minimum lease payments under hire purchase fall due as follows:

2023
2022
£
£


Within one year
147,521
208,735

Between 1-5 years
91,479
-

239,000
208,735

Page 23

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

21.


Deferred taxation




2023
2022


£

£






At beginning of year
(392,129)
(277,196)


Charged to the profit or loss
(95,715)
(114,933)



At end of year
(487,844)
(392,129)

The provision for deferred taxation is made up as follows:

2023
2022
£
£


Accelerated capital allowances
(487,844)
(392,129)


The directors expect the reversal of £135,217 of the deferred taxation liability in the year after the reporting period as the assets are depreciated.


22.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



75 (2022 - 75) Ordinary shares of £1.00 each
75
75
12 (2022 - 12) Ordinary B shares of £1.00 each
12
12
1 (2022 - 1) Ordinary A share of £1.00
1
1
12 (2022 - 12) Ordinary C shares of £1.00 each
12
12

100

100

Ordinary and Ordinary A, B and C shares have equal voting rights.



23.


Reserves

Profit & loss account

Includes all current and prior period retained profits and losses.

Page 24

 
SCRAPCO METAL RECYCLING LIMITED
 
 
 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023

24.


Pension commitments

The company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £33,203 (2022 - £33,188). Contributions totalling £6,668 (2022 - £6,274) were payable to the fund at the balance sheet date and are included in creditors.


25.


Commitments under operating leases - lessee

At 31 December 2023 the company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2023
2022
£
£


Not later than 1 year
7,171
15,771

Later than 1 year and not later than 5 years
14,343
25,814

21,514
41,585


 



26.


Related party transactions


2023
2022
£
£

Amounts due to associated company
2,382,909
2,415,367
Amounts due fom associated companies
53,033
53,033
Rent paid to parent company
156,000
42,000
Key management personnel compensation
14,266
13,296
Sales to associated companies
67,442
-
Purchases from associated companies
148,004
168,739
Amount due from parent company
1,587,166
556,233

Loans between related parties are unsecured and interest free.


27.


Ultimate parent undertaking and controlling party

The parent company is Hunn Group Limited incorporated in England and Wales, registered office Suite D, The Business Centre, Faringdon Avenue, Romford, RM3 8EN. The ultimate controlling party is Mr R G Hunn.
 
Page 25