Company registration number 04122236 (England and Wales)
INDEPENDENT FORGINGS & ALLOYS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
INDEPENDENT FORGINGS & ALLOYS LIMITED
COMPANY INFORMATION
Directors
M Burnham
A McGuinness
C Syson
M Naylor
G Davies
A Wade
A Savile
M Tomlinson
Secretary
C Syson
Company number
04122236
Registered office
Victoria Forge
Livesey Street
Sheffield
South Yorkshire
S6 2BL
Auditor
BHP LLP
2 Rutland Park
Sheffield
S10 2PD
INDEPENDENT FORGINGS & ALLOYS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 25
INDEPENDENT FORGINGS & ALLOYS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 1 -

The directors present the strategic report for the year ended 31 March 2024.

Review of the business

·          Turnover £47.1m (2023: £34.8m)

·          Gross profit £14.6m (2023: £7.5m)

·          Gross margin 30.9% (2023: 21.7%)

·          Operating profit £9.5m (2023: £2.9m)

 

We are now benefiting from our sales/marketing strategy which has demonstrated to customers the advantage of IFA’s ability to manufacture from ingot to components on one site.

 

Covid held our growth back for two years, but the next four years will see growth to £80m with the main sectors continuing to be aerospace and defence.

 

Titanium is key to this growth, and we can expect our current tonnage to double from 450T to 900T over the next four years.

 

The resulting £7.0m increase in gross profit has been partially offset by a £0.4m increase in administrative expenses, including additional staff to support the growth of the business.

 

The company continues to invest in property improvements and plant and machinery with £1.2m of fixed asset additions in the year.

 

Stock has increased by £3.2m due to the growth in the business. Creditors due within one year increased by £2.2m mainly due to a £1.1m increase in current bank loans as these become due in less than one year as well as an £0.5m increase in trade creditors to service the increased trading activity. Group loans have increased by £1.9m offset by a £2.0m decrease in accruals and deferred income due to the timing of energy invoices.

Principal risks and uncertainties

The ongoing recruitment and retention of employees is a yearly area of concern. However, we have been successful in implementing an apprenticeship program to mitigate this. The company is also a major user of energy and as such are open to major fluctuations in prices. We constantly monitor the forward pricing data and fix costs at manageable levels which are built into the business model. Raw material supply is an industry wide uncertainty which we have addressed by placing long term contracts for our strategic materials.

Future developments

The aerospace and defence sectors will support the next 5-year substantial growth with aerospace civil and defence programmes.

 

The onsite integration of the closed die precision forge and machining to the existing open die, ring rolling capabilities now makes IFA a unique offering to the market in being able to manufacture finished components from ingot on one site.

Research and development activities

As a company we continually strive to improve our product offering to the customer and this often involves new processes and / or ways of making components or achieving very tight quality and technical specifications.

INDEPENDENT FORGINGS & ALLOYS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 2 -
Financial instruments

Financial risk management objectives and policies

 

The company uses various financial instruments including loans, cash and various items, such as trade debtors and trade creditors that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the company's operations.

 

The main risks arising from the company's financial instruments are credit, liquidity, and cash flow risk. The directors review and agree policies for managing each of these risks and they are summarised below.

 

Market risk encompasses two types of risk, being currency risk and fair value interest rate risk. The company's policies for managing fair value interest rate risk are considered with those for managing cash flow interest rate risk and are set out in the subsection entitled 'interest rate risk' below.

 

Credit risk

 

The company's principal financial assets are cash and trade debtors. The credit risk associated with cash is limited as the counterparties have high credit ratings assigned by international credit-rating agencies. The principal credit risk arises therefore from its trade debtors. In order to manage credit risk the directors set limits for customers by purchasing credit insurance for the majority of its debtors. Credit limits are reviewed by the credit controller on a regular basis in conjunction with debt ageing and collection history.

 

Liquidity risk

 

In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the company uses a mixture of long-term and short-term debt finance.

 

Cash flow risk

 

The company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. In as far as possible assets held in foreign currency are matched to an appropriate level of creditors in the same currency. The company's exposure to interest rate fluctuations on its borrowings is limited as the majority of the borrowings are on fixed/capped interest rates.

On behalf of the board

C Syson
Director
20 September 2024
INDEPENDENT FORGINGS & ALLOYS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 3 -

The directors present their annual report and financial statements for the year ended 31 March 2024.

Principal activities
The principal activity of the company continued to be that of engaging in the manufacture of high integrity forged products to the premium quality assured markets.
Results and dividends

The results for the year are set out on page 8.

Ordinary dividends were paid amounting to £1,935,000. The directors do not recommend payment of a further dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

M Burnham
A McGuinness
C Syson
M Naylor
G Davies
A Wade
A Savile
M Tomlinson
Disabled persons

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

Employee involvement

The company's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.

 

Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the company's performance.

 

There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.

Auditor
The auditor, BHP LLP, are deemed to be reappointed under section 487(2) of the Companies Act 2006.
INDEPENDENT FORGINGS & ALLOYS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 4 -
Statement of directors' responsibilities

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Strategic Report

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of future developments, research and development, and financial instruments.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

On behalf of the board
C Syson
Director
20 September 2024
INDEPENDENT FORGINGS & ALLOYS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF INDEPENDENT FORGINGS & ALLOYS LIMITED
- 5 -
Opinion

We have audited the financial statements of Independent Forgings & Alloys Limited (the 'company') for the year ended 31 March 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

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 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.

Other information

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:

INDEPENDENT FORGINGS & ALLOYS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF INDEPENDENT FORGINGS & ALLOYS LIMITED (CONTINUED)
- 6 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Extent to which the audit was considered capable of detecting irregularities, including fraud

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

INDEPENDENT FORGINGS & ALLOYS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF INDEPENDENT FORGINGS & ALLOYS LIMITED (CONTINUED)
- 7 -

To address the risk of fraud through management bias and override of controls, we:

 

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

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.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Daniel Varley
Senior Statutory Auditor
For and on behalf of BHP LLP
4 October 2024
Chartered Accountants
Statutory Auditor
2 Rutland Park
Sheffield
S10 2PD
INDEPENDENT FORGINGS & ALLOYS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2024
- 8 -
2024
2023
Notes
£
£
Turnover
3
47,113,818
34,757,916
Cost of sales
(32,561,553)
(27,227,056)
Gross profit
14,552,265
7,530,860
Administrative expenses
(5,043,183)
(4,667,216)
Operating profit
4
9,509,082
2,863,644
Interest payable and similar expenses
7
(625,132)
(310,625)
Profit before taxation
8,883,950
2,553,019
Tax on profit
8
(1,051,934)
(160,500)
Profit for the financial year
7,832,016
2,392,519

The profit and loss account has been prepared on the basis that all operations are continuing operations.

INDEPENDENT FORGINGS & ALLOYS LIMITED
BALANCE SHEET
AS AT
31 MARCH 2024
31 March 2024
- 9 -
2024
2023
as restated
Notes
£
£
£
£
Fixed assets
Tangible assets
11
8,151,427
7,784,396
Current assets
Stocks
12
16,821,842
13,677,234
Debtors
13
14,649,843
12,271,792
Cash at bank and in hand
60,283
805,815
31,531,968
26,754,841
Creditors: amounts falling due within one year
14
(16,662,685)
(14,480,381)
Net current assets
14,869,283
12,274,460
Total assets less current liabilities
23,020,710
20,058,856
Creditors: amounts falling due after more than one year
15
(509,446)
(3,224,608)
Provisions for liabilities
Deferred tax liability
18
903,000
1,123,000
(903,000)
(1,123,000)
Net assets
21,608,264
15,711,248
Capital and reserves
Called up share capital
20
74,318
74,318
Share premium account
21,667
21,667
Capital redemption reserve
63,274
63,274
Profit and loss reserves
21,449,005
15,551,989
Total equity
21,608,264
15,711,248

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The financial statements were approved by the board of directors and authorised for issue on 4 October 2024 and are signed on its behalf by:
A McGuinness
Director
Company registration number 04122236 (England and Wales)
INDEPENDENT FORGINGS & ALLOYS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
- 10 -
Share capital
Share premium account
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 April 2022
74,318
21,667
63,274
14,329,470
14,488,729
Year ended 31 March 2023:
Profit and total comprehensive income
-
-
-
2,392,519
2,392,519
Dividends
9
-
-
-
(1,170,000)
(1,170,000)
Balance at 31 March 2023
74,318
21,667
63,274
15,551,989
15,711,248
Year ended 31 March 2024:
Profit and total comprehensive income
-
-
-
7,832,016
7,832,016
Dividends
9
-
-
-
(1,935,000)
(1,935,000)
Balance at 31 March 2024
74,318
21,667
63,274
21,449,005
21,608,264
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
- 11 -
1
Accounting policies
Company information

Independent Forgings & Alloys Limited is a private company limited by shares incorporated in England and Wales. The registered office is Victoria Forge, Livesey Street, Sheffield, South Yorkshire, S6 2BL.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

 

 

The financial statements of the company are consolidated in the financial statements of IFA Group Limited. These consolidated financial statements are available from its registered office.

1.2
Going concern

These financial statements are prepared on the going concern basis. After reviewing the company's forecasts and projections, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The company therefore continues to adopt the going concern basis in preparing its financial statements.true

1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

 

 

 

 

INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 12 -
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.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Land, buildings and improvements
2-20% straight line (land not depreciated)
Plant and machinery
5-33% straight line
Fixtures, fittings & equipment
20-33% straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

1.5
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.6
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.7
Cash and cash equivalents

Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks and other short-term liquid investments with original maturities of three months or less.

INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 13 -
1.8
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 14 -
Basic financial liabilities

Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.9
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.10
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 15 -
1.11
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.12
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.13
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

1.14
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
2
Judgements and key sources of estimation uncertainty
(Continued)
- 16 -
Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Useful economic lives of tangible fixed assets

The annual depreciation charge for tangible fixed assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values of all asset categories are reviewed on an annual basis to ensure appropriate changes are made for depreciation rates.

 

There have been no changes to the estimated useful economic lives of assets during the year. As at 31 March 2024, tangible fixed assets had a net book value of £8,141,527 (2023: £7,784,396). The depreciation charge for the year was £870,203 (2023: £757,740).

Valuation of work in progress

The work in progress is valued based on the cost of raw materials and an element of labour and overhead costs. The labour and overhead costs are allocated to work in progress throughout the period based on timesheet hours which factor in the cost of processing and machining. At the year end, the total labour and overheads costs are compared to the timesheet hours posted to work in progress and the subsequent over or under recovery rate is used to adjust the year end value of work in progress. This adjustment ensures the value of work in progress at year end accurately reflects the actual rate of overhead recovery during the year.

3
Turnover

An analysis of the company's turnover is as follows:

2024
2023
£
£
Turnover analysed by class of business
Supply of products
37,104,582
26,914,403
Processing and hirework
8,159,360
5,775,567
Sale of scrap and other
1,849,876
2,067,946
47,113,818
34,757,916
2024
2023
£
£
Turnover analysed by geographical market
UK
19,326,454
12,045,667
Europe
17,797,140
18,930,001
Rest of World
9,990,224
3,782,248
47,113,818
34,757,916
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 17 -
4
Operating profit
2024
2023
Operating profit for the year is stated after charging:
£
£
Exchange losses
40,570
320,802
Fees payable to the company's auditor for the audit of the company's financial statements
25,000
19,100
Depreciation of owned tangible fixed assets
740,030
670,655
Depreciation of tangible fixed assets held under finance leases
130,173
87,085
Impairment of stocks recognised or reversed
388,834
210,357
Operating lease charges
80,308
57,680
5
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2024
2023
Number
Number
Production
207
180
Selling & distribution
34
32
Administration
13
11
Total
254
223

Their aggregate remuneration comprised:

2024
2023
£
£
Wages and salaries
10,625,877
8,708,965
Social security costs
1,082,984
857,343
Pension costs
542,918
445,500
12,251,779
10,011,808
6
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
1,359,984
1,063,817
Company pension contributions to defined contribution schemes
125,436
118,691
1,485,420
1,182,508

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 8 (2023 - 8).

INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
6
Directors' remuneration
(Continued)
- 18 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2024
2023
£
£
Remuneration for qualifying services
313,326
255,335
Company pension contributions to defined contribution schemes
24,632
26,871
7
Interest payable and similar expenses
2024
2023
£
£
Interest on bank overdrafts and loans
375,576
161,256
Other interest on financial liabilities
249,556
149,369
625,132
310,625
8
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
1,271,934
-
0
Deferred tax
Origination and reversal of timing differences
(220,000)
160,500
Total tax charge
1,051,934
160,500
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
8
Taxation
(Continued)
- 19 -

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2024
2023
£
£
Profit before taxation
8,883,950
2,553,019
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
2,220,988
485,074
Tax effect of expenses that are not deductible in determining taxable profit
1,566
1,127
Change in unrecognised deferred tax assets
5,002
(5,218)
Group relief
(845,187)
(58,414)
Research and development tax credit
-
0
(291,390)
Remeasurement of deferred tax for changes in tax rates
-
0
39,772
Fixed asset differences
(330,435)
(10,451)
Taxation charge for the year
1,051,934
160,500
9
Dividends
2024
2023
£
£
Final paid
1,935,000
1,170,000
10
Impairments

Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:

2024
2023
Notes
£
£
In respect of:
Stocks
12
388,834
210,357
Recognised in:
Cost of sales
388,834
210,357
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 20 -
11
Tangible fixed assets
Land, buildings and improvements
Plant and machinery
Fixtures, fittings & equipment
Total
£
£
£
£
Cost
At 1 April 2023
5,591,414
13,850,800
782,445
20,224,659
Additions
150,175
1,031,150
55,909
1,237,234
At 31 March 2024
5,741,589
14,881,950
838,354
21,461,893
Depreciation and impairment
At 1 April 2023
1,740,981
10,172,388
526,894
12,440,263
Depreciation charged in the year
100,153
642,027
128,023
870,203
At 31 March 2024
1,841,134
10,814,415
654,917
13,310,466
Carrying amount
At 31 March 2024
3,900,455
4,067,535
183,437
8,151,427
At 31 March 2023
3,850,433
3,678,412
255,551
7,784,396

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

2024
2023
£
£
Plant and machinery
759,253
671,429
Buildings
5,156
8,102
764,409
679,531
12
Stocks
2024
2023
£
£
Raw materials and consumables
5,030,347
4,775,808
Work in progress
11,791,495
8,901,426
16,821,842
13,677,234
INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 21 -
13
Debtors
2024
2023
as restated
Amounts falling due within one year:
£
£
Trade debtors
11,907,342
8,415,294
Amounts owed by group undertakings
1,635,007
601,990
Other debtors
663,178
1,158,916
Prepayments and accrued income
444,316
2,095,592
14,649,843
12,271,792
14
Creditors: amounts falling due within one year
2024
2023
as restated
Notes
£
£
Bank loans and overdrafts
16
3,093,297
2,030,224
Obligations under finance leases
17
256,568
208,752
Trade creditors
4,227,503
3,722,851
Amounts owed to group undertakings
3,105,000
1,170,000
Corporation tax
1,309,096
37,642
Other taxation and social security
624,370
224,285
Other creditors
1,885,151
2,876,888
Accruals and deferred income
2,161,700
4,209,739
16,662,685
14,480,381

Included in other creditors due in less than one year are amounts of £1,609,729 (2023: £2,560,882) relating to invoice financing facilities, secured on fixed and floating charges.

15
Creditors: amounts falling due after more than one year
2024
2023
Notes
£
£
Bank loans and overdrafts
16
-
0
2,861,928
Obligations under finance leases
17
509,446
362,680
509,446
3,224,608

 

INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 22 -
16
Loans and overdrafts
2024
2023
£
£
Bank loans
2,852,810
4,892,152
Bank overdrafts
240,487
-
0
3,093,297
4,892,152
Payable within one year
3,093,297
2,030,224
Payable after one year
-
0
2,861,928

The bank borrowings of the company are secured by charges over the land and buildings owned by the company.

 

At the year end there is a cross guarantee and debenture in place between the company, IFA Group Limited and IFA Metals Limited International.

Included within bank loans is a loan with a total balance of £2,852,811 as at 31 March 2024. Interest is charged at a floating rate of at least 2.25% above the base rate. The loan is due for repayment by November 2024.

17
Finance lease obligations
2024
2023
Future minimum lease payments due under finance leases:
£
£
Within one year
256,568
210,206
In two to five years
509,446
361,226
766,014
571,432

Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The lease creditor is secured against the assets to which the lease agreement relates.

INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 23 -
18
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
2024
2023
Balances:
£
£
Accelerated capital allowances
914,000
1,133,000
Short term timing differences
(11,000)
(10,000)
903,000
1,123,000
2024
Movements in the year:
£
Liability at 1 April 2023
1,123,000
Credit to profit or loss
(220,000)
Liability at 31 March 2024
903,000
19
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
542,918
445,500

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.

20
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
74,318
74,318
74,318
74,318

All Ordinary shares hold equal voting rights and entitlement to dividends.

21
Financial commitments, guarantees and contingent liabilities

At the year end there is a cross guarantee and debenture in place between the company, IFA Metals International Limited and IFA Group Limited covering the following creditors which are also secured by fixed ad floating charges. Bank loans of £2,852,811 (2023: £3,120,261) and invoice finance facilities of £1,609,729 (2023: £2,560,882l).

 

The company has a guarantee given by Export Credits Guarantee department for £1,960,000 dated 6 January 2023.

INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 24 -
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:

2024
2023
as restated
£
£
Within one year
112,722
59,068
Between two and five years
130,719
50,716
243,441
109,784
23
Capital commitments

Amounts contracted for but not provided in the financial statements:

2024
2023
£
£
Acquisition of tangible fixed assets
200,000
-
24
Related party transactions

Entities under common control

M Burnham, a director of the company, is also a director of 4Ren6 Limited. During the year the company made purchases from 4Ren6 Limited with a total value of £nil (2023: £46,200). At the year end a balance of £nil (2023: £nil) was due to the company.

 

M Burnham, a director of the company, is also a director of Iidea Limited. During the year the company made purchases from Iidea Limited with a total value of £13,293 (2023: £1,020). At the year end a balance of £nil (2023: £nil) was due from the company to Iidea Limited.

 

M Tomlinson, a director of the company, is also a director of Smea Events Limited. During the year the company made purchases from Smea Events Limited with a total value of £720 (2023: £nil). At the year end a balance of £nil (2023: £nil) was due from the company to Smea Events Limited.

 

During the year, the company paid rent of £nil (2023: £16,859) to a retirement benefit scheme set up to benefit the directors.

 

INDEPENDENT FORGINGS & ALLOYS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 25 -
25
Directors' transactions
Description
% Rate
Opening balance
Amounts advanced
Amounts repaid
Closing balance
£
£
£
£
G Davies
-
1,548
-
(1,548)
-
A McGuiness
-
144,396
5,905
-
150,301
C Syson
-
40
-
(40)
-
145,984
5,905
(1,588)
150,301
26
Ultimate controlling party

The ultimate parent company is IFA Group Limited. Copies of IFA Group Limited financial statements can be obtained from Companies House.

27
Prior year restatements

The comparative figures for balances as at 31 March 2023 have been restated in respect of prepayments which has increased by £1,771,891 and bank loans due less than 1 year which has also increased by the same amount (see notes 12 and 13). The restatement recognises a bank loan which was received during the year and used to make a prepayment for stock which was also omitted from the accounts. This restatement has no impact on profit, reserves or net assets.

 

The comparative figures for operating lease commitments have also been restated due to omissions in the prior year. This restatement has had no impact on profit, reserves or net assets. The restatement increased the total operating lease commitment for the comparative year by £107,706.

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