Miswa Chemicals Limited - Limited company accounts 20.1

REGISTERED NUMBER: 01579877 (England and Wales)

Strategic Report, Report of the Director and

Financial Statements for the Year Ended 31 March 2020

for

MISWA CHEMICALS LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Director

3

Report of the Independent Auditors

4

Statement of Comprehensive Income

6

Balance Sheet

7

Statement of Changes in Equity

8

Cash Flow Statement

9

Notes to the Cash Flow Statement

10

Notes to the Financial Statements

12

DIRECTOR:

Mrs S Patel-Champion

SECRETARY:

Mrs S Patel-Champion

REGISTERED OFFICE:

Caswell Road

Brackmills

Northampton

Northamptonshire

NN4 7PW

REGISTERED NUMBER:

01579877 (England and Wales)

AUDITORS:

Butler & Co LLP

Chartered Accountants

& Statutory Auditor

Third Floor

126-134 Baker Street

London

W1U 6UE

The director presents her strategic report for the year ended 31 March 2020.

REVIEW OF BUSINESS

The principal activity of the company in the year under review was that of the manufacturing car care products and insecticides.

Revenues are down from last year primarily due to a decline in the Africa export market. The key performance indicators that the company uses are level of sales and gross margin achieved.

Sales £13.4m down by 10.4% from last year

Gross Profit £2.8m which is similar to last year

The business is financially tightly managed with all costs under constant review to maximise on gross profit and gross margins.

The company continues to increase its efforts to increase UK market share. However, the current COVID-19 scenario has impacted the UK economy generally and this company will also feel the impact of the economic downturn in the next financial year with reduced levels of revenue.

PRINCIPAL RISKS AND UNCERTAINTIES

Key business risks remain the operation cost. The company monitors the cost of its operation on a monthly basis. The company's operations expose to a variety of financial risks that include the effects of changes in credit risk and liquidity risk.The company has debt finance but does not use derivative financial instruments to manage interest rate and as such, no hedge accounting is applied.

The company's financial instruments comprise cash and liquid resources, various items such as trade debtors, trade creditors etc, that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the company's operations. It is, and has been throughout the period under review, the company's policy that no trading in financial instruments shall be undertaken. The main risks arising from the company's financial instruments are interest rate risk, credit risk, and foreign currency risk.

Interest rate risk

The company's exposure to market risk for changes in interest rates relates primarily to bank loan and overdraft facilities. The company's exposure to interest rate fluctuations on its borrowings is managed by the use of both fixed and floating facilities.

Credit risk

The company trades with only recognised, creditworthy third parties. It is company policy that all customers who wish to trade on credit terms are subject to credit vetting procedures. In addition, receivables balances are monitored on an ongoing basis with the result that the company's exposure to bad debts is not significant.

Foreign currency risk

The company trades in foreign currency. The possibility that currency depreciation will negatively affect the value of the assets exposed to currency risk. The company manages it by hedging with a combination of forex forwards and options which allow the company to fix country risk within acceptable levels.

ON BEHALF OF THE BOARD:

Mrs S Patel-Champion - Director

23 October 2020

The director presents her report with the financial statements of the company for the year ended 31 March 2020.

DIVIDENDS

No dividends will be distributed for the year ended 31 March 2020.

DIRECTORS

Mrs S Patel-Champion has held office during the whole of the period from 1 April 2019 to the date of this report.

Other changes in directors holding office are as follows:

R R Patel - resigned 30 July 2019

DIRECTOR'S RESPONSIBILITIES STATEMENT

The director is responsible for preparing the Strategic Report, the Report of the Director and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless she is 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 director is required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The director is 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 her to ensure that the financial statements comply with the Companies Act 2006. She is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the director is aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and she has taken all the steps that she ought to have taken as a director in order to make herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Butler & Co LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

Mrs S Patel-Champion - Director

23 October 2020

Opinion

We have audited the financial statements of Miswa Chemicals Limited (the 'company') for the year ended 31 March 2020 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 March 2020 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 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

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

-	the director's use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the director has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The director is responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Director, but does not include the financial statements and our Report of the Auditors thereon.

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.

In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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 the audit:

-	the information given in the Strategic Report and the Report of the Director for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Director 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 Report of the Director.

We have nothing to report in respect of the following matters where 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 director's remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit.

Responsibilities of director

As explained more fully in the Director's Responsibilities Statement set out on page three, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

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 a Report of the Auditors 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.

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 Report of the Auditors.

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 a Report of the Auditors 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.

Sanjeev Phadke (Senior Statutory Auditor)

for and on behalf of Butler & Co LLP

Chartered Accountants

& Statutory Auditor

Third Floor

126-134 Baker Street

London

W1U 6UE

23 October 2020

TURNOVER

3

13,427,748

14,997,199

Cost of sales

10,555,625

12,150,014

GROSS PROFIT

2,872,123

2,847,185

Administrative expenses

2,760,262

2,534,454

111,861

312,731

Other operating income

34,247

33,912

OPERATING PROFIT

5

146,108

346,643

Interest receivable and similar income

795

4,900

146,903

351,543

Interest payable and similar expenses

7

65,250

59,140

PROFIT BEFORE TAXATION

81,653

292,403

Tax on profit

8

13,359

(67,739

)

PROFIT FOR THE FINANCIAL YEAR

68,294

360,142

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

68,294

360,142

FIXED ASSETS

Tangible assets

9

3,743,746

4,009,628

CURRENT ASSETS

Stocks

10

2,630,818

2,178,693

Debtors

11

4,872,447

6,092,852

Cash at bank and in hand

214,820

703,875

7,718,085

8,975,420

CREDITORS

Amounts falling due within one year

12

3,459,797

4,106,790

NET CURRENT ASSETS

4,258,288

4,868,630

TOTAL ASSETS LESS CURRENT LIABILITIES

8,002,034

8,878,258

CREDITORS

Amounts falling due after more than one year

13

(1,077,624

)

(2,042,875

)

PROVISIONS FOR LIABILITIES

16

(320,539

)

(299,806

)

NET ASSETS

6,603,871

6,535,577

CAPITAL AND RESERVES

Called up share capital

17

70,300

70,300

Revaluation reserve

18

1,302,808

1,302,808

Retained earnings

18

5,230,763

5,162,469

SHAREHOLDERS' FUNDS

6,603,871

6,535,577

The financial statements were authorised for issue by the director and authorised for issue on 23 October 2020 and were signed by:

Mrs S Patel-Champion - Director

Called up

share

Retained

Revaluation

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 April 2018

70,300

4,802,327

1,302,808

6,175,435

Changes in equity

Total comprehensive income

-

360,142

-

360,142

Balance at 31 March 2019

70,300

5,162,469

1,302,808

6,535,577

Changes in equity

Total comprehensive income

-

68,294

-

68,294

Balance at 31 March 2020

70,300

5,230,763

1,302,808

6,603,871

Cash flows from operating activities

Cash generated from operations

1

(306,300

)

442,965

Interest paid

(65,250

)

(59,140

)

Tax paid

63,977

19,791

Deferred tax

20,732

-

Net cash from operating activities

(286,841

)

403,616

Cash flows from investing activities

Purchase of tangible fixed assets

(3,068

)

(179,550

)

Interest received

795

4,900

Net cash from investing activities

(2,273

)

(174,650

)

Cash flows from financing activities

Loan repayments in year

(956,618

)

(774,953

)

Net cash from financing activities

(956,618

)

(774,953

)

Decrease in cash and cash equivalents

(1,245,732

)

(545,987

)

Cash and cash equivalents at beginning of year

2

703,872

1,249,859

Cash and cash equivalents at end of year

2

(541,860

)

703,872

1.	RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2020

2019

£

£

Profit before taxation

81,653

292,403

Depreciation charges

268,950

320,456

Finance costs

65,250

59,140

Finance income

(795

)

(4,900

)

415,058

667,099

Increase in stocks

(452,125

)

(599,880

)

Decrease/(increase) in trade and other debtors

1,143,069

(1,225,526

)

(Decrease)/increase in trade and other creditors

(1,412,302

)

1,601,272

Cash generated from operations

(306,300

)

442,965

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 March 2020

31/3/20

1/4/19

£

£

Cash and cash equivalents

214,820

703,875

Bank overdrafts

(756,680

)

(3

)

(541,860

)

703,872

Year ended 31 March 2019

31/3/19

1/4/18

£

£

Cash and cash equivalents

703,875

1,249,862

Bank overdrafts

(3

)

(3

)

703,872

1,249,859

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1/4/19

Cash flow

At 31/3/20

£

£

£

Net cash

Cash at bank and in hand

703,875

(489,055

)

214,820

Bank overdrafts

(3

)

(756,677

)

(756,680

)

703,872

(1,245,732

)

(541,860

)

Debt

Debts falling due within 1 year

(333,601

)

(8,632

)

(342,233

)

Debts falling due after 1 year

(2,042,875

)

965,251

(1,077,624

)

(2,376,476

)

956,619

(1,419,857

)

Total

(1,672,604

)

(289,113

)

(1,961,717

)

1.	STATUTORY INFORMATION

Miswa Chemicals Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain assets.

Accounting judgements and key sources of estimation uncertainty

Preparation of the financial statements requires management to make significant judgements and estimates in determining the carrying amounts of certain assets and liabilities. Management makes assumptions of the effects of uncertain future events on those assets and liabilities at the balance sheet date. The management's estimates and assumptions are based on historical experience and expectation of future events and are reviewed periodically. This disclosure excludes uncertainty over future events and judgement in respect of measuring financial instruments.

Turnover

Revenue comprises the fair value of the sale of goods and services to external customers, net of value added tax, and returns. Revenue is recognised on the sale of goods when the significant risks and rewards of ownership of goods have passed to the buyer and the amount of revenue can be measured reliably. Revenue on goods delivered is recognised when the customer accepts delivery.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Freehold & leasehold property

-

2% on cost and over 5 years for improvem

Plant and machinery

-

25% on reducing balance

Fixtures and fittings

-

25% on reducing balance

Stocks

Stock consists of raw material and finished goods. Stock is valued at the lower of cost (including raw materials, direct labour, other direct costs and related production overheads) and net realisable value, after making due allowance for obsolete and slow moving items. Cost is generally determined on a FIFO basis.

Financial instruments policy

Financial assets and financial liabilities are recognised in the balance sheet when the company becomes a party to the contractual provisions of the instrument.

Trade and other debtors and creditors are classified as basic financial instruments and measured at initial recognition at transaction price.Debtors and creditors are subsequently measured at amortised cost using the effective interest rate method. A provision is established when there is objective evidence that the company will not be able to collect all amounts due.

Cash and cash equivalents are classified as basic financial instruments and comprise cash in hand and at bank and bank overdrafts which are an integral part of the company's cash management.

Financial liabilities and equity instruments issued by the company are classified in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in assets of the company after deducting all of its liabilities. Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Hire purchase and leasing commitments

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

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

Going concern

The directors believe that the company is well placed to manage its business risks successfully despite the current uncertain economic outlook. The directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. The Directors consider it appropriate to adopt the going concern basis in preparing the annual financial statements.

Since the financial year end there are uncertainties relating to the COVID-19 pandemic which may impact on recoverability of some debtors. No provisions have been made in the financial statements.

3.

TURNOVER

The turnover and profit before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

2020

2019

£

£

United Kingdom

8,587,369

8,837,272

Africa

4,821,170

6,159,927

Middle East

19,209

-

13,427,748

14,997,199

4.	EMPLOYEES AND DIRECTORS

2020

2019

£

£

Wages and salaries

2,054,974

1,884,379

Social security costs

166,472

155,822

Other pension costs

53,621

56,922

2,275,067

2,097,123

The average number of employees during the year was as follows:

2020

2019

Production

68

70

Administration

12

12

80

82

2020

2019

£

£

Directors' remuneration

52,500

50,000

5.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

2020

2019

£

£

Hire of plant and machinery

-

1,600

Depreciation - owned assets

268,950

320,459

Foreign exchange differences

(12,663

)

18,351

6.	AUDITORS' REMUNERATION

2020

2019

£

£

Fees payable to the company's auditors for the audit of the company's financial statements

9,750

9,600

The above auditor's remuneration includes £500 (2019 - £500) for the provision of a non-audit services.

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

2020

2019

£

£

Bank interest

65,250

59,140

8.

TAXATION

Analysis of the tax charge/(credit)

The tax charge/(credit) on the profit for the year was as follows:

2020

2019

£

£

Current tax:

UK corporation tax

-

(76,322

)

Deferred tax

20,733

8,583

Over/underprov. in prior years

(7,374

)

-

Tax on profit

13,359

(67,739

)

Reconciliation of total tax charge/(credit) included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained below:

2020

2019

£

£

Profit before tax

81,653

292,403

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2019 - 19%)

15,514

55,557

Effects of:

Timing differences

35,696

8,697

Deferred tax

20,733

8,583

Losses carried back

(7,374

)

-

Disallowable expenses

400

258

Loss relief

(51,610

)

(57,138

)

R&D credit

-

(83,696

)

Total tax charge/(credit)

13,359

(67,739

)

9.	TANGIBLE FIXED ASSETS

Freehold

Fixtures

& leasehold

Plant and

and

property

machinery

fittings

Totals

£

£

£

£

COST OR VALUATION

At 1 April 2019

6,405,236

7,595,507

75,355

14,076,098

Improvements/Additions

-

2,461

607

3,068

At 31 March 2020

6,405,236

7,597,968

75,962

14,079,166

DEPRECIATION

At 1 April 2019

3,022,885

6,979,048

64,537

10,066,470

Charge for year

111,364

154,730

2,856

268,950

At 31 March 2020

3,134,249

7,133,778

67,393

10,335,420

NET BOOK VALUE

At 31 March 2020

3,270,987

464,190

8,569

3,743,746

At 31 March 2019

3,382,351

616,459

10,818

4,009,628

Included in cost or valuation of land and buildings is freehold land of £ 275,000 (2019 - £ 275,000 ) which is not depreciated.

Cost or valuation at 31 March 2020 is represented by:

Freehold

Fixtures

& leasehold

Plant and

and

property

machinery

fittings

Totals

£

£

£

£

Valuation in 1989

6,405,236

7,597,968

75,962

14,079,166

If freehold land and buildings had not been revalued they would have been included at the following historical cost:

2020

2019

£

£

Cost

4,835,587

4,835,587

Aggregate depreciation

2,120,517

2,041,854

Value of land in freehold land and buildings

275,000

275,000

Freehold at 54 Caswell Road was valued on an open market basis on 19 March 1989 by external professional valuers .

In the opinion of the directors, the above carrying value is not significantly different from current market value.