Company registration number 07931973 (England and Wales)
WJ South West Limited
Annual report and financial statements
For the year ended 31 January 2023
WJ South West Limited
Company information
Directors
Mr W D Johnston
Mr M Webb
Mr G M Andrews
Mr T J Trevelyan
Company number
07931973
Registered office
Tremayne House
Westpark
Chelston
Wellington
Somerset
TA21 9AD
Auditor
DJH Mitten Clarke Audit Limited
The Glades
Festival Way
Festival Park
Stoke-on-Trent
Staffordshire
ST1 5SQ
WJ South West Limited
Contents
Page
Strategic report
1 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 9
Statement of comprehensive income
10
Statement of financial position
11
Statement of changes in equity
12
Notes to the financial statements
13 - 27
WJ South West Limited
Strategic report
For the year ended 31 January 2023
- 1 -

The directors present the strategic report for the year ended 31 January 2023.

 

INTRODUCTION

WJ South West Limited ("the company") was incorporated in 2012 and is a trading subsidiary of WJ (Group) Limited.

 

The company is able to provide temporary and permanent road markings (screed, extruded and raised rib line), road stud installation both temporary and permanent, reflective studs, road marking removal (which includes one of the largest fleets of specialist hydro-blasting removal and retexturing machines in the UK), road surface retexturing, road truck fabrication and refurbishment, applied media products, temporary safety cameras and road marking testing services.

In December 2020 THI Investments took a majority share in the WJ Group. THI’s involvement has enabled the company to continue to grow within the existing markets both organically and through acquisition. Additionally, it will support the company's transformation into a data driven business though IT and technology which will improve our operational efficiency. We continue to explore adjacent markets and our commitment to innovation has provided some growth opportunities, particularly in the Intelligent Transportation Systems sector.

The company is committed to creating safe and sustainable journeys for everyone and we have an ambitious target of becoming net zero by 2032.

REVIEW OF BUSINESS

We aim to present a balanced and comprehensive review of the development and performance of our business during the year and its position at the year end. Our review is consistent with the size and non-complex nature of our business and is written in the context of the risks and uncertainties we face.

 

Turnover in 2023 of £16,042,729 was in increase of 10.6% on the previous year which was due to an increase in activity of National Highways (formerly Highways England), a number of local authorities and in our off highways sector.

 

The gross profit margin has decreased from 30.1% in 2022 to 28.0% in 2023 due to cost increases in the year.

 

The company maintains it focus on working capital management with particular focus on inventory management and debt control which resulted in an increase of £986,221 in working capital.

 

During the year the company has invested £1,152,418 in capital expenditure reflecting an ongoing strategy of maintaining the most modern and technologically advanced plant and machinery in our sector in order to ensure maximum self-delivery and unparalleled customer service. Investment decisions are subject to capital appraisal reviews in line with this vision and taking into account the company's resources and innovation strategy.

 

Total net assets at the end of the year increased from £5,469,573 to £7,139,022 reflecting the retained profit in the period.

WJ South West Limited
Strategic report (continued)
For the year ended 31 January 2023
- 2 -
PRINCIPAL RISKS AND UNCERTAINTIES

Government Spending Decisions - the Company recognises that the majority of its income derives from government sources and therefore plays an active role, through a number of trade bodies and associations, in promoting and developing the safety, effectiveness and sustainability of its products and services in live with evolving DoT priorities.

 

Competition - the Company differentiates itself from the competition by continued efforts in R&D and Innovation and a strategy of delivering safer and more sustainable products and services. The Company and wider Group has made strategic investments to develop the UK largest nationwide network and has diversified into adjacent markets to enable it to stay ahead of the evolving competitor base.

 

Materials Supply – the Company has developed an internal supply chain for the bulk of the product it uses and has developed strong partnerships in areas where internal production is not possible. The Company works closely with its raw materials supply chains and utilises group buying power to ensure that availability of product is robust and that pricing is sustainable.

Fuel Prices – the Company is not immune to the impact of rising fuel prices but the effect is mitigated through the development and upgrading of a modern fleet of fuel efficient vehicle and an industry leading driver awareness training program and incentivisation scheme which leads to not only improved fuel consumption but also, as a consequence, a reduction in the Company’s carbon footprint.

 

COVID 19 – the Company adopted a very proactive approach to the management operations and the safety of employees which continues to be the number one priority of the Company. The Company have introduced a number of initiatives during and coming through the pandemic to ensure that their teams are in the best possible position to succeed in the future. Community is a core value for WJ and we fully support the Government our clients, communities and other stakeholders as we deliver our vision of ‘Safer sustainable journeys for all’.

FINANCIAL INSTRUMENT RISK

Credit Risk – the Company has a broad range of customers including both private companies and public sector bodies. The risk that the Company will suffer from significant levels of bad debt is managed by the diversified customer portfolio and the well established credit control procedures operated across the Company.

 

Cash Flow Risk – the Company is funded through a combination of Hire Purchase funding, a Group Term Loan and a Group Revolving Credit Facility. The Company also has access to committed investment funding to support significant capex or acquisitions.

 

Liquidity Risk – the Company is able to meet short and medium term obligations from operational cash generation and in addition have access to in excess of £20m of undrawn committed facilities.

 

KEY PERFORMANCE INDICATORS

We consider that our key financial performance indicators are those that communicate the financial performance and strength of the company as a whole, these being turnover, gross profit margin and operating profit margin. The success of the company will be reflected in the balance sheet net assets and company liquidity.

 

                 2023     2022    

Turnover             £16,042,729     £14,507,335

Gross profit margin         28.0%     30.1%    

Operating profit margin         11.2%     14.5%    

 

Explanation of the key performance indicators detailed above can be found in the review of business section of this report.

WJ South West Limited
Strategic report (continued)
For the year ended 31 January 2023
- 3 -

On behalf of the board

Mr G M Andrews
Director
28 July 2023
WJ South West Limited
Directors' report
For the year ended 31 January 2023
- 4 -

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

Principal activities

The principal activity of the company continued to be that of road markings contractors.

Results and dividends

The results for the year are set out on page 10.

No ordinary dividends were paid (2022 - £Nil). The directors do not recommend payment of a final dividend.

Directors

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

Mr W D Johnston
Mr M Webb
Mr G M Andrews
Mr T J Trevelyan
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.

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.

WJ South West Limited
Directors' report (continued)
For the year ended 31 January 2023
- 5 -
On behalf of the board
Mr G M Andrews
Director
28 July 2023
2023-07-28
WJ South West Limited
Independent auditor's report
To the members of WJ South West Limited
- 6 -
Opinion

We have audited the financial statements of WJ South West Limited (the 'company') for the year ended 31 January 2023 which comprise the statement of comprehensive income, the statement of financial position, 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.

WJ South West Limited
Independent auditor's report (continued)
To the members of WJ South West Limited
- 7 -

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

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.

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:

 

WJ South West Limited
Independent auditor's report (continued)
To the members of WJ South West Limited
- 8 -

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

 

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:

 

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

 

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

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.

WJ South West Limited
Independent auditor's report (continued)
To the members of WJ South West Limited
- 9 -

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.

The Glades
Gary Neil Chadwick FCCA
Festival Way
Senior Statutory Auditor
Festival Park
For and on behalf of
Stoke-on-Trent
DJH Mitten Clarke Audit Limited
Staffordshire
ST1 5SQ
Chartered Accountants
Statutory Auditor
31 July 2023
WJ South West Limited
Statement of comprehensive income
For the year ended 31 January 2023
- 10 -
2023
2022
Notes
£
£
Turnover
16,042,729
14,507,335
Cost of sales
(11,550,910)
(10,136,388)
Gross profit
4,491,819
4,370,947
Administrative expenses
(2,774,286)
(2,435,584)
Other operating income
80,351
175,433
Operating profit
3
1,797,884
2,110,796
Interest receivable and similar income
6
87,961
40,371
Interest payable and similar expenses
7
(46,437)
(58,491)
Profit before taxation
1,839,408
2,092,676
Tax on profit
8
(169,959)
(247,319)
Profit for the financial year
1,669,449
1,845,357

The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

WJ South West Limited
Statement of financial position
as at 31 January 2023
31 January 2023
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
9
341,576
221,214
Tangible assets
10
3,264,518
3,087,325
Investments
11
293,334
-
0
3,899,428
3,308,539
Current assets
Stocks
13
535,421
575,622
Debtors falling due after more than one year
14
3,518,444
1,013,444
Debtors falling due within one year
14
2,025,847
1,560,668
Cash at bank and in hand
544,276
2,333,489
6,623,988
5,483,223
Creditors: amounts falling due within one year
15
(2,653,867)
(2,499,323)
Net current assets
3,970,121
2,983,900
Total assets less current liabilities
7,869,549
6,292,439
Creditors: amounts falling due after more than one year
16
(416,053)
(678,351)
Provisions for liabilities
Deferred tax liability
18
314,474
144,515
(314,474)
(144,515)
Net assets
7,139,022
5,469,573
Capital and reserves
Called up share capital
20
200
200
Share premium account
21
187,900
187,900
Profit and loss reserves
22
6,950,922
5,281,473
Total equity
7,139,022
5,469,573
The financial statements were approved by the board of directors and authorised for issue on 28 July 2023 and are signed on its behalf by:
Mr G M Andrews
Director
Company Registration No. 07931973
WJ South West Limited
Statement of changes in equity
For the year ended 31 January 2023
- 12 -
Share capital
Share premium account
Profit and loss reserves
Total
£
£
£
£
Balance at 1 February 2021
200
187,900
3,436,116
3,624,216
Year ended 31 January 2022:
Profit and total comprehensive income for the year
-
-
1,845,357
1,845,357
Balance at 31 January 2022
200
187,900
5,281,473
5,469,573
Year ended 31 January 2023:
Profit and total comprehensive income for the year
-
-
1,669,449
1,669,449
Balance at 31 January 2023
200
187,900
6,950,922
7,139,022
WJ South West Limited
Notes to the financial statements
For the year ended 31 January 2023
- 13 -
1
Accounting policies
Company information

WJ South West Limited is a private company limited by shares incorporated in England and Wales. The registered office is Tremayne House, Westpark, Chelston, Wellington, Somerset, TA21 9AD.

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:

 

 

This information is included in the consolidated financial statements of WJ Group Holdings Limited as at 31 January 2023 and these financial statements may be obtained from Unit 7 Brock Way, Newcastle, Staffordshire, United Kingdom, ST5 6AZ.

Preparation of consolidated financial statements

 

The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

 

WJ South West Limited is a wholly owned subsidiary of WJ (Group) Limited and the results of WJ South West Limited are included in the consolidated financial statements of WJ Group Holdings Limited which are available from Unit 7 Brock Way, Newcastle, Staffordshire, United Kingdom, ST5 6AZ.

 

WJ Group Holdings Limited is the smallest group for which consolidated accounts are prepared.

 

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with other group entities where the relationship is one of being wholly owned.

1.2
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

WJ South West Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
1
Accounting policies
(Continued)
- 14 -
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 contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

1.4
Intangible fixed assets - goodwill

Goodwill, being the amount paid in connection with the acquisition of a business in 2012, was amortised evenly over its estimated useful life of seven years. This goodwill is fully amortised.

 

The goodwill arising on hive-ups of trade in 2020 and 2023 are being amortised over their estimated useful lives of five years.

1.5
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

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

Leasehold improvements
- in accordance with the lease or 20% straight line
Plant and equipment
- 25% on a reducing balance basis
Fixtures and fittings
- 20% on a reducing balance basis
Motor vehicles
- 25% & 35% on a reducing balance basis

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.

1.6
Fixed asset investments

Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

1.7
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible 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).

WJ South West Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
1
Accounting policies
(Continued)
- 15 -

Recoverable amount is the higher of fair value less costs to sell and value in use.

 

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

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 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 in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

1.8
Stocks

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

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

1.9
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand.

1.10
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 statement of financial position 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.

WJ South West Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
1
Accounting policies
(Continued)
- 16 -
Impairment of financial assets

Financial assets 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.

Basic financial liabilities

Basic financial liabilities, including creditors 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.

Derecognition of financial liabilities

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

1.11
Equity instruments

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

1.12
Taxation

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

WJ South West Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
1
Accounting policies
(Continued)
- 17 -
Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement 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.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.13
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense.

 

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

 

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

1.14
Retirement benefits

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

1.15
Leases

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

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position 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.

WJ South West Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
1
Accounting policies
(Continued)
- 18 -

Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.

1.16
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.

1.17

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost less any provision for impairment.

2
Judgements and key sources of estimation uncertainty

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

 

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

 

Critical judgements

 

In the directors' opinion there are no critical judgements that they have made in applying the company's accounting policies and that have had a significant effect on the amounts recognised in the financial statements.

 

Key sources of estimation uncertainty

 

The directors do not consider there to be any key estimates or assumptions used in preparing the financial statements.

 

3
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
17,500
17,500
Depreciation of owned tangible fixed assets
914,026
807,927
Profit on disposal of tangible fixed assets
(4,499)
(30,725)
Amortisation of intangible assets
118,835
82,956
Operating lease charges
187,511
167,546
WJ South West Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
- 19 -
4
Employees

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

2023
2022
Number
Number
Production
73
73
Administration
25
23
Director
-
1
Total
98
97

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
3,818,805
3,528,808
Social security costs
424,406
374,950
Pension costs
96,928
92,076
4,340,139
3,995,834
5
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
-
0
17,328

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 0 (2022 - 1).

6
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest receivable from group companies
87,961
19,086
Income from fixed asset investments
Income from shares in group undertakings
-
0
21,285
Total income
87,961
40,371
WJ South West Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
- 20 -
7
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
98
-
Interest payable to group undertakings
5,000
14,862
Interest on finance leases and hire purchase contracts
41,339
43,346
Other interest
-
0
283
46,437
58,491
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
-
0
60,317
Deferred tax
Origination and reversal of timing differences
169,959
187,002
Total tax charge
169,959
247,319

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

2023
2022
£
£
Profit before taxation
1,839,408
2,092,676
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
349,488
397,608
Tax effect of expenses that are not deductible in determining taxable profit
39,051
5,657
Effect of change in corporation tax rate
40,790
34,684
Group relief
(282,040)
(148,273)
Amortisation on assets not qualifying for tax allowances
21,709
15,762
Dividend income
-
0
(4,044)
Super deduction allowance
(33,206)
(52,744)
Deferred tax not previously provided
-
0
(1,331)
Tax charge on hive up of assets
34,167
-
0
Taxation charge for the year
169,959
247,319
WJ South West Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
8
Taxation
(Continued)
- 21 -

Factors affecting future tax charges

The main corporation tax rate has been legislated to increase from 19% to 25% with effect from 1 April 2023, significantly increasing the tax payable on profits earned.

 

Given the imminent change to the main corporation tax rate, deferred tax has been provided for at 25% where appropriate.

9
Intangible fixed assets
Goodwill
£
Cost
At 1 February 2022
4,234,778
Additions
239,197
At 31 January 2023
4,473,975
Amortisation and impairment
At 1 February 2022
4,013,564
Amortisation charged for the year
118,835
At 31 January 2023
4,132,399
Carrying amount
At 31 January 2023
341,576
At 31 January 2022
221,214
WJ South West Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
- 22 -
10
Tangible fixed assets
Leasehold improvements
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 February 2022
79,394
315,534
126,137
6,515,303
7,036,368
Additions
-
0
163,888
56,967
931,563
1,152,418
Disposals
-
0
(34,894)
-
0
(215,462)
(250,356)
At 31 January 2023
79,394
444,528
183,104
7,231,404
7,938,430
Depreciation and impairment
At 1 February 2022
32,057
134,661
68,667
3,713,658
3,949,043
Depreciation charged in the year
19,693
69,917
18,651
805,765
914,026
Eliminated in respect of disposals
-
0
(21,779)
-
0
(167,378)
(189,157)
At 31 January 2023
51,750
182,799
87,318
4,352,045
4,673,912
Carrying amount
At 31 January 2023
27,644
261,729
95,786
2,879,359
3,264,518
At 31 January 2022
47,337
180,873
57,470
2,801,645
3,087,325

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

2023
2022
£
£
Motor vehicles
1,144,651
1,757,627
11
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
12
293,334
-
0
WJ South West Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
11
Fixed asset investments
(Continued)
- 23 -
Movements in fixed asset investments
Shares in subsidiaries
£
Cost or valuation
At 1 February 2022
-
Additions
293,334
At 31 January 2023
293,334
Carrying amount
At 31 January 2023
293,334
At 31 January 2022
-
12
Subsidiaries

Details of the company's subsidiaries at 31 January 2023 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Jeff Williams Mobile Pressure Washing Limited
Tremayne House, Westpark, Chelston, Wellington, Somerset, TA21 9AD
Ordinary
100.00
13
Stocks
2023
2022
£
£
Raw materials and consumables
535,421
575,622
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
913,295
770,740
Corporation tax recoverable
520,681
102,681
Amounts owed by group undertakings
166,636
13,122
Prepayments and accrued income
425,235
674,125
2,025,847
1,560,668
WJ South West Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
14
Debtors
(Continued)
- 24 -
2023
2022
Amounts falling due after more than one year:
£
£
Amounts owed by group undertakings
3,518,444
1,013,444
Total debtors
5,544,291
2,574,112

Amounts owed by group undertakings due after more than one year are due between 1 and 2 years. Interest is receivable at a rate of 2.5%. The amounts are unsecured.

15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
17
462,298
680,428
Trade creditors
381,033
587,357
Amounts owed to group undertakings
1,002,307
640,408
Taxation and social security
209,906
178,026
Other creditors
61,549
60,455
Accruals and deferred income
536,774
352,649
2,653,867
2,499,323
16
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
17
216,053
678,351
Amounts owed to group undertakings
200,000
-
0
416,053
678,351

Amounts owed to group undertakings due after more than one year are due between 1 and 2 years. Interest is payable at a rate of 2.5%. The amounts are unsecured.

WJ South West Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
- 25 -
17
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
462,298
680,428
In two to five years
216,053
678,351
678,351
1,358,779

Finance lease payments represent rentals payable by the company for certain items of motor vehicles. 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 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

 

Obligations under finance lease and hire purchase contracts are secured on the assets acquired.

18
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
314,474
144,515
2023
Movements in the year:
£
Liability at 1 February 2022
144,515
Charge to profit or loss
169,959
Liability at 31 January 2023
314,474

The deferred tax liability set out above relates to accelerated capital allowances.

19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
96,928
92,076

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.

WJ South West Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
19
Retirement benefit schemes
(Continued)
- 26 -

Contributions totalling £18,054 (2022 : £17,294) were payable to the fund at the balance sheet date and are included in creditors.

20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A of £1 each
100
100
100
100
Ordinary B of £1 each
100
100
100
100
200
200
200
200

All Ordinary shares rank pari passu in all respects. There are no restrictions on the distribution of dividends and the repayment of capital.

21
Share premium account

The share premium represents the amount paid in excess of the nominal value of the Ordinary B shares. This is not a distributable reserve.

22
Profit and loss reserves

Profit and loss reserves represent the accumulated profits less accumulated losses and distributions up to the reporting date. This is a distributable reserve.

23
Financial commitments, guarantees and contingent liabilities

At the balance sheet date, the company had guaranteed borrowings of a parent company, all charges being managed by a security agent. At 31 January 2023 these borrowings amounted to £55,409,948 (2022 : £50,079,960). As at the date of approval of these financial statements, the directors do not anticipate that the guarantees will be called upon.

24
Operating lease commitments
Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2023
2022
£
£
Within one year
140,445
163,847
Between two and five years
452,067
477,496
In over five years
198,000
306,000
790,512
947,343
Lessor
WJ South West Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
24
Operating lease commitments
(Continued)
- 27 -

Minimum lease payments due to the company from non-cancellable operating leases are as follows:

2023
2022
£
£
Within one year
74,351
74,351
Between two and five years
30,980
105,330
105,331
179,681

Contingent rents recognised as income in the year amount to £74,351 (2022 - £74,351).

25
Capital commitments

Amounts contracted for but not provided in the financial statements:

2023
2022
£
£
Acquisition of tangible fixed assets
-
28,000
26
Related party transactions

Transactions with other related parties

During the prior year, the company disposed of a motor vehicle to an entity with a common director for £50,640. The motor vehicle was disposed of at net book value, and so no profit or loss on disposal was made. No similar transactions have occurred in the current year. No balances were outstanding with this entity at the current or prior period end.

 

During the year, the company rented a property from an entity in which the directors were the primary beneficiaries. The rent charged during the year was £108,000 (2022 - £108,000). At the year end, the balance owing to the entity was £nil (2022: £nil).

 

27
Ultimate controlling party

The immediate parent company is WJ (Group) Limited which owns 100% of the ordinary share capital. WJ (Group) Limited is incorporated in England and the registered office is Unit 7 Brock Way, Newcastle, Staffordshire, ST5 6AZ.

The ultimate controlling party is THI Holdings GmbH, a company registered in Germany. THI Holdings GmbH is controlled by the Hagenmeyer family.

The smallest group into which the entity is consolidated is WJ Group Holdings Limited. WJ Group Holdings Limited is incorporated in England. Copies of the group financial statements of WJ Group Holdings Limited are available from Unit 7 Brock Way, Newcastle, Staffordshire, United Kingdom, ST5 6AZ.

 

The largest group into which the entity is consolidated is THI Holdings GmbH, a company registered in Germany. Copies of the group financial statements of THI Holdings GmbH are available from THI Investments, Eberhardstraße 65, 70173 Stuttgart, Germany.

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