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Registration number: 04373617

Tone Group Limited

Annual Report and Consolidated Financial Statements

for the Year Ended 31 December 2022

 

Tone Group Limited

Contents

Company Information

1

Strategic Report

2 to 3

Directors' Report

4

Statement of Directors' Responsibilities

5

Independent Auditor's Report

6 to 9

Consolidated Profit and Loss Account

10

Consolidated Balance Sheet

11

Balance Sheet

12

Consolidated Statement of Changes in Equity

13

Statement of Changes in Equity

14

Consolidated Statement of Cash Flows

15

Notes to the Financial Statements

16 to 37

 

Tone Group Limited

Company Information

Directors

AS Needham

M Ahluwalia

Company secretary

M Ahluwalia

Registered office

c/o McBrides Accountants LLP
Nexus House
2 Cray Road
Sidcup
Kent
DA14 5DA

Auditors

McBrides Accountants LLP
Nexus House
Cray Road
Sidcup
Kent
DA14 5DA

 

Tone Group Limited

Strategic Report for the Year Ended 31 December 2022

The directors present their strategic report for the year ended 31 December 2022.

Principal activity

The principal activity of the group is that of a holding company. The principal activities of the subsidiary companies are the provision of contract scaffolding services, the provision of specialist structures for the television and film industries, and the provision of seating and staging.

Fair review of the business

The group consists of three operating activities, comments related to which are detailed further below. Each entity has a similar operating model in that they each provide the design and deployment of temporary structures much of which is constructed from scaffolding and other similar related equipment. Each operating company has continued to focus on the requirements of its clients and the quality of its service provision throughout the year. This has relied on the directors continued commitment to the way the group supplies its services and the innovative approach taken to meet the challenges of its clients and their varied requirements. Continued investment in fixed assets has enabled the group to remain in its position of a leading provider of these services throughout the year.

The directors also recognise the importance of the group's employees to the delivery of its services. Ongoing development of employee skills through training remains important to the ongoing aims and success of the group. Health and safety of employees and the general public remains critical to the group and investment in this area ensures continued adherence to the requirements of its operations.

The directors have reviewed the activities of the group as follows:

Contract scaffolding services

Client activity and therefore revenues have increased again during the year, following the recovery from the period during the Covid 19 pandemic. The directors have continued to make operational efficiencies in the year following the prior year downturn in trade to put the company in the best position possible. This has given rise to an improvement in gross profit and gross profit margin. Overheads as a percentage of turnover has also improved, providing an increase in profit before tax for contract scaffolding services.

Specialist structures for the television and film industry

Revenues have continued to improve on the prior year, which was affected by the pandemic. The group continues to retain a strong position in the sector because of its ability to continue to provide high levels of skilled service and bespoke solutions to its customers.

Provision of seating and staging

Whilst the directors recognise this business had a challenging trading period, the group is well positioned to continue with the provision of seating to its clients.

 

Tone Group Limited

Strategic Report for the Year Ended 31 December 2022

Group financial position

The directors recognise that this has been another challenging year but are pleased with the results for the year and the resulting improvement in net current assets and total equity. The directors are satisfied that the financial position of the group will continue to support existing and anticipated contracts, enabling the group to remain a leading and reliable provider of services to its clients.

Key performance indicators

Management use a range of performance measures to monitor and manage the group. The KPIs used to determine the progress and performance are set out below:

Turnover
Turnover has increased by 43.7% to £19,304,506 from £13,429,616 in the previous year.

Gross Profit
The group's gross profit margin has increased in the year to 45.5% (2021: 42.5%) and overall gross profit has risen by £3,088,764.

Profit Before Tax
Profit before tax earned by the group has increased from £1,490,770 to £2,637,211.

Balance Sheet
The balance sheet shows that the group's net assets at the year-end have increased from £6,348,717 to £8,003,949.

Cash Flow
The group saw a net cash inflow during the year of £1,242,417 (2021: cash outflow of £49,171).

Principal risks and uncertainties

The group is susceptible to a number of economic, commercial and environmental risks and uncertainties. Some of these risks are shared with many operators within the construction industry including the state of the underlying economy and business investment confidence. The industry faces particular difficulties during an economic downturn, since construction is an area of the economy susceptible to negative sentiment and low confidence given the levels of investment required to support the industry. In addition, delays in investment decisions may result in downtime and under-utilised resource, both of which could affect the group.

Approved by the Board on 29 September 2023 and signed on its behalf by:


AS Needham
Director

 

Tone Group Limited

Directors' Report for the Year Ended 31 December 2022

The directors present their report and the for the year ended 31 December 2022.

Directors of the group

The directors who held office during the year were as follows:

AS Needham

M Ahluwalia

Financial instruments

The group's principal financial instruments include the availability of an invoice discounting facility, the main purpose of which is to raise finance for its operations when required and which is currently not being utilised. In addition, the group has various other financial assets and liabilities such as trade debtors and trade creditors arising directly from operations.

The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring it has sufficient liquid resources to meet the operating needs of the business. The group is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on its facilities.

Investments of cash surpluses and borrowings are made through banks and institutions which must fulfil credit rating criteria approved by the Board. All customers who wish to trade on credit terms are subject to credit verification procedures and trade debtors are reviewed on a regular basis and provision is made for doubtful debts when necessary.

Future developments

The directors plan to continue to invest to maintain the quality of its staff, its commitment to a strong health and safety policy and the capabilities of its operational activities through investment in its employees and fixed asset base. This will ensure the group will be well positioned to meet the varied and challenging requirements of its clients.

The directors continue to ensure that the group will be well positioned to meet the varied and challenging requirements of its clients.

Disclosure of information to the auditor

Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditor is unaware.

Approved by the Board on 29 September 2023 and signed on its behalf by:


AS Needham
Director

 

Tone Group Limited

Statement of Directors' Responsibilities

The directors acknowledge their responsibilities 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 group and the company and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

select suitable accounting policies and 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 directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group's and the company's transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Tone Group Limited

Independent Auditor's Report to the Members of Tone Group Limited

Opinion

We have audited the financial statements of Tone Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2022, which comprise the Consolidated Profit and Loss Account, Consolidated Balance Sheet, Balance Sheet, Consolidated Statement of Changes in Equity, Statement of Changes in Equity, Consolidated Statement of Cash Flows, and 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).

Opinion on the financial statements

In our opinion the financial statements:

give a true and fair view of the state of the group's and the company's affairs as at 31 December 2022 and of the group's 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.

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 entity'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 directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report 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.

Opinion on other matter 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 Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

 

Tone Group Limited

Independent Auditor's Report to the Members of Tone Group Limited

the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of our 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 and the Directors' Report.

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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

the parent company financial statements are not in agreement with the accounting records and returns; or

certain disclosures of directors' remuneration specified by law are not made; or

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

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities (set out on page 5), 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 group’s and the parent 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 group or the parent 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.

 

Tone Group Limited

Independent Auditor's Report to the Members of Tone Group Limited

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Discussions were held with, and enquiries made of, management and those charged with governance with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.

The following laws and regulations were identified as being of significance to the entity:

those laws and regulations considered to have a direct effect on the financial statements include UK financial reporting standards, Company Law, Tax and Pensions legislation, and distributable profits legislation.

those laws and regulations for which non-compliance may be fundamental to the operating aspects of the business and therefore may have a material effect on the financial statements include vehicle operating licences, transport regulations, health and safety legislation and employment legislation.

Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: inquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; review of board minutes; testing the appropriateness of entries in the nominal ledger, including journal entries; reviewing transactions around the end of the reporting period; and the performance of analytical procedures to identify unexpected movements in account balances which may be indicative of fraud.

No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).

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 auditor's report.

 

Tone Group Limited

Independent Auditor's Report to the Members of Tone Group Limited

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.




Mark Grady (Senior Statutory Auditor)
For and on behalf of McBrides Accountants LLP, Statutory Auditor

Nexus House
Cray Road
Sidcup
Kent
DA14 5DA

29 September 2023

 

Tone Group Limited

Consolidated Profit and Loss Account for the Year Ended 31 December 2022

Note

2022
 £

2021
 £

Turnover

3

19,304,506

13,429,616

Cost of sales

 

(10,513,643)

(7,727,517)

Gross profit

 

8,790,863

5,702,099

Administrative expenses

 

(6,110,767)

(4,192,821)

Operating profit

 

2,680,096

1,509,278

Other interest receivable and similar income

4

1

1

Interest payable and similar charges

5

(42,886)

(18,509)

Profit before tax

 

2,637,211

1,490,770

Taxation

9

(521,417)

(398,786)

Profit for the financial year

 

2,115,794

1,091,984

No Statement of Comprehensive Income has been presented as there is no movement through other comprehensive income for the year.

 

Tone Group Limited

(Registration number: 04373617)
Consolidated Balance Sheet as at 31 December 2022

Note

2022
£

2021
£

Fixed assets

 

Intangible assets

10

57,443

81,215

Tangible assets

11

4,924,908

4,697,728

 

4,982,351

4,778,943

Current assets

 

Debtors

13

4,739,399

3,302,696

Cash at bank and in hand

 

2,036,678

794,261

 

6,776,077

4,096,957

Creditors: Amounts falling due within one year

15

(2,350,334)

(1,394,999)

Net current assets

 

4,425,743

2,701,958

Total assets less current liabilities

 

9,408,094

7,480,901

Creditors: Amounts falling due after more than one year

15

(634,509)

(530,370)

Provisions for liabilities

19, 9

(769,636)

(601,814)

Net assets

 

8,003,949

6,348,717

Capital and reserves

 

Called up share capital

18

75,000

75,000

Other reserves

12,713

12,713

Profit and loss account

7,916,236

6,261,004

Total equity

 

8,003,949

6,348,717

Under the Companies Act 2006, s454, on a voluntary basis, the directors can amend these financial statements if they subsequently prove to be defective.

Approved and authorised by the Board on 29 September 2023 and signed on its behalf by:




M Ahluwalia

Director

 

Tone Group Limited

(Registration number: 04373617)
Balance Sheet as at 31 December 2022

Note

2022
£

2021
£

Fixed assets

 

Tangible assets

11

1,507,826

1,208,067

Investments

12

1,808,466

2,508,466

 

3,316,292

3,716,533

Current assets

 

Debtors

13

201,323

92,145

Cash at bank and in hand

 

143,322

38,539

 

344,645

130,684

Creditors: Amounts falling due within one year

15

(2,114,526)

(2,669,797)

Net current liabilities

 

(1,769,881)

(2,539,113)

Total assets less current liabilities

 

1,546,411

1,177,420

Creditors: Amounts falling due after more than one year

15

(454,043)

(212,065)

Provisions for liabilities

19

(222,857)

(93,731)

Net assets

 

869,511

871,624

Capital and reserves

 

Called up share capital

18

75,000

75,000

Other reserves

12,713

12,713

Retained earnings

781,798

783,911

Shareholders' funds

 

869,511

871,624

The company has taken the exemption in s408 from producing an individual Profit and Loss Account.

The company made a profit after tax for the financial year of £458,449 (2021 - profit of £67,002).

Under the Companies Act 2006, s454, on a voluntary basis, the directors can amend these financial statements if they subsequently prove to be defective.

Approved and authorised by the Board on 29 September 2023 and signed on its behalf by:
 



M Ahluwalia

Director

 

Tone Group Limited

Consolidated Statement of Changes in Equity for the Year Ended 31 December 2022
 

Share capital
£

Share option reserve
£

Profit and loss account
£

Total
£

At 1 January 2022

75,000

12,713

6,261,004

6,348,717

Profit for the year

-

-

2,115,794

2,115,794

Total comprehensive income

-

-

2,115,794

2,115,794

Dividends

-

-

(460,562)

(460,562)

At 31 December 2022

75,000

12,713

7,916,236

8,003,949

Share capital
£

Other reserves
£

Profit and loss account
£

Total
£

At 1 January 2021

75,000

12,713

5,366,705

5,454,418

Profit for the year

-

-

1,091,984

1,091,984

Total comprehensive income

-

-

1,091,984

1,091,984

Dividends

-

-

(197,685)

(197,685)

At 31 December 2021

75,000

12,713

6,261,004

6,348,717

 

Tone Group Limited

Statement of Changes in Equity for the Year Ended 31 December 2022

Share capital
£

Share option reserve
£

Profit and loss account
£

Total
£

At 1 January 2022

75,000

12,713

783,911

871,624

Profit for the year

-

-

1,158,449

1,158,449

Total comprehensive income

-

-

1,158,449

1,158,449

Dividends

-

-

(460,562)

(460,562)

At 31 December 2022

75,000

12,713

1,481,798

1,569,511

Share capital
£

Other reserves
£

Retained earnings
£

Total
£

At 1 January 2021

75,000

12,713

914,594

1,002,307

Profit for the year

-

-

67,002

67,002

Total comprehensive income

-

-

67,002

67,002

Dividends

-

-

(197,685)

(197,685)

At 31 December 2021

75,000

12,713

783,911

871,624

 

Tone Group Limited

Consolidated Statement of Cash Flows for the Year Ended 31 December 2022

Note

2022
 £

2021
 £

Cash flows from operating activities

Profit for the year

 

2,115,794

1,091,984

Adjustments to cash flows from non-cash items

 

Depreciation and amortisation

1,139,913

1,020,250

Profit on disposal of property plant and equipment

(6,862)

(38,066)

Finance income

4

(1)

(1)

Finance costs

5

42,886

18,509

Corporation tax

 

521,417

398,786

 

3,813,147

2,491,462

Working capital adjustments

 

Increase in trade and other debtors

13

(1,436,703)

(784,336)

Increase/(decrease) in trade and other creditors

15

576,119

(375,826)

Cash generated from operations

 

2,952,563

1,331,300

Corporation tax paid

9

(80,220)

(84,278)

Net cash flow from operating activities

 

2,872,343

1,247,022

Cash flows from investing activities

 

Interest received

1

1

Acquisitions of property plant and equipment

(885,101)

(799,401)

Proceeds from sale of property plant and equipment

 

141,673

88,820

Net cash flows from investing activities

 

(743,427)

(710,580)

Cash flows from financing activities

 

Interest paid

5

(42,808)

(18,509)

New loans

 

-

-

Repayment of bank borrowing

 

-

(23,816)

Payments to finance lease creditors

 

(383,051)

(345,603)

Dividends paid

(460,562)

(197,685)

Foreign exchange gains/losses

(78)

-

Net cash flows from financing activities

 

(886,499)

(585,613)

Net increase/(decrease) in cash and cash equivalents

 

1,242,417

(49,171)

Cash and cash equivalents at 1 January

 

794,261

843,432

Cash and cash equivalents at 31 December

14

2,036,678

794,261

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

1

General information

The company is a private company limited by share capital, incorporated in England.

The principal activity of the individual company and group is disclosed in the Strategic Report.

The address of its registered office is:
c/o McBrides Accountants LLP
Nexus House
2 Cray Road
Sidcup
Kent
DA14 5DA

The principal place of business is:
Green Lane Sawmills
Green Lane
Outwood
Redhill
Surrey
RH1 5QP

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

Basis of preparation

These financial statements have been prepared in accordance with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 - 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland' ('FRS 102'), and with the Companies Act 2006.

These financial statements have been prepared using the historical cost convention.

Summary of disclosure exemptions

The company has taken advantage of the reduced disclosure exemption in accordance with FRS102 Section 1.12. This has resulted in the omission of;

Parent Statement of Cash Flows

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Basis of consolidation

The consolidated financial statements consolidate the financial statements of the company and its subsidiary undertakings drawn up to 31 December 2022.

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

The results of subsidiaries acquired or disposed of during the year are included in the Profit and Loss Account from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the group.

The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the group. The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised is recorded as goodwill.

Inter-company transactions, balances and unrealised gains on transactions between the company and its subsidiaries, are eliminated in full.

Intra-group losses are also eliminated but may indicate an impairment that requires recognition in the consolidated financial statements.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the group’s equity therein.

Deferred cash payments arising and payable following the acquisition of a subsidiary are recognised at amortised cost using an appropriate rate of interest.

Going concern

After reviewing the group’s forecasts and projections the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. The group therefore continues to adopt the going concern basis in preparing its financial statements.

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Critical accounting judgements and key sources of estimation uncertainty

In the application of the group's accounting policies management is required to make judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historic experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

Specifically, judgements and estimates are required in determining the useful economic lives of fixed assets and the recoverability of applications for payment and trade debtors.

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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Revenue recognition

Turnover comprises the fair value of the consideration received or receivable for the sale of goods and provision of services in the ordinary course of the group’s activities. Turnover is shown net of sales/value added tax, returns, rebates and discounts.

The group recognises revenue when:
- the amount of revenue can be reliably measured;
- it is probable that future economic benefits will flow to the entity;
- and specific criteria have been met for each of the group's activities.

With regards to long term contracts, turnover is calculated at that proportion of total contract value which costs incurred to date bear to total costs expected for that contract.

Government grants

Government grants are recognised when there is reasonable assurance that the entity will comply with the conditions attaching to the grant and the grant will be received.

The company has adopted the accrual model for accounting for government grants. Grants relating to revenue are recognised in income on a systematic basis over the same period as the related costs for which the grant is intended to compensate. Grants relating to assets are recognised in income on a systematic basis over the expected useful life of the asset.

Tax

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

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

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements and on unused tax losses or tax credits in the group. Deferred corporation tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Enhanced tax relief claims in relation to research and development are made, time permitting, in the same accounting period for which the eligible expenditure is identified. Otherwise, tax recoverable in relation to retrospective claims are recognised in the accounting period when those claims are submitted to HMRC.

Tangible assets

Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

On an annual basis the directors consider the necessity of a provision for items that have been broken, scrapped or used for one-off projects and where they conclude a scrapping provision is required, items will be removed from the records in order to ensure plant and machinery is not overstated in the financial statements.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Leasehold land and buildings

Over the term of the lease

Plant and machinery

10% straight line

Furniture, fixtures & fittings

15 - 25% reducing balance

Motor vehicles

25% reducing balance

Goodwill

Goodwill is amortised over its useful life, which shall not exceed ten years if a reliable estimate of the useful life cannot be made.

Intangible assets

Goodwill arising on the acquisition of an entity represents the excess of the cost of acquisition over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the entity recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Separately acquired intangible assets are shown at historical cost.

Brands and other intangible assets acquired in a business combination are recognised at cost at the acquisition date.

Brands and other intangible assets have a finite useful life and are carried at cost less accumulated amortisation and any accumulated impairment losses.

Amortisation

Amortisation is provided on intangible assets so as to write off the cost, less any estimated residual value, over their useful life as follows:

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Asset class

Amortisation method and rate

Goodwill

10% - 20% straight line

Brand

17% straight line

Website

20% straight line

Other identifiable intangible assets

20% straight line

Investments

Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.

Financial instruments

Classification
Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

Financial assets are classified as financial assets at fair value through profit or loss, loans and debtors, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The group determines the classification of its financial assets at initial recognition.

Financial liabilities are classified as financial liabilities at fair value through profit and loss, loans and borrowings, trade and other creditors, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The group determines the classification of its financial liabilities at initial recognition.

 Recognition and measurement
All financial instruments are recognised initially at fair value plus transaction costs. Thereafter financial instruments are stated at amortised cost using the effective interest rate method (less impairment where appropriate) unless the effect of discounting would be immaterial in which case they are stated at cost (less impairment where appropriate). The exception to this are those financial instruments where it is a requirement to continue recording them at fair value through profit and loss.

 Impairment
Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when 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 of the asset have been affected.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Trade and other debtors

Trade debtors, other debtors and applications for payment are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment, except where the effect of discounting would be immaterial. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the debtor.

Trade and other creditors

Trade creditors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, except where the effect of discounting would be immaterial. In such cases creditors are stated at transaction price.

Borrowings

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the profit and loss account over the period of the relevant borrowing.

Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.

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

Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments.The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance costs in the profit and loss account and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.

Share based payments

Equity settled share-based payments are measured at fair value at the grant date using the Black-Scholes pricing model and Monte Carlo simulation model. This is expensed to the income statement on a straight-line basis over the vesting period and the corresponding credit side of the entry is recorded in equity.

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Dividends

Dividend distribution to the company’s shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the group has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

3

Turnover

The analysis of the group's revenue for the year from continuing operations is as follows:

2022
 £

2021
 £

Rendering of services

19,304,506

13,429,616

The analysis of the group's revenue for the year by class of business is as follows:

2022
 £

2021
 £

Contract scaffolding

14,323,133

11,876,269

Provision of specialist structures and seating

4,981,373

1,553,347

19,304,506

13,429,616

The analysis of the group's Turnover for the year by market is as follows:

2022
£

2021
£

UK

19,304,506

13,429,616

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

4

Other interest receivable and similar income

2022
 £

2021
 £

Interest income on bank deposits

1

1

5

Interest payable and similar expenses

2022
£

2021
£

Interest on bank overdrafts and borrowings

-

62

Interest on obligations under finance leases and hire purchase contracts

38,779

17,012

Interest expense on other finance liabilities

4,029

1,435

Foreign exchange gains

78

-

42,886

18,509

6

Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

2022
 £

2021
 £

Wages and salaries

6,155,171

5,381,402

Social security costs

748,597

588,872

Pension costs, defined contribution scheme

109,957

96,254

7,013,725

6,066,528

The average number of persons employed by the group (including directors) during the year, analysed by category was as follows:

2022
 No.

2021
 No.

Operatives

89

86

Management and administration

29

29

118

115

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

7

Directors' remuneration

The directors' remuneration for the year was as follows:

2022
£

2021
£

Remuneration

149,418

128,891

8

Auditors' remuneration

2022
£

2021
£

Audit of these financial statements

29,870

28,180


 

9

Tax

Tax charged/(credited) in the profit and loss account

2022
£

2021
£

Current taxation

UK corporation tax

353,595

98,827

UK corporation tax adjustment to prior periods

-

(8,029)

353,595

90,798

Deferred taxation

Arising from origination and reversal of timing differences

167,822

307,988

Tax charge in the profit and loss account

521,417

398,786

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2021 - higher than the standard rate of corporation tax in the UK) of 19% (2021 - 19%).

The differences are reconciled below:

2022
£

2021
£

Profit before tax

2,637,211

1,490,770

Corporation tax at standard rate

501,070

283,246

Effect of revenues exempt from taxation

-

(7,608)

Effect of expense not deductible in determining taxable profit (tax loss)

434

760

Deferred tax movement

167,822

307,988

Decrease in UK current tax from adjustment for prior periods

-

(8,029)

Tax decrease from effect of capital allowances and depreciation

(147,892)

(178,787)

Tax (decrease)/increase from other short-term timing differences

(17)

1,216

Total tax charge

521,417

398,786

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

In the Spring Budget 2021, the government announced that the main corporation tax rate for the years starting 1 April 2021 and 2022 would remain at 19%. The rate will increase to 25% from 1 April 2023 and this is the rate that has been applied when measuring deferred tax in these financial statements.

Deferred tax

Group

Deferred tax assets and liabilities

2022

Asset
£

Liability
£

-

796,636

-

796,636

2021

Asset
£

Liability
£

-

601,814

-

601,814

Company

Deferred tax assets and liabilities

2022

Asset
£

Liability
£

-

222,857

-

222,857

2021

Asset
£

Liability
£

-

93,731

-

93,731

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

10

Intangible assets

Group

Goodwill
 £

Other intangible assets
 £

Total
£

Cost or valuation

At 1 January 2022

1,184,706

118,000

1,302,706

At 31 December 2022

1,184,706

118,000

1,302,706

Amortisation

At 1 January 2022

1,103,491

118,000

1,221,491

Amortisation charge

23,772

-

23,772

At 31 December 2022

1,127,263

118,000

1,245,263

Carrying amount

At 31 December 2022

57,443

-

57,443

At 31 December 2021

81,215

-

81,215

Goodwill represents the carrying value of goodwill acquired on the acquisition of Austen Lewis Limited with a carrying value of £57,443 and remaining amortisation period of 3 years. Goodwill acquired on acquisition of other subsidiaries have been fully amortised.

Other intangible assets represent the carrying value of intangible assets acquired on the acquisition of Austen Lewis Limited. The intangible assets include the acquired brand and website, domain and operational knowledge with a carrying value of £Nil.

The amortisation expense for the year and prior year are included in administration expenses.

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

11

Tangible assets

Group

Leasehold land and buildings
£

Furniture, fittings and equipment
 £

Motor vehicles
 £

Plant and equipment
 £

Total
£

Cost or valuation

At 1 January 2022

1,414,348

2,032,769

2,145,521

12,303,791

17,896,429

Additions

6,500

47,430

745,765

678,437

1,478,132

Disposals

-

(258,051)

(117,283)

(1,927,755)

(2,303,089)

At 31 December 2022

1,420,848

1,822,148

2,774,003

11,054,473

17,071,472

Depreciation

At 1 January 2022

580,261

1,861,857

1,327,113

9,429,470

13,198,701

Charge for the year

146,216

37,117

334,882

597,926

1,116,141

Eliminated on disposal

-

(228,076)

(102,488)

(1,837,714)

(2,168,278)

At 31 December 2022

726,477

1,670,898

1,559,507

8,189,682

12,146,564

Carrying amount

At 31 December 2022

694,371

151,250

1,214,496

2,864,791

4,924,908

At 31 December 2021

834,087

170,912

818,408

2,874,321

4,697,728

Assets held under finance leases and hire purchase contracts

The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:

 

2022
£

2021
£

Plant and machinery

429,075

476,750

Motor vehicles

897,007

474,435

 

1,326,082

951,185

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Company

Furniture, fittings and equipment
 £

Motor vehicles
 £

Plant and Equipment
 £

Total
£

Cost or valuation

At 1 January 2022

882,706

1,994,884

4,902,960

7,780,550

Additions

19,620

745,765

11,626

777,011

Disposals

-

(117,283)

(74,231)

(191,514)

At 31 December 2022

902,326

2,623,366

4,840,355

8,366,047

Depreciation

At 1 January 2022

871,089

1,184,799

4,516,595

6,572,483

Charge for the year

1,882

333,723

118,192

453,797

Eliminated on disposal

-

(102,488)

(65,571)

(168,059)

At 31 December 2022

872,971

1,416,034

4,569,216

6,858,221

Carrying amount

At 31 December 2022

29,355

1,207,332

271,139

1,507,826

At 31 December 2021

11,617

810,085

386,365

1,208,067

Assets held under finance leases and hire purchase contracts

The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:

 

2022
£

2021
£

Motor vehicles

897,007

474,435

     
 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

12

Investments

Company

2022
£

2021
£

Investments in subsidiaries

1,808,466

2,508,466

Subsidiaries

£

Cost or valuation

At 1 January 2022

3,208,466

Provision

At 1 January 2022

700,000

Provision

700,000

At 31 December 2022

1,400,000

Carrying amount

At 31 December 2022

1,808,466

At 31 December 2021

2,508,466

Details of undertakings

Details of the investments in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking

Registered office

Holding

Proportion of voting rights and shares held

     

2022

2021

Subsidiary undertakings

Tone Scaffolding Services Limited

Ordinary

100%

100%

 

England

     

Media Structures Limited

Ordinary

100%

100%

 

England

     

Austen Lewis Limited

Ordinary

100%

100%

 

England

     

Tone Hire and Sales Limited

Ordinary

100%

100%

 

England

     

A.M.E. National Rigging Limited

Ordinary

100%

100%

 

England

     
 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

Subsidiary undertakings

Tone Scaffolding Services Limited

The principal activity of Tone Scaffolding Services Limited is the provision of contract scaffolding.

Media Structures Limited

The principal activity of Media Structures Limited is the provision of specialist structures.

Austen Lewis Limited

The principal activity of Austen Lewis Limited is the provision of specialist seating.

Tone Hire and Sales Limited

The principal activity of Tone Hire and Sales Limited is that of a non trading dormant company.

A.M.E. National Rigging Limited

The principal activity of A.M.E. National Rigging Limited is that of a non trading dormant company.

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

13

Debtors

   

Group

Company

Current

Note

2022
£

2021
£

2022
£

2021
£

Trade debtors

 

4,129,805

2,502,859

906

4,020

Amounts owed by group undertakings

24

-

-

147,668

-

Other debtors

 

367,434

386,436

50,604

85,595

Prepayments

 

242,160

299,180

2,145

2,530

Accrued income

 

-

114,221

-

-

   

4,739,399

3,302,696

201,323

92,145

14

Cash and cash equivalents

 

Group

Company

2022
 £

2021
 £

2022
 £

2021
 £

Cash on hand

8,017

8,017

3,589

3,589

Cash at bank

2,028,661

786,244

139,733

34,950

2,036,678

794,261

143,322

38,539

15

Creditors

   

Group

Company

Note

2022
 £

2021
 £

2022
 £

2021
 £

Due within one year

 

Loans and borrowings

16

372,995

267,154

246,861

170,647

Trade creditors

 

788,255

659,037

25,758

1,850

Amounts due to group companies

 

-

-

1,775,597

2,455,065

Social security and other taxes

 

653,848

249,513

50,105

27,275

Other creditors

 

36,851

40,773

1,565

1,565

Accruals

 

152,743

106,255

14,640

13,395

Corporation tax

9

345,642

72,267

-

-

 

2,350,334

1,394,999

2,114,526

2,669,797

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

   

Group

Company

Note

2022
 £

2021
 £

2022
 £

2021
 £

Due after one year

 

Loans and borrowings

16

634,509

530,370

454,043

212,065

16

Loans and borrowings

 

Group

Company

2022
£

2021
£

2022
£

2021
£

Non-current loans and borrowings

Finance lease liabilities

634,509

530,370

454,043

212,065

 

Group

Company

2022
£

2021
£

2022
£

2021
£

Current loans and borrowings

Bank borrowings

-

900

-

900

Finance lease liabilities

372,995

266,254

246,861

169,747

372,995

267,154

246,861

170,647

Group

Finance lease liabilities

Obligations under finance lease agreements with a carrying amount of £1,007,504 (2021 - £796,984) are denominated in Sterling and accrue interest at a nominal interest rate of 2.6% to 9.2%. The final instalment of these liabilities is due on 31 August 2027.

Obligations under hire purchase and leasing agreements are secured against the assets concerned.

Repayments are made monthly consisting of both interest and principal.

Company

Finance lease liabilities

Obligations under finance lease agreements with a carrying amount of £700,904 (2021 - £381,812) are denominated in Sterling and accrue interest at a nominal interest rate of 2.6% to 9.2%. The final instalment is due on 31 August 2027.

Obligations under hire purchase and leasing agreements are secured against the assets concerned.

Repayments are made monthly consisting of both interest and principal.

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

17

Obligations under leases and hire purchase contracts

Group

Operating leases

The total of future minimum lease payments is as follows:

2022
£

2021
£

Not later than one year

34,800

290,197

Later than one year and not later than five years

139,200

694,120

Later than five years

139,200

737,503

313,200

1,721,820

The amount of non-cancellable operating lease payments recognised as an expense during the year was £291,207 (2021 - £337,378).

18

Share capital

Allotted, called up and fully paid shares

 

2022

2021

 

No.

£

No.

£

Ordinary shares of £1 each

75,000

75,000

75,000

75,000

         

Rights, preferences and restrictions

Ordinary shares have the following rights, preferences and restrictions:
The holders of Ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the company. All Ordinary shares rank equally with regard to the company's residual assets.

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

19

Deferred tax and other provisions

Group

Deferred tax
£

Total
£

At 1 January 2022

601,814

601,814

Increase (decrease) in existing provisions

167,822

167,822

At 31 December 2022

769,636

769,636

Company

Deferred tax
£

Total
£

At 1 January 2022

93,731

93,731

Increase (decrease) in existing provisions

129,126

129,126

At 31 December 2022

222,857

222,857

20

Pension and other schemes

Defined contribution pension scheme

The group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the group to the scheme and amounted to £109,957 (2021 - £96,254).

21

Share-based payments

Enterprise Management Incentive (EMI) scheme

Scheme details and movements

The company has established an EMI scheme which grants the option holder the right to acquire up to 7,500 shares. The options can be exercised under certain conditions and will lapse on the 10th anniversary of the grant date.

No options have been exercised at the end of the reporting period.

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

22

Dividends

 

2022

2021

 

£

£

Interim dividend of £6.14 (2021 - £2.64) per ordinary share

460,562

197,685

23

Analysis of changes in net debt

At 1 January 2022
£

Financing cash flows
£

New finance leases
£

At 31 December 2022
£

Cash

794,261

1,242,417

-

2,036,678

Short term borrowings

(900)

900

-

-

Lease liabilities

(796,624)

382,151

(593,031)

(1,007,504)

(3,263)

1,625,468

(593,031)

1,029,174

24

Related party transactions

Group

Transactions with directors

2022

At 1 January 2022
£

Advances to director
£

Repayments by director
£

At 31 December 2022
£

Directors loan account

24,285

436,279

(460,564)

-

         
       

 

2021

At 1 January 2021
£

Advances to director
£

Repayments by director
£

At 31 December 2021
£

Directors loan account

24,588

187,497

(187,800)

24,285

         
       

 

Tone Group Limited

Notes to the Financial Statements for the Year Ended 31 December 2022

 

Dividends paid to directors

 

2022
£

2021
£

   

Dividends paid

437,536

187,800

     
         

 

The Directors loan account is interest free and due on demand.

Summary of transactions with all subsidiaries

The company has taken advantage of the exemption in FRS 102 33.1A "Related Party Disclosures" from disclosing transactions with other members of the group.
 

Income and receivables from related parties

2022

Other related parties
£

Amounts receivable from related party

387,839

2021

Other related parties
£

Amounts receivable from related party

314,062

Expenditure with and payables to related parties

2022

Other related parties
£

Rent payable

291,207

Amounts payable to related party

16,235

2021

Other related parties
£

Rent payable

337,378

Amounts payable to related party

35,080

25

Ultimate controlling party

The ultimate controlling party is A S Needham.