Company registration number 03971816 (England and Wales)
WJ Products Limited
Annual report and financial statements
For the year ended 31 January 2023
WJ Products Limited
Company information
Directors
Mr G M Andrews
Mr W D Johnston
Company number
03971816
Registered office
Brook Farm
Drayton Road
Newton Longville
Milton Keynes
Buckinghamshire
MK17 0BH
Auditor
DJH Mitten Clarke Audit Limited
The Glades
Festival Way
Festival Park
Stoke-on-Trent
Staffordshire
ST1 5SQ
WJ Products 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 - 25
WJ Products 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 Products Limited ("the company") was incorporated in 2000 and is a trading subsidiary of WJ (Group) Limited.
The company manufactures thermoplastic and road marking products.
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 £12,913,323 was an increase of 6.9% on the previous year which was due to an increase in group activity with National Highways (formerly Highways England) a number of local authorities and in our off highways sector.
The gross profit margin has decreased from 29.5% in 2022 to 20.7% in 2023.
The company maintains it focus on working capital management with particular focus on inventory management and debt control which resulted in an increase of £1,487,324 in working capital.
During the year the company has invested £76,685 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 £8,759,927 to £10,197,273 reflecting the retained profit in the period.
WJ Products 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 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 risk that the Company will suffer from significant levels of bad debt is managed by 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.
WJ Products Limited
Strategic report (continued)
For the year ended 31 January 2023
- 3 -
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 £12,913,323 £12,076,402
Gross profit margin 20.7% 29.5%
Operating profit margin 9.3% 19.5%
Explanation of the key performance indicators detailed above can be found in the review of business section of this report.
Mr G M Andrews
Director
28 July 2023
WJ Products 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 the manufacture of thermoplastic and road marking products.
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 G M Andrews
Mr W D Johnston
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:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The 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.
WJ Products Limited
Directors' report (continued)
For the year ended 31 January 2023
- 5 -
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.
On behalf of the board
Mr G M Andrews
Director
28 July 2023
WJ Products Limited
Independent auditor's report
To the members of WJ Products Limited
- 6 -
Opinion
We have audited the financial statements of WJ Products 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:
give a true and fair view of the state of the company's affairs as at 31 January 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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.
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 Products Limited
Independent auditor's report (continued)
To the members of WJ Products 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:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, 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:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the company;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
WJ Products Limited
Independent auditor's report (continued)
To the members of WJ Products 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:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions; and
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC, relevant regulators and the company’s legal advisors.
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 Products Limited
Independent auditor's report (continued)
To the members of WJ Products Limited
- 9 -
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 Products Limited
Statement of comprehensive income
For the year ended 31 January 2023
- 10 -
2023
2022
Notes
£
£
Turnover
3
12,913,323
12,076,402
Cost of sales
(10,238,794)
(8,516,681)
Gross profit
2,674,529
3,559,721
Administrative expenses
(1,473,681)
(1,206,299)
Operating profit
4
1,200,848
2,353,422
Interest receivable and similar income
6
164,712
93,505
Interest payable and similar expenses
7
4,818
(13,069)
Profit before taxation
1,370,378
2,433,858
Tax on profit
8
66,968
(143,810)
Profit for the financial year
1,437,346
2,290,048
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
WJ Products Limited
Statement of financial position
as at 31 January 2023
31 January 2023
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
9
5,800
11,600
Tangible assets
10
315,644
384,672
321,444
396,272
Current assets
Stocks
11
1,958,409
1,728,503
Debtors falling due after more than one year
12
6,372,838
4,816,605
Debtors falling due within one year
12
1,920,917
1,407,359
Cash at bank and in hand
1,142,331
2,323,768
11,394,495
10,276,235
Creditors: amounts falling due within one year
13
(1,515,999)
(1,885,063)
Net current assets
9,878,496
8,391,172
Total assets less current liabilities
10,199,940
8,787,444
Creditors: amounts falling due after more than one year
14
(2,667)
(27,517)
Net assets
10,197,273
8,759,927
Capital and reserves
Called up share capital
18
1
1
Profit and loss reserves
19
10,197,272
8,759,926
Total equity
10,197,273
8,759,927
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. 03971816
WJ Products Limited
Statement of changes in equity
For the year ended 31 January 2023
- 12 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 February 2021
1
6,469,878
6,469,879
Year ended 31 January 2022:
Profit and total comprehensive income for the year
-
2,290,048
2,290,048
Balance at 31 January 2022
1
8,759,926
8,759,927
Year ended 31 January 2023:
Profit and total comprehensive income for the year
-
1,437,346
1,437,346
Balance at 31 January 2023
1
10,197,272
10,197,273
WJ Products Limited
Notes to the financial statements
For the year ended 31 January 2023
- 13 -
1
Accounting policies
Company information
WJ Products Limited is a private company limited by shares incorporated in England and Wales. The registered office is Brook Farm, Drayton Road, Newton Longville, Milton Keynes, Buckinghamshire, MK17 0BH.
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:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
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 its registered office, Unit 7 Brock Way, Newcastle, Staffordshire, United Kingdom, ST5 6AZ.
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.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on despatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
WJ Products Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
1
Accounting policies
(Continued)
- 14 -
1.4
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Software
20% on cost
1.6
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 or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
in accordance with the lease
Plant and equipment
25% on reducing balance
Fixtures and fittings
20% on reducing balance and 50% on reducing balance
Computers
50% on cost
Motor vehicles
35% on reducing balance and 25% on reducing balance
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.
1.7
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).
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.
WJ Products Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
1
Accounting policies
(Continued)
- 15 -
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.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
WJ Products Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
1
Accounting policies
(Continued)
- 16 -
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, 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.
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.
WJ Products Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
1
Accounting policies
(Continued)
- 17 -
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.
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 associates
Investments in associate undertakings are recognised at cost less any provision for impairment.
WJ Products Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
- 18 -
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
Turnover and other revenue
2023
2022
£
£
Other revenue
Interest income
164,712
93,505
4
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Research and development costs
48,103
58,010
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
122,394
135,536
(Profit)/loss on disposal of tangible fixed assets
-
507
Amortisation of intangible assets
5,800
5,800
WJ Products Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
- 19 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Production
9
8
Administration
9
6
Total
18
14
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
739,011
621,972
Social security costs
88,271
73,337
Pension costs
35,334
30,084
862,616
725,393
6
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest receivable from group companies
159,321
92,351
Other interest income
5,391
1,154
Total income
164,712
93,505
7
Interest payable and similar expenses
2023
2022
£
£
Interest on finance leases and hire purchase contracts
(4,818)
13,069
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
149,777
Adjustments in respect of prior periods
(66,968)
Total current tax
(66,968)
149,777
WJ Products Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
8
Taxation
2023
2022
£
£
(Continued)
- 20 -
Deferred tax
Origination and reversal of timing differences
(5,967)
Total tax (credit)/charge
(66,968)
143,810
The actual (credit)/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
1,370,378
2,433,858
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
260,372
462,433
Tax effect of expenses that are not deductible in determining taxable profit
1,889
862
Effect of change in corporation tax rate
1,202
(4,831)
Group relief
(257,274)
(285,805)
Research and development tax credit
(26,325)
Under/(over) provided in prior years
(66,968)
Super deduction allowance
(1,180)
(2,524)
Deferred tax not provided for
(5,009)
Taxation (credit)/charge for the year
(66,968)
143,810
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 calculated at 25% where appropriate.
WJ Products Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
- 21 -
9
Intangible fixed assets
Software
£
Cost
At 1 February 2022 and 31 January 2023
29,000
Amortisation and impairment
At 1 February 2022
17,400
Amortisation charged for the year
5,800
At 31 January 2023
23,200
Carrying amount
At 31 January 2023
5,800
At 31 January 2022
11,600
10
Tangible fixed assets
Leasehold improvements
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 February 2022
24,038
1,293,269
28,564
18,374
246,928
1,611,173
Additions
20,695
55,990
76,685
Disposals
(79,316)
(79,316)
At 31 January 2023
24,038
1,313,964
28,564
18,374
223,602
1,608,542
Depreciation and impairment
At 1 February 2022
24,038
1,023,655
24,766
18,374
135,668
1,226,501
Depreciation charged in the year
71,821
752
49,821
122,394
Eliminated in respect of disposals
(55,997)
(55,997)
At 31 January 2023
24,038
1,095,476
25,518
18,374
129,492
1,292,898
Carrying amount
At 31 January 2023
218,488
3,046
94,110
315,644
At 31 January 2022
269,614
3,798
111,260
384,672
WJ Products Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
10
Tangible fixed assets
(Continued)
- 22 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts. These are secured on the assets in which they relate to.
2023
2022
£
£
Plant and equipment
27,221
36,295
Motor vehicles
42,483
99,770
69,704
136,065
11
Stocks
2023
2022
£
£
Raw materials and consumables
1,958,409
1,728,503
Stock comprises of £1,532,630 (2022 : £1,320,672) in raw materials and £425,779 (2022 : £407,831) in finished goods.
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
159,208
253,714
Corporation tax recoverable
536,582
25,223
Amounts owed by group undertakings
763,092
898,942
Other debtors
41,829
41,826
Prepayments and accrued income
400,078
167,526
1,900,789
1,387,231
Deferred tax asset (note 16)
20,128
20,128
1,920,917
1,407,359
2023
2022
Amounts falling due after more than one year:
£
£
Amounts owed by group undertakings
6,372,838
4,816,605
Total debtors
8,293,755
6,223,964
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.
WJ Products Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
- 23 -
13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
15
24,848
81,176
Trade creditors
1,280,771
1,474,010
Amounts owed to group undertakings
24,676
197,239
Taxation and social security
25,415
21,961
Other creditors
4,422
1,817
Accruals and deferred income
155,867
108,860
1,515,999
1,885,063
14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
15
2,667
27,517
15
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
24,848
81,176
In two to five years
2,667
27,517
27,515
108,693
Finance lease payments represent rentals payable by the company for certain items of plant and machinery and 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.
Hire purchase contracts are secured against the assets in which they relate.
16
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2023
2022
Balances:
£
£
Accelerated capital allowances
20,128
20,128
WJ Products Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
16
Deferred taxation
(Continued)
- 24 -
There were no deferred tax movements in the year.
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
35,334
30,084
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.
There are no contributions outstanding payable to the fund at the balance sheet date (2022 : £nil).
18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary share of £1 each
1
1
1
1
There is a single class of ordinary shares. There are no restrictions on distribution of dividends and the repayment of capital.
19
Profit and loss reserves
Profit and loss reserves are made up of accumulated profits less accumulated losses and distributions to shareholders.
20
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.
WJ Products Limited
Notes to the financial statements (continued)
For the year ended 31 January 2023
- 25 -
21
Related party transactions
Transactions with entities under common control
During the year, the company made purchases from entities under common control of £56,249 (2022 - £60,000). At the year end, the balance owing to this entity was £18,749 (2022 - £15,000).
Transactions with other related parties
During the year, the company made purchase from entities with common directors/owners.
Purchases made from these entities totalled £37,920 (2022 - £36,240). At the year end, the balance owing to these entities was £7,363 (2022 - £6,040).
Transactions with associates
During the year the company entered into the transactions with ACB-WJ Product Services BV, a Belgium company in which WJ Products Limited own 45% of the shares.
2023 2022
£ £
ACB-WJ Product Services BV
Sales and recharges 781,753 608,867
Purchases 82,065 22,962
Interest receivable - 122
Amounts due to WJ Products Ltd 118,275 158,296
Amounts owed by WJ Products Ltd 56,458 2,521
Loan due to WJ Products Ltd 41,826 41,826
22
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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