Company registration number 07991017 (England and Wales)
TANFIELD ENGINEERING SYSTEMS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
TANFIELD ENGINEERING SYSTEMS LIMITED
COMPANY INFORMATION
Director
Mr K D Harris
Company number
07991017
Registered office
Tanfield Lea Industrial Estate
Stanley
Co Durham
DH9 9NX
Auditor
Davies Tracey
Swan House
Westpoint Road
Teesdale Business Park
Stockton on Tees
TS17 6BP
TANFIELD ENGINEERING SYSTEMS LIMITED
CONTENTS
Page
Strategic report
1
Director's report
2 - 3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 23
TANFIELD ENGINEERING SYSTEMS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 1 -

The director presents the strategic report for the year ended 31 March 2023.

Principal activities

The Company's principal activity during the year was the manufacture of fabricated steel parts.

Review of the business

The director is pleased to report a record profit for the financial year of £734,224.

 

Turnover increased from £12.2m to £17.2m due to a combination of increased demand and higher steel prices because of the Russia – Ukraine conflict. Gross Profit percentage remained constant at 20 percent. Unadjusted EBITDA increased from £1m to £1.6m This represents an increase of 60 percent.

Principal risks and uncertainties

The Company's exposure to the risks described below is assessed and controlled by the director and senior management team.

 

Supply chain risk

The supply chain risk is mitigated by a detailed knowledge of key suppliers and the risks that they are exposed to.

 

Price risk

Price risk, particularly rising material costs, is mitigated by the trading arrangements with customers and suppliers.

 

Liquidity risk

Trading cash flow and liquidity risks are managed with funding facilities available to the Company. The cash flow position is closely monitored and controlled, with regular forecasting.

 

Competitive risk

The market for supply of fabricated steel parts is highly competitive. However, this risk is mitigated by the Company’s strong working relationships with key customers.

Key performance indicators

The director and senior management team assess the Company’s financial performance with reference to regularly prepared management information, including the monitoring of actual results with forecasts, enabling corrective action to be taken where appropriate.

 

 

2023

2022

2021

2020

 

£

£

£

£

Turnover

17,164,940

12,202,915

5,818,335

8,119,860

Gross profit

3,407,389

2,534,882

931,566

2,042,230

EBITDA (unadjusted)

1,565,020

1,045,899

13,148

626,548

Dividends

87,000

91,400

12,000

-

Net assets

1,178,795

531,571

173,344

513,111

 

On behalf of the board

Mr K D Harris
Director
11 July 2023
TANFIELD ENGINEERING SYSTEMS LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 2 -

The director presents his annual report and financial statements for the year ended 31 March 2023.

Results and dividends

The results for the year are set out on page 7.

Ordinary dividends were paid amounting to £87,000. The director does not recommend payment of a final dividend.

Director

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

Mr K D Harris
Future developments

Customer demand remains strong and the director is confident that the Company will continue to trade profitably and increase its market share.

Statement of director's responsibilities

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

 

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

 

 

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

Disclosure in the Strategic Report

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.

Statement of disclosure to auditor

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

TANFIELD ENGINEERING SYSTEMS LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 3 -
On behalf of the board
Mr K D Harris
Director
11 July 2023
TANFIELD ENGINEERING SYSTEMS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF TANFIELD ENGINEERING SYSTEMS LIMITED
- 4 -
Opinion

We have audited the financial statements of Tanfield Engineering Systems Limited (the 'company') for the year ended 31 March 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the director's 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 director with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

TANFIELD ENGINEERING SYSTEMS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TANFIELD ENGINEERING SYSTEMS LIMITED
- 5 -
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 director's report.

 

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

Responsibilities of director

As explained more fully in the director's responsibilities statement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines 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 director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

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.

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 the extent to which an audit conducted under ISAs (UK) is capable of detecting irregularity, including fraud. Our procedures include:

 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. We are not responsible for preventing fraud or non-compliance with laws and regulations and cannot be expected to detect all fraud and non-compliance with laws and regulations.

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.

 

 

 

TANFIELD ENGINEERING SYSTEMS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TANFIELD ENGINEERING SYSTEMS LIMITED
- 6 -

Other matter

The company took advantage of audit exemption available to smaller companies in respect of the year ended 31 March 2022 and consequently the corresponding figures in these financial statements are unaudited.

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.

Craig McBride (Senior Statutory Auditor)
for and on behalf of Davies Tracey
Chartered Accountants and Statutory Auditors
Swan House
Westpoint Road
Teesdale Business Park
Stockton on Tees
TS17 6BP
11 July 2023
TANFIELD ENGINEERING SYSTEMS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
- 7 -
2023
2022
Notes
£
£
Turnover
3
17,164,940
12,202,915
Cost of sales
(13,757,551)
(9,668,033)
Gross profit
3,407,389
2,534,882
Administrative expenses
(2,101,935)
(1,726,202)
Other operating income
-
0
2,068
Operating profit
4
1,305,454
810,748
Interest payable and similar expenses
7
(347,860)
(266,202)
Profit before taxation
957,594
544,546
Tax on profit
8
(223,370)
(94,919)
Profit for the financial year
734,224
449,627

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

TANFIELD ENGINEERING SYSTEMS LIMITED
BALANCE SHEET
AS AT
31 MARCH 2023
31 March 2023
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
10
135,000
176,610
Tangible assets
11
1,657,002
1,644,553
1,792,002
1,821,163
Current assets
Stocks
12
1,113,424
1,277,792
Debtors
13
4,268,579
3,810,766
Cash at bank and in hand
1,075,465
336,065
6,457,468
5,424,623
Creditors: amounts falling due within one year
14
(6,431,107)
(5,973,626)
Net current assets/(liabilities)
26,361
(549,003)
Total assets less current liabilities
1,818,363
1,272,160
Creditors: amounts falling due after more than one year
15
(276,705)
(437,053)
Provisions for liabilities
Deferred tax liability
19
362,863
303,536
(362,863)
(303,536)
Net assets
1,178,795
531,571
Capital and reserves
Called up share capital
21
5
5
Revaluation reserve
305,250
331,900
Profit and loss reserves
873,540
199,666
Total equity
1,178,795
531,571
The financial statements were approved and signed by the director and authorised for issue on 11 July 2023
Mr K D Harris
Director
Company Registration No. 07991017
TANFIELD ENGINEERING SYSTEMS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
- 9 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 31 March 2021
5
376,500
(203,161)
173,344
Year ended 31 March 2022:
Profit and total comprehensive income for the year
-
-
449,627
449,627
Dividends
9
-
-
(91,400)
(91,400)
Transfers
-
(44,600)
44,600
-
Balance at 31 March 2022
5
331,900
199,666
531,571
Year ended 31 March 2023:
Profit and total comprehensive income for the year
-
-
734,224
734,224
Dividends
9
-
-
(87,000)
(87,000)
Transfers
-
(26,650)
26,650
-
Balance at 31 March 2023
5
305,250
873,540
1,178,795
TANFIELD ENGINEERING SYSTEMS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
- 10 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
24
1,875,812
1,124,942
Interest paid
(347,860)
(266,202)
Income taxes (paid)/refunded
(61,751)
24,541
Net cash inflow from operating activities
1,466,201
883,281
Investing activities
Purchase of tangible fixed assets
(240,636)
(128,084)
Proceeds from disposal of tangible fixed assets
10,231
-
0
Net cash used in investing activities
(230,405)
(128,084)
Financing activities
Repayment of borrowings
(323,577)
(349,567)
Payment of finance leases obligations
(85,819)
(89,574)
Dividends paid
(87,000)
(91,400)
Net cash used in financing activities
(496,396)
(530,541)
Net increase in cash and cash equivalents
739,400
224,656
Cash and cash equivalents at beginning of year
336,065
111,409
Cash and cash equivalents at end of year
1,075,465
336,065
TANFIELD ENGINEERING SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
- 11 -
1
Accounting policies
Company information

Tanfield Engineering Systems Limited is a private company limited by shares incorporated in England and Wales. The registered office is Tanfield Lea Industrial Estate, Stanley, Co Durham, DH9 9NX.

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, modified to include the revaluation of certain tangible fixed assets. The principal accounting policies adopted are set out below.

1.2
Going concern

Atruet the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues 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.

 

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

1.4
Research and development expenditure

Research and development expenditure is written off in the year it is incurred or, if appropriate, development expenditure is capitalised and written off over its estimate useful life.

1.5
Intangible fixed assets other than goodwill

Intangible assets are initially 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:

Development costs
10% and 20% per annum on a straight line basis

During the year the useful economic life of the intangible assets was reassessed as 7 years rather than 10 years.

1.6
Tangible fixed assets

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

TANFIELD ENGINEERING SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 12 -

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

Land and buildings
2% per annum on a straight line basis
Plant and machinery
10% per annum on a straight line basis
Fixtures and fittings
10% per annum on a straight line basis
Computer equipment
10% per annum on a straight line basis
Motor vehicles
10% per annum on a straight line basis

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

1.7
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.

 

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

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.

1.8
Financial instruments

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

 

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

 

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

Basic financial assets

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

Other financial assets

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

TANFIELD ENGINEERING SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 13 -
Impairment of financial assets

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

 

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

 

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

Derecognition of financial assets

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

Classification of financial liabilities

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

Basic financial liabilities

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

 

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

 

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

Other financial liabilities

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

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

TANFIELD ENGINEERING SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 14 -
Derecognition of financial liabilities

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

1.9
Equity instruments

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

1.10
Taxation

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

Current tax

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

Deferred tax

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

 

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 profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.11
Employee benefits

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

 

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

 

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

1.12
Retirement benefits

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

TANFIELD ENGINEERING SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 15 -
1.13
Leases

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

 

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

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

1.14
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

 

Coronavirus Job Retention Scheme grants are accounted for on accruals basis and are included within Other operating income.

2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the director is 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.

3
Turnover and other revenue
2023
2022
£
£
Other revenue
Grants received
-
2,068
TANFIELD ENGINEERING SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 16 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
-
(2,068)
Fees payable to the company's auditor for the audit of the company's financial statements
8,000
-
0
Depreciation of owned tangible fixed assets
212,399
205,716
Loss on disposal of tangible fixed assets
5,557
-
Amortisation of intangible assets
41,610
29,435
Operating lease charges
175,003
174,999
5
Employees

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

2023
2022
Number
Number
Production
101
100
Administration
8
8
Directors
1
1
Total
110
109

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
3,170,800
2,945,308
Social security costs
301,148
267,479
Pension costs
61,828
55,638
3,533,776
3,268,425
6
Director's remuneration
2023
2022
£
£
Remuneration for qualifying services
12,840
12,570
TANFIELD ENGINEERING SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 17 -
7
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
61,814
80,208
Other interest on financial liabilities
277,909
176,913
339,723
257,121
Other finance costs:
Interest on finance leases and hire purchase contracts
6,296
7,552
Other interest
1,841
1,529
347,860
266,202
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
164,043
61,751
Adjustments in respect of prior periods
-
0
(24,541)
Total current tax
164,043
37,210
Deferred tax
Origination and reversal of timing differences
59,327
57,709
Total tax charge
223,370
94,919

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

2023
2022
£
£
Profit before taxation
957,594
544,546
Expected tax charge based on the standard rate of corporation tax in the UK for the year ended 31 March 2023 of 19.00% (2022: 19.00%)
181,943
103,464
Tax effect of expenses that are not deductible in determining taxable profit
9,316
9,316
Adjustments in respect of prior years
-
0
(10,560)
Effect of change in corporation tax rate on deferred tax
87,087
-
0
Permanent capital allowances in excess of depreciation
(12,606)
(7,301)
Deferred tax adjustments in respect of prior years
(42,370)
-
0
Taxation charge for the year
223,370
94,919
TANFIELD ENGINEERING SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 18 -
9
Dividends
2023
2022
£
£
Interim paid
87,000
91,400
10
Intangible fixed assets
Development costs
£
Cost
At 1 April 2022 and 31 March 2023
294,350
Amortisation and impairment
At 1 April 2022
117,740
Amortisation charged for the year
41,610
At 31 March 2023
159,350
Carrying amount
At 31 March 2023
135,000
At 31 March 2022
176,610
11
Tangible fixed assets
Land and buildings
Plant and machinery
Fixtures and fittings
Computer equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost or valuation
At 1 April 2022
396,125
2,039,372
96,408
69,673
16,500
2,618,078
Additions
-
0
196,566
19,135
5,435
19,500
240,636
Disposals
-
0
(9,900)
-
0
(10,231)
(10,000)
(30,131)
At 31 March 2023
396,125
2,226,038
115,543
64,877
26,000
2,828,583
Depreciation and impairment
At 1 April 2022
43,451
857,321
35,508
29,074
8,171
973,525
Depreciation charged in the year
9,230
184,703
9,807
7,196
1,463
212,399
Eliminated in respect of disposals
-
0
(7,260)
-
0
-
0
(7,083)
(14,343)
At 31 March 2023
52,681
1,034,764
45,315
36,270
2,551
1,171,581
Carrying amount
At 31 March 2023
343,444
1,191,274
70,228
28,607
23,449
1,657,002
At 31 March 2022
352,674
1,182,051
60,900
40,599
8,329
1,644,553
TANFIELD ENGINEERING SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
11
Tangible fixed assets
(Continued)
- 19 -

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

2023
2022
£
£
Plant and machinery
160,000
325,125

Tangible fixed assets were valued on an open market basis on 30 March 2018 by Tanfield Engineering Systems Limited.

The following assets are carried at valuation. If the assets were measured using the cost model, the carrying amounts would be as follows:

2023
2022
£
£
Cost
1,071,070
1,080,970
Accumulated depreciation
(576,217)
(507,921)
Carrying value
494,853
573,049
12
Stocks
2023
2022
£
£
Raw materials and consumables
652,661
601,492
Work in progress
383,819
601,000
Finished goods and goods for resale
76,944
75,300
1,113,424
1,277,792
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
4,144,664
3,745,869
Other debtors
29,736
300
Prepayments and accrued income
94,179
64,597
4,268,579
3,810,766
TANFIELD ENGINEERING SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 20 -
14
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
17
15,000
85,819
Other loans
16
105,121
283,350
Trade creditors
2,787,216
1,889,316
Corporation tax
164,043
61,751
Other taxation and social security
261,307
214,684
Other creditors
2,849,945
3,271,274
Accruals and deferred income
248,475
167,432
6,431,107
5,973,626
15
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
17
-
0
15,000
Other loans
16
276,705
422,053
276,705
437,053
16
Loans and overdrafts
2023
2022
£
£
Other loans
381,826
705,403
Payable within one year
105,121
283,350
Payable after one year
276,705
422,053

Loans totalling £203,066 (2022 - £489,953) are secured by fixed and floating charges over the company's assets.

17
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
19,245
107,988
In two to five years
-
0
19,245
19,245
127,233
Less: future finance charges
(4,245)
(26,414)
15,000
100,819
TANFIELD ENGINEERING SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
17
Finance lease obligations
(Continued)
- 21 -

Obligations under finance leases are secured against the assets to which they relate.

18
Secured debt

The following other secured debt is included within creditors:

 

Other creditors £2,821,453 (2022 - £3,240,568)

 

Other creditors are secured by way of a fixed and floating charge over the company's assets.

 

19
Deferred taxation

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

Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
261,113
183,836
Revaluations
101,750
119,700
362,863
303,536
2023
Movements in the year:
£
Liability at 1 April 2022
303,536
Charge to profit or loss
59,327
Liability at 31 March 2023
362,863
20
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
61,828
55,638

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.

TANFIELD ENGINEERING SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 22 -
21
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of £1 each
1
1
1
1
Ordinary B shares of £1 each
1
1
1
1
Ordinary C shares of £1 each
1
1
1
1
Ordinary D shares of £1 each
1
1
1
1
Ordinary E shares of £1 each
1
1
1
1
5
5
5
5

The Ordinary A, B, C and D shares all have full voting, dividend and capital distribution rights. The Ordinary E shares have no voting rights and no rights to capital.

22
Operating lease commitments

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

2023
2022
£
£
Within one year
175,000
170,000
Between two and five years
175,000
340,000
350,000
510,000
23
Related party transactions

At the year end the company had amounts due to the director of £178,760 (2022 - £215,450).

TANFIELD ENGINEERING SYSTEMS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 23 -
24
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
734,224
449,627
Adjustments for:
Taxation charged
223,370
94,919
Finance costs
347,860
266,202
Loss on disposal of tangible fixed assets
5,557
-
Amortisation and impairment of intangible assets
41,610
29,435
Depreciation and impairment of tangible fixed assets
212,399
205,716
Movements in working capital:
Decrease/(increase) in stocks
164,368
(361,228)
Increase in debtors
(457,813)
(1,747,484)
Increase in creditors
604,237
2,187,755
Cash generated from operations
1,875,812
1,124,942
25
Analysis of changes in net funds/(debt)
1 April 2022
Cash flows
31 March 2023
£
£
£
Cash at bank and in hand
336,065
739,400
1,075,465
Borrowings excluding overdrafts
(705,403)
323,577
(381,826)
Obligations under finance leases
(100,819)
85,819
(15,000)
(470,157)
1,148,796
678,639
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