Company registration number 05448900 (England and Wales)
T.E.C. ELECTRIC MOTORS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
T.E.C. ELECTRIC MOTORS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Notes to the financial statements
10 - 25
T.E.C. ELECTRIC MOTORS LIMITED
COMPANY INFORMATION
Directors
Mr S H Edwards
Mrs T Edwards
Mr G T Richardson
Secretary
Mrs T Edwards
Company number
05448900
Registered office
Units 291 & 296 Oak Drive
Hartlebury Trading Estate
Hartlebury
Kidderminster
Worcestershire
DY10 4JB
Auditor
Ormerod Rutter Limited
The Oakley
Kidderminster Road
Droitwich
Worcestershire
WR9 9AY
T.E.C. ELECTRIC MOTORS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 1 -
The directors present the strategic report for the year ended 31 May 2023.
Review of the business
The company is reporting an increase in turnover of 4%, resulting in the profit for the financial year increasing by 6.5%.
The net assets of the company have increased to £12,617,180 as at 31st May 2023, compared to £12,492,825 as at 31st May 2022.
Despite the reduction in transport costs from the Far East and some raw material and currency stability, prices from suppliers were not reflective of this. British manufacturing slowed with the post covid “bounce back” although raw material prices stabilized the Russian/Ukraine conflict impacted, creating supply issues and in some instances an extended delivery situation from all suppliers.
TEC again closely scrutinized all non-essential spend coupled with a rationalized and closely monitored stock control. This careful overhead analysis in all areas of the business resulted in a further increased profit and turnover whilst simultaneously being able to hold firm on operational costs.
Principal risks and uncertainties
The directors consider that the principal risks and uncertainties of the business are currency instability and foreign exchange rate risk coupled with uncertainty in the financial markets caused by political instability. Both of these risks are monitored regularly by the Board of Directors to ensure that these risks are minimised,
Key performance indicators
The directors measure performance based on turnover and profit margins attributable to each product line and also monitor the level of customer feedback, as they consider these to be the key performance indicators of the business.
The company is reporting an increase in turnover to £21,028,778 (2022: £20,210,241), which in turn has created a profit before tax of £4,558,840 (2022: £4,214,119).
Future Developments
The directors aim to concentrate on closer control of their distribution in 2023/24 with the addition of new product ranges. The new efficiency regulations on all electric motors will also see an uplift in unit sales costs. The Group has an established brand name for service and quality in the UK market, coupled with existing unit sales of over 1.5 million over an 18-year period there is a “healthy” requirement for replacement TEC products gaining momentum via TEC’s distribution network. The directors believe that the Group has responded well in the current climate and will focus their attentions on increasing stock levels and staff numbers whilst introducing new alternative supply lines to ensure future business growth and that customer demands are met.
Mr S H Edwards
Director
2 November 2023
T.E.C. ELECTRIC MOTORS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2023
- 2 -
The directors present their annual report and financial statements for the year ended 31 May 2023.
Principal activities
The principal activity of the company in the year under review was that of distribution of industrial products.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr S H Edwards
Mrs T Edwards
Mr G T Richardson
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £3,518,474. The directors do not recommend payment of a further dividend.
Financial risk management objectives and policies
The company manages its cash and borrowing requirements to maximise interest income and minimise interest expense, whilst ensuring that the company has sufficient liquid resources to meet the operating needs of the business.
Credit risk
All customers who wish to trade on credit terms are subject to credit verification procedures. Receivable balances are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
Auditor
The auditor, Ormerod Rutter Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
T.E.C. ELECTRIC MOTORS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 3 -
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;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the ;
prepare the on the going concern basis unless it is inappropriate to presume that the group and 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.
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 S H Edwards
Director
2 November 2023
T.E.C. ELECTRIC MOTORS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF T.E.C. ELECTRIC MOTORS LIMITED
- 4 -
Opinion
We have audited the financial statements of T.E.C. Electric Motors Limited (the 'company') for the year ended 31 May 2023 which comprise the statement of comprehensive income, the balance sheet, 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 May 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 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.
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.
T.E.C. ELECTRIC MOTORS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF T.E.C. ELECTRIC MOTORS LIMITED
- 5 -
Matters on which we are required to report by exception
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:
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.
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.
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.
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 industry;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or operations of the company and group, including the Companies Act 2006, taxation legislation and data protection, anti-bribery, employment, environmental and health and safety legislation;
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.
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 internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and
understanding the design of the company’s remuneration policies.
T.E.C. ELECTRIC MOTORS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF T.E.C. ELECTRIC MOTORS LIMITED
- 6 -
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual transactions or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out in note 3 were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions.
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; and
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 the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through 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.
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.
Peter Ormerod FCA
Senior Statutory Auditor
For and on behalf of Ormerod Rutter Limited
2 November 2023
2023-11-02
Chartered Accountants
Statutory Auditor
The Oakley
Kidderminster Road
Droitwich
Worcestershire
WR9 9AY
T.E.C. ELECTRIC MOTORS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MAY 2023
- 7 -
2023
2022
Notes
£
£
Turnover
2
21,028,778
20,210,241
Cost of sales
(14,013,478)
(13,869,081)
Gross profit
7,015,300
6,341,160
Administrative expenses
(2,287,951)
(1,971,852)
Other operating income
5,730
23,435
Operating profit
5
4,733,079
4,392,743
Interest receivable and similar income
9
8
Interest payable and similar expenses
8
(174,247)
(178,624)
Profit before taxation
4,558,840
4,214,119
Tax on profit
10
(916,011)
(791,796)
Profit for the financial year
3,642,829
3,422,323
The profit and loss account has been prepared on the basis that all operations are continuing operations.
T.E.C. ELECTRIC MOTORS LIMITED
BALANCE SHEET
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
13
24,660
Tangible assets
14
136,701
144,214
161,361
144,214
Current assets
Stocks
15
11,530,822
7,737,463
Debtors
16
4,786,617
8,068,181
Cash at bank and in hand
2,238,451
435,354
18,555,890
16,240,998
Creditors: amounts falling due within one year
18
(6,033,839)
(3,831,587)
Net current assets
12,522,051
12,409,411
Total assets less current liabilities
12,683,412
12,553,625
Provisions for liabilities
Provisions
21
42,102
44,567
Deferred tax liability
22
24,130
16,233
(66,232)
(60,800)
Net assets
12,617,180
12,492,825
Capital and reserves
Called up share capital
25
102
102
Profit and loss reserves
26
12,617,078
12,492,723
Total equity
12,617,180
12,492,825
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true
The financial statements were approved by the board of directors and authorised for issue on 2 November 2023 and are signed on its behalf by:
Mr S H Edwards
Director
Company registration number 05448900 (England and Wales)
T.E.C. ELECTRIC MOTORS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MAY 2023
- 9 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 June 2021
102
9,070,400
9,070,502
Year ended 31 May 2022:
Profit and total comprehensive income
-
3,422,323
3,422,323
Balance at 31 May 2022
102
12,492,723
12,492,825
Year ended 31 May 2023:
Profit and total comprehensive income
-
3,642,829
3,642,829
Dividends
11
-
(3,518,474)
(3,518,474)
Balance at 31 May 2023
102
12,617,078
12,617,180
T.E.C. ELECTRIC MOTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
- 10 -
1
Accounting policies
Company information
T.E.C. Electric Motors Limited is a private company limited by shares incorporated in England and Wales. The registered office is Units 291 & 296 Oak Drive Hartlebury Trading Estate, Hartlebury, Kidderminster, Worcestershire, DY10 4JB.
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 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Spartan Motor Holdings Limited. These consolidated financial statements are available from its registered office, Units 291 & 296 Hartlebury Trading Estate, Hartlebury, Kidderminster, Worcestershire, DY10 4JB.
1.2
Going concern
At 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.true
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. 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 delivery 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.
T.E.C. ELECTRIC MOTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 11 -
1.4
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.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
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
10% straight line
1.5
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.
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
10% on reducing balance
Plant and equipment
25% on reducing balance
Fixtures and fittings
25% on reducing balance
Office equipment
20% on reducing balance
Motor vehicles
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.
1.6
Stocks
Stocks are valued at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell, after making due allowance for obsolete and slow moving items. Cost comprises the purchase price of goods for resale and spare parts.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
1.7
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.
T.E.C. ELECTRIC MOTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 12 -
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.
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.
T.E.C. ELECTRIC MOTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 13 -
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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.8
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.
1.9
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
T.E.C. ELECTRIC MOTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
1
Accounting policies
(Continued)
- 14 -
1.10
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.11
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.
1.12
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.
In respect of loans received under the Coronavirus Business Interruption Loan scheme, interest paid by the government for the first twelve months of the loan is recognised as government grant income and a corresponding interest cost is recognised in interest payable.
1.13
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.
1.14
The company has entered into an invoice discounting arrangement. Amounts due from the customers are shown in full in trade debtors, with amounts due from the finance company shown within cash at bank and in hand. Amounts due to the finance company are shown within other creditors.
2
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Sale of goods
21,028,778
20,210,241
T.E.C. ELECTRIC MOTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
2
Turnover and other revenue
(Continued)
- 15 -
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
19,535,639
18,993,949
Europe
1,459,221
1,210,544
Rest of world
33,918
5,748
21,028,778
20,210,241
2023
2022
£
£
Other revenue
Interest income
8
-
Grants received
-
9,536
3
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.
T.E.C. ELECTRIC MOTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
3
Judgements and key sources of estimation uncertainty
(Continued)
- 16 -
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Depreciation
The annual depreciation charge for tangible fixed assets is sensitive to changes in the estimated useful lives and residual values of the assets. The useful lives and residual values are reassessed annually. They are amended, when necessary, to reflect current estimates.
Trade debtors
The carrying value of trade debtors is subject to judgements and estimates regarding the level of provision for bad and doubtful debts. The provision is based on the directors' estimates of the likelihood of recovery of amounts due from trade debtors. The recoverability of each balance is reassessed at the year end and specific provisions are made for each balance where recoverability is considered doubtful.
Stock
The carrying value of stock is subject to judgements and estimates regarding the level of provision for slow-moving stock. On an annual basis, the directors review the entire stockholding to identify stock lines for which sales have been slower than expected and might indicate an impairment in the carrying value of the stock. The directors then use their judgement to estimate the degree of impairment and any required adjustment to the provision.
Provisions for liabilities
Provisions for liabilities include the deferred tax provision and the warranty and rectification provision. The warranty and rectification provision is in respect of the estimated future costs of repairing faulty goods previously sold to customers and still within the warranty period; and the estimates future cost of rectification of machines currently held in stock which are expected to require some degree of repair before they can be sold. The estimated future costs are sensitive to changes in sales volumes and the length of time machines are held before sale. The provision is reassessed annually to reflect current estimates.
4
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
15,510
11,055
5
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(5,201)
(6,394)
Government grants
-
(9,536)
Depreciation of owned tangible fixed assets
37,149
31,777
Depreciation of tangible fixed assets held under finance leases
-
7,994
Profit on disposal of tangible fixed assets
(5,238)
(8,009)
Amortisation of intangible assets
2,740
-
Operating lease charges
312,803
316,371
T.E.C. ELECTRIC MOTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 17 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Management
3
3
Operational and clerical
35
33
Total
38
36
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,109,976
1,032,598
Social security costs
106,972
97,975
Pension costs
33,715
38,926
1,250,663
1,169,499
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
41,896
33,967
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 0 (2022 - 0).
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
22,348
42,826
Interest on invoice finance arrangements
148,748
130,546
Interest on finance leases and hire purchase contracts
337
1,571
Other interest
2,814
3,681
174,247
178,624
9
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
8
T.E.C. ELECTRIC MOTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 18 -
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
909,646
806,203
Adjustments in respect of prior periods
(1,532)
(11,238)
Total current tax
908,114
794,965
Deferred tax
Origination and reversal of timing differences
7,897
(3,169)
Total tax charge
916,011
791,796
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
4,558,840
4,214,119
Expected tax charge based on the standard rate of corporation tax in the UK of 19.96% (2022: 19.00%)
909,944
800,683
Tax effect of expenses that are not deductible in determining taxable profit
10,234
3,472
Gains not taxable
(1,046)
(1,522)
Adjustments in respect of prior years
(1,532)
(11,238)
Effect of change in corporation tax rate
5,791
Group relief
(1,516)
(1,300)
Other non-reversing timing differences
3,342
Other timing differences
(3,169)
Capital allowances in excess of depreciation
(9,206)
4,870
Taxation charge for the year
916,011
791,796
11
Dividends
2023
2022
£
£
Interim paid
3,518,474
T.E.C. ELECTRIC MOTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 19 -
12
Impairments
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
2023
2022
Notes
£
£
In respect of:
Stocks
15
373,003
Recognised in:
Cost of sales
-
373,003
13
Intangible fixed assets
Software
£
Cost
At 1 June 2022
Additions
27,400
At 31 May 2023
27,400
Amortisation and impairment
At 1 June 2022
Amortisation charged for the year
2,740
At 31 May 2023
2,740
Carrying amount
At 31 May 2023
24,660
At 31 May 2022
T.E.C. ELECTRIC MOTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 20 -
14
Tangible fixed assets
Leasehold improvements
Plant and equipment
Fixtures and fittings
Office equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 June 2022
43,747
21,408
273,784
95,375
174,374
608,688
Additions
5,921
15,389
17,088
38,398
Disposals
(27,692)
(27,692)
At 31 May 2023
43,747
27,329
289,173
112,463
146,682
619,394
Depreciation and impairment
At 1 June 2022
14,833
14,789
235,338
72,512
127,002
464,474
Depreciation charged in the year
2,892
3,135
13,478
7,991
9,653
37,149
Eliminated in respect of disposals
(18,930)
(18,930)
At 31 May 2023
17,725
17,924
248,816
80,503
117,725
482,693
Carrying amount
At 31 May 2023
26,022
9,405
40,357
31,960
28,957
136,701
At 31 May 2022
28,914
6,619
38,446
22,863
47,372
144,214
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Motor vehicles
23,977
15
Stocks
2023
2022
£
£
Finished goods and goods for resale
11,530,822
7,737,463
An impairment reversal of £373,003 (2022: loss £373,003) was recognised in cost of sales against stock during the year in respect of slow-moving and obsolete stock.
T.E.C. ELECTRIC MOTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 21 -
16
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
4,385,111
4,887,151
Amounts owed by group undertakings
77,213
2,653,182
Amounts owed by undertakings in which the company has a participating interest
282,287
260,087
Other debtors
227,243
Prepayments and accrued income
42,006
40,518
4,786,617
8,068,181
The company operates an invoice discounting facility which is secured by a floating charge over the assets of the company and a fixed charge on the purchased debts which fail to vest in favour of Hsbc Invoice Finance (UK) Ltd.
17
Financial instruments
2023
2022
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
4,744,611
8,027,663
Carrying amount of financial liabilities
Measured at amortised cost
5,105,605
3,087,940
18
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
19
750,000
Obligations under finance leases
20
19,575
Trade creditors
4,847,548
1,907,918
Corporation tax
462,131
529,262
Other taxation and social security
466,103
214,385
Other creditors
82,042
82,724
Accruals and deferred income
176,015
327,723
6,033,839
3,831,587
T.E.C. ELECTRIC MOTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 22 -
19
Loans and overdrafts
2023
2022
£
£
Bank loans
750,000
Payable within one year
750,000
The bank loans bear interest at the Bank of England base rate plus 3.49% and are repayable within three years. The first 12 months' interest charge was funded by a government grant under the Coronavirus Business Interruption Loan Scheme.
The company's bank holds a debenture secured on the assets of the company. The company's liability in respect of the debenture as at 31 May 2023 was £nil (2022: £750,000).
20
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
19,575
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. 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 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
Finance lease obligations are secured over the tangible fixed assets to which they relate.
21
Provisions for liabilities
2023
2022
£
£
Warranty and rectification provision
42,102
44,567
Movements on provisions:
Warranty and rectification provision
£
At 1 June 2022
44,567
Additional provisions in the year
42,102
Reversal of provision
(44,567)
At 31 May 2023
42,102
T.E.C. ELECTRIC MOTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
21
Provisions for liabilities
(Continued)
- 23 -
The warranty and rectification provision is in respect of the estimated future costs of repairing faulty goods previously sold to customers and still within the warranty period; and the estimated future cost of rectification of machines currently held in stock.
Payments in respect of warranty claims are expected to be made within two years of the date of sale. The exact amount and timing of any such payments is uncertain.
22
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
24,130
16,233
2023
Movements in the year:
£
Liability at 1 June 2022
16,233
Charge to profit or loss
2,106
Effect of change in tax rate - profit or loss
5,791
Liability at 31 May 2023
24,130
23
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
33,715
38,926
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. At the year end, the balance due to the pension scheme was £4,850 (2022: £4,150).
T.E.C. ELECTRIC MOTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 24 -
24
Secured debts
The following secured debts are included within creditors:
2023
2022
£
£
Hire purchase contracts
-
19,575
Bank loans
-
750,000
-
769,575
Hire purchase contracts are secured against the assets to which they relate.
Bank loans are secured by way of a fixed and floating charge over all assets of the company.
25
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A of £1 each
100
100
99
99
Ordinary B of £1 each
1
1
1
1
Ordinary C of 50p each
1
1
1
1
Ordinary D of 50p each
1
1
1
1
103
103
102
102
The A shares have voting rights, whereas the B, C and D shares rank pari passu with A shares in all respects but shall constitute separate classes of shares.
26
Profit and loss reserves
The profit and loss reserve represents cumulative profits and losses, net of distributions of profits to members.
27
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
196,387
285,780
Between two and five years
27,867
224,253
224,254
510,033
T.E.C. ELECTRIC MOTORS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023
- 25 -
28
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Payments on behalf of related parties
2023
2022
£
£
Entities with control, joint control or significant influence over the company
950,481
531,787
Services received
2023
2022
£
£
Entities over which the entity has control, joint control or significant influence
18,900
10,746
29
Directors' transactions
Dividends totalling £0 (2022 - £0) were paid in the year in respect of shares held by the company's directors.
During the year, the company paid £5,400 (2022 - £5,400) to directors in respect of property rent.
30
Ultimate controlling party
Spartan Motor Holdings Limited, the parent company, is considered to be the immediate controlling party and ultimate parent undertaking.
Mr S H Edwards and Mrs T Edwards are considered to be the ultimate controlling party by virtue of their joint majority shareholding in Spartan Motor Holdings Limited.
2023-05-312022-06-01falseCCH SoftwareCCH Accounts Production 2023.300Mr S H EdwardsMr G T RichardsonMr G T RichardsonMrs T Edwardsfalse054489002022-06-012023-05-3105448900bus:Director12022-06-012023-05-3105448900bus:CompanySecretaryDirector12022-06-012023-05-3105448900bus:Director22022-06-012023-05-3105448900bus:CompanySecretary12022-06-012023-05-3105448900bus:Director32022-06-012023-05-3105448900bus:RegisteredOffice2022-06-012023-05-31054489002023-05-31054489002021-06-012022-05-3105448900core:RetainedEarningsAccumulatedLosses2021-06-012022-05-3105448900core:RetainedEarningsAccumulatedLosses2022-06-012023-05-3105448900core:OtherResidualIntangibleAssets2023-05-3105448900core:OtherResidualIntangibleAssets2022-05-3105448900core:ComputerSoftware2023-05-3105448900core:ComputerSoftware2022-05-31054489002022-05-3105448900core:LeaseholdImprovements2023-05-3105448900core:PlantMachinery2023-05-3105448900core:FurnitureFittings2023-05-3105448900core:ComputerEquipment2023-05-3105448900core:MotorVehicles2023-05-3105448900core:LeaseholdImprovements2022-05-3105448900core:PlantMachinery2022-05-3105448900core:FurnitureFittings2022-05-3105448900core:ComputerEquipment2022-05-3105448900core:MotorVehicles2022-05-3105448900core:CurrentFinancialInstrumentscore:WithinOneYear2023-05-3105448900core:CurrentFinancialInstrumentscore:WithinOneYear2022-05-3105448900core:CurrentFinancialInstruments2023-05-3105448900core:CurrentFinancialInstruments2022-05-3105448900core:ShareCapital2023-05-3105448900core:ShareCapital2022-05-3105448900core:RetainedEarningsAccumulatedLosses2023-05-3105448900core:RetainedEarningsAccumulatedLosses2022-05-3105448900core:ShareCapital2021-05-3105448900core:RetainedEarningsAccumulatedLosses2021-05-3105448900core:ShareCapitalOrdinaryShares2023-05-3105448900core:ShareCapitalOrdinaryShares2022-05-3105448900core:IntangibleAssetsOtherThanGoodwill2022-06-012023-05-3105448900core:ComputerSoftware2022-06-012023-05-3105448900core:LeaseholdImprovements2022-06-012023-05-3105448900core:PlantMachinery2022-06-012023-05-3105448900core:FurnitureFittings2022-06-012023-05-3105448900core:ComputerEquipment2022-06-012023-05-3105448900core:MotorVehicles2022-06-012023-05-310544890012022-06-012023-05-310544890012021-06-012022-05-3105448900core:UKTax2022-06-012023-05-3105448900core:UKTax2021-06-012022-05-310544890022022-06-012023-05-310544890022021-06-012022-05-310544890032022-06-012023-05-310544890032021-06-012022-05-3105448900core:ComputerSoftware2022-05-3105448900core:ComputerSoftwarecore:ExternallyAcquiredIntangibleAssets2022-06-012023-05-3105448900core:LeaseholdImprovements2022-05-3105448900core:PlantMachinery2022-05-3105448900core:FurnitureFittings2022-05-3105448900core:ComputerEquipment2022-05-3105448900core:MotorVehicles2022-05-31054489002022-05-3105448900core:WithinOneYear2023-05-3105448900core:WithinOneYear2022-05-3105448900core:BetweenTwoFiveYears2023-05-3105448900core:BetweenTwoFiveYears2022-05-3105448900core:EntitiesWithJointControlOrSignificantInfluenceOverReportingEntitycore:SaleOrPurchaseGoods2022-06-012023-05-3105448900core:EntitiesWithJointControlOrSignificantInfluenceOverReportingEntitycore:SaleOrPurchaseGoods2021-06-012022-05-3105448900bus:PrivateLimitedCompanyLtd2022-06-012023-05-3105448900bus:FRS1022022-06-012023-05-3105448900bus:Audited2022-06-012023-05-3105448900bus:FullAccounts2022-06-012023-05-31xbrli:purexbrli:sharesiso4217:GBP