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Company registration number: 13390085







ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2022


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED









































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SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
COMPANY INFORMATION


Directors
Kathleen Simmons 
Daryl Robert Williams 




Company secretary
Daryl Robert Williams



Registered number
13390085



Registered office
Unit 5 Wharfside
Rosemount Road

Alperton

Middlesex

HA0 4PE




Independent auditors
Menzies LLP
Chartered Accountants & Statutory Auditor

Magna House

18-32 London Road

Staines-Upon-Thames

TW18 4BP





 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 



CONTENTS



Page
Group strategic report
1 - 2
Directors' report
3 - 4
Independent auditors' report
5 - 8
Consolidated statement of comprehensive income
9
Consolidated statement of financial position
10
Company statement of financial position
11
Consolidated statement of changes in equity
12
Company statement of changes in equity
13
Consolidated Statement of cash flows
14
Consolidated analysis of net debt
15
Notes to the financial statements
16 - 31


 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022

The directors present their Strategic Report for the year ended 31 December 2022.

Introduction
 
The principal activities of the Group are engineering of innovative experimental techniques as well as the development and manufacture equipment’s for physico-chemical characterization of complex solids and the Company was that of a holding company. 

Business review
 
The results for the year are set out in the statement of comprehensive income on page 9.
The Group generated revenue of £8.7m (2021: £7.9m), an increase of 10.5%. The increase in revenue was partially due to continued recovery from Covid related disruptions to sales performance and a strong first year of trading Surface Measurement Systems GmbH.
Geographically, the main increase in revenue was due to sales bouncing back in China and Korea. An increase of 27% and 22% respectively.
We also saw revenue from three newly launched instruments the BTA, Carbon and Discovery. While only one unit of each was sold, they were a good contribution. 
The gross profit margin was 65.7% (2021: 66.7%) remaining relatively in line with the previous year because of continuing to sell higher valued instruments.
The net current assets of the Group have increased to £4,967,733 (2021: £4,465,616). The Group have made it priority to ensure that receivables overdue are regularly chased and customers credit terms are reviewed closely to reduce their risk   of exposure to any bad debts. Also retaining a strong margin has generated higher levels of cash. Additionally, an increase in inventory to £2,233,579 (2021: £1,779,381) to de-risk against long lead times potential stock shortages was a conscious decision in 2022 as a response to impact both Brexit and Covid had on the supply chain reliability.

Principal risks and uncertainties
 
The Group has assessed the principal risks affecting the Group as follows:
Customer concentration: A large proportion of the Group’s revenue is derived from a limited number of customers and the Group’s results could be impacted from the loss of these customers. The Group mitigates this risk by new product releases and expanding into new regions and industry applications. An example is a focus on new instruments  for supporting research on advanced materials for carbon capture.
Liquidity risk: The objective of the Group in managing liquidity risk is to ensure that it can meet its financial obligations
as and when they fall due. The Group expects to meet these obligations through close monitoring of cash, and in addition
has a prudent dividend policy and an extremely effective credit control system.
Customer credit risk: The Group is at risk to the extent that a customer may be unable to pay the debt on a specified date.
This risk is mitigated by maintaining strong customer relationships, vetting credit ratings and by closely monitoring
outstanding debts from all sources. The customers we have a large multinational stock exchange listed companies with little credit risk. The majority sit in pharmaceuticals, food, personal care products and academia where risk of insolvency is very low.

Page 1

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 



GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

Financial key performance indicators

2022
2021
        £
        £
Revenue

8,723,644

7,894,618
 
Gross profit

5,731,815

5,266,182
 
Operating profit

574,829

1,025,812
 

These are considered within the business review section of this report. 

Future developments
 
The principal objective of the Group is to have the new subsidiaries operating fully and generating revenue. Post year end (late 2023), Particle Characterisation Laboratory Private Limited, the newest subsidiary in India has started to generate revenue. We have also hired a Vice President of Global Sales as a commitment to grow our sales globally along with development of the DVS Carbon which was officially launched mid 2023.

Impact of Covid-19
 
The global tumult wrought by the Covid-19 pandemic over the past 18 months has only intensified the complexity in the supply chain within the manufacturing industry worldwide. This has meant that the delivery times of some components used in the manufacture of our instruments can vary wildly and unpredictably. Delivery times of  6 or 9 months are not unusual- historically 3 months would be a long lead time. We have needed to increase our manufacturing inventory to minimise the business risks of this problem. 
Overall, the Group has continued throughout this year to control is cost base and to ensure the continuity of its operation to reduce the impact of the company’s operations by making sure we have staff in the countries where our customers are. For example we relocated a UK based employee to be the German Service Engineer to look after the DACH region. We also strengthened and expanded the manufacturing capability in Surface Measurement Systems Ltd, NA so that Surface Measurement Systems UK Limited was not the sole site for instrument manufacture.


This report was approved by the board and signed on its behalf.



Daryl Robert Williams
Director

Date: 24 November 2023

Page 2

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022

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

Directors' responsibilities statement

The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 the Group and of the profit or loss of the Group for that period.

 In preparing these financial statements, the directors are required to:


select suitable accounting policies for the Group's financial statements and then apply them consistently;

make judgments and accounting estimates that are reasonable and prudent;

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Results and dividends

The profit for the year, after taxation, amounted to £616,421 (2021 - £978,378).

The Group has not paid an interim dividend during the year (2021: £nil) and the directors do not recommend payment of a final dividend.

Directors

The directors who served during the year were:

Kathleen Simmons 
Daryl Robert Williams 

Future developments

The directors have addressed their future intentions in the strategic report. 

Matters covered in the Group Strategic Report

Report) Regulations 2013 to set out within the company's Strategic Report the Company's Strategic Report Information required by schedule 7 of the Large and Medium Sized Companies and Groups (Accounts and Report) Regulations 2008. This includes information that would have been included in the business review and details of the principal risks and uncertainties.

Page 3

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022

Disclosure of information to auditors

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
 
so far as the director is aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and

the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditors are aware of that information.

Post balance sheet events

There have been no significant events affecting the Group since the year end.

Auditors

Under section 487(2) of the Companies Act 2006Menzies LLP will be deemed to have been reappointed as auditors 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.

This report was approved by the board and signed on its behalf.
 





Daryl Robert Williams
Director

Date: 24 November 2023

Page 4

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 

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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED

Qualified Opinion


We have audited the financial statements of Surface Measurement Systems (Holding) Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2022, which comprise the Group Statement of Comprehensive Income, the Group and Company Statements of Financial Position, the Group Statement of Cash Flows, the Group and Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policiesThe 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, except for the possible effects of the matter described in the basis for qualified opinion section of our report,  the financial statements:


give a true and fair view of the state of the Group's and of the parent Company's affairs as at 31 December 2022 and of the Group's profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


Basis for qualified opinion


We were not appointed as auditor of the Group until after 31 December 2020 and thus did not observe the counting of physical inventories as at 31 December 2020 for the overseas subsidiary; Surface Measurement Systems Ltd, NA. We have therefore not obtained sufficient appropriate audit evidence on the opening stock figure of £361,627 which consequently means that we do not have sufficient and appropriate audit evidence regarding the cost of sales value reported in the year ended 31 December 2021 and are unable to determine whether any adjustment was necessary. Our audit opinion on the financial statements for the year ended 31 December 2021 was modified accordingly. Our opinion on the current period’s financial statements is also modified because of the possible effect of this matter on the comparability of the current period’s figures and the corresponding figures. 


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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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 qualified 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 Group's or the parent 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.


Page 5

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED


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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED (CONTINUED)

Other information


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


As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning the opening inventory quantities of the overseas subsidiary; Surface Measurement Systems Ltd, NA of £361,627 held as at 31 December 2020. We have concluded that where the other information refers to the opening inventory balance or related balances such as cost of sales, it may be materially misstated for the same reason.


Opinion on other matters prescribed by the Companies Act 2006
 

Except for the possible effects of the matter described in the basis for qualified opinion section of our report, in our opinion, based on the work undertaken in the course of the audit:


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


Matters on which we are required to report by exception
 

Except for the matter described in the basis for qualified opinion section of our report, in the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.


Arising solely from the limitation on the scope of our work relating to inventory, referred to above:
 
we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and 
we were unable to determine whether adequate accounting records have been kept.

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:


returns adequate for our audit have not been received from branches not visited by us; or
the parent Company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made.


Page 6

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED


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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED (CONTINUED)

Responsibilities of directors
 

As explained more fully in the Directors' Responsibilities Statement set out on page 3, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


In preparing the financial statements, the directors are responsible for assessing the Group's and the parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.


Auditors' 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 Auditors' 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 Group 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:

The Group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation. We determined that the following laws and regulations were most significant including:
°The Companies Act 2006;
°Financial Reporting Standard 102
°UK tax legislation;
°UK employment legislation;
°UK health and safety legislation; and
°General Data Protection Regulations.

We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

We understood how the Group is complying with those legal and regulatory frameworks by, making inquiries to management and those responsible for legal and compliance procedures.
 
The engagement partner assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations. The assessment did not identify any issues in this area.
 
We assessed the susceptibility of the Group's financial statements to material misstatement, including how fraud might occur. Audit procedures performed by the engagement team included:
 
°Identifying and assessing the design effectiveness of controls management has in place to prevent and detect
fraud;
°Understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process; and
°Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations.
 
Page 7

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED


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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED (CONTINUED)

As a result of the above procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas:
 
°Posting of unusual journals and complex transactions; and
°Risk of fictitious employees.


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.


A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' Report.


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 2006Our 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 Auditors' 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.





Andrew Cook FCA (Senior statutory auditor)
  
for and on behalf of
Menzies LLP
 
Chartered Accountants
Statutory Auditor
  
Magna House
18-32 London Road
Staines-Upon-Thames
TW18 4BP

24 November 2023
Page 8

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022

2022
2021
Note
£
£

  

Turnover
 3 
8,723,644
7,894,618

Cost of sales
  
(2,991,829)
(2,628,436)

Gross profit
  
5,731,815
5,266,182

Administrative expenses
  
(5,412,463)
(4,322,191)

Other operating income
 4 
255,477
160,760

Other operating charges
  
-
(78,939)

Operating profit
 5 
574,829
1,025,812

Interest receivable
 9 
7,125
6,729

Interest payable
 10 
(722)
-

Profit before taxation
  
581,232
1,032,541

Tax on profit
 11 
35,189
(54,163)

Profit for the financial year
  
616,421
978,378

  

Exchange gains/(losses) arising on translation on foreign operations
  
(3,469)
18,092

Other comprehensive income for the year
  
(3,469)
18,092

  

Total comprehensive income for the year
  
612,952
996,470

Profit for the year attributable to:
  

Owners of the parent Company
  
616,421
978,378

  
616,421
978,378

Total comprehensive income for the year attributable to:
  

Owners of the parent Company
  
612,952
996,470

  
612,952
996,470

The notes on pages 16 to 31 form part of these financial statements.

Page 9

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
REGISTERED NUMBER:13390085



CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022

2022
2021
Note
£
£

Fixed assets
  

Tangible assets
 13 
526,048
426,048

  
526,048
426,048

Current assets
  

Stocks
 15 
2,233,579
1,779,381

Debtors
 16 
2,243,376
2,320,055

Cash at bank and in hand
  
1,793,483
1,607,271

  
6,270,438
5,706,707

Creditors: amounts falling due within one year
 17 
(1,302,705)
(1,241,091)

Net current assets
  
 
 
4,967,733
 
 
4,465,616

Total assets less current liabilities
  
5,493,781
4,891,664

Creditors: amounts falling due after more than one year
 18 
(30,746)
(39,352)

Provisions for liabilities
  

Deferred taxation
 20 
(24,797)
(27,026)

  
 
 
(24,797)
 
 
(27,026)

Net assets
  
5,438,238
4,825,286


Capital and reserves
  

Called up share capital 
 21 
95
95

Foreign exchange reserve
 22 
(16,991)
(13,522)

Profit and loss account
 22 
5,455,134
4,838,713

Equity attributable to owners of the parent Company
  
5,438,238
4,825,286

  
5,438,238
4,825,286


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 




Daryl Robert Williams
Director

Date: 24 November 2023

The notes on pages 16 to 31 form part of these financial statements.

Page 10

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
REGISTERED NUMBER:13390085



COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022

2022
2021
Note
£
£

Fixed assets
  

Investments
 14 
341,077
165,824

  
341,077
165,824

Current assets
  

Debtors
 16 
11,063
43

Cash at bank and in hand
  
25,545
2,981

  
36,608
3,024

Creditors: amounts falling due within one year
 17 
(383,469)
(168,907)

Net current liabilities
  
 
 
(346,861)
 
 
(165,883)

Total assets less current liabilities
  
(5,784)
(59)

  

  

Net liabilities
  
(5,784)
(59)


Capital and reserves
  

Called up share capital 
  
95
95

Profit and loss account brought forward
  
(154)
-

Loss for the year
  
(5,725)
(154)

Profit and loss account carried forward
  
(5,879)
(154)

  
(5,784)
(59)


The financial statements were approved and authorised for issue by the board and were signed on its behalf by: 




Daryl Robert Williams
Director

Date: 24 November 2023

The notes on pages 16 to 31 form part of these financial statements.

Page 11


 
SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022



Called up share capital
Foreign exchange reserve
Profit and loss account
Total equity


£
£
£
£



At 1 January 2021
95
(31,614)
3,860,335
3,828,816



Comprehensive income for the year


Profit for the year
-
-
978,378
978,378


Foreign exchange on translation of
subsidiaries
-
18,092
-
18,092





At 1 January 2022
95
(13,522)
4,838,713
4,825,286



Comprehensive income for the year


Profit for the year
-
-
616,421
616,421


Foreign exchange on translation of
subsidiaries
-
(3,469)
-
(3,469)



At 31 December 2022
95
(16,991)
5,455,134
5,438,238



The notes on pages 16 to 31 form part of these financial statements.

Page 12

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 



COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022


Called up share capital
Profit and loss account
Total equity

£
£
£


Comprehensive income for the year

Loss for the year

-
(154)
(154)


Contributions by and distributions to owners

Shares issued during the year
95
-
95



At 1 January 2022
95
(154)
(59)


Comprehensive income for the year

Loss for the year
-
(5,725)
(5,725)


At 31 December 2022
95
(5,879)
(5,784)


The notes on pages 16 to 31 form part of these financial statements.

Page 13

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 



CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022

2022
2021
£
£

Cash flows from operating activities

Profit for the financial year
616,421
978,378

Adjustments for:

Depreciation of tangible assets
110,701
68,320

Interest paid
722
-

Interest received
(7,125)
(6,729)

Taxation charge
(35,189)
54,163

(Increase) in stocks
(454,198)
(243,444)

(Increase) in debtors
(71,865)
(182,325)

Increase in creditors
22,065
24,620

Corporation tax received/(paid)
216,289
(24,804)

Net cash generated from operating activities

397,821
668,179


Cash flows from investing activities

Purchase of tangible fixed assets
(204,548)
(280,313)

Interest received
7,125
6,729

Net cash from investing activities

(197,423)
(273,584)

Cash flows from financing activities

Repayment of loans
(9,989)
-

Interest paid
(722)
-

Net cash used in financing activities
(10,711)
-

Net increase in cash and cash equivalents
189,687
394,595

Cash and cash equivalents at beginning of year
1,607,265
1,194,578

Foreign exchange (losses)/gains
(3,469)
18,092

Cash and cash equivalents at the end of year
1,793,483
1,607,265


Cash and cash equivalents at the end of year comprise:

Cash at bank and in hand
1,793,483
1,607,265

1,793,483
1,607,265


The notes on pages 16 to 31 form part of these financial statements.

Page 14

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 



CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 DECEMBER 2022




At 1 January 2022
Cash flows
At 31 December 2022
£

£

£

Cash at bank and in hand

1,607,271

186,212

1,793,483

Bank overdrafts

(6)

6

-

Debt due after 1 year

(39,352)

8,606

(30,746)

Debt due within 1 year

(10,648)

1,383

(9,265)


1,557,265
196,207
1,753,472

The notes on pages 16 to 31 form part of these financial statements.

Page 15

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

1.


General information

Surface Measurement Systems (Holding) Limited is a private company limited by shares incorporated in England and Wales. The address of the registered office is disclosed on the company information page.

2.Accounting policies

 
2.1

Basis of preparation of financial statements

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies.

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.

The following principal accounting policies have been applied:

 
2.2

Basis of consolidation

The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
In the prior period, the acquisition of the subsidiaries had been completed under Merger accounting. Where ownership of the Group had not changed with the introduction of a new parent company, Merger accounting required a consolidation to be completed as if that new parent has always existed. As such, these consolidated statements presented the results as if the parent company had always existed, even though it was only incorporated on 12 May 2021, and gained control of the Group at that date.

 
2.3

Foreign currency translation

Functional and presentation currency

The Company's functional and presentational currency is GBP.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.

Page 16

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.4

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
- a valid purchase order has been received for the sale;
- the invoice has been raised per the purchase order;
- the goods have been shipped.
Rendering of services
Revenue from a contract to provide services is treated as deferred income and recognised as revenue on a
monthly basis over the period of the contract until the expiry of the contract.

 
2.5

Operating leases: the Group as lessee

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight-line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

 
2.6

Research and development

Research and development expenditure is written off in the year which it is incurred.

 
2.7

Government grants

Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Consolidated statement of comprehensive income in the same period as the related expenditure.

 
2.8

Interest income

Interest income is recognised in profit or loss using the effective interest method.

Page 17

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.9

Pensions

Defined contribution pension plan

The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Group in independently administered funds.

 
2.10

Share based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Group keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.
Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.

Page 18

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.11

Current and deferred taxation

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

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company and the Group operate and generate income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and
Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

 
2.12

Tangible fixed assets

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following basis:

Long-term leasehold property
-
10% straight line
Plant and machinery
-
25% - 33% straight line
Motor vehicles
-
25% - 33% straight line
Office equipment
-
25% - 33% straight line

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.

 
2.13

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

Page 19

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

2.Accounting policies (continued)

 
2.14

Stocks

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.

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.

 
2.15

Financial instruments

The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.


3.


Turnover

An analysis of turnover by class of business is as follows:


As restated
2022
2021
£
£

Sales
8,723,644
7,894,618

8,723,644
7,894,618


Analysis of turnover by country of destination:

As restated
2022
2021
£
£

United Kingdom
980,173
637,670

Rest of the world
7,743,471
7,256,948

8,723,644
7,894,618


A prior period restatement has occured in relation to the split between turnover by country of the destination. This reallocation has not resulted in a change to the overall turnover for the year ending 31 December 2021.  

Page 20

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

4.


Other operating income

2022
2021
£
£

Net rents receivable
4,849
4,362

Government grants
-
156,398

Foreign exchange gain
250,628
-

255,477
160,760



5.


Operating profit

The operating profit is stated after charging:

2022
2021
£
£

Research & development charged as an expense
836,507
745,825

Foreign exchange (gain)/loss
(250,628)
79,069

Operating lease rentals
133,336
91,321

Depreciation
110,701
49,652


6.


Auditors' remuneration

2022
2021
£
£


Fees payable to the Group's auditor and its associates for the audit of the Group's annual financial statements
15,250
15,000



Page 21

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

7.


Employees

Staff costs, including directors' remuneration, were as follows:


Group
Group
Company
Company
2022
As restated
2021
2022
As restated
2021
£
£
£
£


Wages and salaries
2,415,694
2,242,999
-
-

Social security costs
368,172
389,967
-
-

Cost of defined contribution scheme
45,507
44,449
-
-

2,829,373
2,677,415
-
-


A prior period restatement has occured in relation to the disclosure of staff costs which had previously been included within a seperate sub heading within adminstrative expenses and not included within this note. 
This reallocation has not resulted in a change to the overall administrative expenses for the year ending 31 December 2021.  

The average monthly number of employees, including the directors, during the year was as follows:



Group
Group
Company
Company
        2022
        2021
        2022
        2021
            No.
            No.
            No.
            No.









Employees including directors
69
61
2
1


8.


Directors' remuneration

2022
2021
£
£

Directors' emoluments
72,433
64,989

72,433
64,989



9.


Interest receivable

2022
2021
£
£


Other interest receivable
7,125
6,729

7,125
6,729

Page 22

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

10.


Interest payable

2022
2021
£
£


Bank interest payable
550
-

Other loan interest payable
172
-

722
-


11.


Taxation


2022
2021
£
£

Corporation tax


Current tax on profits for the year
5,447
206


5,447
206

Foreign tax


Foreign tax on income for the year
55,078
-

55,078
-

Total current tax
60,525
206

Deferred tax


Origination and reversal of timing differences
(95,714)
53,957

Total deferred tax
(95,714)
53,957


Taxation on (loss)/profit on ordinary activities
(35,189)
54,163
Page 23

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
 
11.Taxation (continued)


Factors affecting tax charge for the year

The tax assessed for the year is the same as (2021 - the same as) the standard rate of corporation tax in the UK of 19% (2021 -19%) as set out below:

2022
2021
£
£


Profit on ordinary activities before tax
581,232
1,032,541


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 -19%)
110,434
196,183

Effects of:


Non-taxable income less expenses not deductible for tax purposes, other than goodwill and impairment
(201)
9,344

Utilisation of tax losses
-
(6,926)

Adjustments to tax charge in respect of prior periods
5,537
-

Adjustment relating to R&D expenditure
(160,297)
(139,243)

Tax charged at different rates
(8,330)
-

Movement in deferred tax
-
(6,979)

Unrelieved tax losses carried forward
17,668
1,784

Total tax charge for the year
(35,189)
54,163


Factors that may affect future tax charges

The main rate of corporation tax in the UK is 19%. The Finance Bill 2021, published on 11 March 2021 includes an increase to the main rate of corporation tax to 25% from 1 April 2023. Deferred tax is reflected at the rate of 25% in these accounts since this change was substantively enacted by the Balance Sheet date. 


12.


Parent company profit for the year

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The loss after tax of the parent Company for the year was £5,725.

Page 24

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

13.


Tangible fixed assets

Group






Land and  buildings
Plant and machinery
Motor vehicles
Office equipment
Total

£
£
£
£
£



Cost or valuation


At 1 January 2022
335,630
1,210,138
17,805
115,031
1,678,604


Additions
17,592
72,405
-
114,551
204,548


Disposals
(434)
-
-
-
(434)


Exchange adjustments
2,545
57,118
2,113
10,171
71,947



At 31 December 2022

355,333
1,339,661
19,918
239,753
1,954,665



Depreciation


At 1 January 2022
202,515
948,394
17,805
83,842
1,252,556


Charge for the year on owned assets
17,564
90,159
-
2,978
110,701


Disposals
(434)
-
-
-
(434)


Exchange adjustments
640
53,055
2,113
9,986
65,794



At 31 December 2022

220,285
1,091,608
19,918
96,806
1,428,617



Net book value



At 31 December 2022
135,048
248,053
-
142,947
526,048



At 31 December 2021
133,115
261,744
-
31,189
426,048

Page 25

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

14.


Fixed asset investments

Company





Investments in subsidiary companies

£



Cost or valuation


At 1 January 2022
165,824


Additions
158,873


Transfers from subsidiary
16,380



At 31 December 2022
341,077





Subsidiary undertakings


The following were subsidiary undertakings of the Company:

Name

Registered office

Class of shares

Holding

Surface Measurement Systems Limited
Unit 5 Wharfside, Rosemont Road, Alperton, Middlesex, HA0 4PE
Ordinary
100%
Surface Measurement Systems GmbH
lm Breitspiel 2l,69126 Heidelberg, Deutschland
Ordinary
100%
SMS Technology (Shanghai) Co., Ltd.
Room 715 , 7/F, No.80 Pingwu Road, Changning District, Shanghai
Ordinary
100%
Surface Measurement Systems Ltd, NA
2125 28th Street SW, Suite 1, Allentown, PA 18103 USA
Ordinary
100%
SMS Instruments Private Limited
BLOCK III IDA, PLOT NO C-1, Uppal Main Road, Uppal, Hyderabad, Rangareddy, Telangana, 500039, India
Ordinary
100%
SMS Characterisation Laboratories Private Limited
BLOCK III IDA, PLOT NO C-1, Uppal Main Road, Uppal, Hyderabad, Rangareddy, Telangana, 500039, India
Ordinary
100%

The shareholding of SMS Instruments Private Limited and Surface Measurement Systems Ltd, NA were transferred from Surface Measurement Systems Limited to the parent company Surface Measurement Systems (Holding) Limited on 4 August 2022 and 24 November 2022 respectively at their carrying value. 

Page 26

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

15.


Stocks

Group
Group
2022
2021
£
£

Raw materials and consumables
1,923,754
1,573,921

Finished goods and goods for resale
309,825
205,460

2,233,579
1,779,381



16.


Debtors

Group
Group
Company
Company
2022
2021
2022
2021
£
£
£
£

Due after more than one year

Directors loan account
250,000
250,000
-
-

Other debtors
4,313
19,787
-
-

Prepayments and accrued income
23,974
17,216
-
-

Taxation recoverable
89,125
86,866
-
-

367,412
373,869
-
-

Due within one year

Trade debtors
1,555,198
1,497,940
-
-

Amounts owed by group undertakings
-
-
11,063
43

Other debtors
154,577
161,807
-
-

Prepayments and accrued income
50,967
45,238
-
-

Tax recoverable
468
221,251
-
-

Deferred taxation
114,754
19,950
-
-

2,243,376
2,320,055
11,063
43


Page 27

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

17.


Creditors: Amounts falling due within one year

Group
Group
Company
Company
2022
2021
2022
2021
£
£
£
£

Bank overdrafts
-
6
-
6

Bank loans
9,265
10,648
-
-

Trade creditors
476,889
457,520
-
-

Amounts owed to group undertakings
-
-
383,469
168,901

Corporation tax
43,080
2,142
-
-

Other taxation and social security
22,893
3,272
-
-

Other creditors
217,338
188,909
-
-

Accruals and deferred income
533,240
578,594
-
-

1,302,705
1,241,091
383,469
168,907



18.


Creditors: Amounts falling due after more than one year

Group
Group
2022
2021
£
£

Bank loans
30,746
39,352

30,746
39,352


The bank loan is repayable by instalments with the final amounts being due between 2 and 5 years from the reporting date.
The Company had no creditors falling due after one year at the reporting date.

Page 28

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

19.


Loans

Analysis of the maturity of bank loans is given below:


Group
Group
2022
2021
£
£

Amounts falling due within one year

Bank loans
9,265
10,648


9,265
10,648

Amounts falling due 1-2 years

Bank loans
30,746
39,352


30,746
39,352



40,011
50,000


The Company had no bank loans at the reporting date.


20.


Deferred taxation


Group



2022
2021


£

£






At beginning of year
(7,076)
46,881


Charged to profit or loss
97,033
(53,957)



At end of year
89,957
(7,076)

Page 29

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
 
20.Deferred taxation (continued)

Group
Group
2022
2021
£
£

Accelerated capital allowances
(68,636)
(78,527)

Tax losses carried forward
158,593
71,451

89,957
(7,076)

Comprising:

Asset - due within one year
114,754
19,950

Liability
(24,797)
(27,026)

89,957
(7,076)



21.


Share capital

2022
2021
£
£
Allotted, called up and fully paid



95,000 (2021 -95,000) Ordinary Shares shares of £0.001 each
95
95



22.


Reserves

Foreign exchange reserve

This reserve records the accumulated foreign exchange movements as a result of the subsidiary companies financial information being presented in a currency different to their functional currency.

Profit and loss account

This reserve records retained earnings and accumulated losses attributable to the shareholders of the Group.

Page 30

 


SURFACE MEASUREMENT SYSTEMS (HOLDING) LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022

23.


Commitments under operating leases

At 31 December 2022 the Group had future minimum lease payments due under non-cancellable operating leases for each of the following periods:


Group
Group
2022
2021
£
£

Not later than 1 year
334,315
207,967

Later than 1 year and not later than 5 years
753,619
360,992

Later than 5 years
262,500
337,500

1,350,434
906,459

The Company had no commitments under non-cancellable operating leases at the reporting date.


24.


Related party transactions

Balances and transactions between the Group, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note.
In prior years, the Group has incurred non interest bearing expenses of £65 on behalf of Dr D Williams. Dr D Williams repaid the Group £nil in respect of these expenses during the year.
In 2019, Dr D Williams received an unsecured loan from the Group of £250,000. Interest is charged monthly at the HMRC official beneficial loan rate on the balance outstanding from the commencement date until the loan is repaid in full. During the year, repayments were made of £nil and interest charged of £6,591. 
At the year end, Dr D Williams owed the Group £274,039 (2021: £267,281), £65 is repayable on demand and £273,974 is repayable in over more than one year.


25.


Controlling party

The ultimate controlling party of the company is its directors, who between them own all of the company's issued share capital.
 
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