Company Registration No. 09055758 (England and Wales)
CHALLENGER SOLUTIONS HOLDINGS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 MARCH 2023
31 March 2023
CHALLENGER SOLUTIONS HOLDINGS LIMITED
COMPANY INFORMATION
Directors
E Clapton
AJ Mair
NB Shakespeare
Company number
09055758
Registered office
85 Haltwhistle Road
South Woodham Ferrers
Chelmsford
Essex
CM3 5ZA
Auditor
Rickard Luckin Limited
1st Floor
County House
100 New London Road
Chelmsford
Essex
CM2 0RG
CHALLENGER SOLUTIONS HOLDINGS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Group statement of comprehensive income
9
Group balance sheet
10
Company balance sheet
11
Group statement of changes in equity
12
Company statement of changes in equity
13
Group statement of cash flows
14
Notes to the financial statements
15 - 34
CHALLENGER SOLUTIONS HOLDINGS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 1 -

The directors present the strategic report for the year ended 31 March 2023.

Review of the business

For manufacturing companies such as Challenger Solutions business conditions have remained challenging; post pandemic issues with our supply chain have changed both the stock and sales profile as detailed in the financial statements. Our actions taken during the year to maintain the supply chain and protect customer contracts should reduce considerably in the future as trading conditions return to pre pandemic normality.

 

Business activity continues to improve with customer orders increasing. Our buyers have proven ability to protect customer revenue with strategic purchasing that ensures minimal delay to customer schedules caused by supply chain issues. In addition the general economic and political conditions have led to increases in Aerospace and Defence clients activity that in turn has seen our sales increase.

 

In August 2022 we acquired CSI Electronic Manufacturing Ltd. The purchase afforded an opportunity to introduce skilled employees, additional plant & machinery, and new clients to our main site in South Woodham Ferrers. After a successful transition the acquisition is adding value and profit.

 

The directors’ strategy and actions continue to prioritise cash flow management so that the continuing growth is managed efficiently. The company works closely with customers and suppliers to ensure the availability of materials to meet demand, and has been supported in this activity by our bankers

 

The 2020 operational review has been revisited to ensure that the rationalised manufacturing process continues to allow the company to respond flexibly to customer demands.

Principal risks and uncertainties

 

Liquidity risk

The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the Company has sufficient liquid resources to meet the operating needs of the business.

 

Interest rate risk

The company is exposed to interest rate risk on its borrowings and cash flow interest rate risk on bank overdrafts, loans and finance agreements.

 

Foreign currency risk

The company’s principal foreign currency exposures arise from trading with overseas companies.

 

Credit risk

Investments of cash surpluses and borrowings are made through banks and companies which must fulfil credit rating criteria approved by the board.

 

All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.

CHALLENGER SOLUTIONS HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 2 -
Key performance indicators

The financial statements report these effects with turnover increasing by £5,986,168 or 71.00% with a resultant growth in gross profit from the figures reported in 2022.

 

During the course of the financial year cash inflow totalled £297,217 after taking into account the continuing repayment of the CBILs by £111,111.

 

The EBITDA of the group for 31 March 2023 was £1,242,372 compared to £350,669 in 2022.

On behalf of the board

AJ Mair
Director
23 November 2023
CHALLENGER SOLUTIONS HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2023
- 3 -

The directors present their annual report and financial statements for the year ended 31 March 2023.

Results and dividends

The results for the year are set out on page 9.

Ordinary dividends were paid amounting to £113,463. The directors do not recommend payment of a further dividend.

Directors

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

E Clapton
AJ Mair
NB Shakespeare
Auditor

In accordance with the company's articles, a resolution proposing that Rickard Luckin Limited be reappointed as auditor of the group will be put at a General Meeting.

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

 

 

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

CHALLENGER SOLUTIONS HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 4 -
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 auditor of the company 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 auditor of the company is aware of that information.

On behalf of the board
AJ Mair
Director
23 November 2023
CHALLENGER SOLUTIONS HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CHALLENGER SOLUTIONS HOLDINGS LIMITED
- 5 -
Opinion

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

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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 group's and 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.

Other information

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

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

CHALLENGER SOLUTIONS HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CHALLENGER SOLUTIONS HOLDINGS LIMITED
- 6 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

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

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 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 parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Capability of the audit in detecting irregularity, including fraud

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.

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our: general commercial and sector experience; through verbal and written communications with those charged with governance and other management; and via inspection of the company’s regulatory and legal correspondence.

We discussed with those charged with governance and other management the policies and procedures regarding compliance with laws and regulations.

We communicated identified laws and regulations to our team and remained alert to any indicators of non-compliance throughout the audit, we also specifically considered where and how fraud may occur within the group.

The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the group is subject to laws and regulations that directly affect the financial statements, including: the company’s constitution; relevant financial reporting standards; company law; tax legislation and distributable profits legislation and we assess the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

CHALLENGER SOLUTIONS HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CHALLENGER SOLUTIONS HOLDINGS LIMITED
- 7 -

Secondly the group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on the amounts or disclosures in the financial statements, for instance through the imposition of fines and penalties, or through losses arising from litigations. We identified the following areas as those most likely to have such an affect: employment legislation; health and safety legislation; trade and import and export legislation; the waste electronic and electronic equipment (WEEE) regulations; data protection regulations; anti-bribery and anti-corruption legislation.

ISAs (UK) limit the required procedures to identify non-compliance with these laws and regulations to the procedures, and no procedures over and above those already noted are required. These limited procedures did not identify any actual or suspected non-compliance which laws and regulations that could have a material impact on the financial statements.

In relation to fraud, we performed the following specific procedures in addition to those already noted:

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with ISAs (UK). For example, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely the procedures that we are required to undertake would identify it. In addition, as with any audit, there remains a high risk of non-detection of irregularities, as these might involve collusion, forgery, intentional omissions, misrepresentation, or the override of internal controls. We are not responsible for preventing non-compliance with laws and regulations or fraud, and cannot be expected to detect non-compliance with all laws and regulations or every incidence of fraud.

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.

CHALLENGER SOLUTIONS HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CHALLENGER SOLUTIONS HOLDINGS LIMITED
- 8 -

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Paul Forster (Senior Statutory Auditor)
For and on behalf of Rickard Luckin Limited
27 November 2023
Chartered Accountants
Statutory Auditor
1st Floor
County House
100 New London Road
Chelmsford
Essex
CM2 0RG
CHALLENGER SOLUTIONS HOLDINGS LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
14,417,860
8,431,692
Cost of sales
(10,635,308)
(6,081,137)
Gross profit
3,782,552
2,350,555
Administrative expenses
(3,027,759)
(2,511,928)
Other operating income
3
2,206
59,306
Operating profit/(loss)
4
756,999
(102,067)
Interest receivable and similar income
6
2,980
2,814
Interest payable and similar expenses
7
(33,905)
(32,473)
Profit/(loss) before taxation
726,074
(131,726)
Tax on profit/(loss)
10
(118,096)
(11,110)
Profit/(loss) for the financial year
607,978
(142,836)
Profit/(loss) for the financial year is all attributable to the owners of the parent company.
Total comprehensive income for the year is all attributable to the owners of the parent company.
CHALLENGER SOLUTIONS HOLDINGS LIMITED
GROUP BALANCE SHEET
AS AT
31 MARCH 2023
31 March 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
12
426,403
639,606
Tangible assets
13
1,191,516
1,151,454
1,617,919
1,791,060
Current assets
Stocks
16
3,353,594
2,275,680
Debtors
17
2,932,109
2,954,392
Cash at bank and in hand
30,128
14,011
6,315,831
5,244,083
Creditors: amounts falling due within one year
18
(4,853,890)
(3,391,943)
Net current assets
1,461,941
1,852,140
Total assets less current liabilities
3,079,860
3,643,200
Creditors: amounts falling due after more than one year
19
(407,373)
(1,482,052)
Provisions for liabilities
Deferred tax liability
25
115,934
99,410
(115,934)
(99,410)
Net assets
2,556,553
2,061,738
Capital and reserves
Called up share capital
26
572
272
Share premium account
2,720,000
2,720,000
Profit and loss reserves
(164,019)
(658,534)
Total equity
2,556,553
2,061,738
The financial statements were approved by the board of directors and authorised for issue on 23 November 2023 and are signed on its behalf by:
AJ Mair
Director
CHALLENGER SOLUTIONS HOLDINGS LIMITED
COMPANY BALANCE SHEET
AS AT
31 MARCH 2023
31 March 2023
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Investments
14
5,253,088
4,748,782
Current assets
Cash at bank and in hand
239
309
Creditors: amounts falling due within one year
18
(1,937,546)
(602,414)
Net current liabilities
(1,937,307)
(602,105)
Total assets less current liabilities
3,315,781
4,146,677
Creditors: amounts falling due after more than one year
19
-
(933,910)
Net assets
3,315,781
3,212,767
Capital and reserves
Called up share capital
26
572
272
Share premium account
2,720,000
2,720,000
Profit and loss reserves
595,209
492,495
Total equity
3,315,781
3,212,767

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £216,177 (2022 £85,915 profit).

These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the board of directors and authorised for issue on
23 November 2023
23 November 2023
and are signed on its behalf by:
AJ Mair
Director
Company Registration No. 09055758
CHALLENGER SOLUTIONS HOLDINGS LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
- 12 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 April 2021
272
2,720,000
(417,363)
2,302,909
Year ended 31 March 2022:
Loss and total comprehensive income for the year
-
-
(142,836)
(142,836)
Dividends
11
-
-
(98,335)
(98,335)
Balance at 31 March 2022
272
2,720,000
(658,534)
2,061,738
Year ended 31 March 2023:
Profit and total comprehensive income for the year
-
-
607,978
607,978
Issue of share capital
26
300
-
0
-
300
Dividends
11
-
-
(113,463)
(113,463)
Balance at 31 March 2023
572
2,720,000
(164,019)
2,556,553
CHALLENGER SOLUTIONS HOLDINGS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
- 13 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 April 2021
272
2,720,000
504,915
3,225,187
Year ended 31 March 2022:
Profit and total comprehensive income for the year
-
-
85,915
85,915
Dividends
11
-
-
(98,335)
(98,335)
Balance at 31 March 2022
272
2,720,000
492,495
3,212,767
Year ended 31 March 2023:
Profit and total comprehensive income for the year
-
-
216,177
216,177
Issue of share capital
26
300
-
0
-
300
Dividends
11
-
-
(113,463)
(113,463)
Balance at 31 March 2023
572
2,720,000
595,209
3,315,781
CHALLENGER SOLUTIONS HOLDINGS LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
- 14 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
33
1,140,990
(289,468)
Interest paid
(33,905)
(32,473)
Income taxes refunded
7,316
10,380
Net cash inflow/(outflow) from operating activities
1,114,401
(311,561)
Investing activities
Cash acquired through purchase of business
622,504
-
Purchase of tangible fixed assets
(178,217)
(148,205)
Proceeds on disposal of tangible fixed assets
55,500
16,942
Purchase of subsidiaries
(1,069,000)
-
Interest received
2,980
2,814
Net cash used in investing activities
(566,233)
(128,449)
Financing activities
Proceeds from issue of shares
300
-
Repayment of bank loans
(111,111)
(111,111)
Payment of finance leases obligations
(26,677)
(18,809)
Dividends paid to equity shareholders
(113,463)
(98,335)
Net cash used in financing activities
(250,951)
(228,255)
Net increase/(decrease) in cash and cash equivalents
297,217
(668,265)
Cash and cash equivalents at beginning of year
(846,670)
(178,405)
Cash and cash equivalents at end of year
(549,453)
(846,670)
Relating to:
Cash at bank and in hand
30,128
14,011
Bank overdrafts included in creditors payable within one year
(579,581)
(860,681)
CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
- 15 -
1
Accounting policies
Company information

Challenger Solutions Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 85 Haltwhistle Road, South Woodham Ferrers, Chelmsford, Essex, CM3 5ZA.

 

The group consists of Challenger Solutions Holdings Limited and all of its subsidiaries as listed in note 14.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to certain financial instruments at fair value. The principal accounting policies adopted are set out below.

The 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 for parent company information presented within the consolidated financial statements:

 

1.2
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company Challenger Solutions Holdings Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

 

The financial statements for all group members are made up to 31 March 2023, in line with the parent company.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 16 -

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

1.4
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. It is noted that the Group balance sheet shows a negative reserves position which has arisen due to the adjustment required to pre-acquisition reserves. The individual balance sheet position for this company and the main trading company in the group both show positive reserves and therefore this is not considered to revoke the going concern conclusion drawn, The directors have considered a period in excess of 12 months from the date of signing these financial statements when making this assessment. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.5
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch 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.

1.6
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10% straight line.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

1.7
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:

Freehold land and buildings
4% straight line with residual of £89,750 for buildings and £116,000 for land
Plant and equipment
25% reducing balance
Fixtures and fittings
25% straight line
Motor vehicles
10-25% straight line

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 recognised in the profit and loss account.

CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 17 -
1.8
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

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

1.9
Impairment of fixed assets

At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.10
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

 

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

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

The value of stock includes a provision for those items that are considered to be obsolete at the year end.

CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 18 -
1.11
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.12
Financial instruments

The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.

 

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

Basic financial assets

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

Other financial assets

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

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 group 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.

CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 19 -
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 group 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.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.13
Equity instruments

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

1.14
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 group’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 if, and only if, there is 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.

CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
1
Accounting policies
(Continued)
- 20 -
1.15
Employee benefits

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

 

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

 

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

1.16
Retirement benefits

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

1.17
Share-based payments

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black-Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

 

The expense in relation to options over the parent company’s shares granted to employees of a subsidiary is recognised by the company as a capital contribution, and presented as an increase in the company’s investment in that subsidiary.

1.18
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 leased asset are consumed.

1.19
Government grants

Government grants were received in the year in relation to the Coronavirus Job Retention Scheme. These 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.

1.20
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.

CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 21 -
2
Judgements and key sources of estimation uncertainty

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.

 

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.

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.

Stock and Work In Progress

Stock is provided for where items are identified as slow moving or obsolete. The calculation of the provision involves management's best estimate on the net realisable value of the identified stock.

 

Work in progress is valued at the costs incurred to date to fulfil customer orders. This uses the cost of raw materials used in projects, which are stated at the lower of cost and estimated selling price less costs to complete and sell, and a labour absorption provision, calculated by management. Work in progress is provided for in the event of project cost overruns. The calculation of the provision involves management's best estimate of the profitability of contracts.

Fair value of investment

The fair value of the investment in a subsidiary is derived from the value of that company at the date of its acquisition . This is then reviewed annually for indications of impairment and adjusted as necessary.

Fair value of share options

The fair value of share options is calculated at the grant date of the options and recognised over the vesting period in which the options are expected to be exercised. This valuation is reviewed annually to determine the value of the options that are expected to vest.

Depreciation

Depreciation is provided for on all tangible fixed assets at the point upon which the asset is available for use . Depreciation rates used are the management's best estimates of the useful economic life of these assets.

3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Sale of goods
14,417,860
8,431,692
CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
3
Turnover and other revenue
(Continued)
- 22 -
2023
2022
£
£
Turnover analysed by geographical market
Sale to UK markets
14,266,494
8,386,493
Sales to Europe
14,944
20,800
Sales to the Rest of the World
136,422
24,399
14,417,860
8,431,692
2023
2022
£
£
Other significant revenue
Interest income
2,980
2,814
Coronavirus Job Retention Scheme
-
59,306
4
Operating profit/(loss)
2023
2022
£
£
Operating profit/(loss) for the year is stated after charging/(crediting):
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
15,491
1,714
Government grants
-
(59,306)
Depreciation of owned tangible fixed assets
265,936
239,533
Profit on disposal of tangible fixed assets
(49,587)
(16,942)
Amortisation of goodwill
213,203
213,203
Operating lease charges
122,353
72,409
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
15,935
12,400
Audit of the financial statements of the company's subsidiaries
19,765
19,931
35,700
32,331
For other services
All other non-audit services
10,005
-
CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 23 -
6
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
2,980
2,814
7
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
15,203
9,535
Interest on finance leases and hire purchase contracts
18,702
22,938
Total finance costs
33,905
32,473
8
Employees

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

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Management and administration
8
8
3
3
Production
68
68
-
-
Total
76
76
3
3

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
2,315,110
1,932,354
-
0
-
0
Social security costs
226,105
175,751
-
-
Pension costs
77,927
70,288
-
0
-
0
2,619,142
2,178,393
-
0
-
0

Employees of this company are remunerated through group companies.

CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 24 -
9
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
103,517
103,538
Company pension contributions to defined contribution schemes
3,006
3,006
106,523
106,544

The number of directors that exercised share options during the year was 3.

10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
105,566
-
0
Adjustments in respect of prior periods
1,994
(10,460)
Total current tax
107,560
(10,460)
Deferred tax
Origination and reversal of timing differences
10,536
21,570
Total tax charge
118,096
11,110

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

2023
2022
£
£
Profit/(loss) before taxation
726,074
(131,726)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 19.00% (2022: 19.00%)
137,954
(25,028)
Tax effect of expenses that are not deductible in determining taxable profit
(14,565)
46,284
Tax effect of utilisation of tax losses
(2,360)
(77,947)
Unutilised tax losses carried forward
-
0
59,174
Capital allowances
(55,206)
(42,992)
Depreciation on assets not qualifying for tax allowances
1,228
-
0
Under/(over) provided in prior years
-
0
(10,460)
Amortisation of goodwill on consolidaton
40,509
40,509
Deferred tax movement
10,536
21,570
Taxation charge
118,096
11,110
CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 25 -
11
Dividends
2023
2022
Recognised as distributions to equity holders:
£
£
Interim paid
113,463
98,335
12
Intangible fixed assets
Group
Goodwill arising on consolidation
£
Cost
At 1 April 2022 and 31 March 2023
2,132,027
Amortisation
At 1 April 2022
1,492,421
Amortisation charged for the year
213,203
At 31 March 2023
1,705,624
Carrying amount
At 31 March 2023
426,403
At 31 March 2022
639,606
The company had no intangible fixed assets at 31 March 2023 or 31 March 2022.

Goodwill on consolidation has arisen from the acquisition of this companies trading subsidiary on 30 September 2014. Amortisation of goodwill of £213,203 (2022: £213,203) was charged to the consolidated profit and loss account for the year ended 31 March 2023.

CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 26 -
13
Tangible fixed assets
Group
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 April 2022
367,075
2,477,798
472,417
500,986
3,818,276
Additions
-
0
126,238
-
0
51,980
178,218
Business combinations
-
0
120,648
1,045
12,000
133,693
Disposals
-
0
(128,168)
(5,448)
(33,720)
(167,336)
At 31 March 2023
367,075
2,596,516
468,014
531,246
3,962,851
Depreciation
At 1 April 2022
85,221
1,938,767
439,376
203,458
2,666,822
Depreciation charged in the year
6,462
171,454
21,493
66,527
265,936
Eliminated in respect of disposals
-
0
(122,255)
(5,448)
(33,720)
(161,423)
At 31 March 2023
91,683
1,987,966
455,421
236,265
2,771,335
Carrying amount
At 31 March 2023
275,392
608,550
12,593
294,981
1,191,516
At 31 March 2022
281,854
539,031
33,041
297,528
1,151,454
The company had no tangible fixed assets at 31 March 2023 or 31 March 2022.

Hire purchase agreements are secured on the assets to which they relate.

14
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
15
-
0
-
0
5,253,088
4,748,782
CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
14
Fixed asset investments
(Continued)
- 27 -
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 April 2022
4,748,782
Additions
1,069,000
At 31 March 2023
5,817,782
Impairment
At 1 April 2022
-
Impairment losses
564,694
At 31 March 2023
564,694
Carrying amount
At 31 March 2023
5,253,088
At 31 March 2022
4,748,782

The investment held in CSI Electronic Manufacturing Services Ltd has been impaired due to its surplus cash being extracted by the group at acquisition.

15
Subsidiaries

Details of the company's subsidiaries at 31 March 2023 are as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Indirect
Challenger Solutions Limited
England & Wales
Ordinary £0.01
100
-
Challenger Solutions Eco Limited
England & Wales
Ordinary £1
100
-
Challenger Solutions Aerospace and Defence Limited
England & Wales
Ordinary £1
0
100
CSI Electronic Manufacturing Services Limited
England & Wales
Ordinary £1
100
-
16
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Stocks
3,353,594
2,275,680
-
-
CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 28 -
17
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
2,717,350
2,737,189
-
0
-
0
Corporation tax recoverable
-
0
10,460
-
0
-
0
Other debtors
193,858
183,975
-
0
-
0
Prepayments and accrued income
20,901
22,768
-
0
-
0
2,932,109
2,954,392
-
-
18
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
20
690,692
971,792
-
0
-
0
Obligations under finance leases
21
61,483
58,502
-
0
-
0
Trade creditors
2,356,270
1,931,271
-
0
-
0
Amounts owed to group undertakings
-
0
-
0
1,051,592
594,164
Corporation tax payable
107,560
-
0
-
0
-
0
Other taxation and social security
357,074
270,536
-
-
Deferred income
22
59,630
-
0
-
0
-
0
Other creditors
1,022,821
62,138
870,019
-
0
Accruals and deferred income
198,360
97,704
15,935
8,250
4,853,890
3,391,943
1,937,546
602,414
19
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
20
138,889
250,000
-
0
-
0
Obligations under finance leases
21
268,484
298,142
-
0
-
0
Other creditors
-
0
933,910
-
0
933,910
407,373
1,482,052
-
933,910
CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 29 -
20
Loans and overdrafts
Group
Company
2023
2022
2023
2022
£
£
£
£
Bank loans
250,000
361,111
-
0
-
0
Bank overdrafts
579,581
860,681
-
0
-
0
829,581
1,221,792
-
-
Payable within one year
690,692
971,792
-
0
-
0
Payable after one year
138,889
250,000
-
0
-
0

The long-term loans and bank overdraft are secured by fixed and floating charges over the group's freehold property and assets.

21
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
61,483
58,502
-
0
-
0
In two to five years
268,484
298,142
-
0
-
0
329,967
356,644
-
-

Finance lease payments represent rentals payable by the company or group 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. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

22
Deferred income
Group
Company
2023
2022
2023
2022
£
£
£
£
Arising from government grants
1,891
-
-
-
Other deferred income
57,739
-
-
-
59,630
-
-
-
CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 30 -
23
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
77,927
70,288

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

24
Share-based payment transactions

Equity settled share based payment arrangements, in the form of share options, existed at the year end. The share options relate to ordinary shares. The exercise price on all options granted is £1.00. All shares are equity based.

Group
Number of share options
Weighted average exercise price
2023
2022
2023
2022
Number
Number
£
£
Outstanding at 1 April 2022
300
-
1.00
-
Granted
13
300
1.00
1.00
Exercised
(300)
-
1.00
-
Outstanding at 31 March 2023
13
300
1.00
1.00
Exercisable at 31 March 2023
13
300
1.00
1.00

The fair value of each option awarded is estimated on the date of the grant by applying the Black-Scholes option pricing model and by using market data to the greatest extent possible as inputs to the model.

The options outstanding at 31 March 2023 had an exercise price of £1.00 and a remaining contractual life of 30 days.

The total intrinsic value at 31 March 2023 amounted to £13.00 (2022 - £300.00) for the group and £13.00 (2022 - £300.00) for the company.

25
Deferred taxation

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

Liabilities
Liabilities
2023
2022
Group
£
£
Accelerated capital allowances
117,142
100,495
Retirement benefit obligations
(1,208)
(1,085)
115,934
99,410
CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
25
Deferred taxation
(Continued)
- 31 -
The company has no deferred tax assets.
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 1 April 2022
99,410
-
Charge to profit or loss
10,536
-
Acquired on business combinations
5,988
-
Liability at 31 March 2023
115,934
-
26
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
260
260
260
260
Ordinary A of £1 each
12
12
12
12
Ordinary B of £1 each
100
-
100
-
Ordinary C of £1 each
200
-
200
-
572
272
572
272

On 27 May 2022, 100 Ordinary B shares of £1 each and 200 Ordinary C shares of £1 each were allotted, called up and fully paid in the year.

CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 32 -
27
Acquisition of a business

On 18 August 2022 the group acquired 100% percent of the issued capital of CSI Electronic Manufacturing Services Limited.

Book Value
Adjustments
Fair Value
Net assets acquired
£
£
£
Property, plant and equipment
23,694
110,000
133,694
Inventories
415,540
-
415,540
Trade and other receivables
171,904
-
171,904
Cash and cash equivalents
622,504
-
622,504
Trade and other payables
(265,510)
-
(265,510)
Tax liabilities
(3,144)
-
(3,144)
Deferred tax
(5,988)
-
(5,988)
Total identifiable net assets
959,000
110,000
1,069,000
Goodwill
-
Total consideration
1,069,000
The consideration was satisfied by:
£
Issue of shares
1,069,000
Contribution by the acquired business for the reporting period included in the group statement of comprehensive income since acquisition:
£
Turnover
779,579
Profit after tax
162,173
28
Financial commitments, guarantees and contingent liabilities

Lease payments of £42,241 (2022: £42,241) made in respect of assets held by a one group company have been guaranteed by a fellow group company.

 

A guarantee has been provided as security over the purchase of a property by a company with common directorships to the value of £210,000.

CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 33 -
29
Operating lease commitments
Lessee

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

Group
Company
2023
2022
2023
2022
£
£
£
£
Within one year
118,093
98,376
-
-
Between two and five years
112,287
116,615
-
-
230,380
214,991
-
-
30
Events after the reporting date

After the year end the company issued 13 £1 Ordinary C shares in Challenger Solutions Holdings Limited at their nominal value.

31
Related party transactions

The company has taken advantage available in accordance with FRS102 Section 33 whereby it has not disclosed group transactions with its wholly owned subsidiaries.

 

During the year the company repaid £63,891 (2022: £4,999) of a loan which had been advanced by a director. At the balance sheet date the amount outstanding was £870,019 (2022: £933,910) which is shown within creditors due within more than one year. No interest has been charged on this loan.

 

At the year end, the company owed £1,051,592 (2022: £594,164) to its wholly owned subsidiary companies. There is no fixed repayment schedule and no interest charged on this balance.

 

During the year the group purchased materials and paid management charges to Shakespeare Engineering Asia Limited totalling £228,000 (2022: £228,000), a related company of which N B Shakespeare is a director and shareholder. At the balance sheet date the amount outstanding was £69,011 (2022: £55,003)

 

During the year, the group paid rent of £9,230 (2022: £9,230) to NSM Special Products UK Limited which is part of the Shakespeare group and which N B Shakespeare is a director and shareholder. At the balance sheet date the amount outstanding was £7,191 (2022: £4,378)

32
Controlling party

The ultimate controlling party of the Company and Group is N Shakespeare by virtue of his majority shareholding.

CHALLENGER SOLUTIONS HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
- 34 -
33
Cash generated from/(absorbed by) group operations
2023
2022
£
£
Profit/(loss) for the year after tax
607,978
(142,836)
Adjustments for:
Taxation charged
118,096
11,110
Finance costs
33,905
32,473
Investment income
(2,980)
(2,814)
Gain on disposal of tangible fixed assets
(49,587)
(16,942)
Amortisation of goodwill upon consolidation
213,203
213,203
Depreciation of tangible fixed assets
265,936
239,533
Movements in working capital:
Increase in stocks
(662,374)
(611,613)
Decrease/(increase) in debtors
183,727
(1,136,887)
Increase in creditors
373,456
1,125,305
Increase in deferred income
59,630
-
Cash generated from/(absorbed by) operations
1,140,990
(289,468)
34
Analysis of changes in net debt - group
1 April 2022
Cash flows
Acquisitions
31 March 2023
£
£
£
£
Cash at bank and in hand
14,011
(606,387)
622,504
30,128
Bank overdrafts
(860,681)
281,100
-
(579,581)
(846,670)
(325,287)
622,504
(549,453)
Borrowings excluding overdrafts
(361,111)
111,111
-
(250,000)
Obligations under finance leases
(356,644)
26,677
-
(329,967)
(1,564,425)
(187,499)
622,504
(1,129,420)
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