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Company registration number: 02285953







ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 MAY 2023


ESPRIT ELECTRONICS LIMITED






































img2b63.png                        

 


ESPRIT ELECTRONICS LIMITED
 


 
COMPANY INFORMATION


Directors
P Handley 
L Holloway 
I McInnes 
J McInnes 
R Otter 
G Page 
L Sigournay 
Z M Vine (appointed 18 October 2022)
R F O'Mara (appointed 1 August 2023)




Company secretary
Mr A Ward



Registered number
02285953



Registered office
Unit 33 Mitchell Point
Ensign Way

Hamble

Southampton

SO31 4RF




Independent auditors
Menzies LLP
Chartered Accountants & Statutory Auditor

3000a Parkway

Whiteley

Hampshire

PO15 7FX




Bankers
National Westminster Bank PLC
69-73 High Street

Cosham

Portsmouth

Hampshire

PO6 3DA





 


ESPRIT ELECTRONICS LIMITED
 



CONTENTS



Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditors' report
5 - 8
Statement of income and retained earnings
9
Statement of financial position
10 - 11
Notes to the financial statements
12 - 29


 


ESPRIT ELECTRONICS LIMITED
 


 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MAY 2023

Business review
 
The principal activity of the Company continued to be that of manufacturing electronic components and assemblies.
The Company reported a net profit before tax for the year of £1,107,689 (2022 - £502,846). In common with many in the industry, there has been extreme pressure on component supply and pricing following supply disruption post Covid and the impact of US$ exchange rates. The disruption is expected to continue for some time, but customer and supplier relationships have ensured continued business development so that the directors are confident of continued benefits from the marketing and investment activities over recent years with both new customers and a wider spread of manufactured electronic components & assemblies for established customers. This has led to a sales growth of 23.0% (2022 - 34.1%).
The risk of any individual customer dependence by the Company has become more contained. Component availability and stability of pricing, which includes $ exchange rates, and the lead time for that supply is considered to be the biggest risk to the Company as that impacts on the service to its customers on which the company has built its reputation. Improved productivity will be required to finance continued increases in direct wage costs and the Company, therefore, continually reviews its capital expenditure program. The conclusion of the last major review of equipment led to the purchase of almost £460,000 (2022 - £400,000). This expenditure being primarily funded by asset finance to maintain working capital.
Increased product ranges and current supply issues have expanded stock holding needs but the Company believes its method of working capital finance and good customer relations accommodate most of the pressure that may create. The directors believe the Company is well placed to continue to take advantage of new business.
At the year end, the directors consider the Company remains in a strong financial position with shareholders' funds totaling £5,081,103 (2022 - £4,245,063) and maintaining a good working capital position.

Principal risks and uncertainties
 
The principal threats to the Company, in addition to material availability and the lead time for that supply, is as with most other companies, will always be the loss of major customers and the cost of supply impacted by wages, sourcing of components and stability of material prices which are affected by world supply and the values of the GBP.
The Company’s management with the support of its valued, and loyal customers has so far managed to mitigate the extremes of the global shortage of electronic components and has continued to deliver to its customers meeting deadlines, the Company is confident that there are sufficient available resources to ensure a strong future.

Page 1

 


ESPRIT ELECTRONICS LIMITED
 



STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Financial key performance indicators
 
The directors consider the Company's key financial performance indicators to be its operating profit and margins together with stock turn which then has an impact on working capital.  These key performance indicators of the business have all been adequate and at a level to ensure customer development, and retention and the long term success of the Company. The reduction in stock turn was consistent with increased stock needs for new products.
The main key financial performance indicators are as follows:

2023
2022
         
Operating profit

1,187,759

539,404

Gross profit margin

27.25%

26.77%

Stock turn

3.87

4.03

Current ratio

1.84

1.64



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



................................................
Mr A Ward
Company Secretary

Date: 2 February 2024

Page 2

 


ESPRIT ELECTRONICS LIMITED
 


 
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MAY 2023

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

Directors' responsibilities statement

The directors are responsible for preparing the Strategic report, the Directors' 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 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 of the profit or loss of the Company for that period.

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


select suitable accounting policies for the Company'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 Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and 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 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 £911,040 (2022 - £421,678).

The directors have recommended the payment of a dividend of £75,000 (2022 - £75,000).

Directors

The directors who served during the year were:

P Handley 
L Holloway 
I McInnes 
J McInnes 
R Otter 
G Page 
L Sigournay 
Z M Vine (appointed 18 October 2022)

Future developments

The Company will continue to focus its efforts on core customers and service lines in order to maintain profit levels, whilst actively seeking to develop relationships with new customers to increase profit levels.

Financial instruments

The Company uses basic financial instruments such as cash and fixed term deposits. 

Page 3

 


ESPRIT ELECTRONICS LIMITED
 


 
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MAY 2023

Matters covered in the Strategic report

The Company has chosen in accordance with section 414C(11) of the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 to set out in the Company's strategic report information required by schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 it must be stated in the Directors' Report that it has done so. This includes information that would have been included in the business review and the principal risks and uncertainties.

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'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's auditors are aware of that information.

Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:

Post balance sheet events

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

Going concern

The directors have a reasonable expectation that the Company has adequate resources to continue operational existence for a period of at least 12 months from the date that the accounts are autrhorised for issue. For this reason the directors continue to adopt the going concern basis of accounting in preparing the annual financial statements. 

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.
 





................................................
Mr A Ward
Secretary

Date: 2 February 2024

Page 4

 


ESPRIT ELECTRONICS LIMITED
 

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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ESPRIT ELECTRONICS LIMITED

Opinion


We have audited the financial statements of Esprit Electronics Limited (the 'Company') for the year ended 31 May 2023, which comprise the Statement of income and retained earnings, the Statement of financial position 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 the financial statements:


give a true and fair view of the state of the Company's affairs as at 31 May 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.


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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the 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 opinion.


Conclusions relating to going concern


In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.


Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.


Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.


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 ReportOur 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.


Page 5

 


ESPRIT ELECTRONICS LIMITED


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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ESPRIT ELECTRONICS LIMITED (CONTINUED)

Opinion on other matters prescribed by the Companies Act 2006
 

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


the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.


Matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.


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


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


Responsibilities of directors
 

As explained more fully in the Directors' responsibilities statement 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 Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.


Page 6

 


ESPRIT ELECTRONICS LIMITED


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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ESPRIT ELECTRONICS LIMITED (CONTINUED)

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 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 Company is subject to laws and regulations that directly affect the financial statements including The Companies Act 2006, UK taxation legislation, financial reporting legislation and general regulations such as occupational health and safety and General Data Protection. There are no industry specific laws and regulations which would be deemed to have a significant impact on the financial statements. We assessed the extent of compliance with the appropriate laws and regulations as part of our procedures on the related financial statement items.

We understood how the Company is complying with those legal and regulatory frameworks by, making inquiries to management, those responsible for legal and compliance procedures and the company secretary. We corroborated our inquiries through our review of documentation.

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 Company'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 orother inappropriate influence over the financial reporting process;
°Challenging assumptions and judgments made by management in its significant accounting estimates;
°Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations; and
°Review of legal and professional expenditure and supporting documentation.

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;
°Misappropriation of funds through fraudulent supplier ledger activity; and
°Manipulation of amounts subject to significant judgement or estimate.


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.


Page 7

 


ESPRIT ELECTRONICS LIMITED


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INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF ESPRIT ELECTRONICS LIMITED (CONTINUED)

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.





James Hadfield FCA (Senior statutory auditor)
  
for and on behalf of
Menzies LLP
 
Chartered Accountants
Statutory Auditor
  
3000a Parkway
Whiteley
Hampshire
PO15 7FX

6 February 2024
Page 8

 


ESPRIT ELECTRONICS LIMITED
 


 
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 MAY 2023

2023
2022
Note
£
£

  

Turnover
 4 
18,822,214
15,303,952

Cost of sales
  
(13,692,527)
(11,207,669)

Gross profit
  
5,129,687
4,096,283

Administrative expenses
  
(3,972,031)
(3,588,418)

Other operating income
 5 
30,103
31,539

Operating profit
 6 
1,187,759
539,404

Interest receivable and similar income
 10 
4,921
1,840

Interest payable and similar expenses
 11 
(84,991)
(38,398)

Profit before tax
  
1,107,689
502,846

Tax on profit
 12 
(196,649)
(81,168)

Profit after tax
  
911,040
421,678

  

  

Retained earnings at the beginning of the year
  
4,180,063
3,833,385

  
4,180,063
3,833,385

Profit for the year
  
911,040
421,678

Dividends declared and paid
  
(75,000)
(75,000)

Retained earnings at the end of the year
  
5,016,103
4,180,063
The notes on pages 12 to 29 form part of these financial statements.

Page 9

 


ESPRIT ELECTRONICS LIMITED
REGISTERED NUMBER:02285953



STATEMENT OF FINANCIAL POSITION
AS AT 31 MAY 2023

2023
2022
Note
£
£

Fixed assets
  

Tangible assets
 14 
1,533,827
1,399,945

Investments
 15 
54,499
54,499

  
1,588,326
1,454,444

Current assets
  

Stocks
 16 
3,381,158
3,689,386

Debtors: amounts falling due within one year
 17 
5,238,402
4,763,213

Cash at bank and in hand
 18 
753,690
722,386

  
9,373,250
9,174,985

Creditors: amounts falling due within one year
 19 
(5,097,099)
(5,608,784)

Net current assets
  
 
 
4,276,151
 
 
3,566,201

Total assets less current liabilities
  
5,864,477
5,020,645

Creditors: amounts falling due after more than one year
 20 
(490,144)
(525,112)

Provisions for liabilities
  

Deferred tax
 22 
(293,230)
(250,470)

  
 
 
(293,230)
 
 
(250,470)

Net assets
  
5,081,103
4,245,063


Capital and reserves
  

Called up share capital 
 23 
65,000
65,000

Profit and loss account
 24 
5,016,103
4,180,063

  
5,081,103
4,245,063


Page 10

 


ESPRIT ELECTRONICS LIMITED
REGISTERED NUMBER:02285953


    
STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 MAY 2023

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




................................................
I McInnes
................................................
L Sigournay
Director
Director


Date: 2 February 2024


The notes on pages 12 to 29 form part of these financial statements.

Page 11

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

1.


Statement of compliance

These financial statements have been prepared in compliance with FRS102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.
Esprit Electronics Limited is a private company limited by shares incorporated and domiciled in England & Wales. 
The address of its registered office, which is also the Company's principal place of business, 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 management to exercise judgment in applying the Company's accounting policies (see note 3).

The following principal accounting policies have been applied:

 
2.2

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
the requirements of Section 7 Statement of Cash Flows;
the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
the requirements of Section 33 Related Party Disclosures paragraph 33.7.

This information is included in the consolidated financial statements of Esprit Business Services Limited as at 31 May 2023 and these financial statements may be obtained from Companies House.

 
2.3

Going concern

The directors consider the Company's  finances remain strong and having taken that into consideration the expected performance over the foreseeable future, the directors consider that the Company has sufficient resources to continue its operational existence for a period of at least 12 months from the date that these accounts are authorised for approval.
For this reason, the Company continues to adopt the going concern basis of accounting in preparing these annual financial statements.

Page 12

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

2.Accounting policies (continued)

 
2.4

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.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of income and retained earnings within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.

 
2.5

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company 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:
the Company has transferred the significant risks and rewards of ownership to the buyer;
the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the Company will receive the consideration due under the transaction; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.

 
2.6

Operating leases: the Company 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.

Page 13

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

2.Accounting policies (continued)

 
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 Statement of income and retained earnings in the same period as the related expenditure.

 
2.8

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

 
2.9

Borrowing costs

All borrowing costs are recognised in profit or loss in the year in which they are incurred.

 
2.10

Pensions

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company 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 Company in independently administered funds.

Page 14

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

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 operates and generates 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; and
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

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, on a reducing balance basis.

Depreciation is provided on the following basis:

Long-term leasehold property
-
25-50% reducing balance
Plant and machinery
-
20-25% reducing balance
Motor vehicles
-
30-35% reducing balance
Fixtures and fittings
-
25-50% reducing balance

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 15

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

2.Accounting policies (continued)

 
2.14

Associates and joint ventures

Associates and Joint Ventures are held at cost less impairment.

 
2.15

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.

 
2.16

Debtors

Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

 
2.17

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

 
2.18

Creditors

Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

 
2.19

Provisions for liabilities

Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Statement of financial position.

Page 16

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

2.Accounting policies (continued)

 
2.20

Financial instruments

The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the Company's Statement of financial position when the Company becomes party to the contractual provisions of the instrument.

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

Basic financial assets

Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.

Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.

Financial liabilities

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

Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.

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

Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.

 
2.21

Dividends

Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.

Page 17

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

3.


Judgments in applying accounting policies and key sources of estimation uncertainty

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Fixed asset residual values:
The directors have reviewed the asset lives and associated residual values of all fixed asset classes and have concluded that asset lives and residual values are appropriate.
Slow moving stock provision:
Slow moving stock is defined as stock that cannot be directly allocated to a customer order for a period of between 3 and 18 months. The directors believe this is a reasonable measure based on their experience of the business.


4.


Turnover

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


2023
2022
£
£

Sales of goods
18,822,214
15,303,952

18,822,214
15,303,952


Analysis of turnover by country of destination:

2023
2022
£
£

Sales made predominantly in the United Kingdom
18,822,214
15,303,952

18,822,214
15,303,952



5.


Other operating income

2023
2022
£
£

Government grants receivable
30,103
31,539

30,103
31,539


Page 18

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

6.


Operating profit

The operating profit is stated after charging:

2023
2022
£
£

Exchange differences
(14,361)
(3,203)

Other operating lease rentals
181,487
168,634


7.


Auditors' remuneration

During the year, the Company obtained the following services from the Company's auditors:


2023
2022
£
£

Fees payable to the Company's auditors for the audit of the Company's financial statements
16,450
14,950


8.


Employees

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


2023
2022
£
£

Wages and salaries
2,791,393
2,397,923

Social security costs
282,128
230,183

Cost of defined contribution scheme
88,521
73,075

3,162,042
2,701,181


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


        2023
        2022
            No.
            No.







Management and production
90
82

Page 19

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

9.


Directors' remuneration

2023
2022
£
£

Directors' emoluments
583,446
456,575

Company contributions to defined contribution pension schemes
40,227
27,510

623,673
484,085


During the year retirement benefits were accruing to 6 directors (2022 - 6) in respect of defined contribution pension schemes.

The highest paid director received remuneration of £177,318 (2022 - £140,644).

The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £12,053 (2022 - £9,000).


10.


Interest receivable

2023
2022
£
£


Other interest receivable
4,921
1,840

4,921
1,840


11.


Interest payable and similar expenses

2023
2022
£
£


Bank interest payable
1,188
705

Finance leases and hire purchase contracts
31,869
26,403

Other interest payable
51,934
11,290

84,991
38,398

Page 20

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

12.


Taxation


2023
2022
£
£

Corporation tax


Current tax on profits for the year
153,889
14,268

Adjustments in respect of previous periods
-
(16,500)


153,889
(2,232)


Total current tax
153,889
(2,232)

Deferred tax


Origination and reversal of timing differences
42,760
83,400

Total deferred tax
42,760
83,400


Tax on profit
196,649
81,168

Factors affecting tax charge for the year

The tax assessed for the year is lower than (2022 - lower than) the standard rate of corporation tax in the UK of 20% (2022 - 19%). The differences are explained below:

2023
2022
£
£


Profit on ordinary activities before tax
1,107,689
502,846


Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 20% (2022 - 19%)
221,538
95,541

Effects of:


Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
2,698
1,589

Capital allowances for year in excess of depreciation
(36,139)
(4,261)

Adjustments to tax charge in respect of prior periods
-
(16,500)

Short-term timing difference leading to an increase (decrease) in taxation
-
4,799

Changes in taxation rates
8,552
-

Total tax charge for the year
196,649
81,168

Page 21

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

13.


Dividends

2023
2022
£
£


Equity dividends paid on Ordinary shares
75,000
75,000

75,000
75,000


14.


Tangible fixed assets





Long-term leasehold property
Plant and machinery
Motor vehicles
Fixtures and fittings
Total

£
£
£
£
£



Cost or valuation


At 1 June 2022
188,264
3,246,717
330,020
531,807
4,296,808


Additions
66,811
462,129
149,493
21,151
699,584


Disposals
-
(70,106)
(91,619)
(32,510)
(194,235)



At 31 May 2023

255,075
3,638,740
387,894
520,448
4,802,157



Depreciation


At 1 June 2022
165,843
2,098,974
153,631
478,415
2,896,863


CCharge for the year
13,783
422,093
85,726
30,583
552,185


Disposals
-
(70,106)
(78,101)
(32,510)
(180,717)



At 31 May 2023

179,626
2,450,961
161,256
476,488
3,268,331



Net book value



At 31 May 2023
75,449
1,187,779
226,638
43,960
1,533,826



At 31 May 2022
22,421
1,147,743
176,389
53,392
1,399,945

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:


2023
2022
£
£



Plant and machinery
976,306
967,044

Motor vehicles
96,750
138,215

1,073,056
1,105,259

The depreciation charge in respect of assets held under finance leases or hire purchase contracts amounted to £375,698 (2022 - £275,403).

Page 22

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

15.


Fixed asset investments





Investments in associates

£



Cost or valuation


At 1 June 2022
54,499



At 31 May 2023
54,499




The Company holds 100% of the Ordinary shares in Niche Holdings and 22.5% of its Preference shares. 


2023
2022
£
£

Aggregate capital and reserves


Niche Holdings Limited
426,763
418,166

Profit and (loss) for the year


Niche Holdings Limited
8,597
(19,675)

16.


Stocks

2023
2022
£
£

Raw materials and consumables
2,360,881
2,247,143

Work in progress (goods to be sold)
1,020,277
1,442,243

3,381,158
3,689,386


Page 23

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

17.


Debtors

2023
2022
£
£


Trade debtors
3,631,266
2,834,086

Amounts owed by group undertakings
898,840
903,912

Other debtors
490,545
460,653

Prepayments and accrued income
217,652
564,463

Tax recoverable
99
99

5,238,402
4,763,213


Included within 'Trade debtors' are debts of £3,631,266 (2022 - £2,834,086) which are under a factoring agreement where recourse lies with the lender.


18.


Cash and cash equivalents

2023
2022
£
£

Cash at bank and in hand
753,690
722,386

753,690
722,386



19.


Creditors: Amounts falling due within one year

2023
2022
£
£

Bank loans
32,500
42,500

Trade creditors
2,196,210
3,820,913

Amounts owed to group undertakings
-
2,549

Corporation tax
5,441
-

Other taxation and social security
524,806
83,266

Obligations under finance lease and hire purchase contracts
340,946
336,797

Proceeds of factored debts
1,576,111
843,338

Other creditors
595
595

Accruals and deferred income
420,490
478,826

5,097,099
5,608,784


Bank overdrafts and advances from factored debt are secured by charges over the Company's assets. In addition to this security, there is a third party guarantee in place dated 25 May 2005 limited to £100,000 in respect of the available overdraft facility.
Hire purchase creditors are secured by a charge over the related asset.

Page 24

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

20.


Creditors: Amounts falling due after more than one year

2023
2022
£
£

Net obligations under finance leases and hire purchase contracts
490,144
525,112

490,144
525,112


Hire purchase creditors are secured by a charge over the related asset.


21.


Hire purchase and finance leases


Minimum lease payments under hire purchase fall due as follows:

2023
2022
£
£


Within one year
340,946
336,797

Between 1-5 years
490,144
525,112

831,090
861,909


22.


Deferred taxation




2023


£






At beginning of year
250,470


Charged to the profit or loss
42,760



At end of year
293,230

The provision for deferred taxation is made up as follows:

2023
2022
£
£


Accelerated capital allowances
297,439
250,470

Short term timing differences
(4,209)
-

293,230
250,470

Page 25

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

23.


Share capital

2023
2022
£
£
Allotted, called up and fully paid



65,000 (2022 - 65,000) Ordinary shares of £1.00 each
65,000
65,000

Each Ordinary share has equal voting and dividend rights.



24.


Reserves

Profit and loss account

This reserve includes all current and prior period retained profit and losses.


25.


Pension commitments

The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £88,521 (2022 - £73,075). Contributions totalling £16,834 (2022 - £120) were payable to the fund at the reporting date and are included in creditors.


26.


Commitments under operating leases

At 31 May 2023 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2023
2022
£
£

Land and buildings


Not later than 1 year
74,850
18,713

Later than 1 year and not later than 5 years
206,045
-

280,895
18,713

2023
2022

£
£

Other


Not later than 1 year
9,498
4,249

Later than 1 year and not later than 5 years
4,957
6,997

14,455
11,246

Page 26

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

27.


Transactions with directors

The following is a summary of the directors' transactions with the Company during the year:

I McInnes
        £

Balance due to the Company as at 1 June 2022

6,436

Payments made on behalf of the director

-

Repayments made on behalf of the director

-

Balance due to the Company as at 31 May 2023

6,436



28.


Related party transactions

The Company has taken advantage of the exemption in Financial Reporting Standard 102 Section 33 from the requirement to disclose transactions with companies wholly owned within the Group.


The Company had the following related party transactions with companies related to the Company by virtue of Mr I McInnes' controlling interest in the Group:
During the year, the Company sold goods and recharged expenses to:

2023
2022
£
£
Wavelength Holdings Limited

59,312

59,520

Open System Solutions Limited

551,069

302,330

Icon Electronics Limited

2,122

44,098


The Company made purchases from:

2023
2022
£
£
Wavelength Holdings Limited

479,223

845,871

Icon Electronics Limited

-

20,636

Open System Solutions Limited

1,492

6,964

Page 27

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023

Page 28

 


ESPRIT ELECTRONICS LIMITED
 


 
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MAY 2023
 
28.
 

Related party transactions (continued)
 
The Company also incurred a management fee of £471,000 (2022 - £471,000) from Wavelength Holdings Limited.
At the balance sheet date, the Company was owed the following amounts:

2023
2022
£
£
Revival Power Boats LLP

75,198

75,198

Revival Yachts LLP

30,300

30,300

Wavelength Holdings Limited

340,855

244,626

Wavelength Property Services LLP

3,640

3,640

Open System Solutions Limited

-

18


Included in creditors falling due within one year are the following amounts provided against the above balances in case of non-recovery:

2023
2022
£
£
Revival Powerboats LLP

75,198

75,198

Revival Yachts LLP

30,200

30,200


Included within trade creditors are the following amounts:

2023
2022
£
£
Wavelength Holdings Limited

23,970

23,950


Included within trade debtors are the following amounts:

2023
2022
£
£
Open System Solutions Limited

221,688

114,595

Icon Electronics Limited

-

14,496


29.


Ultimate parent undertaking and controlling party

The ultimate parent company is Esprit Business Services Limited, by virtue of its majority shareholding in the issued
shares of the Company, and is registered in England and Wales.
Esprit Business Services Limited is the smallest and largest group undertaking to prepare consolidated accounts,
which include Esprit Electronics Limited. Its registered office and address is the same as that of the Company from
which the accounts may be obtained. 
The ultimate controlling party is considered to be Mr I McInnes by virtue of his interest in the parent company.

 
Page 29