Registered number:
FOR THE YEAR ENDED 31 MARCH 2023
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EAMONT HOLDINGS LIMITED
COMPANY INFORMATION
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EAMONT HOLDINGS LIMITED
CONTENTS
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EAMONT HOLDINGS LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The overall scope of the group operations remains unchanged from the previous year. As we have started to emerge from some of the restrictions imposed due to the pandemic, the new working practices that enabled operational continuity together with the adaptability of employees have ensured continued delivery of products and services to all customers throughout the year. During this transitional period the group continued to deliver an acceptable level of profitability for the year.
As the holding company, EHL owns the 2 main businesses in the group: Possum Limited and Nortec Solutions Limited. EHL also has an investment fund in an Open-Ended Investment Company (OEIC) structure and owns 2 of the 3 industrial buildings used by Nortec.
Possum Limited (PL) PL is a medical technology business operating in 2 main markets. Environmental Control Systems (ECS) Main customer is the NHS. Business model - ECS are systems which enable people with disabilities to control items within their own homes without the help of family or carers. This provides independence, security, privacy, and electronic communication as well as entertainment to the client. PL develops and sells proprietary ECS. PL also operates a network of service engineers operating nationally to support users and their equipment. PL has a leading position in the NHS ECS market in both products and service provision. Growth potential in this market is modest and is driven by new product developments and innovation in service delivery. Telecare Main customers are Local Authorities. Telecare provides the frail elderly or people with disabilities with a dedicated telephone landline which is connected to an Alarm Response Centre (ARC). The care phone sends an alert to the ARC when activated by the user or by an automatic alarm e.g., smoke alarm. The operator at the ARC provides assistance by phone or arranges a visit from the response team or emergency services as appropriate. PL supplies a range of telecare products from several companies and is the exclusive UK reseller of the Novo care phone from Legrand. PL is the number 2 supplier of telecare products in the UK. The Directors anticipate significant growth in care phone sales in the next 2 or 3 years as phone networks transition from analogue to digital. The Directors recognise the need to recruit additional staff members to support the planned growth in activity. During the year ended March 2023, PL’s sales increased by 12.8% to £6.6m. Towards the end of FY 2023 sales were adversely impacted by difficulties in obtaining products from 3rd party telecare suppliers. Overall, PBT remained steady at £1.2m. Nortec Solutions Limited (NSL) NSL is a Contract Electronic Manufacturing business (CEM) based in Warwickshire. NSL has several long-standing customers for whom it provides manufacturing services. The customers operate in a diverse number of markets including automotive, aerospace, medical equipment, mining, marine navigation, and others. NSL’s main activity is populating printed circuit boards to be incorporated into customers products. In addition, NSL carries out the complete fabrication processes for some of its customers. NSL has traded for 30 years. Unlike many of its competitors it has a secure financial position with no borrowings. This enables NSL to provide improved security and service to customers by securing and fixing component supplies.
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EAMONT HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
Business review (continued) Since acquisition by EHL in 2009, NSL turnover has increased three-fold. The company has invested heavily in new, up to date production machinery including several surface mount technology production lines which augment capacity, as well as improving quality. Investments in other types of production equipment has also widened the range of services which NSL can provide. During the year ended March 2023, turnover increased by 21.7% to £5.2m and operating profit increased by 88.2% to £609k.
Possum Limited (PL)
Environmental Control Systems (ECS) Technological changes continue to present PL with both challenges and opportunities. Mature products using established components face the risk of obsolescence. PL obviates this by investing in Research & Development to update the designs of established products. R&D also incorporates emerging technologies into new PL products to improve product functionality and provide inter-operability with other suppliers’ products. Telecare In Telecare, the main risks are reliance on products from third party suppliers. However, PL has been an exclusive reseller for its major supplier for over a decade and continues to increase market share. In addition, the Directors ensure that written exclusive agreements are in place with third party suppliers. Exposure to Foreign Currency exchange movements can impact on the costs of third-party products which are sourced from the EU and beyond. Whilst the Group does not currently enter into any form of forward contracts to fix rates, it does utilise a number of different brokers to ensure the best rates of exchange are obtained. In addition, the Group has no borrowings and carries high levels of cash and convertible investments on its balance sheet. Nortec Solutions Limited (NSL) The CEM market in which NSL operates is low risk relative to many others. UK manufacturing is benefitting from the onshoring of production away from remote countries potentially affected by interruptions to supply lines. Since Brexit NSL has gained significant business from EU territories. Security is ensured by having many customers in different industries and continued investment in plant and machinery.
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EAMONT HOLDINGS LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The Directors monitor the financial performance of the business by reference to Key Performance Indicators, including sales growth, margin, and profit before tax and cashflows.
The Directors are satisfied with the financial performance of the business and some KPI’s are set out below: 2023 2022 £000 £000 Turnover £11,610 £9,945 Operating profit £1,759 £1,657 Operating profit % 15.2% 16.6% Operating cashflow £1,345 £934
The Company complies with all relevant legislation regarding environmental issues and has a written Equality & Diversity Policy of which all staff are aware of.
This report was approved by the board and signed on its behalf.
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EAMONT HOLDINGS LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 MARCH 2023
The director presents his report and the financial statements for the year ended 31 March 2023.
The director is responsible for preparing the Group Strategic Report, the Director's Report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with 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 director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the director is required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable him to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the year, after taxation, amounted to £1,417,632 (2022 - £1,490,018).
During the year the directors recommended dividends of £500,000 (2022: £725,000).
The directors who served during the year were:
The Group uses various financial instruments including cash, listed investments, trade creditors and trade debtors that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the Company's operations. The principle credit risk arises from debtors which consist of a number of diverse customers including a significant proportion within the public sector. No single customer represents a significant proportion of debtors. In order to manage credit risk the directors set limits for customers based on a combination of payment history and third party credit references. Credit limits are reviewed by the credit controller on a regular basis in conjunction with debt ageing and collection history.
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EAMONT HOLDINGS LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
The Group is committed to continued development of its business operations and investment activity. Key to this is ensuring that product offerings are kept fresh and up to date and that the production capabilities and capacity are sufficient to meet demands now and in the future. The directors continually review the business strategy to ensure that the Group can meet the challenges that arise and take advantage of opportunities to ensure that the business continues to deliver the level of service and product quality that the customer demands whilst remaining on track to achieve an acceptable level of profitability.
The business review and the principal risks and uncertainties sections are not shown in the Directors' Report, because they are shown in the Strategic Report instead under s414c(11).
The auditor, MHA, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006. Following a rebranding exercise on 15 May 2023 the trading name of the company’s independent auditor changed from MHA MacIntyre Hudson to MHA.
Under section 487(2) of the Companies Act 2006, MHA will be deemed to have been reappointed as auditor 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.
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EAMONT HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBER OF EAMONT HOLDINGS LIMITED
We have audited the financial statements of Eamont Holdings Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 March 2023, which comprise the Consolidated Statement of Income and Retained Earnings, the Consolidated Balance Sheet, the Company Balance Sheet, the Consolidated Statement of Cash Flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
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 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.
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
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EAMONT HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBER OF EAMONT HOLDINGS LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's Report thereon. The director is responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group Strategic Report and the Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group Strategic Report and the Director's Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Director's Report.
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EAMONT HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBER OF EAMONT HOLDINGS LIMITED (CONTINUED)
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 Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙Enquiry of management and those charged with governance around actual and potential litigation and claims;
∙Performing audit work over the risk of management override of controls, including testing of journal entries
and other adjustments for appropriateness, evaluating the business rationale of significant transactions
outside the normal course of business and reviewing accounting estimates for bias:
∙Reviewing minutes of meetings of those charged with governance;
∙Testing of key controls over expenditure to ensure the correct authorisation;
∙Substantive testing to ensure accuracy for key financial statement areas;
∙Analytical procedures to highlight any unexpected discrepancies;
∙Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
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 Auditor's Report.
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EAMONT HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBER OF EAMONT HOLDINGS LIMITED (CONTINUED)
This report is made solely to the Company's member 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 member 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 member for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Maidenhead, United Kingdom
Date:
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EAMONT HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 MARCH 2023
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EAMONT HOLDINGS LIMITED
REGISTERED NUMBER: 03139128
CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 17 to 34 form part of these financial statements.
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EAMONT HOLDINGS LIMITED
REGISTERED NUMBER: 03139128
COMPANY BALANCE SHEET
AS AT 31 MARCH 2023
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EAMONT HOLDINGS LIMITED
REGISTERED NUMBER: 03139128
COMPANY BALANCE SHEET (CONTINUED)
AS AT 31 MARCH 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 17 to 34 form part of these financial statements.
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EAMONT HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
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EAMONT HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023
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EAMONT HOLDINGS LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 MARCH 2023
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Eamont Holdings Limited is a private company incorporated in England whose registered office is at Unit 8, Farmbrough Close, Stocklake Park Industrial Estate, Aylesbury, Buckinghamshire, HP20 1DQ.
The principal activities of the Group are the provision of environmental control systems and technology enabled care and support products and services for disabled people, the design and manufacture of electronic and electrical equipment, and the provision of software and hardware design services.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Income and Retained Earnings in these financial statements.
The financial statements are presented in Sterling (£).
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance Sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Income and Retained Earnings from the date on which control is obtained. They are deconsolidated from the date control ceases. In accordance with the transitional exemption available in FRS 102, the Group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102.
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Turnover is the total amount receivable by the Group for goods and services provided, excluding VAT and trade discounts.
Sale of goods Turnover from the sale of goods is recognised when the significant risks and rewards of ownership of the goods has transferred to the buyer. This is usually at the point that the customer has signed for the delivery of the goods. Rendering of services Service revenues are recognised over the period to which they relate. In respect of contracts for on-going services, turnover represents the value of work done in the year, including estimates of amounts not invoiced.
Short-term employee benefits and contributions to defined contribution pension plans are recognised as an expense in the period in which they are incurred.
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating profit.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only. Grants of a revenue nature are recognised in the Consolidated Statement of Income and Retained Earnings in the same period as the related expenditure.
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Leases are classified as finance leases whenever the terms of the lease transfer substantially all risks and rewards of ownership of the leased asset to the Company. All other leases are classified as operating leases.
The payments made under operating leases are charged to the Statement of Income and Retained Earnings on a straight line basis over the period of the lease, unless the payments are structured to increase in line with expected general inflation, in which case the Company recognises annual payment expense equal to amounts owed to the lessor. The aggregate benefit of lease incentives are recognised as a reduction to the expense recognised over the lease term on a straight line basis.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
Amortisation is provided on the following bases:
If there is an indication that there has been a significant change in amortisation rate of an asset, the amortisation is revised prospectively to reflect the new expectation.
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
The rates applicable are:
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.
Investment properties are measured at fair value. Changes in fair value are recognised in the Statement of Income and Retained Earnings.
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
2.Accounting policies (continued)
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value using a pre-tax discount rate. The unwinding of the discount is recognised as a finance cost in the Statement of Income and Retained Earnings in the period it arises. The Group recognises a provision for annual leave accrued by employees as a result of services rendered in the current period, and which employees are entitled to carry forward and use within the next 9 months. The provision is measured at the salary cost payable for the period of absence.
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
Significant judgements The judgements (apart from those involving estimations) that management has made in the process of applying the entity's accounting policies and that have the most significant effect on the amounts recognised in the financial statements are as follows: Recognition of provisions and contingencies - Judgement is exercised by management to distinguish between provisions and contingencies. Key sources of estimation uncertainty Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome. The key assumptions and other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows: Net realisable value of stock - To determine net realisable value, management takes into account the most reliable evidence available at the dates the estimates are made. Deferred taxation - Where a deferred tax asset has been recognised, judgement is made on the recoverability of that asset. This is based on sensitising management forecasts to estimate the future taxable profits against which the losses will be relieved. Judgements have been made in respect of profitability going forward based upon current and anticipated sales. Where a deferred tax asset has not been recognised, judgement has been made by the directors of the Company that the asset should not be recognised based on the expectation of the current market. This is then reviewed and approved by the Board of Directors on an annual basis.
The turnover and profit before tax are attributable to the principal activities of the Group.
Analysis of turnover by country of destination:
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
18.Deferred taxation (continued)
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £103,687 (2022 - £121,171). Contributions totalling £15,629 (2022 - £17,328) were payable to the fund at the balance sheet date and are included in creditors.
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
The ultimate controlling party is
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EAMONT HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023
The Group has exposure to two main areas of risk - foreign exchange currency exposure and customer credit exposure.
Foreign exchange transactional currency exposure The Group is exposed to currency exchange risk due to a significant proportion of its payables being denominated in non-Sterling currencies. This risk is managed in a number of ways - wherever possible currency matching is undertaken where receivables in non-Sterling currency are matched against payables in the same currency by the operation of foreign currency bank accounts. Where there is a net exposure the Company monitors the exchange rates with a view to making strategic purchases of currency and also reviews options for forward contracts as appropriate. Customer credit risk The Group may offer credit terms to its customers which allow payment of the debt after delivery of the goods or performance of the service. The Company is at risk to the extent that a customer may be unable to pay the debt on the specified date. The risk is mitigated by strong on-going customer relationships and the application of credit limits and credit terms which are reviewed on a regular basis. Customer/market risk Credit risk: this is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Market risk: this comprises currency risk, interest rate risk and other price risk. - Currency risk: this is the risk that the fair value or future cash flows of a financial asset will fluctuate because of changes in foreign exchange rates. - Interest rate risk: this is the risk that fair value or future cash flows of a financial asset will fluctuate because of changes in market interest rates. - Other price risk: this is the risk that the fair value or future cash flows of a financial asset will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The directors have set the investment strategy for the Group after taking advice from a professional investment adviser. Subject to complying with the agreed strategy, which specifies the target proportions of the fund which should be invested in the principal market sectors, the day-to-day management of the asset portfolio of the Group including the full discretion for stock selection, is the responsibility of the investment manager. The directors manage investment risks, including credit risk and market risk, within agreed risk limits which are set taking into account the Group's strategic investment objectives. These investment objectives and risk limits are implemented through the investment management agreements in place with the Group's investment managers and monitored by the directors by regular reviews of the investment portfolio.
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