Company registration number 04261387 (England and Wales)
SHARPSMART LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
SHARPSMART LIMITED
COMPANY INFORMATION
Directors
D Daniels
J Hart
(Appointed 1 October 2023)
Secretary
D J McPhee
Company number
04261387
Registered office
Unit 1 Enterprise Point Enterprise City
Meadowfield Avenue
Spennymoor
Durham
DL16 6JF
Auditor
BK Plus Audit Limited
Azzurri House
Walsall Road
Aldridge
Walsall
England
WS9 0RB
SHARPSMART LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Income statement
8
Statement of financial position
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 23
SHARPSMART LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 1 -

The directors present the strategic report for the year ended 30 June 2023.

Review of the business

The principle activity of the company during the year was the hire and processing of medical waste containers.

Principal risks and uncertainties

Principal risks and uncertainties relate to the subsidiary which include competition for new business and increase in costs for disposal of healthcare waste. The market in which the company operates is extremely competitive. Factors such as the economic conditions, number of competitors, available capacity for healthcare waste treatment and legislative changes exert further financial pressure which may affect the company profitability.

Key performance indicators

The directors considers revenue and operating profit of the subsidiary to be the key financial performance indicators. Number of containers being processed and compliance with environmental legislation are the key non-financial performance indicators.

 

Key performance indicators (KPIs) are managed at a divisional level. As a result, the director believes that analysis using the key performance indicators for the company is not necessary or appropriate for an understanding of the development, performance or position of the business.

On behalf of the board

D Daniels
Director
28 March 2024
SHARPSMART LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 2 -

The directors present their annual report and financial statements for the year ended 30 June 2023.

Principal activities

The principal activity of the company continued to be that of the hire and processing of medical waste containers.

Results and dividends

The results for the year are set out on page 8.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

No preference dividends were paid. The directors do not recommend payment of a final dividend.

Directors

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

D Daniels
J Hart
(Appointed 1 October 2023)
Disabled persons

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company's continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

Employee involvement

The company's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.

 

Information of matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.

Future developments

As a result of the significant investment in plant and machinery and new premises the company is now in an excellent position to win further contracts to grow revenue and profits in difficult market and economic conditions. Management will look to accelerate growth by winning new contracts and management will also monitor pricing and costs to improve profitability.

Auditor

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

Statement of disclosure to auditor

The director in office at the date of approval of this annual report confirms that:

 

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

SHARPSMART LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 3 -
On behalf of the board
D Daniels
Director
28 March 2024
SHARPSMART LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
- 4 -

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 International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom. 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, International Accounting Standard 1 requires that directors:

 

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

SHARPSMART LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SHARPSMART LIMITED
- 5 -
Opinion

We have audited the financial statements of Sharpsmart Limited (the 'company') for the year ended 30 June 2023 which comprise the income statement, the statement of financial position, the statement of changes in equity, the 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 UK adopted international accounting standards.

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 company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

 

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

 

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

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:

SHARPSMART LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SHARPSMART LIMITED
- 6 -
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:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

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

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

 

From the preliminary of the audit, we ensure our understanding of the entity is up to date. This includes, but is not limited to, current knowledge of their activities, the business and control environments, and their compliance with the applicable legal and regulatory frameworks. This information supports our risk identification and the subsequent design of audit procedures to mitigate those risks; ensuring that the audit evidence obtained is sufficient and appropriate to support our opinion.

 

In response to the risks identified, specific to this entity, we designed procedures which included, but were not limited to:

 

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.

SHARPSMART LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SHARPSMART LIMITED
- 7 -

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.

Christopher Hession C.A. (Senior Statutory Auditor)
For and on behalf of BK Plus Audit Limited
28 March 2024
Statutory Auditor
Azzurri House
Walsall Road
Aldridge
Walsall
England
WS9 0RB
SHARPSMART LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
- 8 -
2023
2022
Notes
£
£
Revenue
2
30,163,017
23,002,877
Cost of sales
(10,347,048)
(7,261,551)
Gross profit
19,815,969
15,741,326
Administrative expenses
(22,492,054)
(17,827,056)
Operating loss
3
(2,676,085)
(2,085,730)
Finance costs
5
(274,406)
(150,033)
Loss before taxation
(2,950,491)
(2,235,763)
Income tax expense
6
-
-
Loss and total comprehensive income for the year
17
(2,950,491)
(2,235,763)
SHARPSMART LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
30 June 2023
- 9 -
2023
2022
Notes
£
£
Non-current assets
Goodwill
7
-
0
13,935
Property, plant and equipment
8
22,201,464
14,675,534
Investments
9
10,000,000
10,000,000
32,201,464
24,689,469
Current assets
Inventories
10
480,865
356,782
Trade and other receivables
11
7,331,097
6,475,225
Cash and cash equivalents
517,958
284,964
8,329,920
7,116,971
Current liabilities
Trade and other payables
13
4,864,749
4,141,713
Lease liabilities
14
1,383,859
793,467
6,248,608
4,935,180
Net current assets
2,081,312
2,181,791
Non-current liabilities
Borrowings
12
23,235,704
15,969,676
Lease liabilities
14
6,130,224
3,034,245
29,365,928
19,003,921
Net assets
4,916,848
7,867,339
Equity
Called up share capital
16
11,388,416
11,388,416
Retained earnings
17
(6,471,568)
(3,521,077)
Total equity
4,916,848
7,867,339
The financial statements were approved by the board of directors and authorised for issue on 28 March 2024 and are signed on its behalf by:
D Daniels
Director
Company registration number 04261387 (England and Wales)
SHARPSMART LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 10 -
Share capital
Retained earnings
Total
£
£
£
Balance at 1 July 2021
11,388,416
(1,285,314)
10,103,102
Year ended 30 June 2022:
Loss and total comprehensive income
-
(2,235,763)
(2,235,763)
Balance at 30 June 2022
11,388,416
(3,521,077)
7,867,339
Year ended 30 June 2023:
Loss and total comprehensive income
-
(2,950,491)
(2,950,491)
Balance at 30 June 2023
11,388,416
(6,471,568)
4,916,848
SHARPSMART LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
21
699,071
1,191,895
Interest paid
(274,406)
(150,033)
Net cash inflow from operating activities
424,665
1,041,862
Investing activities
Purchase of property, plant and equipment
(6,512,665)
(4,759,476)
Proceeds from disposal of property, plant and equipment
4,000
-
0
Net cash used in investing activities
(6,508,665)
(4,759,476)
Financing activities
Proceeds from borrowings
7,266,028
3,608,249
Payment of lease liabilities
(949,034)
(379,899)
Net cash generated from financing activities
6,316,994
3,228,350
Net increase/(decrease) in cash and cash equivalents
232,994
(489,264)
Cash and cash equivalents at beginning of year
284,964
774,228
Cash and cash equivalents at end of year
517,958
284,964
SHARPSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 12 -
1
Accounting policies
Company information

Sharpsmart Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 1 Enterprise Point Enterprise City, Meadowfield Avenue, Spennymoor, Durham, DL16 6JF. The company's principal activities and nature of its operations are disclosed in the directors' report.

1.1
Accounting convention

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.

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

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

1.2
Going concern

The directors have at the time of approving the financial statements, a reasonable expectation that the truecompany has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Revenue

Revenue is measure at the fair value of the consideration received or receivable and represents amounts receivable for services rendered, stated net of discounts and of Value added Tax.

 

Revenue from services includes waste process services and reusable containers. The contractual arrangement is executed with the customer. The performance obligation for waste processing services is completed at a point in time upon the collection of waste from customers. The performance obligation for reusable containers which are primarily used for medical sharps material and disposal of their contents is completed at a point of time at the end of the periodical cycle.

1.4
Goodwill

Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less impairment losses.

 

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. An impairment loss recognised for goodwill is not subsequently reversed.

SHARPSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 13 -
1.5
Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

Plant and equipment
6.67% - 33% per annum
Right to use vehicles
Life of lease
Right to use property
Life of lease

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 income statement.

1.6
Impairment of tangible and intangible assets

At each reporting end date, the company 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.

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.

 

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.

1.7
Inventories

Inventories 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 inventories to their present location and condition.

 

Inventories 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.

Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

1.8
Cash and cash equivalents

Cash and cash equivalents 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.

SHARPSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 14 -
1.9
Financial assets

Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

 

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.

Financial assets at fair value through profit or loss

When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are recognized initially at fair value and any transaction costs are recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting period in which it arises.

Financial assets held at amortised cost

Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.

Financial assets at fair value through other comprehensive income

Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.

The company has made an irrevocable election to recognize changes in fair value of investments in equity instruments through other comprehensive income, not through profit or loss. A gain or loss from fair value changes will be shown in other comprehensive income and will not be reclassified subsequently to profit or loss. Equity instruments measured at fair value through other comprehensive income are recognized initially at fair value plus transaction cost directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognized through other comprehensive income are directly transferred to retained earnings when the equity instrument is derecognized or its fair value substantially decreased. Dividends are recognized as finance income in profit or loss.

SHARPSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 15 -
Impairment of financial assets

Financial assets carried at amortised cost and FVOCI are assessed for indicators of impairment at each reporting end date.

 

The expected credit losses associated with these assets are estimated on a forward-looking basis. A broad range of information is considered when assessing credit risk and measuring expected credit losses, including past events, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

 

For trade receivables, the simplified approach permitted by IFRS 9 is applied, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

1.10
Financial liabilities

The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

Other financial liabilities

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Derecognition of financial liabilities

Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.

1.11
Equity instruments

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

1.12
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 inventories or non-current 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.

1.13
Retirement benefits

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

SHARPSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 16 -
1.14
Leases

At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

 

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.

1.15
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.

2
Revenue
2023
2022
£
£
Revenue analysed by class of business
Rendering of services
30,163,017
23,002,877
SHARPSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
2
Revenue
(Continued)
- 17 -
2023
2022
£
£
Revenue analysed by geographical market
United Kingdom
30,163,017
23,002,877
3
Operating loss
2023
2022
Operating loss for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
15,500
15,250
Depreciation of property, plant and equipment
3,608,540
2,692,878
Profit on disposal of property, plant and equipment
(4,701)
-
Impairment of intangible assets (included within administrative expenses)
13,935
-
Loss on disposal of intangible assets
14,301
21,762
Cost of inventories recognised as an expense
10,347,048
7,261,551
4
Employees

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

2023
2022
Number
Number
250
194

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
9,576,433
5,240,945
Social security costs
915,322
632,473
Pension costs
189,375
143,654
10,681,130
8,648,984
5
Finance costs
2023
2022
£
£
Interest on lease liabilities
263,685
143,226
Other interest payable
10,721
6,807
Total interest expense
274,406
150,033
SHARPSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 18 -
6
Income tax expense

The charge for the year can be reconciled to the loss per the income statement as follows:

2023
2022
£
£
Loss before taxation
(2,950,491)
(2,235,763)
Expected tax credit based on a corporation tax rate of 19.00% (2022: 19.00%)
(560,593)
(424,795)
Unutilised tax losses carried forward
481,464
565,742
Change in unrecognised deferred tax assets
-
0
(45,422)
Group relief
36,896
69,649
Permanent capital allowances in excess of depreciation
(65,662)
(252,816)
Depreciation on assets not qualifying for tax allowances
107,895
87,642
Taxation charge for the year
-
-
7
Intangible assets
Goodwill
£
Cost
At 30 June 2022
13,935
At 30 June 2023
13,935
Amortisation and impairment
Charge for the year
13,935
At 30 June 2023
13,935
Carrying amount
At 30 June 2023
-
0
At 30 June 2022
13,935
SHARPSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 19 -
8
Property, plant and equipment
Assets under construction
Plant and equipment
Right to use vehicles
Right to use property
Total
£
£
£
£
£
Cost
At 1 July 2021
-
0
17,798,104
278,855
4,308,647
22,385,606
Additions
-
0
4,759,476
-
0
-
0
4,759,476
Disposals
-
0
-
0
(263,764)
(351,293)
(615,057)
At 30 June 2022
-
0
22,557,580
15,091
3,957,354
26,530,025
Additions
2,257,328
6,286,545
276,712
2,620,626
11,441,211
Disposals
-
0
(45,132)
-
0
(921,009)
(966,141)
At 30 June 2023
2,257,328
28,798,993
291,803
5,656,971
37,005,095
Accumulated depreciation and impairment
At 1 July 2021
-
0
8,481,795
66,728
805,025
9,353,548
Charge for the year
-
0
2,253,368
5,030
434,480
2,692,878
Eliminated on disposal
-
0
-
0
(56,667)
(135,268)
(191,935)
At 30 June 2022
-
0
10,735,163
15,091
1,104,237
11,854,491
Charge for the year
-
0
3,054,606
87,783
466,151
3,608,540
Eliminated on disposal
-
0
(30,333)
-
0
(629,067)
(659,400)
At 30 June 2023
-
0
13,759,436
102,874
941,321
14,803,631
Carrying amount
At 30 June 2023
2,257,328
15,039,557
188,929
4,715,650
22,201,464
At 30 June 2022
-
11,822,417
-
2,853,117
14,675,534
9
Investments
Current
Non-current
2023
2022
2023
2022
£
£
£
£
Loans to subsidiaries
-
-
10,000,000
10,000,000
Fair value of financial assets carried at amortised cost

Except as detailed below the directors believe that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.

SHARPSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 20 -
10
Inventories
2023
2022
£
£
Raw materials
480,865
356,782
11
Trade and other receivables
2023
2022
£
£
Trade receivables
6,434,574
5,812,280
Other receivables
70,832
26,400
Prepayments
825,691
636,545
7,331,097
6,475,225
12
Borrowings
Non-current
2023
2022
£
£
Borrowings held at amortised cost:
Loans from fellow group undertakings
23,235,704
15,969,676

The company has loans outstanding from its fellow group company, Daniels Corporation International Pty Ltd of £7,266,028 (2022: £15,718,626). This loan is not interest bearing and will not be repaid within 12 months of the balance sheet date. No repayment terms have been agreed.

 

The company has loans outstanding from its fellow group company, Daniels Sharpsmart Inc of £15,649,430 (2022: £Nil). This loan is not interest bearing and will not be repaid within 12 months of the balance sheet date. No repayment terms have been agreed.

 

The company also has outstanding loans from Smartec Pty. Ltd of £320,246 (2022: £320,246), a company that has a common director with parent company Daniels Corporation (UK) Limited.

13
Trade and other payables
2023
2022
£
£
Trade payables
2,580,292
3,259,713
Accruals
1,758,426
620,442
Social security and other taxation
488,545
261,558
Other payables
37,486
-
0
4,864,749
4,141,713
SHARPSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 21 -
14
Lease liabilities
2023
2022
Maturity analysis
£
£
Within one year
1,383,859
793,467
In two to five years
4,247,699
1,785,885
In over five years
1,882,525
1,248,360
Total undiscounted liabilities
7,514,083
3,827,712

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

2023
2022
£
£
Current liabilities
1,383,859
793,467
Non-current liabilities
6,130,224
3,034,245
7,514,083
3,827,712
2023
2022
Amounts recognised in profit or loss include the following:
£
£
Interest on lease liabilities
263,685
143,226
15
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
189,375
143,654

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

16
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A Shares of £1 each
988,316
988,316
988,316
988,316
Ordinary B Shares of £1 each
100
100
100
100
Ordinary C Shares of £1 each
400,000
400,000
400,000
400,000
Ordinary D Shares of £1 each
10,000,000
10,000,000
10,000,000
10,000,000
11,388,416
11,388,416
11,388,416
11,388,416
SHARPSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
16
Share capital
(Continued)
- 22 -

Ordinary A and Ordinary B shares carry equal rights with respect to voting, dividend and return of capital on winding up, the shares are non-redeemable.

 

Ordinary C shares have no right to vote on resolutions at general meetings and carry right to dividend of 0.00001% of the dividend voted on the Ordinary A shares, the shares are non-redeemable.

 

Ordinary D shares carry equal rights to the Ordinary A shares, the shares are non-redeemable.

17
Retained earnings
2023
2022
£
£
At the beginning of the year
(3,521,077)
(1,285,314)
Loss for the year
(2,950,491)
(2,235,763)
At the end of the year
(6,471,568)
(3,521,077)
18
Capital risk management

The company is not subject to any externally imposed capital requirements.

19
Related party transactions

During the year the company entered into the following transactions with related parties:

Sale of goods
Purchase of goods
2023
2022
2023
2022
£
£
£
£
Parent company
-
0
-
0
254,796
-
0
Other related parties
-
0
-
0
4,049
-
0
-
0
-
0
258,845
-
0

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due to related parties
£
£
Entities with joint control or significant influence over the company
22,915,458
15,718,626
Other related parties
324,238
320,246
23,239,696
16,038,872
SHARPSMART LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
19
Related party transactions
(Continued)
- 23 -

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due from related parties
£
£
Parent company
10,000,000
10,000,000
20
Controlling party

The company is a wholly owned subsidiary of Daniels Corporation (UK) limited, a UK company whose registered office is Unit 1 Enterprise Point Enterprise City, Meadowfield Avenue, Spennymoor, England, DL16 6JF. The ultimate parent company is Daniels Corporation Group Holdings Pty Ltd, an Australian company whose registered office is 34 Cahill Street, Dandenong, South Victoria 3175, Australia.

 

A copy of the consolidated group accounts of Daniels Corporation Group Holdings Pty Ltd can be found, by request, at 34 Cahill Street, Dandenong, South Victoria 3175, Australia.

 

The company was under the control of Mr D Daniels throughout the current and previous year due to the nature of his control of the ultimate parent company.

21
Cash generated from operations
2023
2022
£
£
Loss for the year before income tax
(2,950,491)
(2,235,763)
Adjustments for:
Finance costs
274,406
150,033
Gain on disposal of property, plant and equipment
(4,701)
-
Loss on disposal of intangibles
14,301
21,762
Amortisation and impairment of intangible assets
13,935
-
Depreciation and impairment of property, plant and equipment
3,608,540
2,692,878
Movements in working capital:
(Increase)/decrease in inventories
(124,083)
1,756,436
Increase in trade and other receivables
(855,872)
(2,500,999)
Increase in trade and other payables
723,036
1,307,548
Cash generated from operations
699,071
1,191,895
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