Company registration number 02185735 (England and Wales)
SIP LIMITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2023
The Courtyard
Shoreham Road
Upper Beeding
Steyning
West Sussex
BN44 3TN
SIP LIMITED
CONTENTS
Page
Company information
1
Strategic report
2 - 4
Directors' report
5
Directors' responsibilities statement
6
Independent auditor's report
7 - 10
Profit and loss account
11
Statement of comprehensive income
12
Balance sheet
13
Statement of changes in equity
14
Statement of cash flows
15
Notes to the financial statements
16 - 30
SIP LIMITED
COMPANY INFORMATION
- 1 -
Directors
M Hind
A Colcord
F Colcord
S Oliver
Company number
02185735
Registered office
The Courtyard
Shoreham Road
Upper Beeding
Steyning
West Sussex
BN44 3TN
Auditor
TC Group
The Courtyard
Shoreham Road
Upper Beeding
Steyning
West Sussex
BN44 3TN
Bankers
National Westminster Bank plc
15 Bishops Gate
London
EC2P 2AP
Solicitors
Blake Morgan
Watchmaker Court
33 St John's Lane
London
EC1M 4DB
SIP LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
The directors present the strategic report for the year ended 31 December 2023.
Fair review of the business
The trading results are summarized on page 11.
SIP has delivered a significant upturn in results for 2023, and is well positioned for growth in 2024.
The new management of SIP spent 2023 stabilizing the company, regrouping and re-focusing. Those changes have now settled, and the company is now clearly focused on growth. Morale is high, and new projects are coming to fruition.
The new management team has encouraged the inherent strengths within the company to work together, nurturing great projects, with a clear focus on growth, while managing risks.
SIP’s continuing strategy is to grow organically using our unique strengths of technical knowledge, agility, and supply options.
The agility of the company has let us maneuver around the global supply issues and respond quickly to constraints as they arise.
The Company continues to invest in Quality and Environmental management systems.
SIP’s staff remain critical to the success of the Company and the ability to respond positively to the challenges of 2023. The Board would like to express thanks to all the employees for their contributions over the last year.
The Company has rigorous procedures for identifying, quantifying and mitigating all aspects of risks relevant to the business. The Directors are confident that the Company has adequate resources to continue in operational existence for the foreseeable future.
Key performance indicators
The Company has a number of performance indicators. Aside from pure financial performance indicators, there are measures of quality and customer satisfaction. Those key to the Company are set out below.
Financial KPIs: MT sold, gross margin and net profit.
Non-Financial KPIs: As set out in ISO 9001, namely, customer complaints and non-conformances.
SIP LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Principal risks and uncertainties
The following are the most significant known risks and uncertainties facing the Company.
Economic Environment
Geo-political events and economic downturns may have a negative impact on the gross profit of the Company. Rise in prices and reduction of demand are risks that the Company manages through close attention to the quantity held in stock.
Foreign exchange risks
The Company has two main policies to protect itself. Firstly, it matches assets and liabilities in each currency, known as natural hedging, as far as possible. Secondly, where purchases and sales are contracted in unmatched currencies, future currency contracts are used to minimize the risks.
Operational risks
The Company is exposed to the risk of interruptions in supply, transport, quality problems or technical difficulties. The Company counters these risks through standardized quality and safety processes, by specifically training its employees, and improving communication throughout the company. The Company has taken out appropriate insurance to mitigate the risk of potential business interruptions.
Risks may also arise if the products purchased and delivered to customers do not meet the specifications agreed. However, the Company has procedures in place to purchase from reliable sources, and to track the quality of the product to the customer.
The framework of ISO 9001 is used to reduce all of our operational risks.
Another key risk to the Company would be a change in trading arrangements with suppliers. The Directors ensure that the Company has appropriate terms of trade with both suppliers and customers. These are reviewed on a regular basis.
Developments and Future Outlook
In 2023, SIP built on new supplier relationships to expand sales, while managing stocks carefully.
SIP continues their sustainability and net-zero efforts through achieving the standards measured by Ecovadis Gold. SIP was re-certified for ISO 9001:2015 in 2023. SIP aims to achieve Cyber Essentials Plus mid way through 2024.
SIP LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Duty to promote the success of the company
(1) A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to -
(a) the likely consequences of any decision in the long term,
(b) the interests of the company's employees,
(c) the need to foster the company's business relationships with suppliers, customers and others,
(d) the impact of the company's operations on the community and the environment,
(e) the desirability of the company maintaining a reputation for high standards of business conduct, and
(f) the need to act fairly as between members of the company.
The Board accepts the duties above, and has continued to act on them in the following manner:
The Company is working on a three-year and ten-year plan and frames all important decisions in this long term framework.
The Company has a detailed Quarterly Review process which is linked to a Bonus scheme. The Quarterly Reviews let the company hear the employee concerns and address them clearly. The Company also holds Town Halls several times a year to allow questions to be asked in public.
The Company involves all departments in strengthening our relationships with our customers, suppliers and others through regular problem-solving and growth discussions.
The Company has been working hard on Ecovadis to minimize our impact on the environment. The Company has been recruiting and training from the local community.
The Company has always held itself to the highest standards of business conduct and has had to make some difficult decisions to maintain that.
The Board regularly reviews the fairness of the actions between members of the actions.
The Company continues to work through the strategy of removing the headaches of the customers and the headaches of the suppliers through our prompt, flexible and high service skills of our employees.
The Company provides technical expertise combined with close knowledge of the customer requirements and changing applications. The Company supplies products through a flexible and resilient supply chain.
Our employees play a key role in the Company’s success and long-term prospects. The Company continues to provide an incentive scheme which brings out the most creative solutions to the different problems which arise.
The two shareholders work closely together to fulfil their duties as listed above.
F Colcord
Director
18 April 2024
SIP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be the wholesale of petroleum and petroleum products.
Results and dividends
The results for the year are set out on page 11.
No ordinary 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:
M Hind
A Colcord
F Colcord
S Spencer
(Resigned 31 March 2023)
S Oliver
Research and development
The company continues to investigate and evaluate means of improving the quality of certain finished products and feedstocks.
Auditor
TC Group were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
F Colcord
Director
18 April 2024
SIP LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the 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 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 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 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.
SIP LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SIP LIMITED
- 7 -
Opinion
We have audited the financial statements of SIP Limited (the 'company') for the year ended 31 December 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, 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 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 December 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.
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.
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.
SIP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SIP LIMITED
- 8 -
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our 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 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, 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. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Extent to which the audit was considered capable of detecting irregularities, including fraud
The objectives of our audit, in respect to fraud, are: to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and its management.
SIP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SIP LIMITED
- 9 -
Our approach was as follows:
We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussion with the directors and other management (as required by auditing standards), and discussed with the directors and other management the policies and procedures regarding compliance with laws and regulations;
We identified the following areas as those most likely to have such an effect: health and safety; General Data Protection Regulation (GDPR); fraud; bribery and corruption, and employment law. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and other management and inspection of regulatory and legal correspondence, if any. The identified actual or suspected non-compliance was not sufficiently significant to our audit to result in our response being identified as a key audit matter.
We considered the legal and regulatory frameworks directly applicable to the financial statements reporting framework (FRS 102 and the Companies Act 2006) and the relevant tax compliance regulations in the UK;
We considered the nature of the industry, the control environment and business performance, including the key drivers for management’s remuneration;
We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit;
We considered the procedures and controls that the company has established to address risks identified, or that otherwise prevent, deter and detect fraud; and how senior management monitors those programmes and controls.
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Where the risk was considered to be higher, we performed audit procedures to address each identified fraud risk. These procedures included: testing manual journals; reviewing the financial statement disclosures and testing to supporting documentation; performing analytical procedures; and enquiring of management, and were designed to provide reasonable assurance that the financial statements were free from fraud or error.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/Our-Work/Audit/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Auditors-responsibilities-for-audit/Description-of-auditors-responsibilities-for-audit.aspx. This description forms part of our auditor’s report.
SIP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SIP LIMITED
- 10 -
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.
Chris Checkley FCCA (Senior Statutory Auditor)
For and on behalf of TC Group
Statutory Auditor
18 April 2024
Office: Steyning
SIP LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
Notes
$
$
Turnover
3
32,477,406
41,987,181
Cost of sales
(29,210,391)
(38,042,106)
Gross profit
3,267,015
3,945,075
Administrative expenses
(3,118,439)
(4,487,762)
Other operating income
199,821
3,275
Operating profit/(loss)
4
348,397
(539,412)
Interest receivable and similar income
7
4
Interest payable and similar expenses
8
(90,793)
(117,937)
Profit/(loss) before taxation
257,608
(657,349)
Tax on profit/(loss)
9
(106,932)
169,019
Profit/(loss) for the financial year
150,676
(488,330)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
SIP LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
2023
2022
$
$
Profit/(loss) for the year
150,676
(488,330)
Other comprehensive income
-
-
Total comprehensive income for the year
150,676
(488,330)
SIP LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 13 -
2023
2022
Notes
$
$
$
$
Fixed assets
Intangible assets
10
54,816
54,046
Tangible assets
11
20,850
36,947
Investments
12
12,226
12,226
87,892
103,219
Current assets
Stocks
14
4,477,583
5,416,601
Debtors
15
5,259,947
5,967,814
Cash at bank and in hand
1,460,323
2,127,771
11,197,853
13,512,186
Creditors: amounts falling due within one year
16
(5,607,662)
(8,000,615)
Net current assets
5,590,191
5,511,571
Total assets less current liabilities
5,678,083
5,614,790
Provisions for liabilities
Provisions
17
372,621
434,075
(372,621)
(434,075)
Net assets
5,305,462
5,180,715
Capital and reserves
Called up share capital
20
148,160
148,160
Other reserves
84,586
84,586
Profit and loss reserves
5,072,716
4,947,969
Total equity
5,305,462
5,180,715
The financial statements were approved by the board of directors and authorised for issue on 18 April 2024 and are signed on its behalf by:
F Colcord
Director
Company Registration No. 02185735
SIP LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
Share capital
Currency translation reserve
Profit and loss reserves
Total
$
$
$
$
Balance at 1 January 2022
148,160
84,586
5,377,998
5,610,744
Year ended 31 December 2022:
Loss and total comprehensive income for the year
-
-
(488,330)
(488,330)
Other movements
-
-
58,301
58,301
Balance at 31 December 2022
148,160
84,586
4,947,969
5,180,715
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
-
150,676
150,676
Other movements
-
-
(25,929)
(25,929)
Balance at 31 December 2023
148,160
84,586
5,072,716
5,305,462
SIP LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 15 -
2023
2022
Notes
$
$
$
$
Cash flows from operating activities
Cash (absorbed by)/generated from operations
22
(552,468)
1,062,481
Interest paid
(90,793)
(117,937)
Net cash (outflow)/inflow from operating activities
(643,261)
944,544
Investing activities
Purchase of intangible assets
(24,191)
(53,676)
Purchase of tangible fixed assets
(7,781)
Proceeds from disposal of tangible fixed assets
27,169
Interest received
4
Net cash used in investing activities
(24,187)
(34,288)
Net (decrease)/increase in cash and cash equivalents
(667,448)
910,256
Cash and cash equivalents at beginning of year
2,127,771
1,217,515
Cash and cash equivalents at end of year
1,460,323
2,127,771
SIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
1
Accounting policies
Company information
SIP Limited is a private company limited by shares incorporated in England and Wales. The registered office is The Courtyard, Shoreham Road, Upper Beeding, Steyning, West Sussex, BN44 3TN.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in USD, 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
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company 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
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Intangible fixed assets other than goodwill
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
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 recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Patents & licences
10% straight line
Trademarks
10% straight line
IT project
over 3 years
SIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Fixtures and fittings
20% straight line and 33% straight line
Motor vehicles
25% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.7
Impairment of fixed assets
At each reporting period 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.
SIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet 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 debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
SIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 19 -
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
1.11
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
SIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 20 -
1.12
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that 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 reporting end date, 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. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.15
Foreign exchange
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 and 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 comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit and loss within 'other operating income'.
1.16
The company has an invoice discounting arrangement. The amounts owed to the company are included in trade receivables and the amounts owed to the invoice discounting company are included in short term borrowings. The amounts owed to the invoice discounting company represent the difference between the amounts advanced by the invoice discounting company and the invoices discounted. The interest element of the invoice discounting charges and other related costs are recognised as they accrue and are included in the Income statement within finance costs.
SIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
A provision for annuity is recognised which attempts to quantify future annuity payments expected to be made in the future. This is split between amounts expected to be paid within one year and amounts expected to be paid thereafter.
Deferred tax assets are recognised for all unabsorbed tax losses and unutilised capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.
Stock are reviewed on a regular basis and the company will make allowance for excess or obsolete stock and write down to net realisable value based primarily on historical trends and management estimates of expected and future product demand and related pricing.
These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of stock.
Directors consider the key sources of accounting estimates relate to the expected life expectancy when calculating the provisions of annuity. The expected life expectancy is based on Office for National Statistics published data.
3
Turnover and other revenue
2023
2022
$
$
Turnover analysed by geographical market
Europe - EU
15,160,774
15,665,147
Europe - Non EU
17,020,628
25,786,822
Asia
172,649
50,328
Middle East
50,668
147,538
Oceania
72,687
89,087
Africa
-
137,871
Americas
-
110,388
32,477,406
41,987,181
SIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Turnover and other revenue
(Continued)
- 22 -
2023
2022
$
$
Other revenue
Interest income
4
-
4
Operating profit/(loss)
2023
2022
Operating profit/(loss) for the year is stated after charging/(crediting):
$
$
Exchange (gains)/losses
(88,924)
475,466
Fees payable to the company's auditors in respect of non audit services
-
4,113
Fees payable to the company's auditor for the audit of the company's financial statements
37,200
36,000
Depreciation of owned tangible fixed assets
16,097
26,449
Profit on disposal of tangible fixed assets
-
(20,603)
Amortisation of intangible assets
23,421
15,101
Operating lease charges
195,178
200,422
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Sales and administration
21
23
Their aggregate remuneration comprised:
2023
2022
$
$
Wages and salaries
2,065,939
2,643,582
Social security costs
167,168
179,073
Pension costs
92,874
113,689
2,325,981
2,936,344
SIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
6
Directors' remuneration
2023
2022
$
$
Remuneration for qualifying services
865,744
1,185,740
Company pension contributions to defined contribution schemes
21,901
33,219
887,645
1,218,959
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
$
$
Remuneration for qualifying services
366,465
381,440
During the year retirement benefits were accruing to 2 directors (2022 - 2) in respect of defined contribution pension schemes.
7
Interest receivable and similar income
2023
2022
$
$
Interest income
Interest on bank deposits
4
Investment income includes the following:
Interest on financial assets not measured at fair value through profit or loss
4
8
Interest payable and similar expenses
2023
2022
$
$
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
-
96
Interest on invoice finance arrangements
90,793
117,841
90,793
117,937
SIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
9
Taxation
2023
2022
$
$
Deferred tax
Origination and reversal of timing differences
106,932
(169,019)
The actual charge/(credit) for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
$
$
Profit/(loss) before taxation
257,608
(657,349)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
64,402
(124,896)
Tax effect of expenses that are not deductible in determining taxable profit
1,151
552
Unutilised tax losses carried forward
127,991
Change in unrecognised deferred tax assets
106,932
(169,019)
Effect of change in corporation tax rate
(3,811)
Permanent capital allowances in excess of depreciation
2,154
1,684
Under/(over) provided in prior years
(1,416)
Profit on sale of fixed assets
(3,915)
Marginal relief
(1,169)
Utilisation of losses brought forward
(47,512)
Effect of change in value of provision
(15,215)
Taxation charge/(credit) for the year
106,932
(169,019)
SIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
10
Intangible fixed assets
Patents & licences
Trademarks
IT project
Total
$
$
$
$
Cost
At 1 January 2023
31,277
275,349
53,676
360,302
Additions
21,079
3,112
24,191
At 31 December 2023
52,356
275,349
56,788
384,493
Amortisation and impairment
At 1 January 2023
29,926
267,722
8,608
306,256
Amortisation charged for the year
1,522
1,132
20,767
23,421
At 31 December 2023
31,448
268,854
29,375
329,677
Carrying amount
At 31 December 2023
20,908
6,495
27,413
54,816
At 31 December 2022
1,351
7,627
45,068
54,046
11
Tangible fixed assets
Fixtures and fittings
Motor vehicles
Total
$
$
$
Cost
At 1 January 2023 and 31 December 2023
895,347
51,321
946,668
Depreciation and impairment
At 1 January 2023
861,608
48,113
909,721
Depreciation charged in the year
12,889
3,208
16,097
At 31 December 2023
874,497
51,321
925,818
Carrying amount
At 31 December 2023
20,850
20,850
At 31 December 2022
33,739
3,208
36,947
SIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
12
Fixed asset investments
2023
2022
Notes
$
$
Investments in subsidiaries
13
12,226
12,226
13
Subsidiaries
Details of the company's non-trading subsidiary at 31 December 2023 is as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
SIP Oils and Fluids Europe BV
Lierseteenweg 400. 2800 Mechelen, Belgium
Ordinary
100.00
The financial statements of SIP Oils and Fluids Europe BV have not been consolidated into the financial statements of SIP Limited as the inclusion is not material for the purpose of giving a true and fair view of the financial position of the company.
14
Stocks
2023
2022
$
$
Finished goods and goods for resale
4,477,583
5,416,601
The replacement cost of stock was not materially different to the book value at both year ends.
15
Debtors
2023
2022
Amounts falling due within one year:
$
$
Trade debtors
4,218,721
5,286,707
Amounts owed by group undertakings
30,091
14,482
Other debtors
561,441
19,604
Prepayments and accrued income
110,893
201,288
4,921,146
5,522,081
Deferred tax asset (note 18)
338,801
445,733
5,259,947
5,967,814
SIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 27 -
16
Creditors: amounts falling due within one year
2023
2022
$
$
Trade creditors
4,103,423
2,278,241
Taxation and social security
502,736
587,034
Other creditors
144,343
4,128,702
Accruals and deferred income
857,160
1,006,638
5,607,662
8,000,615
17
Provisions for liabilities
2023
2022
$
$
Current
129,691
122,013
Non-current
372,621
434,075
502,312
556,088
Movements on provisions:
$
At 1 January 2022
556,088
Additional provisions in the year
46,875
Utilisation of provision
(126,580)
Other movements
25,929
At 31 December 2023
502,312
SIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 28 -
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2023
2022
Balances:
$
$
Accelerated capital allowances
(1,134)
9,206
Tax losses
221,033
297,779
Short term timing differences
118,902
138,748
338,801
445,733
2023
Movements in the year:
$
Asset at 1 January 2023
(445,733)
Charge to profit or loss
106,932
Asset at 31 December 2023
(338,801)
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
$
$
Charge to profit or loss in respect of defined contribution schemes
92,874
113,689
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.
20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
$
$
Issued and fully paid
Ordinary shares of $1 each
100,000
100,000
148,160
148,160
SIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 29 -
21
Operating lease commitments
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
$
$
Within one year
50,267
143,329
Between two and five years
50,267
143,329
22
Cash (absorbed by)/generated from operations
2023
2022
$
$
Profit/(loss) for the year after tax
150,676
(488,330)
Adjustments for:
Taxation charged/(credited)
106,932
(169,019)
Finance costs
90,793
117,937
Investment income
(4)
Gain on disposal of tangible fixed assets
-
(20,603)
Amortisation and impairment of intangible assets
23,421
15,101
Depreciation and impairment of tangible fixed assets
16,097
26,449
Other gains and losses
(25,929)
-
Decrease in provisions
(61,454)
(62,314)
Movements in working capital:
Decrease/(increase) in stocks
939,018
(1,397,049)
Decrease/(increase) in debtors
600,935
(762,210)
(Decrease)/increase in creditors
(2,392,953)
3,802,519
Cash (absorbed by)/generated from operations
(552,468)
1,062,481
SIP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 30 -
23
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
$
$
$
Cash at bank and in hand
2,127,771
(667,448)
1,460,323
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