Company registration number 01779292 (England and Wales)
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
COMPANY INFORMATION
Directors
Mr T Maddison
Mr B J Hassell
Mr C Burnett
Company number
01779292
Registered office
Level 5A
Maple House
149 Tottenham Court Road
London
W1T 7NF
Auditor
Silver Levene (UK) Limited
Chartered Certified Accountants
Level 5A, Maple House
149 Tottenham Court Road
London
W1T 7NF
Business address
Christy Way
Southfields Industrial Estate
Basildon
Essex
SS15 6TE
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 24
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Review of the business
The year ending December 2023 has been exceptionally strong for LFF Limited, demonstrating remarkable growth and resilience in a dynamic market. Turnover increased significantly from £78.9 million in 2022 to £103 million in 2023. This growth has been underpinned by robust market demand and strategic initiatives that have enhanced our market position.
Profit before tax also saw a substantial increase, rising from £3.1 million in 2022 to £5.8 million in 2023. This impressive performance highlights the effectiveness of our operational strategies and the dedication of our team in executing our business objectives.
Principal risks and uncertainties
In the face of fluctuating oil prices and potential supply chain disruptions, LFF Limited has implemented several strategic initiatives to mitigate these risks:
Fluctuating Oil Prices: We have developed flexible strategies and mechanisms to manage the impact of oil price volatility on our operations and profitability.
Supply Chain Disruption: To counteract potential disruptions, we have diversified our supplier base and strengthened our relationships with key partners. This approach has enhanced our supply chain resilience and ensured the continuity of our operations.
Strategic Initiatives
In 2023, we focused on improving our operational efficiencies through a series of strategic initiatives:
Operational Efficiencies: We have invested in advanced technologies and streamlined our processes to reduce costs and improve productivity. These improvements have not only enhanced our operational efficiency but also contributed to our increased profitability.
Risk Management Strategies: Our comprehensive risk management framework has been pivotal in identifying and mitigating potential risks. This framework includes regular risk assessments, contingency planning, and continuous monitoring of key risk indicators.
Ethical Standards and Corporate Responsibility
LFF Limited is committed to maintaining the highest ethical standards in all aspects of our business. As part of our commitment, we align our operations with the 10 Principles of the United Nations Global Compact, which focus on human rights, labour standards, environmental responsibility, and anti-corruption practices. This alignment reinforces our dedication to ethical business practices and corporate social responsibility.
Appreciation
The Board of Directors extends its sincere gratitude to all staff members for their exceptional dedication and hard work over the past year. We also thank our stakeholders, including clients, suppliers, and partners, for their continued support and trust in LFF Limited. Together, we look forward to building on this year’s performance.
Mr T Maddison
Director
15 July 2024
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
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 supply of pipes, fittings, flanges and valves in a variety of materials.
The company changed its name from ''London Fittings & Flanges Limited'' to ''LFF Limited'' on 2 July 2024.
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £4,500,000. 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:
Mr T Maddison
Mr B J Hassell
Mr C Burnett
Financial instruments
Treasury policies and organisation
The Company's principal treasury operations are coordinated by the Group treasury function. All treasury operations are conducted within a framework of policies and procedures approved by the Board. As a matter of policy, the Company does not undertake speculative transactions that would increase its currency or interest rate exposure.
Interest rate risk
The Company is exposed to interest rate risk on cash and cash equivalents and on foreign exchange contracts. As the Company maintains all of its cash, liquid investments and foreign exchange contracts on a short term basis for liquidity purposes, this risk is not actively managed.
Foreign currency risk
The Company transacts some of its business in US Dollars, EUROs and CNH. Exposure to these foreign currencies is managed using spot or forward trades.
Credit risk
The Company continues to evaluate its accounts receivable for potential collection risks and has made provision for amounts where collection is considered to be doubtful.
Auditor
The auditor, Silver Levene (UK) Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the 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.
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.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
Mr T Maddison
Director
15 July 2024
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF LFF LIMITED
- 4 -
Opinion
We have audited the financial statements of LFF Limited (the 'company') for the year ended 31 December 2023 which comprise 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.
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.
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LFF LIMITED
- 5 -
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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Discussions were held with, and enquiries made of, management and those charged with governance with a view to identifying those laws and regulations that could be expected to have a material impact on the financial statements. During the engagement team briefing, the outcomes of these discussions and enquiries were shared with the team, as well as consideration as to where and how fraud may occur in the entity.
The following laws and regulations were identified as being of significance to the entity:
Those laws and regulations considered to have a direct effect on the financial statements include UK Financial Reporting Standards, Company Law, Employment Law, Health and Safety legislation, General Data Protection Regulation, Tax and Pensions legislation, and distributable profits legislation.
Audit procedures undertaken in response to the potential risks relating to irregularities (which include fraud and non-compliance with laws and regulations) comprised of: inquiries of management and those charged with governance as to whether the entity complies with such laws and regulations; enquiries with the same concerning any actual or potential litigation or claims; inspection of relevant legal correspondence; review of board minutes; testing the appropriateness of entries in the nominal ledger, including journal entries; reviewing transactions around the end of the reporting period; and the performance of analytical procedures to identify unexpected movements in account balances which may be indicative of fraud.
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF LFF LIMITED
- 6 -
No instances of material non-compliance were identified. However, the likelihood of detecting irregularities, including fraud, is limited by the inherent difficulty in detecting irregularities, the effectiveness of the entity’s controls, and the nature, timing and extent of the audit procedures performed. Irregularities that result from fraud might be inherently more difficult to detect than irregularities that result from error. As explained above, there is an unavoidable risk that material misstatements may not be detected, even though the audit has been planned and performed in accordance with ISAs (UK).
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.
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.
Marc Ian Franks
Senior Statutory Auditor
For and on behalf of Silver Levene (UK) Limited
Chartered Certified Accountants
Statutory Auditor
Level 5A, Maple House
149 Tottenham Court Road
London
W1T 7NF
22 July 2024
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
2023
2022
Notes
£
£
Turnover
3
103,083,852
78,858,080
Cost of sales
(95,178,662)
(73,946,247)
Gross profit
7,905,190
4,911,833
Administrative expenses
(7,042,421)
(5,285,822)
Other operating income
4,929,273
3,528,804
Operating profit
4
5,792,042
3,154,815
Other interest receivable and similar income
7
51,358
562
Other interest payable and similar expenses
8
(2,127)
(1,408)
Profit before taxation
5,841,273
3,153,969
Tax on profit
9
(1,377,245)
(613,848)
Profit for the financial year
4,464,028
2,540,121
The profit and loss account has been prepared on the basis that all operations are continuing operations.
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
341,745
73,791
Current assets
Stocks
13
117,100
120,645
Debtors
14
5,386,036
26,876,063
Cash at bank and in hand
5,596,302
4,021,511
11,099,438
31,018,219
Creditors: amounts falling due within one year
15
(8,280,508)
(27,908,977)
Net current assets
2,818,930
3,109,242
Total assets less current liabilities
3,160,675
3,183,033
Provisions for liabilities
Deferred tax liability
17
13,614
(13,614)
-
Net assets
3,147,061
3,183,033
Capital and reserves
Called up share capital
19
1,000,000
1,000,000
Share premium account
27,500
27,500
Profit and loss reserves
2,119,561
2,155,533
Total equity
3,147,061
3,183,033
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 15 July 2024 and are signed on its behalf by:
Mr B J Hassell
Director
Company registration number 01779292 (England and Wales)
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
Share capital
Share premium account
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 January 2022
1,000,000
27,500
1,115,412
2,142,912
Year ended 31 December 2022:
Profit and total comprehensive income
-
-
2,540,121
2,540,121
Dividends
10
-
-
(1,500,000)
(1,500,000)
Balance at 31 December 2022
1,000,000
27,500
2,155,533
3,183,033
Year ended 31 December 2023:
Profit and total comprehensive income
-
-
4,464,028
4,464,028
Dividends
10
-
-
(4,500,000)
(4,500,000)
Balance at 31 December 2023
1,000,000
27,500
2,119,561
3,147,061
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
24
7,453,714
6,110,719
Interest paid
(2,127)
(1,408)
Income taxes paid
(1,081,173)
(101,580)
Net cash inflow from operating activities
6,370,414
6,007,731
Investing activities
Purchase of tangible fixed assets
(345,035)
(5,979)
Interest received
51,358
562
Net cash used in investing activities
(293,677)
(5,417)
Financing activities
Payment of finance leases obligations
(1,946)
(23,357)
Dividends paid
(4,500,000)
(1,500,000)
Net cash used in financing activities
(4,501,946)
(1,523,357)
Net increase in cash and cash equivalents
1,574,791
4,478,957
Cash and cash equivalents at beginning of year
4,021,511
(457,446)
Cash and cash equivalents at end of year
5,596,302
4,021,511
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information
LFF Limited is a private company limited by shares incorporated in England and Wales. The registered office is Level 5A, Maple House, 149 Tottenham Court Road, London, W1T 7NF.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. 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 inspected 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.
Revenue from orders is recognised by reference to the stage of completion of order when the stage of completion of order, costs incurred and costs to complete can be estimated reliably. The stage of completion of order is calculated by comparing order fulfilled as proportion of total orders. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
1.4
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:
Short Leasehold land and buildings
Over the period of the lease
Plant and machinery
15% reducing balance
Fixtures, fittings & equipment
15% - 25% on cost
Motor vehicles
33% reducing balance
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.
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible 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.
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.
1.6
Stocks
Stocks and work-in-progress 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. Cost of raw materials and goods for resale are valued at purchases cost on average basis of inspected goods.
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.
1.7
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.
1.8
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.
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Trade debtors, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.
Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
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.
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
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.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Derivatives
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.
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.
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
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.
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 stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
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.
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
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.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Impairment of stock
Stocks are valued at lower of cost and estimated selling price in the ordinary course of business, less estimated costs of selling expenses,. These estimates are based on the current market condition and the historical experience of selling products of similar nature. It could change significantly as a result of changes in customer demand and competitor actions.
Typical practice for the company to provide for slow moving stock even though they are not perishable and may be sold in the future depending on the project work undertaken and demand for certain specific parts. hence most prudent course of action is to write-down stock as timing and certainty of future sale is very much unknown. See note 9 for the carrying amount of the stocks and associated impairment.
3
Turnover and other revenue
The company is engaged in supply of pipeline equipment to the oil and petroleum industries and in the opinion of the directors, it does not carry on classes of business substantially different from each other, therefore only geographical analysis of the business is included in the financial statements.
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
2,613,532
1,307,879
EC
194,422
511,950
Rest of the world
100,275,898
77,038,251
103,083,852
78,858,080
2023
2022
£
£
Other revenue
Interest income
51,358
562
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(88,831)
(243,357)
Fees payable to the company's auditor for the audit of the company's financial statements
36,592
26,340
Depreciation of owned tangible fixed assets
77,081
33,149
Operating lease charges
57,834
113,657
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Office and management
10
8
Production and sales
12
12
Total
22
20
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
5,328,665
3,983,805
Social security costs
248,389
209,018
Pension costs
213,672
208,195
5,790,726
4,401,018
Redundancy payments made or committed
-
(590)
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
1,386,375
485,300
Company pension contributions to defined contribution schemes
56,866
49,047
1,443,241
534,347
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
6
Directors' remuneration
(Continued)
- 18 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
470,600
183,250
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
51,358
Other interest income
562
Total income
51,358
562
Disclosed on the profit and loss account as follows:
Other interest receivable and similar income
51,358
562
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
51,358
8
Interest payable and similar expenses
2023
2022
£
£
Other finance costs:
Interest on finance leases and hire purchase contracts
117
1,408
Other interest
2,010
2,127
1,408
Disclosed on the profit and loss account as follows:
Other interest payable and similar expenses
2,127
1,408
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
1,349,577
622,260
Adjustments in respect of prior periods
(2,675)
Total current tax
1,346,902
622,260
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
9
Taxation
2023
2022
£
£
(Continued)
- 19 -
Deferred tax
Origination and reversal of timing differences
30,343
(8,412)
Total tax charge
1,377,245
613,848
During the year, the corporation tax rate increased from current 19% to 25%, starting from 1 April 2023 for companies with profits over £250,000. Therefore, the effective tax rate is 23.52%. For the purposes of deferred tax, this has been provided at the standard corporation tax rate of 25%.
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
5,841,273
3,153,969
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
1,373,867
599,254
Tax effect of expenses that are not deductible in determining taxable profit
30,509
26,297
Change in unrecognised deferred tax assets
30,343
(8,412)
Permanent capital allowances in excess of depreciation
(54,799)
(3,291)
Under/(over) provided in prior years
(2,675)
Taxation charge for the year
1,377,245
613,848
10
Dividends
2023
2022
£
£
Interim paid
4,500,000
1,500,000
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
11
Tangible fixed assets
Short Leasehold land and buildings
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2023
388,164
70,982
300,130
197,837
957,113
Additions
67,353
277,682
345,035
At 31 December 2023
388,164
70,982
367,483
475,519
1,302,148
Depreciation and impairment
At 1 January 2023
371,432
67,259
289,294
155,337
883,322
Depreciation charged in the year
3,308
569
13,361
59,843
77,081
At 31 December 2023
374,740
67,828
302,655
215,180
960,403
Carrying amount
At 31 December 2023
13,424
3,154
64,828
260,339
341,745
At 31 December 2022
16,732
3,723
10,836
42,500
73,791
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Motor vehicles
21,293
31,780
12
Financial instruments
2023
2022
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
5,284,594
26,582,785
Carrying amount of financial liabilities
Measured at amortised cost
7,288,198
27,188,266
Forward contracts
The company enters into forward foreign currency contracts to mitigate the exchange rate risk for certain receivables and payables.
As at 31 December 2023, the outstanding contracts all mature within 5 months of the year end.
The company is committed to buy €2,500,000 (2022: €9,240,000), to buy CNH Nil (2022: CNH44,821,000), to sell US$3,000,000 (2022: US$9,045,000) and to sell €1,200,000 (2022: €Nil) and pay/receive a fixed sterling amount.
The fair value of the forward foreign currency contracts is £2,166,566 (2022: £6,420,147), £Nil(2022: £7,170,725), £2,353,495 (2022: £7,513,082) and £1,039,951 (2022: £Nil) respectively.
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
13
Stocks
2023
2022
£
£
Finished goods and goods for resale
117,100
120,645
Stocks are stated after impairment of £48,620 (2022: £48,354).
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
3,026,460
23,655,692
Amounts owed by group undertakings
2,251,158
2,912,942
Other debtors
6,976
14,151
Prepayments and accrued income
101,442
268,137
5,386,036
26,850,922
Deferred tax asset (note 17)
25,141
5,386,036
26,876,063
Amounts owed by group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
16
1,946
Trade creditors
3,168,378
24,639,435
Amounts owed to group undertakings
428,660
138,843
Corporation tax
829,577
572,260
Other taxation and social security
162,733
148,451
Other creditors
151,337
57,935
Accruals and deferred income
3,539,823
2,350,107
8,280,508
27,908,977
Amounts owed by group undertakings are unsecured, interest free, have no fixed repayment date and are repayable on demand.
The bank holds a debenture incorporating a fixed and floating charge over all the current and future assets of the company.
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
16
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
1,946
17
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Balances:
£
£
£
£
ACAs
13,614
-
-
25,141
2023
Movements in the year:
£
Asset at 1 January 2023
(25,141)
Charge to profit or loss
38,755
Liability at 31 December 2023
13,614
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
213,672
208,195
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.
Contributions totalling £7,261 (2022: £5,950) were payable to the fund at the year end-end and are included in creditors.
19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
A Ordinary shares of £1 each
950,000
950,000
950,000
950,000
B Ordinary shares of £1 each
50,000
50,000
50,000
50,000
1,000,000
1,000,000
1,000,000
1,000,000
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
19
Share capital
(Continued)
- 23 -
All classes of shares rank pari passu in all respect.
20
Financial commitments, guarantees and contingent liabilities
The company is a party to a composite unlimited multilateral guarantee with other companies within the group.
Assets held as security formally charged to the bank by way of a debenture and first legal charges on all assets of the company.
The company's bankers have provided group facilities of £27,410,000 (2022: £39,410,000) in respect of foreign exchange commitments, letter of credits and guarantees of which £10,869,656 (2022: £25,698,919) have been utilised.
21
Operating lease commitments
Lessee
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
134,744
144,530
Between two and five years
149,488
263,259
284,232
407,789
22
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
The company sold goods and services to the value of £1,199,724. (2022: £942,477) to fellow subsidiaries within the group.
The company also purchased goods and services to the value of £1,899,317 (2022: £1,305,131) from fellow subsidiaries within the group.
The amounts owed from and to subsidiaries within the group are disclosed in note 14 and 15 of these financial statements.
The company paid rent of £120,000 (2022: £120,000) to LFF Properties Limited, a fellow subsidiary within the group. .
The company received rent of £84,000 (2022: £28,000) from LFF Glamal Limited, a fellow subsidiary within the group.
The company received management fees of £4,929,273 (2022: £3,528,804) from companies within the group, for services rendered.
The company paid dividends of £4,275,000 (2022: £1,425,000) to LFF Holdings Limited and £225,000 (2022: £75,000) to Terry Maddison respectively.
LFF LIMITED
(FORMERLY LONDON FITTINGS & FLANGES LIMITED)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
23
Ultimate controlling party
The parent company is LFF Holdings Limited, a company registered in England and Wales.
The smallest and largest group in which the accounts are consolidated are those of the parent company. Copies of the LFF Holdings Limited consolidated financial statements can be obtained from Christy Way, Southfields Industrial Estate, Basildon, Essex SS15 6TE.
24
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
4,464,028
2,540,121
Adjustments for:
Taxation charged
1,377,245
613,848
Finance costs
2,127
1,408
Investment income
(51,358)
(562)
Depreciation and impairment of tangible fixed assets
77,081
33,149
Movements in working capital:
Decrease in stocks
3,545
29,823
Decrease/(increase) in debtors
21,464,886
(21,339,031)
(Decrease)/increase in creditors
(19,883,840)
24,231,963
Cash generated from operations
7,453,714
6,110,719
25
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
4,021,511
1,574,791
5,596,302
Obligations under finance leases
(1,946)
1,946
-
4,019,565
1,576,737
5,596,302
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