The Directors present the strategic report for Lendlock Group Limited (“the Group”) the year ended 31 July 2023.
The principal activities of the Group are that of a market leader in the manufacture of injection moulded closures and anodised packaging for cosmetics and toiletries premium brands together with own label production. The Group operate from UK locations in Burnley, Poole and Chester.
The results for the year and the financial position of the Group and the Company are shown in the annexed financial statements.
Turnover for the Group was £44.8M compared with £39.5M in the previous year. As a whole, the Group has performed well albeit with the cost pressures and supply chain issues they have been faced with.
The Directors monitor gross profit margins from principal activities as a key performance indicator. Gross profit margin decreased by 0.8% to 31.8% during the year. The Directors continue to review how the Group can improve efficiencies and streamline processes to maintain or increase gross profit margins.
The Group’s operational risks include health and safety, power failures and environmental. Documented procedures are in place to minimise these risks.
Following the lockdown in March 2020 it is expected that all impacts of Covid-19 have now been recognised in the financial statements to the year ended 31 July 2023. The Russian Ukraine war has though impacted the supply chain which is leading to increased prices, and these are being managed by review and implementation of efficiencies in every area of the group operations, but there has been a need to increase prices as necessary across the group.
The Group uses financial instruments to manage interest rate risk. It is exposed to the usual credit risk and cash flow risk associated with selling on credit and manages this through robust credit control procedures.
Buying and selling in different countries has allowed the Group to manage its exchange risk through hedging.
Cash and net borrowings
The net cash position of the Group at 31 July 2023 was £16.7M compared to £14.5M in the previous year. This is a direct result of retained profits from operations less investment in the growth and infrastructure of the Group as indicated in the Group cash flow.
The Group continues to draw on their research team’s expertise, to solve clients' strategic problems by developing innovative products and reviewing their in house technologies.
In discharging their duty to promote the interests of the Company under section 172 Companies Act 2006, the Directors of the Company have regard to several factors and stakeholder interests. These are described below. As a holding company, the Directors do not consider the factors listed in section 172(1)(f) (need to act fairly between the members of the company) are relevant to the proper discharge of their duty under section 172.
The Directors, in line with their duties under s 172 of the Companies Act 2006, act individually and collectively in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its member, and in doing so have regard, amongst other matters, to the:
• Likely consequences of any decision in the long-term Interests of the company's employees
• Need to foster the company's business relationships with suppliers, customers and other stakeholders
• Impact of the company's operations on the community and the environment
• Desirability of the company maintaining a reputation for high standards of business conduct
The Directors' regard to these matters is embedded in their decision-making process, through the Company's business strategy, culture, governance framework, management information flows and stakeholder engagement processes.
The Company's business strategy is focused on achieving success for the Company in the long-term. In setting this strategy, the Board takes into account the impact of relevant factors and stakeholder interests on the Company's performance. The Board also identifies principal risks facing the business and sets risk management objectives.
The Board promotes a culture of upholding the highest standards of business conduct and regulatory conduct. The Board ensures these core values are communicated to the Company's employees and embedded in the Company's policies and procedures, employee induction and training programmes and its risk control and oversight framework.
The Board recognizes that building strong and lasting relationships with our stakeholders will help us to deliver our strategy in line with our long-term values and operate a sustainable business.
The Directors are supported in the discharge of their duties by:
Director training to further their understanding of their duties and obligations under applicable law and regulation.
Processes which ensure the provision of timely management information and escalation through reporting lines to the Board from the Company's business areas, its risk and control functions, support teams and committees of the Board.
Agenda planning for Board and Committee meetings to provide sufficient time for the consideration and discussion of key matters.
The Board understands the importance of engagement with all of its stakeholders and gives appropriate weighting to the outcome of its decisions for the relevant stakeholder in weighing up how best to promote the success of the Company.
The Board regularly discusses issues concerning employees, customers, suppliers, community and environment, regulators and its shareholder, which it considers in its discussions and in its decision-making process. In addition to this, the Board seeks to understand the interests and views of the Company's stakeholders by engaging with them directly when required. The following page summarises the key stakeholders and how we engage with each:
Stakeholder Engagement
Employees
Our employees contribute to a positive working culture and safe working environment. Employees are key to the success of our business. In addition to aiming to be a responsible employer in our approach to pay and benefits, we continue to engage with our team to ascertain which training and development opportunities should be made available to improve our team's productivity and our individual employees' potential within the business.
We continually invest in employee development and wellbeing to create and encourage an inclusive culture within the organisation. Our employee appraisal programme encourages employee feedback and facilities the
opportunity for both employees and managers to set performance goals on an annual basis.
Our culture invites different perspectives, new ideas and opportunities for growth. We work hard to ensure employees feel welcome and are valued and recognized for their hard work. All employees receive regular updates on the performance of the company ranging from regular published updates.
Customers
Customers are at the centre of our business. Our business development team allied with our customer service teams build lasting relationships with current and potential customers to understand their objectives and requirements. We are in regular contact with customers in order to meet their defined service and reporting requirements. This includes attending monthly and quarterly update calls, face to face meetings (quarterly/bi-annually/annually) depending on customer preferences.
We take a consultative approach with customers focused on building long-term relationships and solving their supply-chain challenges.
Suppliers
We work with a wide range of suppliers both in the UK and the European Union. We remain committed to being fair and transparent in our dealings with all our suppliers.
The Company has procedures requiring due diligence of suppliers as to their internal governance, including for example, their anti-bribery and corruption practices, data protection policies and modem slavery matters.
The Company has systems and processes in place to ensure suppliers goods and services are provided in line with terms and conditions which are acceptable to the company, in addition to ensuring suppliers are paid in a timely manner.
The Board's approach to social responsibility, Diversity & the community is of high importance. Corporate social responsibility principles are part of our culture and decision-making process. We take a consultative approach focused on building long-term relationships and solving business problems.
Diversity and Inclusion is a key pillar for our Company. Our HR resource is responsible for Diversity & Inclusion and aims to connect with affiliates and networks, updating the Board regularly.
The Board continues to commit and broaden the company's work and associations with local charitable organisations.
Shareholders
The Board also seeks to behave in a responsible manner towards our shareholders. The Board communicates information relevant to its shareholder on a regular basis to cover such items as financial performance, forecasting, annual budgeting, etc.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 July 2023.
The Group has a branch in France. This branch has closed post year-end.
The results for the year are set out on page 13.
No ordinary dividends were paid during the year.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the group has sufficient liquid resources to meet the operating needs of the business.
The group is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans. The group uses interest rate derivatives to manage the mix of fixed and variable rate debt so as to reduce its exposure to changes in interest rates.
The group’s principal foreign currency exposures arise from trading with overseas companies. Group policy permits but does not demand that these exposures may be hedged in order to fix the cost in sterling. This hedging activity involves the use of foreign exchange forward contracts.
Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
Research and development plays a key role in supporting Lendlock Group's activities. Details of such activities are given in the Strategic report.
The Group is committed to employee involvement throughout the business. The Group is intent on motivating and keeping staff informed on matters that concern them in the context of their employment and involving them through local consultative procedures.
Employees are kept well informed on matters of interest and the financial and economic factors affecting the Group's performance through management channels and meetings.
The Group's branch in France has closed post year-end. This has had no material impact on the consolidated financial statements.
A subsidiary company, Specialist Anodising Company Limited, completed the purchased of Integrated Aluminium Components Limited on 22nd December 2023.
The Group aims to grow organically and through acquisitions where suitable opportunities arise.
Sedulo Audit Limited are deemed to be reappointed in accordance with an elective resolution made under section 386 of the Companies Act 1985 which continues in force under the Companies Act 2006.
The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2018 require the disclosure of annual UK energy consumption and greenhouse gas emissions from SECR regulated sources. These figures are for the financial year end July 2023.
The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per £m of turnover, the recommended ratio for the sector.
We are committed to year-on-year improvements in our operational energy efficiency. Measures prioritised for implementation in 2023/24 within Lendlock Group include completing the ESOS phase 3 energy efficiency surveys during the 2023/24 reporting period,
Emissions information not included above is fuel consumed for own transport (direct emissions), and fuel consumed for transport not owned by the company (other indirect emissions), as this information was deemed to not be significant to the report, the Group will look to quantify these figures in subsequent reporting periods.
We have audited the financial statements of Lendlock Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 July 2023 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company 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).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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 group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
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.
In the light of the knowledge and understanding of the group and the parent company and their 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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 parent 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 parent company or to cease operations, or have no realistic alternative but to do so.
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.
Based on our understanding of the company and industry, we identified that there are no particular principle risks of non-compliance with laws and regulations. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006. We evaluated management incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principle risks were related to posting inappropriate journal entries to increase profits, through management bias in accounting for significant creditors and expenses.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Audit procedures performed included:
Enquiry of management, those charged with governance around actual and potential litigation and claims.
Enquiry of entity staff in the compliance function to identify any instances of non-compliance with laws and regulations.
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the normal course of business.
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.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £2,465 (2022 - £446 loss).
Lendlock Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Guilden Sutton Lane, Guilden Sutton, Chester, Cheshire, England, CH3 7EX.
The group consists of Lendlock Group Limited and all of its subsidiaries. Subsidiaries are listed in note 18.
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. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Lendlock Group Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 31 July 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
At 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.
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.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
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.
Research and development expenditure is written off against profits in the year in which it is incurred.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, 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.
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 group after deducting all of its 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.
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.
The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 if, and only if, there is 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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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 leased asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
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.
In the application of the group’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.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
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:
In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:
As permitted by Section 408 of the Companies Act 2006, the Income Statement of the parent company is not presented as part of these financial statements.
The aggregate amount of research and development expenditure recognised as an expense during the year within the Group is £2,390,561 (2022: £1,467,834).
The carrying value of land and buildings comprises:
Freehold land and buildings have been pledged to secure borrowings of the company. The company is not allowed to pledge these assets as security for other borrowings or to sell them to another entity.
Long leasehold property with a carrying amount of £1,000,000 and Freehold property with a carrying amount of
£11,990,000 were independently revalued in the individual companies in March 2024 by Grant Forbes, Chartered Surveyor, on an market value basis.
The directors consider this reflected property and market conditions at 31 July 2023 and accordingly an adjustment has
been made to record this valuation in the financial statements.
The revaluation surplus is disclosed in note 27.
Properties are carried at valuation. If properties were measured using the cost model, the carrying amounts for the group would have been approximately £3,193,837 (2022 - £3,279,693), being cost £5,057,855 (2022 - £5,057,855) and depreciation £1,864,018 (2022 - £1,778,162).
Land and buildings held as investment property were independently revalued to £945,000 in March 2024 by Grant Forbes, Chartered Surveyor, on an open market basis. The directors consider this reflected property and market conditions at 31 July 2023 and accordingly an adjustment has been made to record this valuation in the financial statements.
Details of the company's subsidiaries at 31 July 2023 are as follows:
All subsidiaries listed above are included within these consolidated financial statements.
F-L Plastics Ltd is exempt from audit by parent guarantee for the year ended 31st July 2023.
The bank loans and overdrafts are secured by way of:
1. First legal charge over the freehold and leasehold properties held by the Group
2. A mortgage debenture given by all companies in the Group
3. A cross guarantee structure between all companies in the Group
The bank loans, which had a capital balance outstanding of £625,792 at 31 July 2023 (2022: £809,796) are repayable evenly over 10 years to 2033.
Interest is charged on the loan at 1.1% above bank rate. These interest costs are expensed to the profit and loss account in the period to which they relate.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
The company has one class of ordinary share which carry full voting rights.
The merger reserve arose on the share for share acquisition of GTL Plastics Ltd in 2022.
This reserve is used to record increases in the fair value of investment property. This reserve is non-distributable.
Lease payments recognised as an expense totalled £22,816 (2022: £23,251).
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The Group's branch in France has closed post year-end. This has had no material impact on the consolidated financial statements.
Specialist Anodising Company Limited has acquired 100% of the share capital of Integrated Aluminium Components Ltd on 22nd December 2023.
The remuneration of key management personnel is as follows.
During the year the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
Sales and purchases between related parties are made at normal market prices. Outstanding balances with entities are unsecured, interest free and cash settlement is expected within the ordinary course of the business.
At 31 July 2023 the group owed the directors £7,392,031 (2022 - £1,925,556).
No interest has been charged to the group in respect of these loans which are repayable on demand and classified as creditors due within one year.
The following amounts were outstanding at the reporting end date:
Sales and purchases between related parties are made at normal market prices. Outstanding balances with entities are unsecured, interest free and cash settlement is expected within the ordinary course of the business.
Lendlock International Ltd has advanced loans to various entities under the control of the Mr M Duffell, Mrs V Duffell, and their family for the purpose property and construction related activity as detailed below.
The loans bear interest at 3% per annum. The loans are personally guaranteed by Mr M Duffell and Mrs V Duffell.
This amount is made up from an opening balance of £6,356,626 at 01/08/2022, prior year adjustments of additional amounts advanced of £3,391,257 resulting in a restated opening balance of £8,921,749. Repayments during the year were £3,548,414, and additional loans advanced of £12,088,406. This resulted in amounts owed by related parties at the end of the year of £19,752,079.
In respect of the prior year adjustment a corresponding credit was made to directors loans. The prior year comparatives have been restated accordingly.
Not included in the above balances is Interest accrued at 01/08/2022 of £487,750 and interest charged during the year of £231,955. Nil interest was paid during the year. At 31/7/2023 interest accrued was £719,705.