The directors present the strategic report for the year ended 31 December 2023.
The group's subsidiary, Ford Windows Limited, welcomed two new directors to its board in Q3 of the previous year – Wesley Shackley & Courtney Shackley, 2023 was the first full year with all four directors on the board.
The business has had a downturn in turnover throughout 2023 which relates to the decrease in houses sold throughout the UK. New homes registered in the private sector were 42% lower than in 2022 Q2. Supply and demand therefore saw a drop which continued throughout 2023.
The group continues to be restrictive with its customer base based on their type and location.
Price increases from their top three suppliers were not as frequent which helped towards GP. Gross profit shrunk by 10.38%. Production staff efficiencies and use of sub-contractors have been closely monitored which has resulted in margins of 22% (2022 – 22%).
The balance sheet shows a liquidity level of £2,193,776 and total net assets of £3,146,624.
Material costs have been closely monitored throughout the year mainly due to economic pressures however surcharges have fallen off and fixed prices have been agreed toward the end of 2023, therefore helping matters going into 2024.
Manufacturing and fitting labour, form a substantial proportion of the underlying cost base which requires constant monitoring for the maintenance of the group’s profitability. In addition to the above stock holding levels are also recorded and used on a monthly basis to assess both profitability and liquidity.
Production, processing and installation errors are investigated monthly to avoid and improve upon problems which may become reoccurring. This has especially been considered due to the downturn in turnover thus tightening the gap for any errors. The directors are confident that with the continuous efforts being made by the quality control department, another improvement to the group’s performance will be made throughout the 2024 financial year.
The group regulates its carbon footprint by seeking movement in all available factors including recycling its main material back to the suppliers originally purchased from and switching vehicles to electric.
Management continues to consider competitive pressure within the window manufacturing and glazing sector and has done so especially throughout 2023 due to inflationary economic pressures.
Price increases have remained site-specific to essentially mitigate risks of losing potential turnover from current customers. The market has seen a loss of some competitors in 2023 which has led to additional work being taken on in the year.
The group is not dependent upon any single customer, retaining current customers by continuing to maintain the quality of products and services provided.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £2,000,000. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The directors aim to maintain the management policies which have led to the group's profits over recent years. Demand in the market is strong and the market is consolidating, with a number of key competitors struggling, therefore enabling the group to continue to grow its operations. There are also plans to expand the product line to include composite doors alongside existing operations.
In addition to this, the directors have continued to monitor staff levels closely and believe the group now has the correct mix and number of employees to meet the turnover goals for the next financial year.
The auditor, Hart Shaw LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
We have audited the financial statements of IC 107 Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the group statement of income and retained earnings, the group balance sheet, the company balance sheet, the group statement of cash flows, the company statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
At the outset and throughout the planning stage, laws and regulations were discussed with both the management team and the audit team to:
identify laws and regulations which were significant to the entity.
understand how the entity was complying with relevant frameworks.
understand the effectiveness of those controls.
enquire into any knowledge of actual, suspected, or alleged fraud prior to commencing the fieldwork.
understand and challenge where errors could arise as a result of fraud or error.
Using our knowledge of the client and general commercial and sector experience we built on our understanding and our response to those risks.
The potential effect of any laws and regulation on the financial statements can vary considerably. There are laws and regulations that directly affect the financial statements (e.g. the Companies Act) as well as many other operational laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements.
Owing to the size, nature and complexity of the organisation and the applicable laws and regulations to which it must adhere, the risk of material misstatement was deemed to be low. In response, our approach included but was not limited to:
communicating identified laws and regulations to the audit team.
ensuring the audit team had recent, relevant experience and were aware of the significant laws and regulations relating to the entity and its sector along with the competence to identify instances of non-compliance.
reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.
performing analytical procedures to identify any unusual or unexpected relationships.
discussions with those charged with governance regarding any instances of non-compliance with laws and regulations or any actual or potential litigation and claims.
reviewing legal and professional costs for any indication of non-compliance with laws and regulations.
Management override is the most likely way in which fraud might present itself and as such is inherently high risk on any audit. In relation to how the risk of management override of controls was addressed, our approach included but was not limited to:
assessing whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias.
investigating rationale of significant or unusual transactions and agreeing to underlying records.
reviewing related parties and transactions with them to ensure these were not outside the normal course of business.
enquiring with management as to whether they had any knowledge of any actual or suspected fraud.
reviewing of all material journal entries made throughout the year as well as those made to prepare the financial statements.
review of legal fees.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected material misstatements in the financial statements, even though we have performed our audit in accordance with auditing standards. Furthermore, as with all audits, there is a higher risk of irregularities (especially those relating to fraud) being undetected, as these may involve the override of internal controls, collusion, intentional omissions and misrepresentations etc. We are not responsible for preventing non-compliance or fraud and therefore cannot be expected to detect all instances of such. Our audit was not designed to identify misstatements or other irregularities that would not be considered to be material to the financial statements. The further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
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.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
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 £2,000,000 (2022 - £859,918 profit).
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
IC 107 Limited (“the company”) is a private limited company, domiciled and incorporated in England and Wales. The registered office is 80 Catley Road, Darnall, Sheffield, South Yorkshire, S9 5JF.
The group consists of IC 107 Limited and both of its subsidiaries.
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 financial statements incorporate those of IC 107 Limited and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
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.
At the time of approving the financial statements, the directors have a reasonable expectation that the group and company have 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.
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 completion of the installation), 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.
The total turnover of the group for the year has been derived from its principal activity wholly undertaken in the United Kingdom.
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.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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 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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 and loans from fellow group companies, 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
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 period. 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 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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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.
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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The group and company's assets and liabilities, including goodwill, are measured at fair value for financial reporting purposes. The directors carry out detailed analyses and are confident that the carrying amount of assets will be recovered in full. This situation will be closely monitored and adjustments made in future periods if future market activity indicate that such adjustments are appropriate for fair value measurement.
Determining whether the group and company investments in subsidiaries have been impaired requires estimations of the investments’ values in use. The value in use calculations require the entity to estimate the future cash lows expected to arise from the investments and suitable discount rates in order to calculate present values. The carrying amount of investments in subsidiaries at the balance sheet date was considered appropriate.
Goodwill arising under a business combination (acquired intangibles) are capitalised at fair value as determined at the date of exchange and are stated at fair value less accumulated amortisation and impairment losses. Amortisation of acquired intangibles is charged to the profit and loss account on a straight-line basis over the estimated useful life of 10 years.
The total turnover of the group for the year has been derived from its principal activities wholly undertaken in the United Kingdom.
The average monthly number of persons (including directors) employed by the group and company during the period or year respectively was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 -1).
It is considered that the directors are the key management personnel of the company.
The actual charge for the period can be reconciled to the expected charge based on the profit or loss and the standard rate of tax as follows:
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Details of the company's subsidiaries at 31 December 2023 are as follows:
Bank borrowings are secured by fixed charges over book and other debts, goodwill, uncalled capital and intellectual property and a floating charge over all other assets dated 9 November 1994.
There is an unlimited multilateral guarantee dated 13 December 1999 given by Ford Windows Limited and Griffingold Limited.
There is an unlimited multilateral guarantee dated 19 April 2018 given by IC 107 Limited, Ford Windows Limited and Griffingold Limited.
A £345,000 mortgage loan was taken out by the group on 12 February 2019. This is at an interest rate of 2.25% per annum over the base rate. The loan is repayable within 10 years with monthly repayments of £3,409. The loan is secured by a first legal mortgage over the freehold property at Unit 1, First Road, Blantyre, Glasgow, G72 0ND.
The company does not have any loans at 31 December 2023 or at 31 December 2022.
All finances leases were taken out over 36 month periods; the interest rate on those finances leases is between 9% and 15% per annum. Obligations under finance leases and hire purchase contracts are secured by related assets.
The company does not have any finance leases at 31 December 2023 or at 31 December 2022.
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.
During the year an employee had an accident while operating machinery which was reported, as required, to the Health and Safety Executive (HSE). The HSE has since carried out an investigation and the matter has been reviewed by the company's insurers.
The HSE has notified its intention to prosecute the company's subsidiary, Ford Windows Limited, under the provisions of the Health and Safety at Work etc. Act 1974. Ford Windows Limited has yet to enter a plea. However, in setting the level of any fine, the court will determine the category of the risk of harm created by the offence and whether the offence was a significant cause of actual harm, among other factors.
In response, the health and safety compliance manager has worked with external health and safety compliance consultants to restructure and enhance the group's health and safety procedures.
Given the variability of the factors that the court will examine in setting an appropriate level of fine, the directors are unable to reliably estimate the amount of the obligation. Therefore, they have not recognised a liability or expense in respect of this in the group's financial statements.
During the year the group entered into the following transactions with related parties: