Company registration number 04340974 (England and Wales)
SILICONE ENGINEERING LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
SILICONE ENGINEERING LIMITED
COMPANY INFORMATION
Directors
Mr P Kinsella
Mrs S Paquette
Mr J Rogers
(Appointed 25 January 2024)
Company number
04340974
Registered office
Greenbank Business Park
Blakewater Road
Blackburn
Lancashire
BB1 3HU
Auditor
JS. Audit Limited
James House
Stonecross Business Park
Yew Tree Way
Warrington
Cheshire
WA3 3JD
Business address
Greenbank Business Park
Blakewater Road
Blackburn
Lancashire
BB1 3HU
Bankers
National Westminster Bank Plc
35 King William Street
Blackburn
Lancashire
BB1 7DJ
JPMorgan Chase Bank
London Branch
25 Bank Street
London
E14 5JP
SILICONE ENGINEERING 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 - 23
SILICONE ENGINEERING LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Fair review of the business
Silicone Engineering Limited ("SEL") was acquired in October 2021 by Rogers Corporation headquartered in Chandler, Arizona USA. SEL continues to innovate and invest in sustainable business growth. SEL is Europe's leading design and manufacturing specialist of heat cured silicone rubber products.
Key performance indicators
The company's key financial performance indicators during the year were as follows :
2023 2022 2021
Turnover £30.2m £33.1m £29.3m
Gross profit £17.4m £17.9m £15.4m
Principal risks and uncertainties
The business is committed to regular SWOT reviews as part of integrated business risk management controls underpinning our ISO 9001:2015 quality kitemark. The external risks that mainly concern SEL include: Geopolitical conflicts and various sanctions that put stress and imbalance on supply chains. Inflationary pressures and disruptions that permeate throughout many industrial supply chains on both raw materials and unit price point. Energy costs have risen substantially in UK/Europe since 2022 and remain an ongoing concern. The post pandemic period has brought about a cost-of-living crisis that is placing many challenges on resource retention and recruitment. Other identified risks largely derive through changes with industry standards or regulatory changes, such is the nature of the chemistry within our wider manufacturing environment.
Development and performance
Despite some short term headwinds the silicone industry is expected to continue growing at more than twice the rate of other flexible industrial rubbers or plastics and this acceleration is predicted to continue throughout the 2030’s as we transition from combustion engines and fossil fuels to more sustainable and eco-friendly electrified technologies. Silicone is well positioned to succeed due to silicone's unique "in-application" performance features in ever more demanding applications and environments. This is especially the case where elevated temperatures are generated and sensitive componentry needs to be protected and remain functional in confined spaces such as transportation systems (think EV/HEV), portable electronic devices or electronic control panels / data storage hubs.
Silicone not surprisingly acts as a perfect seal or gasket choice in underground systems or stock interiors due to excellence in extreme temperature environments together with not emitting hazardous toxic fumes into the immediate air space unlike many other rubber and plastic solutions. Silicone solutions are not just premium performance and best in class safety and environmental features that draw attention from equipment design engineers, but competitive lifetime values and reduced after sales service support needed to maintain optimal unit performance levels.
Innovative manufacturing and formulation design houses such as Silicone Engineering have proprietary material science knowledge to share with platform design engineers and converting partners in improving performance, design and value add features for next generation applications in many scalable globalized build programs.
Silicone Engineering continues to focus on broadening key customer relationships with service and value together with exploring new opportunities and diversifying revenue streams. A primary strategic objective of the business remains a targeted focus on aligning niche products to scalable future OEM design programs. SEL continues to outperform industry peers in many product line classes and remains on track to continue delivering business growth throughout the decade ahead.
Mr P Kinsella
Director
22 July 2024
SILICONE ENGINEERING 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 that of the manufacture of silicone products.
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £10,210,000. The directors do not recommend payment of a further 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 P Kinsella
Mr R McCard
(Resigned 25 January 2024)
Mrs S Paquette
Mr J Rogers
(Appointed 25 January 2024)
Financial instruments
Objectives and policies
The company finances its operations through a mixture of retained profits and an available invoice discounting facility to fund working capital.
Management's objectives are to retain sufficient liquid funds to enable the company to meet its day to day obligations as they fall due whilst maximising returns on surplus funds.
Where appropriate, funds are invested in sterling bank deposit accounts and borrowings are all obtained from standard bank loan accounts. As such, there is little price risk exposure.
The company manages its exposure to fluctuations in currency exchange rates by the use of operational bank accounts in the currency of the originating transactions. The company does not utilise any other type of hedging instruments.
Research and development
The company incurs research and development expenditure costs as part of its trading activity. These costs are expensed as incurred.
The company's R&D activities focus on the formulation, mixing and supply of silicone based products for a range of industrial sectors, including rail, aerospace and automotive industries. The company has a core team of technical development staff and the major strength of the technical team is its formulating capability. When developing a new silicone based product, the team will overcome a wide selection of technical challenges to produce products offering enhanced specifications.
Post reporting date events
On the 6 June 2024, an interim dividend was proposed and approved by the board of £3,011,000 to be paid immediately in respect of the year ended 31 December 2024 as disclosed in note 24 to the accounts.
Auditor
The auditor, JS. Audit Limited, is deemed to be reappointed under section487(2) of the Companies Act 2006.
SILICONE ENGINEERING 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.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr P Kinsella
Director
22 July 2024
SILICONE ENGINEERING LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SILICONE ENGINEERING LIMITED
- 4 -
Opinion
We have audited the financial statements of Silicone Engineering 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.
SILICONE ENGINEERING LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SILICONE ENGINEERING 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, included within the directors' report, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities and 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.
Based on our understanding of the company and sector, we identified that the principal risks of non-compliance with laws and regulations related to, but were not limited to, the Companies Act 2006, UK tax, employment, pension and health and safety legislation and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to management bias in accounting estimates and judgements and the risk of fraud in revenue recognition.
SILICONE ENGINEERING LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SILICONE ENGINEERING LIMITED
- 6 -
Our procedures to respond to risks identified included the following:
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
enquiring of management about actual and potential litigation and claims, their policies and procedures to prevent and detect fraud as well as whether they have knowledge of any actual, suspected or alleged fraud;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
obtaining an understanding of provisions and holding discussions with management to understand the basis of recognition or non-recognition of tax provisions; and
in addressing the risk of fraud through management override of controls: testing the appropriateness of journal entries; assessing whether the accounting estimates, judgements and decisions made by management are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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.
Christopher Moss BSc F.C.A. (Senior Statutory Auditor)
For and on behalf of JS. Audit Limited
22 July 2024
Chartered Accountants
Statutory Auditor
James House
Stonecross Business Park
Yew Tree Way
Warrington
Cheshire
WA3 3JD
SILICONE ENGINEERING LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
2023
2022
Notes
£
£
Turnover
3
30,244,746
33,056,495
Cost of sales
(12,888,360)
(15,185,975)
Gross profit
17,356,386
17,870,520
Distribution costs
(2,101,927)
(2,643,744)
Administrative expenses
(4,694,568)
(3,027,753)
Exceptional item
4
(158,700)
936,256
Operating profit
5
10,401,191
13,135,279
Interest receivable and similar income
9
129,315
9,479
Profit before taxation
10,530,506
13,144,758
Tax on profit
10
(2,493,498)
(2,509,808)
Profit for the financial year
8,037,008
10,634,950
The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.
The notes on pages 11 to 23 form part of these financial statements.
SILICONE ENGINEERING LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
12
6,043,199
6,037,910
Current assets
Stocks
13
1,043,181
1,444,967
Debtors
14
4,228,644
4,759,659
Cash at bank and in hand
8,774,025
10,401,685
14,045,850
16,606,311
Creditors: amounts falling due within one year
15
(3,121,352)
(3,523,235)
Net current assets
10,924,498
13,083,076
Total assets less current liabilities
16,967,697
19,120,986
Provisions for liabilities
Deferred tax liability
16
664,868
645,165
(664,868)
(645,165)
Net assets
16,302,829
18,475,821
Capital and reserves
Called up share capital
19
40,000
40,000
Capital redemption reserve
20
200,000
200,000
Capital contribution reserve
20
3,832,500
3,832,500
Profit and loss reserves
20
12,230,329
14,403,321
Total equity
16,302,829
18,475,821
The financial statements were approved by the board of directors and authorised for issue on 22 July 2024 and are signed on its behalf by:
Mr P Kinsella
Director
Company Registration No. 04340974
SILICONE ENGINEERING LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
Share capital
Capital redemption reserve
Capital contribution reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 January 2022
40,000
200,000
3,832,500
13,660,371
17,732,871
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
-
10,634,950
10,634,950
Dividends
11
-
-
-
(9,892,000)
(9,892,000)
Balance at 31 December 2022
40,000
200,000
3,832,500
14,403,321
18,475,821
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
-
-
8,037,008
8,037,008
Dividends
11
-
-
-
(10,210,000)
(10,210,000)
Balance at 31 December 2023
40,000
200,000
3,832,500
12,230,329
16,302,829
SILICONE ENGINEERING 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
26
11,352,924
14,963,869
Income taxes paid
(2,563,838)
(3,406,992)
Net cash inflow from operating activities
8,789,086
11,556,877
Investing activities
Purchase of tangible fixed assets
(336,061)
(223,907)
Interest received
129,315
9,479
Net cash used in investing activities
(206,746)
(214,428)
Financing activities
Dividends paid
(10,210,000)
(9,892,000)
Net cash used in financing activities
(10,210,000)
(9,892,000)
Net (decrease)/increase in cash and cash equivalents
(1,627,660)
1,450,449
Cash and cash equivalents at beginning of year
10,401,685
8,951,236
Cash and cash equivalents at end of year
8,774,025
10,401,685
The notes on pages 11 to 23 form part of these financial statements.
SILICONE ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information
Silicone Engineering Limited is a private company limited by shares incorporated in England and Wales. The registered office is Greenbank Business Park, Blakewater Road, Blackburn, Lancashire, BB1 3HU.
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. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
- Section 4 ‘Statement of Financial Position’: Reconciliation of the opening and closing number of shares;
- Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
- Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Rogers Corporation. These consolidated financial statements are available from its registered office, Global Headquarters, 2225 W.Chandler Blvd,Chandler, AZ 85224, USA.
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
The turnover shown in the statement of income and retained earnings represents amounts receivable during the year, exclusive of VAT and trade discounts. The turnover has been generated from the sale of silicone products manufactured by the company. Turnover is recognised when the risks and rewards of ownership of the goods have been transferred to the customer, which is usually on dispatch, However, for export sales income is recognised in accordance with agreed INCO terms to determine when the risks and rewards have been transferred, which may be at a point later than on dispatch.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
SILICONE ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Freehold buildings
3.33% per annum straight line basis
Plant and equipment
5% - 25% per annum straight line basis
Motor vehicles
20% per annum straight line basis
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
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.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Work in progress
Work in progress is valued on the basis of direct costs plus attributable overheads based on normal level of activity. Provision is made for any foreseeable losses where appropriate. No element of profit is included in the work in progress.
Consignment stock
Consignment stock at the year end is not recorded in the balance sheet on the basis that the risks and rewards of the stock have not passed to the company. The principal terms of the consignment agreement are such that the company can return any or all of the stock to the relevant supplier without financial or commercial penalties.
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 at bank and in hand
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks.
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.
SILICONE ENGINEERING 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.
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.
Basic financial liabilities
Basic financial liabilities, including creditors 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.
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.
SILICONE ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
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.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
1.14
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.
SILICONE ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 15 -
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. The critical estimate made by the directors in preparing these financial statements relates to the assessment of the useful economic lives of the company's tangible fixed assets when determining the appropriate depreciation policies as disclosed in Note 1.4. The critical judgements applied are in determining the classification of certain stock items as consignment stock as disclosed in Note 13 and the directors' assessment of the appropriate INCO terms to be applied to revenue recognition as per Note 1.3.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Sale of goods
30,244,746
33,056,495
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
8,568,288
10,522,395
Europe
15,318,116
15,072,691
Rest of the World
6,358,342
7,461,409
30,244,746
33,056,495
2023
2022
£
£
Other revenue
Interest income
129,315
9,479
4
Exceptional items
2023
2022
£
£
Expenditure
Inter-company loan provision
-
354,910
(Profit)/loss on foreign exchange
158,700
(1,291,166)
158,700
(936,256)
SILICONE ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
5
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
15,700
15,475
Depreciation of owned tangible fixed assets
330,772
322,075
(Profit)/loss on disposal of tangible fixed assets
-
5,463
Operating lease charges
105,629
86,825
6
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
15,700
15,475
7
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Production
97
105
Selling
15
15
Administrative
9
8
121
128
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,982,139
4,165,716
Social security costs
365,000
404,351
Pension costs
170,594
185,882
4,517,733
4,755,949
SILICONE ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
8
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
193,889
192,588
Company pension contributions to defined contribution schemes
3,726
3,656
197,615
196,244
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 1).
9
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
129,315
9,121
Other interest income
358
Total income
129,315
9,479
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
2,465,397
2,489,269
Adjustments in respect of prior periods
8,398
17,665
Total current tax
2,473,795
2,506,934
Deferred tax
Origination and reversal of timing differences
24,937
4,723
Adjustment in respect of prior periods
(5,234)
(1,849)
Total deferred tax
19,703
2,874
Total tax charge
2,493,498
2,509,808
SILICONE ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
10
Taxation
(Continued)
- 18 -
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
10,530,506
13,144,758
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
2,476,775
2,497,504
Tax effect of expenses that are not (chargeable)/deductible in determining taxable profit
12,235
3,875
Adjustments in respect of prior years
8,398
17,665
Other permanent differences
87
(3,164)
Deferred tax adjustments in respect of prior years
(5,234)
(1,849)
Fixed asset differences
(239)
(4,100)
Difference in deferred and corporation tax rates
1,476
(123)
Taxation charge for the year
2,493,498
2,509,808
A UK corporation tax rate of 25% was announced in the Chancellor's Budget of 3 March 2021. The 25% rate applied from 1 April 2023 and deferred tax has been calculated at this rate.
11
Dividends
2023
2022
£
£
Final paid
10,210,000
9,892,000
SILICONE ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
12
Tangible fixed assets
Freehold buildings
Plant and equipment
Motor vehicles
Total
£
£
£
£
Cost
At 1 January 2023
3,222,500
5,875,585
19,050
9,117,135
Additions
336,061
336,061
Disposals
(19,050)
(19,050)
At 31 December 2023
3,222,500
6,211,646
9,434,146
Depreciation and impairment
At 1 January 2023
75,843
2,984,332
19,050
3,079,225
Depreciation charged in the year
60,674
270,098
330,772
Eliminated in respect of disposals
(19,050)
(19,050)
At 31 December 2023
136,517
3,254,430
3,390,947
Carrying amount
At 31 December 2023
3,085,983
2,957,216
6,043,199
At 31 December 2022
3,146,657
2,891,253
6,037,910
13
Stocks
2023
2022
£
£
Raw materials and consumables
594,059
879,306
Work in progress
189,988
259,845
Finished goods and goods for resale
259,134
305,816
1,043,181
1,444,967
The company held £584,918 (2022: £692,448) of consignment stock at the year end which is not recorded in the balance sheet.
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
3,774,502
4,341,244
Corporation tax recoverable
150,643
60,600
Amounts owed by group undertakings
67,462
100,579
Other debtors
101,783
106,831
Prepayments and accrued income
134,254
150,405
4,228,644
4,759,659
SILICONE ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Trade creditors
2,143,976
3,079,265
Taxation and social security
109,086
95,129
Deferred income
17
53,004
Other creditors
360,160
26,151
Accruals and deferred income
455,126
322,690
3,121,352
3,523,235
16
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
665,827
652,414
Short term timing differences
(959)
(7,249)
664,868
645,165
2023
Movements in the year:
£
Liability at 1 January 2023
645,165
Charge to profit or loss
19,703
Liability at 31 December 2023
664,868
The deferred tax liability set out above is expected to reverse within 4 years and mainly relates to accelerated capital allowances that are expected to mature within the same period.
17
Deferred income
2023
2022
£
£
Other deferred income
53,004
-
SILICONE ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
170,594
185,882
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.
At the year-end accrued pension contributions amounted to £24,592 (2022: £26,151).
19
Share capital
2023
2022
£
£
Ordinary share capital
Issued and fully paid
20,000 Ordinary A shares of £1 each
20,000
20,000
20,000 Ordinary B shares of £1 each
20,000
20,000
40,000
40,000
20
Reserves
Capital redemption reserve
A non-distributable reserve into which amounts are transferred following the redemption or purchase of the company's own shares.
Capital contribution reserve
The capital contribution reserve represents the introduction of economic benefits by the parent company that does not contribute share capital or debt. It reflects the transfer of Rogers Corporation's land and buildings in the prior year.
Profit and loss reserves
The profit and loss reserves represents cumulative profits and losses, net of distributions, to shareholders.
SILICONE ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
21
Operating lease commitments
Lessee
Operating lease payments represent rentals payable by the company for its properties, as well as for some of its motor vehicles. Leases are negotiated for an average term of 3-4 years.
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
97,116
68,833
Between two and five years
351,080
191,679
In over five years
78,920
448,196
339,432
22
Capital commitments
Amounts contracted for but not provided in the financial statements:
2023
2022
£
£
Acquisition of tangible fixed assets
-
225,046
SILICONE ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
23
Related party transactions
At the balance sheet date the company has made a provision of £Nil (2022: £354,910) against the debtor balance due from its immediate parent company. During 2023, the parent company was liquidated and the debtor balance was written off.
No guarantees have been given or received.
24
Events after the reporting date
On the 6 June 2024, an interim dividend was proposed and approved by the board of £3,011,000 to be paid immediately in respect of the year ended 31 December 2024.
25
Ultimate controlling party
At the balance sheet date the directors consider the immediate and ultimate parent undertaking and controlling party to be Rogers Corporation, a company incorporated in the U.S.A. Rogers Corporation is the smallest and largest group of undertakings preparing consolidated accounts including the company's financial statements.
26
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
8,037,008
10,634,950
Adjustments for:
Taxation charged
2,493,498
2,509,808
Investment income
(129,315)
(9,479)
(Gain)/loss on disposal of tangible fixed assets
-
5,463
Depreciation and impairment of tangible fixed assets
330,772
322,075
Movements in working capital:
Decrease in stocks
401,786
263,828
Decrease in debtors
621,058
2,769,545
Decrease in creditors
(454,887)
(1,532,321)
Increase in deferred income
53,004
-
Cash generated from operations
11,352,924
14,963,869
27
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
10,401,685
(1,627,660)
8,774,025
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