Company registration number 03202912 (England and Wales)
CUTWEL LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
CUTWEL LIMITED
COMPANY INFORMATION
Directors
A Gillard
A S Moore
G J Short
Company number
03202912
Registered office
Unit A
Riverside Drive
Cleckheaton
West Yorkshire
England
BD19 4DH
Auditor
BHP LLP
New Chartford House
Centurion Way
Cleckheaton
Bradford
West Yorkshire
BD19 3QB
Bankers
Clydesdale Bank PLC
94 Briggate
Leeds
LS1 6NP
CUTWEL LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Directors' responsibilities statement
6
Independent auditor's report
7 - 9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Notes to the financial statements
13 - 24
CUTWEL LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 APRIL 2024
- 1 -

The directors present the strategic report for the year ended 30 April 2024.

Review of the business

The company has had a successful trading year with growth to key KPI’s including sales, average sales per customer, volume of customers, gross profit margin, gross profit generation and EBITDA. This is despite a difficult manufacturing market which suffered 11 months of negative PMI and the macro-economic conditions of a recessionary economy and high interest rates.

The management team have been focussed on business improvements including:

•    Product diversification into adjacent groups

•    Reducing supply chain costs and increasing goods-in efficiency

•    Continuous development of the ecommerce strategy

•    Growth of the sales team

•    Improving supplier relationships and terms

Whilst the UK manufacturing market continues with difficult trading conditions due to lack of growth, the business is confident that it can continue to grow, whilst successfully managing customer debt and risk.

Principal risks and uncertainties

The key business risks and uncertainties affecting the company relate to uncertainty of supply in the manufacturing sector and economic instability.

Suppliers and supply chain disruption

The company relies upon a relatively small number of key suppliers to provide the products sold to our customers. Strong existing long-term relationships with these suppliers and a short supply chain mitigate the risks of disruption to supply to customers. The company has continued to invest in stock holding to mitigate delays in deliveries from suppliers and has implemented a procurement management system which uses both demand and supply side data points to identify optimal stock holdings at a part level.

Employees safety and retention

Investment in the people is a key pillar of the company's success, the retention and development of our highly engaged workforce will continue through both internal and external training, career development and well-rounded rewards packages. Health and safety procedures are embedded in our daily routines with monthly reviews undertaken by an external consultant.

CUTWEL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
- 2 -

Economic instability and currency Fluctuations

The company purchases the majority of our products lines in Euros and therefore is exposed to transaction and translation foreign exchange risk. Exposure is partly minimised by natural hedging of matching Euro revenues with purchase costs, with the remaining exposure mitigated via hedging using forward exchange contracts. Wherever possible the company seeks to buy in Sterling, even from overseas suppliers, in order to mitigate the risk of currency fluctuations. Whilst the company has exposure to overheads and purchases for resale inflationary pressures, they are able to absorb the impacts, offset via operational efficiencies or mitigate with dynamic pricing.

The company is exposed to credit risk, this is mitigated by controls around provision of credit limits and clear debtor collection procedures supported by a collection system implemented in the year.

Working Capital

Working capital efficiency continued to be a focus in the year with regular monitoring of cashflow and refinement of stock purchasing strategies. The implementation of stock procurement management and debtor collection systems in the previous financial year has supported efficiencies.

Data Security, GDPR & Cyber Security

Security of data and compliance with GDPR regulations are managed through a GDPR framework which identifies where risks may arise. The framework is reviewed periodically to refresh risks. Cyber Security risks are managed through maintaining a robust and up to date infrastructure with our IT partners. There is continuous training of all staff to ensure the risk of social engineering is minimised. All systems are audited annually by independent, third party, consultants including penetration testing.

Key performance indicators

The Directors consider the key performance indicators to be;

• Revenue of £28m (2023: £26m). Increase of 8% on PY driven by increased average spend per customer and increased numbers of regular spending customers.

• Gross Profit of £11.9m (2023: £10.7m). Margin increased by 1.44% due to cost saving initiative around carriage and changes to ordering patterns to lower shipment frequencies.

• Operating Profit (excluding foreign exchange gains/loss) of £5.8m (2023: £4.92m). Continued investment in people and headcount to drive growth in following years.

Management use a number of operating KPIs to measure and improve business performance including;

• Daily sales and gross profit

• Gross margin by product line

• Stock turnover

• Debtor days

• Number of trading customers

CUTWEL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
- 3 -

Future developments

Management do not believe there are any future developments to note other than those noted in the risk management and review of the business section. The business is continuing to grow.

Employee & Environmental Matters

The Environment and Social Governance framework has operated throughout the year. Positive employee engagement continues which was indicated in a strong and stable eNPS score. Specific people focussed initiatives during the year included mental health support, charitable support in the local community, an increase in investment in management training to support internal promotions and a discount scheme on retail items to assist employees with cost of living pressures.

In the year, the company engaged an external body to define our climate mission, measure our emissions and build a route to aim to remove Scope 1 and 2 emissions by 2030. Alongside this we continue to improve our recycling levels and we worked with our suppliers on packaging usage reduction.

On behalf of the board

A S Moore
Director
2 August 2024
CUTWEL LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 APRIL 2024
- 4 -

The directors present their annual report and financial statements for the year ended 30 April 2024.

Principal activities

The principal activity of the company is the supply of engineering tools, including cutting tools, machine tool accessories, precision measuring tools and lubricants to a wide range of companies and individuals in the precision engineering sector. The business offers technical support and advice alongside prompt delivery to customers across the UK and Ireland from a range of over 100,000 stock lines.

Results and dividends

The results for the year are set out on page 10.

 

The profit before tax for the year in the company amounted to £6.3M (2023: £5.6m).

The key financial results for the year are summarised in the KPI section of the strategic report.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

A Gillard
A S Moore
G J Short
Auditor

In accordance with the company's articles, a resolution proposing that BHP LLP be reappointed as auditor of the company will be put at a General Meeting.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

Going concern

The directors have a reasonable expectation that the Company has adequate resources to continue in operational existence based on the following assessments, considering the principal risks and uncertainties detailed above;

 

 

The Company showed a net asset position at year end of £13.8m (2023: £8.6m) driven by continued good profitability, liquidity remains strong.

 

Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

CUTWEL LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
- 5 -
On behalf of the board
A S Moore
Director
2 August 2024
CUTWEL LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 APRIL 2024
- 6 -

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

 

 

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.

CUTWEL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF CUTWEL LIMITED
- 7 -
Opinion

We have audited the financial statements of Cutwel Limited (the 'company') for the year ended 30 April 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity 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:

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 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:

CUTWEL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF CUTWEL LIMITED (CONTINUED)
- 8 -
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:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. 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.

 

We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the risk, recognising that 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.

We focussed on laws and regulations, relevant to the company, which could give rise to a material misstatement in the financial statements. Our tests included agreeing the financial statement disclosures to underlying supporting documentation, enquiries with management, review of client's operation of controls within the year, in particular, cash and stock controls, and review of expenses, such as legal costs. There are inherent limitations in the audit procedures described and, 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.

As part of our audit, we addressed the risk of management override of internal controls, including testing of journals and review of nominal ledger. We evaluated whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.

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.

CUTWEL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF CUTWEL LIMITED (CONTINUED)
- 9 -

Use of our report

This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.

Jamie Williams
Senior Statutory Auditor
For and on behalf of BHP LLP
2 August 2024
Chartered Accountants
Statutory Auditor
New Chartford House
Centurion Way
Cleckheaton
Bradford
West Yorkshire
BD19 3QB
CUTWEL LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2024
- 10 -
2024
2023
Notes
£
£
Turnover
3
27,938,618
25,987,888
Cost of sales
(16,039,617)
(15,293,544)
Gross profit
11,899,001
10,694,344
Administrative expenses
(6,054,103)
(5,715,345)
Operating profit
4
5,844,898
4,978,999
Interest receivable and similar income
7
436,708
608,254
Profit before taxation
6,281,606
5,587,253
Tax on profit
8
(1,105,234)
(578,251)
Profit for the financial year
5,176,372
5,009,002

The profit and loss account has been prepared on the basis that all operations are continuing operations.

CUTWEL LIMITED
BALANCE SHEET
AS AT
30 APRIL 2024
30 April 2024
- 11 -
2024
2023
Notes
£
£
£
£
Fixed assets
Intangible assets
10
49,770
87,407
Tangible assets
11
356,296
435,574
406,066
522,981
Current assets
Stocks
12
3,702,078
3,594,361
Debtors
13
12,933,269
7,138,667
Cash at bank and in hand
941,229
1,461,682
17,576,576
12,194,710
Creditors: amounts falling due within one year
14
(4,127,530)
(4,034,721)
Net current assets
13,449,046
8,159,989
Total assets less current liabilities
13,855,112
8,682,970
Provisions for liabilities
Deferred tax liability
15
51,756
55,986
(51,756)
(55,986)
Net assets
13,803,356
8,626,984
Capital and reserves
Called up share capital
17
10,000
10,000
Profit and loss reserves
13,793,356
8,616,984
Total equity
13,803,356
8,626,984

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The financial statements were approved by the board of directors and authorised for issue on 2 August 2024 and are signed on its behalf by:
A S Moore
Director
Company registration number 03202912 (England and Wales)
CUTWEL LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2024
- 12 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 May 2022
10,000
20,337,265
20,347,265
Year ended 30 April 2023:
Profit and total comprehensive income
-
5,009,002
5,009,002
Dividends
9
-
(16,729,283)
(16,729,283)
Balance at 30 April 2023
10,000
8,616,984
8,626,984
Year ended 30 April 2024:
Profit and total comprehensive income
-
5,176,372
5,176,372
Balance at 30 April 2024
10,000
13,793,356
13,803,356
CUTWEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2024
- 13 -
1
Accounting policies
Company information

Cutwel Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit A, Riverside Drive, Cleckheaton, West Yorkshire, England, BD19 4DH.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. 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:

 

 

The financial statements of the company are consolidated in the financial statements of Crossco (1427) Limited. These consolidated financial statements are available from its registered office, Unit A, Riverside Drive, Cleckheaton, BD19 4DH.

1.2
Going concern

The directors have a reasonable expectation that the Company has adequate resources to continue in operational existence based on the following assessments, considering the principal risks and uncertainties detailed above;true

 

 

The Company showed a net asset position at year end of £13.8m (2023: £8.6m) driven by continued good profitability, liquidity remains strong.

 

Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

CUTWEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
1
Accounting policies
(Continued)
- 14 -

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

1.4
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Website development costs
33% straight line
1.5
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold property improvements
10% straight line
Fixtures and fittings
20% straight line
Office equipment
33% straight line
Motor vehicles
25% straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

1.6
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

CUTWEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
1
Accounting policies
(Continued)
- 15 -
1.7
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.

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.

1.8
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.9
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

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.

CUTWEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
1
Accounting policies
(Continued)
- 16 -
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, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.10
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.11
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

CUTWEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
1
Accounting policies
(Continued)
- 17 -
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.

1.12
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.13
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.14
Leases

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

1.15
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

CUTWEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
- 18 -
2
Judgements and key sources of estimation uncertainty

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets and liabilities as at the Statement of Financial Position date and the amounts reported for the revenues and expenses during the year. However, the nature of estimation means that actual outcomes could differ from those estimates.

 

Useful lives of property, plant and equipment

Property, plant and equipment is depreciated over its useful life. Useful lives are based on management's estimates of the periods within which the assets will generate revenue and which are periodically reviewed for continued appropriateness. Changes to judgements can result in significant variations in the carrying value and amounts charged to the Statement of Comprehensive Income.

Stock

Management estimates the net realisable values of stock, taking into account the most reliable evidence available at each reporting date. The future realisation of these stocks may be affected by future technology or other market-driven changes that may reduce future selling prices.

3
Turnover and other revenue
2024
2023
£
£
Turnover analysed by class of business
Sale of goods
27,938,618
25,987,888
2024
2023
£
£
Turnover analysed by geographical market
United Kingdom
27,368,638
25,442,384
Overseas
569,980
545,504
27,938,618
25,987,888
2024
2023
£
£
Other revenue
Interest income
436,708
608,254
4
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(1,613)
(57,256)
Fees payable to the company's auditor for the audit of the company's financial statements
21,820
20,390
Depreciation of owned tangible fixed assets
142,949
173,060
Profit on disposal of tangible fixed assets
(4,372)
(5,479)
Amortisation of intangible assets
33,226
66,009
Operating lease charges
120,210
130,435
CUTWEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
- 19 -
5
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2024
2023
Number
Number
Sales
45
41
Administration
26
24
Warehouse
19
23
Directors
4
4
Total
94
92

Their aggregate remuneration comprised:

2024
2023
£
£
Wages and salaries
3,728,384
3,442,386
Social security costs
249,422
241,096
Pension costs
64,421
58,906
4,042,227
3,742,388
6
Directors' remuneration

Directors' remuneration is disclosed in Crossco (1432) Limited. The company made use of key management personnel which is subsequently charged on a monthly basis to Cutwel Limited as a service fee. The service fees costs for the year were £791,968 (2023: £704,556).

 

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2023 - 3).

7
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest receivable from group companies
436,708
608,024
Other interest income
-
0
230
Total income
436,708
608,254
CUTWEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
- 20 -
8
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
1,109,464
677,533
Adjustments in respect of prior periods
-
0
(65,268)
Total current tax
1,109,464
612,265
Deferred tax
Origination and reversal of timing differences
(4,230)
(34,014)
Total tax charge
1,105,234
578,251

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:

2024
2023
£
£
Profit before taxation
6,281,606
5,587,253
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.49%)
1,570,402
1,089,132
Tax effect of expenses that are not deductible in determining taxable profit
2,727
4,728
Adjustments in respect of prior years
-
0
(65,268)
Group relief
(482,409)
(426,514)
Effect of capital allowances and depreciation
1,329
(4,338)
Effect of changes in deferred tax closing position
2,377
(4,104)
Effect of other timing differences
10,808
(15,385)
Taxation charge for the year
1,105,234
578,251
9
Dividends
2024
2023
£
£
Final paid
-
0
16,729,283
CUTWEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
- 21 -
10
Intangible fixed assets
Website development costs
£
Cost
At 1 May 2023
261,191
Disposals
(154,631)
At 30 April 2024
106,560
Amortisation and impairment
At 1 May 2023
173,784
Amortisation charged for the year
33,226
Disposals
(150,220)
At 30 April 2024
56,790
Carrying amount
At 30 April 2024
49,770
At 30 April 2023
87,407
11
Tangible fixed assets
Leasehold property improvements
Fixtures and fittings
Office equipment
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 May 2023
677,184
499,361
805,220
22,464
2,004,229
Additions
35,818
1,567
29,914
-
0
67,299
Disposals
-
0
(449,139)
(640,998)
-
0
(1,090,137)
At 30 April 2024
713,002
51,789
194,136
22,464
981,391
Depreciation and impairment
At 1 May 2023
415,277
472,141
680,769
468
1,568,655
Depreciation charged in the year
52,086
9,886
75,361
5,616
142,949
Eliminated in respect of disposals
-
0
(449,139)
(637,370)
-
0
(1,086,509)
At 30 April 2024
467,363
32,888
118,760
6,084
625,095
Carrying amount
At 30 April 2024
245,639
18,901
75,376
16,380
356,296
At 30 April 2023
261,907
27,220
124,451
21,996
435,574
CUTWEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
- 22 -
12
Stocks
2024
2023
£
£
Finished goods and goods for resale
3,702,078
3,594,361

The directors do not believe there is a material difference between the carrying cost and replacement value. This applied in both the current and prior financial periods.

13
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
4,939,694
5,160,999
Corporation tax recoverable
11,154
11,154
Amounts owed by group undertakings
7,637,137
1,775,961
Other debtors
5,838
4,885
Prepayments and accrued income
339,446
185,668
12,933,269
7,138,667

Amounts owed by group companies are repayable on demand and attract a market rate of interest.

14
Creditors: amounts falling due within one year
2024
2023
£
£
Trade creditors
2,365,228
2,260,194
Corporation tax
547,692
286,397
Other taxation and social security
908,514
946,799
Other creditors
108,480
98,255
Accruals and deferred income
197,616
443,076
4,127,530
4,034,721

Amounts owed to group companies are repayable on demand and attract a market rate of interest.

CUTWEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
- 23 -
15
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Liabilities
Liabilities
2024
2023
Balances:
£
£
Accelerated capital allowances
52,176
77,682
Other timing differences
(420)
(21,696)
51,756
55,986
2024
Movements in the year:
£
Liability at 1 May 2023
55,986
Credit to profit or loss
(4,230)
Liability at 30 April 2024
51,756
16
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
64,421
58,906

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.

17
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
10,000
10,000
10,000
10,000

The ordinary shares have full rights to voting, dividend entitlement and participation in capital distributions. They are irredeemable other than by way of capital reduction.

18
Financial commitments, guarantees and contingent liabilities

The bank loans within Crossco (1432) Limited are covered by a cross guarantee including Cutwel Limited. This is secured by a fixed and floating charge over the company's property, assets and rights.

CUTWEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2024
- 24 -
19
Operating lease commitments
Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2024
2023
£
£
Within one year
146,213
120,210
Between two and five years
490,529
389,139
In over five years
440,000
413,333
1,076,742
922,682
20
Related party transactions

Amounts paid to NorthEdge Capital LLP in relation to monitoring fees for the financial year were £76,042 (2023: £75,000). This is inclusive of board member remuneration/fees.

21
Ultimate controlling party

The company’s immediate parent company is Crossco (1432) Limited , and its ultimate parent company is Crossco (1427) Limited. The company’s ultimate controlling party is NorthEdge Capital Fund II, LP.

 

The registered office of NorthEdge Capital Fund II, LP is: 13th Floor Number One Spinningfields, 1 Hardman Square Spinningfields, Manchester, M3 3EB.

 

The smallest and largest group in which these financial statements are consolidated into is the financial statements of Crossco (1427) Limited.

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