Company Registration No. 02141828 (England and Wales)
WEC GROUP LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED
31 DECEMBER 2023
31 December 2023
PM+M Solutions for Business LLP
Chartered Accountants
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
WEC GROUP LIMITED
COMPANY INFORMATION
Directors
J S Hartley
W Tierney
Secretary
A B Sedgley
Company number
02141828
Registered office
Britannia House
Junction Street
Darwen
Lancashire
BB3 2RB
Auditor
PM+M Solutions for Business LLP
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
Bankers
Lloyds Bank Plc
Church Street
Blackburn
BB2 1JQ
WEC GROUP LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 5
Independent auditor's report
6 - 9
Statement of comprehensive income
10
Balance sheet
11
Statement of changes in equity
12
Notes to the financial statements
13 - 24
WEC GROUP LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The Directors present their Strategic Report for the year ended 31 December 2023, as follows:
Business Review
The business has had another good year, holding turnover and operating profit under challenging market conditions. There is a great deal of optimism about further future growth opportunities, and future success will continue to be grounded in upholding ongoing exceptional levels of customer service, product quality and value for money offerings in the market.
Total headcount at year end was 322
The directors consider the business to be well placed for the future.
Principal risks and uncertainties
The principal risks to the business include the following:
Operating in a very competitive marketplace. The company has consistently demonstrated its ability to mitigate this risk through provision of high-quality products at competitive prices with strong values in customer care and reliable delivery performance.
Changes in technology. The company mitigates this risk by continued re-investment in the latest available state of the art production equipment, allowing control of operating costs and highest levels of efficiency to maintain its position as market leader.
Economic Uncertainty. At the date of this report, there are many uncertainties around the economic and other general impacts of recent events in Ukraine and any potential impacts on the business.
Excessive and intrusive government legislation. A company’s ability to remain competitive in a global supply chain can be negatively affected by unnecessary legislation and “red-tape”.
Financial and other key performance indicators
During the year, various indicators were used to monitor and compare the company’s performance. The following are regarded as the key financial indicators of performance, all of which can be observed in the attached financial statements. The company uses other performance indicators in its day to day operations but the directors consider these commercially sensitive and they are therefore not specifically disclosed.
- Turnover £42.9 million (2022: £43.1 million)
- Gross Margin 33.7% (2022: 32.8%)
- Operating Profit £5.35 million (2022: £5.42 million)
WEC GROUP LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Stakeholder Engagement
The directors have a responsibility under S172 of the Companies Act 2006 to act in a way that promotes the company’s success for the benefit of the members as a whole, and to have regard to the long-term effects of decisions on the company and stakeholders, The following statement outlines the way in which these responsibilities are handled:
The company is privately held and provides employment, training and financial reward to the owners and employees, including profit sharing arrangements.
Strategic decisions are based on medium and long-term objectives. In particular, the policy of continued investment in latest state of the art production technologies ensures high quality and efficiency of output and provides an ongoing competitive edge in the market.
Key stakeholders, and the ways in which we engage with them, are as follows:
Employees
We rely on a skilled and highly motivated workforce and recruitment & retention of staff is critical to the business. We help engagement with our team by:
Appropriate remuneration and rewarding outstanding performance through profit sharing arrangements;
Providing industry leading training, coupled with career development opportunities
Customers and suppliers
We invest heavily in the latest technology throughout our business so that we can continue to offer quality products at short lead times. Our customers value our high degree of expertise, reliability and value for money offerings. We have built a reputation for fair dealings in our interaction with both customers and suppliers alike.
J S Hartley
Director
6 August 2024
WEC GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activities of the company are fabrication and forming of metals, laser cutting, powder coating and the manufacture of camera towers.
Results and dividends
The results for the year are set out on page 10.
Ordinary dividends were paid amounting to £4,000,000. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
J S Hartley
W Tierney
Disabled persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the company continues and that the appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.
Employee involvement
It is the policy of the company to ensure that employees are aware of their individual roles and responsibilities and are informed about the trading performance and progress of the group.
Auditor
The auditor, PM+M Solutions for Business LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Energy and carbon report
During the year, the company within the group consumed 5.3m kWh (2022 - 4.9m kWh) of energy.
The volume of CO2 equivalent produced through direct emissions by gas combustion was 480 tonnes (2022 - 447 tonnes) and fuel consumed by own transport was 225 tonnes (2022 - 256 tonnes).
The volume of CO2 equivalent produced through indirect emissions by the purchase of electricity was 544 tonnes (2022 - 471 tonnes) and fuel consumed for transport not owned by the company was 13 tonnes (2022 - 9 tonnes).
WEC GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Energy consumption is measured through extensive metering systems in all locations and captured in real time. Emissions in tonnes of CO2 are calculated using industry standard conversion factors applied to the real time consumption data.
The company uses an intensity ratio of tonnes of CO2e per employee. During the period this ratio was 3.92 tonnes per employee (2022 - 3.85).
Energy efficiency improvement initiatives are important to the company. We have actively invested in the latest production equipment and technologies, which significantly cuts like for like consumption, and are currently looking for opportunities generally in production and non-production environments, including installation of LED lighting in a number of areas.
The company is focused on energy and cost reduction throughout, and ultimately on cutting emissions by default. A relatively volatile product mix in operations makes meaningful ratio analysis difficult in the current climate but we will consider opportunities to develop statistics going forward which will meaningfully demonstrate our progress in relation to these goals.
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;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Disclosure
The ultimate shareholder has requested that the directors include the following statement
- the ultimate parent company is privately held, as is the company, and they believe the requirement to publish
private accounts is a violation of both the spirit and law under UK right to privacy legislation.
WEC GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
On behalf of the board
J S Hartley
Director
6 August 2024
WEC GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF WEC GROUP LIMITED
- 6 -
Opinion
We have audited the financial statements of WEC Group 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 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.
WEC GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF WEC GROUP LIMITED
- 7 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was considered capable of detecting irregularities, including fraud
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 identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.
WEC GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF WEC GROUP LIMITED
- 8 -
Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we have considered the following:
the nature of the industry and sector, control environment and business performance including the design of the Company's remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
results of our enquiries of management about their own identification and assessment of the risks of irregularities;
the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud;
any matters we identified having obtained and reviewed the Company's documentation of their policies and procedures relating to:
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas: timing of recognition of commercial income; posting of unusual journals and complex transactions; and manipulating the Company's performance profit measures and other key performance indicators to meet remuneration targets and externally communicated targets. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included UK Companies Act, employment law, health and safety, pensions legislation and tax legislation.
Audit response to risks identified
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 concerning actual and potential litigation and claims;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
reading minutes of meetings of those charged with governance and reviewing correspondence with HMRC; and
in addressing the identified risks of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates 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.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
WEC GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF WEC GROUP LIMITED
- 9 -
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 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.
Ceri Dixon BSc (Hons) FCA (Senior Statutory Auditor)
For and on behalf of PM+M Solutions for Business LLP
9 August 2024
Chartered Accountants
Statutory Auditor
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
WEC GROUP LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
Notes
£
£
Turnover
3
42,969,036
43,101,872
Cost of sales
(28,487,531)
(28,908,998)
Gross profit
14,481,505
14,192,874
Distribution costs
(2,421,824)
(2,322,015)
Administrative expenses
(6,742,353)
(6,469,844)
Other operating income
30,491
14,025
Operating profit
4
5,347,819
5,415,040
Interest received and similar income
7
1,411,228
669,129
Interest paid and similar expenses
9
(134,858)
(154,429)
Profit before taxation
6,624,189
5,929,740
Tax on profit
10
(1,606,176)
(1,095,311)
Profit for the financial year
5,018,013
4,834,429
There are no recognised gains and losses other than those passing through the Statement of Comprehensive Income.
WEC GROUP LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
12
4,478,781
4,216,496
Current assets
Stocks
13
2,738,928
2,189,078
Debtors
14
20,731,798
27,360,814
Cash at bank and in hand
13,856,127
7,131,945
37,326,853
36,681,837
Creditors: amounts falling due within one year
15
(13,342,143)
(13,805,444)
Net current assets
23,984,710
22,876,393
Total assets less current liabilities
28,463,491
27,092,889
Creditors: amounts falling due after more than one year
16
(2,163,130)
(1,981,924)
Provisions for liabilities
Deferred tax liability
18
228,525
57,142
(228,525)
(57,142)
Net assets
26,071,836
25,053,823
Capital and reserves
Called up share capital
20
8,332
8,332
Share premium account
148,928
148,928
Other reserves
2,500
2,500
Profit and loss reserves
25,912,076
24,894,063
Total equity
26,071,836
25,053,823
The financial statements were approved by the board of directors and authorised for issue on 6 August 2024 and are signed on its behalf by:
J S Hartley
Director
Company registration number 02141828 (England and Wales)
WEC GROUP LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
Share capital
Share premium account
Other reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 January 2022
8,332
148,928
2,500
23,059,634
23,219,394
Year ended 31 December 2022:
Profit and total comprehensive income
-
-
-
4,834,429
4,834,429
Dividends
11
-
-
-
(3,000,000)
(3,000,000)
Balance at 31 December 2022
8,332
148,928
2,500
24,894,063
25,053,823
Year ended 31 December 2023:
Profit and total comprehensive income
-
-
-
5,018,013
5,018,013
Dividends
11
-
-
-
(4,000,000)
(4,000,000)
Balance at 31 December 2023
8,332
148,928
2,500
25,912,076
26,071,836
WEC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
1
Accounting policies
Company information
WEC Group Limited is a private company limited by shares incorporated in England and Wales. The registered office is Britannia House, Junction Street, Darwen, Lancashire, BB3 2RB.
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:
The financial statements of the company are consolidated in the financial statements of WEC Group Holdings Limited. These consolidated financial statements are available from its registered office, Britannia House, Junction Street, Darwen, Lancashire, BB3 2RB.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of 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.
Revenue from long term contract works is recognised by reference to stage of completion when this, cost incurred and costs to complete can be estimated reliably. Stage of completion is assessed mainly in relation to materials consumed and labour applied to the contract as a proportion of total estimated costs.
WEC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold improvements
over the term of the lease
Plant and machinery
10%-20% straight line
Fixtures, fittings & office equipment
20% 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.
1.5
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).
1.6
Stocks
Stocks are stated at the lower of either cost or 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.
1.7
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, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are measured at transaction price.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies are recognised at transaction price.
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.
WEC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.9
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.
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.
1.10
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.11
Hire purchase and operating leases
A hire purchase arises whenever the terms of the contract transfer substantially all the risks and rewards of ownership to the company.
Assets held under hire purchase are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum hire purchase payments. The related liability is included in the balance sheet as a hire purchase obligation. Payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, 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.
1.12
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
1.13
Research expenditure is written off against profits in the year in which it is incurred.
WEC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods. The main areas of judgement are in relation to revenue recognition, stock and debtor provisions, and the useful economic lives and residual values of the company's fixed assets.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
42,634,698
42,569,352
Rest of Europe
145,870
345,451
Rest of World
188,468
187,069
42,969,036
43,101,872
All turnover arose from the principal activity of the company.
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Government grants
(14,025)
Depreciation of owned tangible fixed assets
438,895
535,592
Depreciation of tangible fixed assets held under hire purchase
1,057,691
965,225
Profit on disposal of tangible fixed assets
(95,533)
(163,654)
Operating lease charges
587,698
185,133
5
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
15,500
15,000
For other services
Taxation compliance services
1,800
1,750
WEC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Production
208
197
Selling and distribution
21
21
Administration
93
89
Total
322
307
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
14,512,587
14,112,325
Social security costs
1,507,979
1,463,574
Pension costs
294,111
244,270
16,314,677
15,820,169
7
Interest received and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
20,074
Interest received from group companies
1,391,154
669,129
Total income
1,411,228
669,129
8
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
1,049,646
1,061,718
Company pension contributions to defined contribution schemes
12,738
8,000
1,062,384
1,069,718
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 1).
WEC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
8
Directors' remuneration
(Continued)
- 18 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
709,172
722,663
9
Interest paid and similar expenses
2023
2022
£
£
Interest on hire purchase
134,858
154,429
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
1,428,999
1,101,516
Adjustments in respect of prior periods
5,794
(18,195)
Total current tax
1,434,793
1,083,321
Deferred tax
Origination and reversal of timing differences
161,241
8,988
Changes in tax rates
10,142
2,838
Adjustment in respect of prior periods
164
Total deferred tax
171,383
11,990
Total tax charge
1,606,176
1,095,311
From the 1 April 2023 the effective tax rate is 25%. During the period the effective tax rate has changed to 23.5%.
WEC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
10
Taxation
(Continued)
- 19 -
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
6,624,189
5,929,740
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
1,558,009
1,126,651
Tax effect of expenses that are not deductible in determining taxable profit
14,097
9,609
Adjustments in respect of prior years
5,794
(18,195)
Permanent capital allowances in excess of depreciation
6,101
Depreciation on assets not qualifying for tax allowances
(25,756)
Research and development tax credit
(7,172)
Deferred tax adjustments in respect of prior years
164
Remeasure deferred tax for future changes in tax rate
10,142
2,838
Group asset transfer adjustment
19,205
Taxation charge for the year
1,606,176
1,095,311
11
Dividends
2023
2022
£
£
Interim paid
4,000,000
3,000,000
WEC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
12
Tangible fixed assets
Leasehold improvements
Assets under construction
Plant and machinery
Fixtures, fittings & office equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 January 2023
114,305
97,260
14,064,405
949,823
1,020,785
16,246,578
Additions
110,450
996,671
66,561
263,760
1,437,442
Disposals
(695,993)
(37,573)
(733,566)
Intercompany transfer
312,858
10,040
322,898
Transfer
(97,260)
97,260
At 31 December 2023
114,305
110,450
14,775,201
1,026,424
1,246,972
17,273,352
Depreciation and impairment
At 1 January 2023
38,766
10,372,996
788,538
829,782
12,030,082
Depreciation charged in the year
11,436
1,334,108
67,425
83,617
1,496,586
Eliminated in respect of disposals
(694,524)
(37,573)
(732,097)
At 31 December 2023
50,202
11,012,580
855,963
875,826
12,794,571
Carrying amount
At 31 December 2023
64,103
110,450
3,762,621
170,461
371,146
4,478,781
At 31 December 2022
75,539
97,260
3,691,409
161,285
191,003
4,216,496
The net carrying value of tangible fixed assets includes the following in respect of assets held under hire purchase.
2023
2022
£
£
Plant and machinery
2,858,390
2,700,781
Motor vehicles
248,304
119,747
3,106,694
2,820,528
13
Stocks
2023
2022
£
£
Raw materials and consumables
459,174
379,593
Work in progress
2,089,347
1,625,223
Finished goods and goods for resale
190,407
184,262
2,738,928
2,189,078
WEC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
8,258,588
7,938,033
Gross amounts owed by contract customers
168,778
Corporation tax recoverable
789,389
112,535
Amounts owed by group undertakings
11,333,681
18,670,872
Other debtors
97,913
42,870
Prepayments and accrued income
252,227
427,726
20,731,798
27,360,814
The amounts owed by group undertakings are not subject to any formal agreement.
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under hire purchase
17
897,996
892,142
Trade creditors
5,163,057
4,511,615
Amounts due to group undertakings
1,085,852
2,719,767
Other taxation and social security
919,016
1,051,538
Deferred income
437,150
Other creditors
220,995
199,617
Accruals and deferred income
4,618,077
4,430,765
13,342,143
13,805,444
The amounts owed to group undertakings are not subject to any formal agreement.
Obligations under hire purchase contracts are secured on the assets to which they relate.
16
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under hire purchase
17
2,163,130
1,981,924
Obligations under hire purchase contracts are secured on the assets to which they relate.
WEC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
17
Hire purchase obligations
2023
2022
Future minimum payments due under hire purchase contracts:
£
£
Within one year
1,020,436
989,686
In two to five years
2,129,111
2,067,771
In over five years
242,812
3,392,359
3,057,457
Less: future finance charges
(331,233)
(183,391)
3,061,126
2,874,066
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Fixed asset timing differences
259,221
85,203
Short term timing differences
(30,696)
(28,061)
228,525
57,142
2023
Movements in the year:
£
Liability at 1 January 2023
57,142
Charge to profit or loss
171,383
Liability at 31 December 2023
228,525
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
294,111
244,270
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 balance sheet date, these contributions outstanding totalled £87,984 (2022: £81,295).
WEC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
8,332
8,332
8,332
8,332
21
Financial commitments, guarantees and contingent liabilities
On 16 June 2023, a fixed and floating charge over all assets of the company was created with Comerica Bank N.A.
22
Operating lease commitments
Lessee
At the reporting 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
502,644
475,168
Between two and five years
459,083
669,227
961,727
1,144,395
23
Capital commitments
Amounts contracted for but not provided in the financial statements:
2023
2022
£
£
Acquisition of tangible fixed assets
1,104,500
875,340
WEC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
24
Related party transactions
Transactions with related parties
As permitted by FRS 102 the financial statements do not disclose transactions with the parent company and fellow subsidiaries where 100% of the voting rights are controlled within the group.
WEC Group Limited has sold goods and services to companies in which a director has an interest amounting to £358,151 (2022 - £73,794). A total of £91,987 (2022 - £12,856) was due from these companies at the year end.
WEC Group Limited has purchased services from companies in which a director has an interest amounting to £634,017 (2022 - £279,770). A total of £123,847(2022 - £55,424) was due to these companies at the year end.
WEC Group Limited made purchases from companies that are connected by common control of £1,583,753 (2022 - £1,921,641). A total of £183,867 (2022 - £289,914) was due to these companies at the year end.
WEC Group Limited made sales to companies that are connected by common control of £9,698 (2022 - £55,634). A total of £3,319 (2022 - £7,782) was due to these companies at the year end.
25
Ultimate controlling party
WEC Group Holdings Limited, a company registered in the UK, is the parent company and is the smallest group which the company is consolidated into. The immediate parent company to WEC Group Holdings Ltd is Britannia Metals Holdings Ltd, a company registered in the USA. Britannia Metals Parent Company, also a company registered in the USA, is the controlling party and ultimate parent company and is the largest group which the company is consolidated into.
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