Company registration number 1746462 (England and Wales)
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
COMPANY INFORMATION
Directors
P J Webb MBE DL
M H Webb
C L Flower
L A Gamble
J P Webb
Secretary
M H Webb
Company number
1746462
Registered office
Riverside House
Easting Close
Worthing
West Sussex
BN14 8HQ
Auditor
Martlet Audit Limited
Martlet House
E1, Yeoman Gate
Yeoman Way
Worthing
West Sussex
BN13 3QZ
Bankers
National Westminster
5 Broadwater Street East
Broadwater
Worthing
West Sussex
BN14 9AB
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Statement of income and retained earnings
9
Statement of financial position
10
Statement of cash flows
11
Notes to the financial statements
12 - 24
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Review of the Business
The company continues to be the United Kingdom’s (UK) number one supplier and manufacturer of electronic temperature measuring instruments. Electronic Temperature Instruments Ltd. (ETI) was founded in 1983 to fulfil the opportunity in the market to manufacture digital thermometers and temperature measuring probes to assist companies to comply with the Food Safety and HACCP regulations in the hospitality and food processing industries. The business also supplies numerous industrial businesses with temperature measuring test equipment to comply predominantly with the HVAC building service regulations.
Results and Performance
The company has used two key performance indicators to assess the performance of the company, being gross profit and gross profit margin percentage. The company has experienced an increase in gross profit for 2023: £8,351,457 (2022: £6,166,964), and the gross profit margin has increased to 36.1% (2022: 32.7%). The increase in gross margin percentage is largely the result of improved component costs after a period in which both supply and prices were volatile. The company enjoyed a significant increase in turnover in 2023 compared to 2022.
The company continues to bring a range of new and improved products to the market, with further new product launches expected in 2024.
ETI continues to support local charities. The charities are chosen by the Directors which they feel that will have the biggest impact in the local area and for those families who work at, or are associated with ETI. The charities ETI supported during 2023 were as follows:
Turning Tides (Worthing Homeless Project)
St Barnabas Hospices
Worthing Soup Kitchen
Mind Charity (Mental Health and Wellness)
Guildcare (Children and Adults with Learning Disabilities)
Care for Veterans
Love your Hospital
Macmillan Cancer Support
Future R&D Developments
The ongoing investment in R&D is seen as key for ETI’s continued success. Developing new innovative ways to measure temperature efficiently, whilst seeking to save end user's time. The driver for this is our customer base who are continuously looking for financial efficiencies in the hospitality and food processing industries, and who are increasingly using computers and other handheld devices to record temperatures. Using new technologies such as Wi-Fi and Bluetooth, linked to cloud storage for the data collected is a significant improvement for the industry, rather than pen and paper logbooks for recording temperature readings, this technology also improves traceability and provides compliance.
Projects which include technologies such as Wi-Fi and Bluetooth have been key to success for the company and the fast-moving developments of these technologies require continuous redevelopment and engineering to work with all up to date IOT / Smart Devices.
Other developments include redesigning existing thermometer products to make them quicker and easier for production to assemble, using customer feedback to re-engineer products to be more fit for purpose.
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Risk Management
The board of directors have considered the risks and uncertainties of the company as part of the business review. The company has identified four key risk areas. The continued key risk is sterling being devalued against the US dollar which would increase the costs of imported components. We hope to counter this by growing the demand in exports, whilst sourcing local suppliers where economically feasible. An annual review of the company's selling prices, and discounts given to resellers and distributors across the product range is seen as paramount.
The second risk would be our instruments becoming obsolete due to technological development; this has been addressed by constant investment in pioneering research and the development of new products. We have launched several successful new products in 2023, including the Thermapen One Blue and the Thermapen IR Blue, which are Bluetooth enabled handheld thermometers.
Another risk is ensuring that there remains a strong demand for the products the company manufactures; the company continues to invest heavily in marketing and developing the brand worldwide.
Lastly, the company's vulnerability in having one particularly large customer. Whilst a strong relationship exists with this customer, the company continually considers its exposure by broadening its customer base as widely as possible.
The company also regularly reviews factors which are not in ETI's control, which include the impact of current economic conditions, both locally and globally.
At the time of signing the accounts the board of directors believe that the company has considered and addressed where appropriate all foreseeable uncertainties and risks.
P J Webb MBE DL
Director
13 August 2024
ELECTRONIC TEMPERATURE INSTRUMENTS 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 activity of the company continued to be that of production and sales of electronic temperature equipment.
Results and dividends
The results for the year are set out on the Income Statement.
Particulars of recommended dividends are detailed in note 11 to the financial statements.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
P J Webb MBE DL
M H Webb
C L Flower
L A Gamble
J P Webb
Research and development
The company continues to invest in research and development to ensure that it can continue to fulfil the object of the company of being a leading supplier and manufacturer both in the United Kingdom and the United States of America of electronic temperature measuring instruments.
Future developments
The directors believe that the diverse range of products and the continued investment in the development of new products will enable the company to maintain its position as the number one supplier and manufacturer of electronic temperature measuring and recording instruments in the UK.
Auditor
In accordance with the company's articles, a resolution proposing that Martlet Audit Limited be reappointed as auditor of the company will be put at a Board Meeting.
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
P J Webb MBE DL
Director
13 August 2024
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
- 5 -
Opinion
We have audited the financial statements of Electronic Temperature Instruments Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of income and retained earnings, the statement of financial position, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED (CONTINUED)
- 6 -
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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Capability of the audit in detecting irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:
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;
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED (CONTINUED)
- 7 -
We obtained an understanding of the legal and regulatory framework that the company operates in, focusing on those laws and regulations that had a material effect on the financial statements or that had a fundamental effect on the operations of the company from our professional and sector experience.
In addressing the risk of fraud through management override of controls, we tested the appropriateness of journal entries and other adjustments, assessed whether the judgements made in making accounting estimates are indicative of a potential bias and tested significant transactions that are unusual or those outside the normal course of business.
As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to him in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED (CONTINUED)
- 8 -
John Pudduck FCCA
Senior Statutory Auditor
For and on behalf of Martlet Audit Limited
13 August 2024
Chartered Accountants
Statutory Auditor
Martlet House
E1, Yeoman Gate
Yeoman Way
Worthing
West Sussex
BN13 3QZ
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
23,104,312
18,856,316
Cost of sales
(14,752,856)
(12,689,352)
Gross profit
8,351,456
6,166,964
Distribution costs
(421,820)
(353,763)
Administrative expenses
(4,753,255)
(4,030,116)
Operating profit
4
3,176,381
1,783,085
Interest receivable and similar income
8
62,649
12,707
Interest payable and similar expenses
9
(10,281)
(2,683)
Profit before taxation
3,228,749
1,793,109
Tax on profit
11
(416,435)
(175,723)
Profit for the financial year
2,812,314
1,617,386
Retained earnings brought forward
12,365,143
11,947,757
Dividends
10
(1,200,000)
(1,200,000)
Retained earnings carried forward
13,977,457
12,365,143
The income statement has been prepared on the basis that all operations are continuing operations.
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
12
3,743,268
3,639,879
Current assets
Stocks
13
4,428,261
5,387,717
Debtors
14
3,300,188
2,749,119
Cash at bank and in hand
4,944,696
2,483,172
12,673,145
10,620,008
Creditors: amounts falling due within one year
15
(2,193,956)
(1,632,744)
Net current assets
10,479,189
8,987,264
Total assets less current liabilities
14,222,457
12,627,143
Provisions for liabilities
Deferred tax liability
16
235,000
252,000
(235,000)
(252,000)
Net assets
13,987,457
12,375,143
Capital and reserves
Called up share capital
18
10,000
10,000
Profit and loss reserves
13,977,457
12,365,143
Total equity
13,987,457
12,375,143
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 13 August 2024 and are signed on its behalf by:
P J Webb MBE DL
Director
Company registration number 1746462 (England and Wales)
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
23
3,829,441
2,062,294
Interest paid
(10,281)
(2,683)
Income taxes paid
(265,022)
(320,535)
Net cash inflow from operating activities
3,554,138
1,739,076
Investing activities
Purchase of tangible fixed assets
(479,321)
(452,228)
Proceeds from disposal of tangible fixed assets
35,265
60,642
Loans made to director
(500,000)
Repayment of loan to director
488,793
90,654
Interest received
62,649
12,707
Net cash generated from/(used in) investing activities
107,386
(788,225)
Financing activities
Dividends paid
(1,200,000)
(1,200,000)
Net cash used in financing activities
(1,200,000)
(1,200,000)
Net increase/(decrease) in cash and cash equivalents
2,461,524
(249,149)
Cash and cash equivalents at beginning of year
2,483,172
2,732,321
Cash and cash equivalents at end of year
4,944,696
2,483,172
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information
The company is a private company limited by shares, registered in England and Wales. The address of the registered office is Riverside House, Easting Close, Worthing, West Sussex, BN14 8HQ. The principal activity of the company during the year was that of the manufacture, sale and calibration of electronic temperature measuring instruments and recording instruments and associated probes.
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 £.
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 measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of discounts and Value Added Tax.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on despatch of the goods); the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably.
1.4
Tangible fixed assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
An increase in the carrying amount of an asset as a result of a revaluation, is recognised in other comprehensive income and accumulated in equity, except to the extent it reverses a revaluation decrease of the same asset previously recognised in profit or loss. A decrease in the carrying amount of an asset as a result of revaluation, is recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity in respect of that asset. Where a revaluation decrease exceeds the accumulated revaluation gains accumulated in equity in respect of that asset, the excess shall be recognised in profit or loss.
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:
Freehold land and buildings
2% straight line
Plant and equipment
25% straight line
Fixtures and fittings
Between 10% and 20% straight line
IT equipment
33% straight line or over finance lease term
Motor vehicles
33% reducing balance
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.5
Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date.
For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
1.6
Stocks
Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the stock to its present location and condition.
1.7
Financial instruments
A financial asset or a financial liability is recognised only when the company becomes a party to the contractual provisions of the instrument.
Basic financial instruments are initially recognised at the transaction price, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
Other financial instruments are subsequently measured at fair value, with any changes recognised in profit or loss, with the exception of hedging instruments in a designated hedging relationship.
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.
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.
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
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.
1.8
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.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.9
Taxation
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively.the sum of the tax currently payable and deferred tax.
Current tax
Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date.
Deferred tax
Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
1.10
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.
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.11
Retirement benefits
Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund.
When contributions are not expected to be settled wholly within 12 months of the end of the reporting date in which the employees render the related service, the liability is measured on a discounted present value basis. The unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.12
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.
1.13
Foreign exchange
Foreign currency transactions are initially recorded in the functional currency, by applying the spot exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date, with any gains or losses being taken to the profit and loss account.
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Determine whether there are indicators of impairment of the company's tangible assets. Factors taken into consideration in taking such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash generating unit, the viability and expected future financial performance of that unit.
Inventories are valued at the lower cost and net realisable value. Net realisable value includes, where necessary, provisions for slow moving and obsolete stocks. Calculation of these provisions requires judgements to be made, which include forecast consumer demand, the promotional, competitive and economic environment and inventory loss trends.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Sale of goods
23,104,312
18,856,316
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Turnover and other revenue
(Continued)
- 16 -
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
7,297,800
6,629,142
Overseas sales
15,806,512
12,227,174
23,104,312
18,856,316
2023
2022
£
£
Other revenue
Interest income
62,649
12,707
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
88,136
(402,605)
Depreciation of owned tangible fixed assets
375,932
471,846
Profit on disposal of tangible fixed assets
(35,265)
(30,151)
Operating lease charges
42,419
42,378
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
9,900
9,500
For other services
Audit-related assurance services
14,210
13,650
ELECTRONIC TEMPERATURE INSTRUMENTS 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
116
114
Distribution
15
15
Sales and marketing
16
16
Administration
31
31
Management
14
14
Total
192
190
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
4,961,916
4,579,587
Social security costs
429,466
414,778
Pension costs
206,895
154,917
5,598,277
5,149,282
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
127,658
129,804
Company pension contributions to defined contribution schemes
81,700
28,000
209,358
157,804
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2022 - 3).
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
60,105
8,608
Other interest income
2,544
4,099
Total income
62,649
12,707
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
8
Interest receivable and similar income
(Continued)
- 18 -
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
60,105
8,608
9
Interest payable and similar expenses
2023
2022
£
£
Other finance costs:
Interest on overdue taxation
10,281
2,683
10
Dividends
2023
2022
2023
2022
Per share
Per share
Total
Total
£1
£1
£
£
Ordinary shares
Interim paid
20.00
120.00
200,000
1,200,000
Ordinary A shares
Interim paid
100.00
500,000
Ordinary B shares
Interim paid
100.00
500,000
Total dividends
Interim paid
1,200,000
1,200,000
The dividends reported include the final dividends for the financial year.
11
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
433,284
132,475
Adjustments in respect of prior periods
151
6,248
Total current tax
433,435
138,723
Deferred tax
Origination and reversal of timing differences
(17,000)
37,000
Total tax charge
416,435
175,723
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
11
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
3,228,749
1,793,109
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
759,420
340,691
Tax effect of expenses that are not deductible in determining taxable profit
4,169
2,759
Adjustments in respect of prior years
151
6,248
Permanent capital allowances in excess of depreciation
(26,711)
61,183
Depreciation on assets not qualifying for tax allowances
12,245
9,827
Research and development tax credit
(169,833)
(185,376)
Patent box relief
(163,006)
(59,609)
Taxation charge for the year
416,435
175,723
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
12
Tangible fixed assets
Freehold land and buildings
Assets under construction
Plant and equipment
Fixtures and fittings
IT equipment
Motor vehicles
Total
£
£
£
£
£
£
£
Cost
At 1 January 2023
3,401,457
33,749
1,003,408
272,213
418,822
409,949
5,539,598
Additions
123,616
169,552
64,704
19,384
102,065
479,321
Disposals
(80,088)
(80,088)
At 31 December 2023
3,401,457
157,365
1,172,960
336,917
438,206
431,926
5,938,831
Depreciation and impairment
At 1 January 2023
531,931
619,257
178,179
396,214
174,138
1,899,719
Depreciation charged in the year
62,895
168,910
39,516
13,272
91,339
375,932
Eliminated in respect of disposals
(80,088)
(80,088)
At 31 December 2023
594,826
788,167
217,695
409,486
185,389
2,195,563
Carrying amount
At 31 December 2023
2,806,631
157,365
384,793
119,222
28,720
246,537
3,743,268
At 31 December 2022
2,869,526
33,749
384,151
94,034
22,608
235,811
3,639,879
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
13
Stocks
2023
2022
£
£
Raw materials and consumables
3,391,819
4,549,055
Inventory in transit
17,489
2,832
Finished goods and goods for resale
1,018,953
835,830
4,428,261
5,387,717
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
2,469,304
1,731,313
Other debtors
401,687
640,633
Prepayments and accrued income
429,197
377,173
3,300,188
2,749,119
15
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
1,411,548
1,215,878
Corporation tax
240,888
72,475
Other taxation and social security
91,269
71,437
Other creditors
202,760
117,482
Accruals and deferred income
247,491
155,472
2,193,956
1,632,744
16
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
235,000
252,000
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
16
Deferred taxation
(Continued)
- 22 -
2023
Movements in the year:
£
Liability at 1 January 2023
252,000
Credit to profit or loss
(17,000)
Liability at 31 December 2023
235,000
Any net reversal of the deferred tax liability is not expected to be significant in the current year.
It cannot be predicted with any accuracy as to when the timing differences existing at the year-end will expire, except that it will be in the foreseeable future. The prediction is that new timing differences will arise in the foreseeable future, due to continuing investment in plant and equipment, replacing the reversing timing differences, thereby leading to a relatively constant overall deferred tax balance.
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
206,895
154,917
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.
18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
-
10,000
-
10,000
Ordinary A shares of £1 each
5,000
-
5,000
-
Ordinary B shares of £1 each
5,000
-
5,000
-
10,000
10,000
10,000
10,000
On 6 March 2023 the company passed a special resolution to reclassify the share capital into 'A' and 'B' ordinary shares. The company's Articles of Association were revised to allow for a share capital that is comprised of 'A' Ordinary Shares of £1 each and 'B' Ordinary Shares of £1 each.
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
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:
2023
2022
£
£
Within one year
36,750
36,750
Between two and five years
18,375
55,125
55,125
91,875
20
Events after the reporting date
In January 2024, the company completed on the purchase of a new property, being an industrial unit geographically close to its current premises. The acquisition price was £1.2m and was paid in full in January 2024.
21
Directors' transactions
At the balance sheet date, the company owed a director £2,450 (2022 - £2,450). The loan was provided with no formal repayments terms, on an interest-free basis and therefore repayable on demand.
During the year the a loan made to another director was fully repaid in April 2023. The company charged interest on the loan at what it considered at the time to be a commercial rate of 2%.
Dividends totalling £1,200,000 (2022 - £1,200,000) were paid in the year in respect of shares held by the company's directors.
22
Ultimate controlling party
The company is under the control of P J Webb, MBE and M H Webb, who own the issued share capital.
ELECTRONIC TEMPERATURE INSTRUMENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
23
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
2,812,314
1,617,386
Adjustments for:
Taxation charged
416,435
175,723
Finance costs
10,281
2,683
Investment income
(62,649)
(12,707)
Gain on disposal of tangible fixed assets
(35,265)
(30,151)
Depreciation and impairment of tangible fixed assets
375,932
471,846
Movements in working capital:
Decrease/(increase) in stocks
959,456
(453,992)
(Increase)/decrease in debtors
(1,039,862)
557,439
Increase/(decrease) in creditors
392,799
(265,933)
Cash generated from operations
3,829,441
2,062,294
24
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
2,483,172
2,461,524
4,944,696
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