Company registration number 13811038 (England and Wales)
DISTINCTION MANUFACTURING GROUP LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
DISTINCTION MANUFACTURING GROUP LIMITED
COMPANY INFORMATION
Directors
A J Fowlds
O D Jones
S Massey
C N Roach
Company number
13811038
Registered office
36 Wentworth Industrial Estate
Wentworth Way
Tankersley
Barnsley
S75 3DH
Auditor
BHP LLP
2 Rutland Park
Sheffield
S10 2PD
DISTINCTION MANUFACTURING GROUP LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Group statement of comprehensive income
8
Group balance sheet
9
Company balance sheet
10
Group statement of changes in equity
11
Company statement of changes in equity
12
Group statement of cash flows
13
Notes to the financial statements
14 - 33
DISTINCTION MANUFACTURING GROUP 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 group continually strives to be a pioneer in the external door market. It sources and supplies high quality innovative products to its customers based on their bespoke needs, assisting them through the product life cycle by delivering technical and marketing expertise and support.

The group provides an environment which allows engaged employees to share the group values so they can flourish and develop to their full potential. Objectives are constantly reviewed to ensure a thriving and sustainable business for the future.

The workforce is the group’s most valuable asset and are supported with employee training and development at all levels. In 2023 the Investors in People accreditation was retained, and employee numbers were increased.

Business Environment

Throughout 2023 the macro-economic environment remained challenging. The impact of the war in Ukraine endured with continued high inflation rates, consequently driving interest rates to their highest level since August 2008.

Despite the drop in demand in the fenestration industry, long standing relationships with our customers have enabled us to sustain profitability.

The outbreak of war in Israel and the Red Sea crisis began to impact Distinction at the end of 2023, with supply chain delays and increased shipping costs. The business expects this to continue into 2024. To mitigate this and enable us to support customers, the business will once again look to maintain a buffer level of stock.

Business Performance

Another year of volatility with spiralling costs and uncertainty in the supply chain has yet again limited many businesses ability to trade freely. Distinction, like most businesses has been faced with costs rising at an alarming rate, leaving the business in the unfavourable position of passing on cost or accepting significant profitability erosion. However, an increased proportion of manufacturing sales has supported the overall profitability.

Gross Profit increased YOY to 33.2% in 2023 vs 28.6% in 2022.

Outlook

The group continues to adapt to an ever-changing business environment, harnessing its strengths and capabilities towards achieving targeted development of both new and existing product lines. The experienced, talented, and engaged workforce is in a strong position to steer the business through the current uncertainty.

The group has considerable financial resources together with long term contracts with key suppliers. Consequently, the directors believe it is well placed to manage its business risk successfully despite the ongoing uncertainty.

The directors have considered the impact of inflationary pressures on the group’s trade, workforce, and supply chain as well as the wider economy.

Whilst it is not considered practical to accurately assess the duration and extent of the disruption, the directors are confident that they have in place plans to limit any impact on business performance, as reflected in 2023 performance in an uncertain business environment.

The directors have undertaken a comprehensive review of the 2024 forecasts including cashflows and are confident, even with conservative estimates, that the company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

DISTINCTION MANUFACTURING GROUP LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
S172 statement

Engaging with stakeholders

The success of our business is dependent on the support of all our stakeholders. Building positive relationships with stakeholders that share our values is important to us and working together towards shared goals assists us in delivering long-term sustainable success.

Shareholders

We maintain an open dialogue with our shareholders through periodic board meetings and quarterly shareholder meetings. Our shareholders are integral to the success of the business and play a key role in our decision-making process, financial performance, and strategic outlook.

Employees

Distinction maintains a continual open dialogue with all employees on both performance and wider outlook. Managers are provided periodic KPI packs with performance analysis of all areas of the business allowing for open dialogue on the company H&S audits, business financial performance, supplier and customer relationships and operational performance.

Quarterly, a full employee brief is run that provides a top line overview to every employee of the key results reviewed in the periodic KPI’s. Our drive is to maintain an open culture where all employees have a direct dialogue with senior management as we strive to grow the business in our pursuit of perfection.

Customers

Our pursuit of perfection is to delight our customers. We strive to deliver the best product and service to the market. Our customer base is key to the success of our business, as such we invest a large amount of time working with customers to understand their needs and emerging market changes. From order to after-sales care, we provide our customers a dedicated 1-2-1 contact in customer service, a dedicated external sales contact, access to marketing and brochure support and technical representatives to assist with their staff training on our product.

Suppliers

We continue to build strong working relationships with our suppliers to develop long lasting partnerships. Supplier relationships run throughout the business assisted by our procurement team. From the board down our main supplier KPI is to continue to develop and support long-term supplier relationships. Supported through our periodic reviews with key accounts and more informally with open dialogue on a day-to-day basis.

Communities

We are proud to be part of the Barnsley and wider South Yorkshire community. We engage with the local communities on several fronts and aim to give something back to the local communities we work in. We partner with a local charity each year to help raise awareness and funds and organise several fund-raising events throughout the year which are keenly supported by employees.

We maintain a strong working relationship with Barnsley College with our ongoing apprenticeships and Sheffield Hallam University with our undergraduate placement scheme.

On behalf of the board

A J Fowlds
Director
19 August 2024
DISTINCTION MANUFACTURING 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 Group's principal activity during the year was that of the distribution of composite doors. The principal activity of the company during the period was that of a holding company.

Results and dividends

The results for the year are set out on page 8.

Ordinary dividends were paid amounting to £3,000,000. The directors do not recommend payment of a further dividend.

Directors

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

A J Fowlds
O D Jones
S Massey
C N Roach
Energy and carbon report
2023
2022
Energy consumption
kWh
kWh
Aggregate of energy consumption in the year
- Gas combustion
277,628
234,462
- Electricity purchased
1,729,995
2,057,596
- Fuel consumed for transport
199,204
203,882
2,206,827
2,495,940
2023
2022
Emissions of CO2 equivalent
metric tonnes
metric tonnes
Scope 1 - direct emissions
- Gas combustion
59.40
47.80
- Fuel consumed for owned transport
39.10
36.50
98.50
84.30
Scope 2 - indirect emissions
- Electricity purchased
358.20
396.70
Scope 3 - other indirect emissions
- Fuel consumed for transport not owned by the group
8.50
12.70
Total gross emissions
465.20
493.70
Intensity ratio
Tonnes of C02e per employee
2.35
2.60
DISTINCTION MANUFACTURING GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Quantification and reporting methodology

The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting

Intensity measurement

The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per employee, the recommended ratio for the sector.

Measures taken to improve energy efficiency

In 2023 Distinction Doors saw an overall decrease in CO2 per employee due to an effort to identify areas of energy wastage and the implementation of measures to improve consumption such as the installation of motion detection lighting.

Going forward, the company hopes to increasingly move towards the use of electric vehicles to reduce fuel consumption.

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 group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and 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 auditor of the company 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 auditor of the company is aware of that information.

On behalf of the board
A J Fowlds
Director
19 August 2024
DISTINCTION MANUFACTURING GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF DISTINCTION MANUFACTURING GROUP LIMITED
- 5 -
Opinion

We have audited the financial statements of Distinction Manufacturing Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group 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:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

DISTINCTION MANUFACTURING GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF DISTINCTION MANUFACTURING GROUP LIMITED
- 6 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

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 parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.

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.

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

 

 

We assessed the susceptibility of the entity’s financial statements to material misstatement, including obtaining an

understanding of how fraud might occur, by:

DISTINCTION MANUFACTURING GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF DISTINCTION MANUFACTURING GROUP LIMITED
- 7 -

To address the risk of fraud through management bias and override of controls, we

 

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those

leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases

the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Lisa Leighton (Senior Statutory Auditor)
For and on behalf of BHP LLP
19 August 2024
Chartered Accountants
Statutory Auditor
2 Rutland Park
Sheffield
S10 2PD
DISTINCTION MANUFACTURING GROUP LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
Year
Period
ended
ended
31 December
31 December
2023
2022
Notes
£
£
Turnover
3
43,202,179
40,668,769
Cost of sales
(28,837,904)
(29,027,443)
Gross profit
14,364,275
11,641,326
Administrative expenses
(9,002,636)
(7,709,214)
Other operating income
22,301
16,248
Operating profit
4
5,383,940
3,948,360
Interest receivable and similar income
8
15,883
-
0
Interest payable and similar expenses
9
(828,411)
(548,592)
Profit before taxation
4,571,412
3,399,768
Tax on profit
10
(1,168,518)
(668,898)
Profit for the financial year
28
3,402,894
2,730,870
Other comprehensive income
Fair value adjustments reclassified to profit or loss
(798,690)
151,881
Tax relating to other comprehensive income
199,673
(37,910)
Total comprehensive income for the year
2,803,877
2,844,841
Profit for the financial year is all attributable to the owners of the parent company.
Total comprehensive income for the year is all attributable to the owners of the parent company.
DISTINCTION MANUFACTURING GROUP LIMITED
GROUP BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
13
5,141,525
5,777,590
Tangible assets
12
1,696,371
1,855,534
6,837,896
7,633,124
Current assets
Stocks
17
5,824,378
8,253,520
Debtors
18
5,601,206
6,172,404
Cash at bank and in hand
29,967
508,647
11,455,551
14,934,571
Creditors: amounts falling due within one year
19
(10,039,523)
(14,423,077)
Net current assets
1,416,028
511,494
Total assets less current liabilities
8,253,924
8,144,618
Creditors: amounts falling due after more than one year
20
(5,299,000)
(4,931,597)
Provisions for liabilities
Deferred tax liability
23
191,000
312,792
(191,000)
(312,792)
Net assets
2,763,924
2,900,229
Capital and reserves
Called up share capital
27
555
555
Fair value reserve
28
(485,046)
113,971
Profit and loss reserves
28
3,248,415
2,785,703
Total equity
2,763,924
2,900,229
The financial statements were approved by the board of directors and authorised for issue on 19 August 2024 and are signed on its behalf by:
19 August 2024
A J Fowlds
Director
Company registration number 13811038 (England and Wales)
DISTINCTION MANUFACTURING GROUP LIMITED
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Investments
14
6,710,490
6,650,672
Current assets
Debtors
18
37
362,629
Creditors: amounts falling due within one year
19
(1,736,184)
(2,227,814)
Net current liabilities
(1,736,147)
(1,865,185)
Total assets less current liabilities
4,974,343
4,785,487
Creditors: amounts falling due after more than one year
20
(1,749,580)
(2,332,913)
Net assets
3,224,763
2,452,574
Capital and reserves
Called up share capital
27
555
555
Profit and loss reserves
28
3,224,208
2,452,019
Total equity
3,224,763
2,452,574

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the period was £3,712,371 (2022 - £2,397,186 profit)

The financial statements were approved by the board of directors and authorised for issue on 19 August 2024 and are signed on its behalf by:
19 August 2024
A J Fowlds
Director
Company registration number 13811038 (England and Wales)
DISTINCTION MANUFACTURING GROUP LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
Share capital
Fair value reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 21 December 2021
-
0
-
0
-
0
-
Period ended 31 December 2022:
Profit for the period
-
-
2,730,870
2,730,870
Other comprehensive income:
Gains reclassified to profit or loss
-
151,881
-
151,881
Tax relating to other comprehensive income
-
(37,910)
-
0
(37,910)
Total comprehensive income
-
113,971
2,730,870
2,844,841
Issue of share capital
27
555
-
-
555
Credit to equity for equity settled share-based payments
26
-
-
54,833
54,833
Balance at 31 December 2022
555
113,971
2,785,703
2,900,229
Year ended 31 December 2023:
Profit for the year
-
-
3,402,894
3,402,894
Other comprehensive income:
Tax relating to other comprehensive income
-
199,673
-
0
199,673
Amounts attributable to non-controlling interests
-
(798,690)
-
(798,690)
Total comprehensive income
-
(599,017)
3,402,894
2,803,877
Dividends
11
-
-
(3,000,000)
(3,000,000)
Credit to equity for equity settled share-based payments
26
-
-
59,818
59,818
Balance at 31 December 2023
555
(485,046)
3,248,415
2,763,924
DISTINCTION MANUFACTURING GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 21 December 2021
-
0
-
0
-
Period ended 31 December 2022:
Profit and total comprehensive income for the period
-
2,397,186
2,397,186
Issue of share capital
27
555
-
555
Credit to equity for equity settled share-based payments
26
-
54,833
54,833
Balance at 31 December 2022
555
2,452,019
2,452,574
Year ended 31 December 2023:
Profit and total comprehensive income
-
3,712,371
3,712,371
Dividends
11
-
(3,000,000)
(3,000,000)
Credit to equity for equity settled share-based payments
26
-
59,818
59,818
Balance at 31 December 2023
555
3,224,208
3,224,763
DISTINCTION MANUFACTURING GROUP LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
32
6,431,949
1,285,111
Interest paid
(828,411)
(548,592)
Income taxes paid
(1,109,164)
(1,768,274)
Net cash inflow/(outflow) from operating activities
4,494,374
(1,031,755)
Investing activities
Purchase of business
-
(4,960,351)
Purchase of tangible fixed assets
(535,838)
(1,320,949)
Proceeds from disposal of tangible fixed assets
22,646
-
Proceeds from hedging
-
151,881
Interest received
15,883
-
0
Net cash used in investing activities
(497,309)
(6,129,419)
Financing activities
Proceeds from issue of shares
-
135
Repayment of preference shares
(583,333)
-
Proceeds from borrowings
5,000,000
8,980,161
Repayment of borrowings
(5,837,610)
(666,667)
Purchase of derivatives
-
(503,641)
Payment of finance leases obligations
(54,802)
(140,167)
Dividends paid to equity shareholders
(3,000,000)
-
0
Net cash (used in)/generated from financing activities
(4,475,745)
7,669,821
Net (decrease)/increase in cash and cash equivalents
(478,680)
508,647
Cash and cash equivalents at beginning of year
508,647
-
0
Cash and cash equivalents at end of year
29,967
508,647
DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
1
Accounting policies
Company information

Distinction Manufacturing Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 36 Wentworth Industrial Estate, Wentworth Way, Tankersley, Barnsley, S75 3DH.

 

The group consists of Distinction Manufacturing Group Limited and all of its subsidiaries.

1.1
Accounting convention

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

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

The financial statements have been prepared under the historical cost convention modified to include certain items at fair value. The principal accounting policies adopted are set out below.

The 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 for parent company information presented within the consolidated financial statements:

 

1.2
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets acquired, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill.

1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company Distinction Manufacturing Group Limited together with all entities controlled by the parent company (its subsidiaries).

 

All financial statements are made up to 31 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

 

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

1.4
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the group 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.

1.5
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.

1.6
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

1.7
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 land and buildings
20% straight line
Plant and equipment
20% to 33% straight line
Fixtures and fittings
20% to 33% straight line
Computers
33% 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 recognised in the profit and loss account.

1.8
Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

 

In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

1.9
Impairment of fixed assets

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

 

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

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

 

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

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

1.10
Stocks

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.

 

Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.

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.

1.11
Cash and cash equivalents

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

DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.12
Financial instruments

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

 

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

 

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

Basic financial assets

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

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

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

 

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

Other financial liabilities

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

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

1.13
Equity instruments

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

1.14
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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 19 -
Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is 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.

1.15
Employee benefits

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

 

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

 

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

1.16
Retirement benefits

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

1.17
Share-based payments

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Black Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

 

The expense in relation to options over the parent company’s shares granted to employees of a subsidiary is recognised by the company as a capital contribution, and presented as an increase in the company’s investment in that subsidiary.

When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

 

Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.

DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 20 -

The company participates in a share-based payment arrangement granted to its employees and employees of its subsidiaries. The company has elected to recognise and measure its share-based payment expense on the basis of a reasonable allocation of the expense for the group recognised in its consolidated accounts. The directors consider the number of unvested options granted to the company’s employees compared to the total unvested options granted under the group plan to be a reasonable basis for allocating the expense.

 

The expense in relation to options over the company’s shares granted to employees of a subsidiary is recognised by the company as a capital contribution, and presented as an increase in the company’s investment in that subsidiary.

1.18
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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

1.19
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.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

1.20
Foreign exchange

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

2
Judgements and key sources of estimation uncertainty

In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 21 -
Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Goodwill and intangible fixed assets

The company establishes a reliable estimate of the useful life of goodwill and intangible fixed assets arising on business combinations. This estimate is based on a variety of factors such as the expected use of the acquired business, the expected useful life of the cash generating units to which the goodwill is attributed, any legal, regulatory or contractual provisions that can limit useful lives, and assumptions that market participants would consider in respect of similar businesses.

3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Sale of goods
43,202,179
40,668,769
2023
2022
£
£
Turnover analysed by geographical market
UK
41,880,864
39,099,127
Rest of Europe
1,321,315
1,569,642
43,202,179
40,668,769
2023
2022
£
£
Other revenue
Interest income
15,883
-
Grants received
22,301
16,248
4
Operating profit
2023
2022
£
£
Operating profit for the year is stated after charging/(crediting):
Exchange gains
(130,075)
(1,740,436)
Government grants
(22,301)
(16,248)
Depreciation of owned tangible fixed assets
550,535
264,280
Depreciation of tangible fixed assets held under finance leases
144,466
176,776
Profit on disposal of tangible fixed assets
(22,646)
-
Amortisation of intangible assets
636,065
583,060
Share-based payments
59,818
54,833
Operating lease charges
559,568
606,753
DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
5
Employees

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

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Administration and Sales
75
71
-
-
Production
122
119
-
-
Total
197
190
-
0
-
0

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
7,114,711
6,114,450
-
0
-
0
Social security costs
648,112
542,554
-
-
Pension costs
274,387
204,062
-
0
-
0
8,037,210
6,861,066
-
0
-
0
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
768,820
613,107
Company pension contributions to defined contribution schemes
47,067
17,413
815,887
630,520
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
273,301
238,888
DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
7
Auditor's remuneration
2023
2022
Fees payable to the company's auditor:
£
£
For audit services
Audit of the financial statements of the group and company
3,225
4,000
Audit of the financial statements of the company's subsidiaries
23,650
21,000
26,875
25,000
For other services
Taxation compliance services
9,500
9,000
Other taxation services
9,900
22,066
Services relating to corporate finance transactions
16,725
107,976
36,125
139,042
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
15,883
-
9
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
673,665
433,969
Interest on convertible loan notes
15,641
54,312
Interest on finance leases and hire purchase contracts
139,105
60,311
Total finance costs
828,411
548,592
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
1,260,078
634,561
Adjustments in respect of prior periods
(58,441)
(113,452)
Total current tax
1,201,637
521,109
Deferred tax
Origination and reversal of timing differences
(33,119)
147,789
Total tax charge
1,168,518
668,898
DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
10
Taxation
(Continued)
- 24 -

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
4,571,412
3,399,768
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
1,075,196
645,956
Tax effect of expenses that are not deductible in determining taxable profit
32,804
17,700
Tax effect of income not taxable in determining taxable profit
(82)
-
0
Adjustments in respect of prior years
(58,441)
(113,452)
Permanent capital allowances in excess of depreciation
(6,393)
(55,149)
Other permanent differences
(2,590)
-
0
Deferred tax not recognised
4,620
5,565
Change in deferred tax rates
(14,050)
38,560
Other tax adjustments
137,454
129,718
Taxation charge
1,168,518
668,898

In addition to the amount charged to the profit and loss account, the following amounts relating to tax have been recognised directly in other comprehensive income:

2023
2022
£
£
Deferred tax arising on:
Revaluation of financial instruments treated as cash flow hedges
(199,673)
37,910
11
Dividends
2023
2022
Recognised as distributions to equity holders:
£
£
Final paid
3,000,000
-
DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
12
Tangible fixed assets
Group
Leasehold land and buildings
Plant and equipment
Fixtures and fittings
Computers
Total
£
£
£
£
£
Cost
At 1 January 2023
184,083
1,671,071
375,580
65,856
2,296,590
Additions
79,692
156,377
261,929
37,840
535,838
Disposals
-
0
(669,817)
(401,844)
(99,012)
(1,170,673)
At 31 December 2023
263,775
1,157,631
235,665
4,684
1,661,755
Depreciation and impairment
At 1 January 2023
8,550
343,645
65,789
23,072
441,056
Depreciation charged in the year
43,307
468,525
155,396
27,773
695,001
Eliminated in respect of disposals
-
0
(669,817)
(401,844)
(99,012)
(1,170,673)
At 31 December 2023
51,857
142,353
(180,659)
(48,167)
(34,616)
Carrying amount
At 31 December 2023
211,918
1,015,278
416,324
52,851
1,696,371
At 31 December 2022
175,533
1,327,426
309,791
42,784
1,855,534
The company had no tangible fixed assets at 31 December 2023 or 31 December 2022.

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Group
Company
2023
2022
2023
2022
£
£
£
£
Plant and equipment
73,000
217,466
-
0
-
0
DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
13
Intangible fixed assets
Group
Goodwill
£
Cost
At 1 January 2023 and 31 December 2023
6,360,650
Amortisation and impairment
At 1 January 2023
583,060
Amortisation charged for the year
636,065
At 31 December 2023
1,219,125
Carrying amount
At 31 December 2023
5,141,525
At 31 December 2022
5,777,590
The company had no intangible fixed assets at 31 December 2023 or 31 December 2022.
14
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
15
-
0
-
0
6,710,490
6,650,672
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 January 2023
6,650,672
Valuation changes
59,818
At 31 December 2023
6,710,490
Carrying amount
At 31 December 2023
6,710,490
At 31 December 2022
6,650,672
DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 27 -
15
Subsidiaries

Details of the company's subsidiaries at 31 December 2023 are as follows:

Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
Axis Doors Limited
UK
Dormant company
Ordinary
100.00
Distinction Doors Holdings Limited
UK
Holding company
Ordinary
100.00
Distinction Doors Limited
UK
Distribution of composite doors
Ordinary
100.00
Distinction Group Limited
UK
Holding company
Ordinary
100.00
Evergreen Doors Limited
UK
Dormant company
Ordinary
100.00
Fire Door Systems Limited
UK
Dormant company
Ordinary
100.00
16
Financial instruments
Group
Company
2023
2022
2023
2022
£
£
£
£
Carrying amount of financial assets
Instruments measured at fair value through profit or loss
-
503,641
-
-
Carrying amount of financial liabilities
Measured at fair value through profit or loss
- Other financial liabilities
295,049
-
-
-
17
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Finished goods and goods for resale
5,824,378
8,253,520
-
0
-
0
18
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
5,237,243
5,539,633
-
0
-
0
Amounts owed by group undertakings
-
-
-
362,629
Derivative financial instruments
-
503,641
-
-
Other debtors
620
-
37
-
0
Prepayments and accrued income
252,343
129,130
-
0
-
0
5,490,206
6,172,404
37
362,629
Deferred tax asset (note 23)
111,000
-
0
-
0
-
0
5,601,206
6,172,404
37
362,629
DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 28 -
19
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Obligations under finance leases
22
-
0
54,802
-
0
-
0
Other borrowings
21
3,975,884
5,779,535
-
0
-
0
Trade creditors
2,816,397
3,952,751
-
0
-
0
Amounts owed to group undertakings
-
0
-
0
1,736,184
-
0
Corporation tax payable
591,370
498,897
-
0
-
0
Other taxation and social security
1,068,038
1,230,336
-
-
Derivative financial instruments
295,049
-
0
-
0
-
0
Government grants
24
21,225
21,225
-
0
-
0
Other creditors
46,438
2,165,533
-
0
2,125,000
Accruals and deferred income
1,225,122
719,998
-
0
102,814
10,039,523
14,423,077
1,736,184
2,227,814

Obligations under finance lease and hire purchase contracts are secured on the assets to which they relate.

20
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Other borrowings
21
5,249,580
4,866,872
1,749,580
2,332,913
Government grants
24
49,420
64,725
-
0
-
0
5,299,000
4,931,597
1,749,580
2,332,913
21
Loans and overdrafts
Group
Company
2023
2022
2023
2022
£
£
£
£
Preference shares
1,749,580
2,332,913
1,749,580
2,332,913
Other loans
7,475,884
8,313,494
-
0
-
0
9,225,464
10,646,407
1,749,580
2,332,913
Payable within one year
3,975,884
5,779,535
-
0
-
0
Payable after one year
5,249,580
4,866,872
1,749,580
2,332,913
DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
21
Loans and overdrafts
(Continued)
- 29 -

Included in other loans is a bank loan of £4,500,000 (2022: £3,333,333) which bears interest at the rate of 5.75% plus base rate per annum and is secured by a fixed and floating charge over all the present and future assets of Distinction Manufacturing Group Limited. The loan is repayable over 60 months.

 

Also included within other loans is invoice financing creditors of £2,975,884 (2022: £4,480,161) and inventory facility of £nil (2022: £500,000) which are secured by a legal charge over the assets of Distinction Manufacturing Group Limited.

22
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
-
0
51,590
-
0
-
0
In two to five years
-
0
3,212
-
0
-
0
-
54,802
-
-
23
Deferred taxation

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

Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Group
£
£
£
£
Accelerated capital allowances
191,000
200,500
-
-
Tax losses
-
-
22,000
-
Share based payments
-
(13,708)
15,000
-
Deferred tax on forward contracts through the OCI
-
126,000
74,000
-
191,000
312,792
111,000
-
The company has no deferred tax assets or liabilities.
DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
23
Deferred taxation
(Continued)
- 30 -
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 1 January 2023
312,792
-
Credit to profit or loss
(33,119)
-
Credit to other comprehensive income
(199,673)
-
Liability at 31 December 2023
80,000
-

The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.

24
Government grants
Group
Company
2023
2022
2023
2022
£
£
£
£
Arising from government grants
70,645
85,950
-
-

Deferred income is included in the financial statements as follows:

Current liabilities
21,225
21,225
-
0
-
0
Non-current liabilities
49,420
64,725
-
0
-
0
70,645
85,950
-
-
25
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
274,387
204,062

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 31 -
26
Share-based payment transactions
Group
Number of share options
Weighted average exercise price
2023
2022
2023
2022
Number
Number
£
£
Outstanding at 1 January 2023
3,000
-
0.01
-
Granted
-
18,000
-
0.01
Exercised
-
(13,500)
-
0.01
Expired
(1,500)
(1,500)
0.01
0.01
Outstanding at 31 December 2023
1,500
3,000
-
0.01
Exercisable at 31 December 2023
1,500
3,000
0.01
0.01

 

The options outstanding at 31 December 2023 had an exercise price of £0.01 and a remaining contractual life of 8 years and 1 month.

Group
Company
2023
2022
2023
2022
£
£
£
£
Expenses recognised in the year
Arising from equity settled share based payment transactions
59,818
54,833
-
-

EMI Share options are awarded to key personnel to incentivise and encourage their long-term commitment to the group. Management is required to use an appropriate pricing model to value the issue of equity to employees or those providing similar services.

 

Fair value is measured by use of the Black-Scholes option pricing model with the value of each option considered separately at the date of grant. Any charge to the profit and loss account in respect of the options is a function of the model.

27
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of 1p each
55,500
55,500
555
555
2023
2022
2023
2022
Preference share capital
Number
Number
£
£
Issued and fully paid
Preference shares of £1 each
1,749,580
2,332,913
1,749,580
2,332,913
Preference shares classified as liabilities
1,749,580
2,332,913
DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 32 -
28
Reserves

Includes movements in fair values on derivative financial instruments identified as designated and effective hedges. This is a non-distributable reserve impacting Other Comprehensive Income.

29
Operating lease commitments
Lessee

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

Group
Company
2023
2022
2023
2022
£
£
£
£
Within one year
534,346
401,778
-
-
Between two and five years
1,528,211
1,270,140
-
-
In over five years
585,000
877,500
-
-
2,647,557
2,549,418
-
-
30
Related party transactions

The company has taken advantage of the exemption available in FRS102 section 33 "related party disclosures" whereby it has not disclosed transactions with the ultimate parent company and any wholly owned subsidiary undertaking in the group.

31
Controlling party

The ultimate controlling party is Mr A J Fowlds by virtue of his shareholding in the group.

DISTINCTION MANUFACTURING GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 33 -
32
Cash generated from group operations
2023
2022
£
£
Profit for the year after tax
3,402,894
2,730,870
Adjustments for:
Taxation charged
1,168,518
668,898
Finance costs
828,411
548,592
Investment income
(15,883)
-
0
Gain on disposal of tangible fixed assets
(22,646)
-
Amortisation and impairment of intangible assets
636,065
583,060
Depreciation and impairment of tangible fixed assets
695,001
441,056
Equity settled share based payment expense
59,818
54,833
Decrease in provisions
-
(2,291,667)
Movements in working capital:
Decrease in stocks
2,429,142
2,661,700
Decrease in debtors
178,557
767,009
Decrease in creditors
(2,912,623)
(4,965,190)
(Decrease)/increase in deferred income
(15,305)
85,950
Cash generated from operations
6,431,949
1,285,111
33
Analysis of changes in net debt - group
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
508,647
(478,680)
29,967
Borrowings excluding overdrafts
(10,646,407)
1,420,943
(9,225,464)
Obligations under finance leases
(54,802)
54,802
-
(10,192,562)
997,065
(9,195,497)
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