Company Registration No. 00911606 (England and Wales)
HANSON SPRINGS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 2023
PM+M Solutions for Business LLP
Chartered Accountants
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
HANSON SPRINGS LIMITED
COMPANY INFORMATION
Directors
Mr Malcolm Hanson
Mr John Hanson
Mr Roy Fox
Mrs Maureen Hanson
Mrs Lisa Jenkinson
Secretary
Mr John Baldwin
Company number
00911606
Registered office
Hanson Place
Gorrells Way
Rochdale
Lancs
OL11 2PX
Auditor
PM+M Solutions for Business LLP
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
Bankers
Barclays Bank Plc
1 Churchill Place
Canary Wharf
London
E14 5HP
HANSON SPRINGS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 31
HANSON SPRINGS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 1 -
The directors present the strategic report for the year ended 30 November 2023.
Review of the business
During the year the company’s turnover increased by 11% as the company experienced strong demand following the end of the pandemic, which has continued post year end.
A key issue affecting the company during the year was the continued impact of the invasion of Ukraine which caused significant rises in costs in the 2022 year end. There has been a subsequent reduction in distribution costs but steel prices and energy costs remain high. These cost changes have been closely monitored by the directors and where required sales price increases have been implemented to mitigate the increased costs.
From a careful control of costs and sales prices the company has been able to restore its gross margin to pre-pandemic levels. A pre-tax profit for the year of £1,619,699 (2022: £1,384,078) was achieved. In addition to the retained profit, the company’s net asset position has also increased as a result of the reduction to the defined benefit pension liability (as noted below) with net assets reported at the year end of £10,185,787 (2022: £9,274,005).
The company has continued to develop strong working relationships with its customers, which is a key aim for the directors, along with continued high quality control. This has resulted in an ongoing strong future order book.
Key performance indicators include actual sales per day that are achieved, which are monitored at both the company’s standard exchange rate, to ease comparison with prior periods, and at actual exchange rate. In addition, sales, margin and borrowing levels are closely monitored.
During the year the net position (as calculated by the Actuary) of the company’s defined benefit pension scheme changed from a liability (net of deferred tax) of £258,000, to an asset of £772,000 as at 30 November 2023, largely as a result of the increase in corporate bond yields and hence the discount rate, which has reduced the value placed on the Scheme’s liabilities. However, the directors do not envisage recovering this asset from the scheme in the foreseeable future and so, as required under Financial Reporting Standard 102, the company has not recognised the £772k pension surplus within the company balance sheet. In the previous year, the scheme’s liability at that time was recognised, decreasing the reported net assets of the company by £258k, net of deferred tax.
Principal risks and uncertainties
The company finances its operations through a mixture of retained profits and through bank borrowings, hire purchase financing arrangements, directors' loan accounts and other loans.
The management's objectives are to minimise the company's exposure to fluctuating interest rates wherever possible when seeking new borrowings and match the repayment schedule of any external borrowings or overdrafts with the expected future cash flows expected to arise from the company's trading activities.
Certain of the company's borrowings are in fixed interest loans, eliminating any cash flow risk associated with changing interest payments. The directors believe the loss of ability to take advantage of falls in interest rates is more than offset by the certainty of knowing their financial commitments when managing the company's trading activities.
The company has always been subject to changes in demand from the oil and gas industry as peaks and troughs occur. The company has signed supply agreements with key customers to help mitigate these risks. As a high energy user in the manufacturing process the company is also exposed to the risk of changes in the cost of energy and inflationary events impacting on material prices. As noted above, material costs are closely monitored by the directors. Energy costs are contracted on minimum 12 month agreements to reduce risk and prices are monitored.
HANSON SPRINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 2 -
Mr Malcolm Hanson
Director
21 August 2024
HANSON SPRINGS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 3 -
The directors present their annual report and financial statements for the year ended 30 November 2023.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £444,000 (2022 - £312,000). The directors do not recommend payment of a further dividend
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr Malcolm Hanson
Mr John Hanson
Mr Roy Fox
Mrs Maureen Hanson
Mrs Lisa Jenkinson
Research and development
During the period the company incurred £130,000 (2022 - £139,288) of research and development expenditure, the benefits of which are anticipated in the near future.
Post reporting date events
In August 2024 the company completed the sale of its freehold property to the Hanson Pension Fund at its market value of £5.5m. The proceeds received were used to repay the bank and other loans of approximately £4m with the remaining funds being used to assist with working capital funding.
Auditor
The auditor, PM+M Solutions for Business LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
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.
HANSON SPRINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 4 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr Malcolm Hanson
Director
21 August 2024
HANSON SPRINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HANSON SPRINGS LIMITED
- 5 -
Opinion
We have audited the financial statements of Hanson Springs Limited (the 'company') for the year ended 30 November 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 30 November 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.
HANSON SPRINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HANSON SPRINGS 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.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.
HANSON SPRINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HANSON SPRINGS LIMITED (CONTINUED)
- 7 -
Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we have considered the following:
the nature of the industry and sector, control environment and business performance including the design of the Company's remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
results of our enquiries of management about their own identification and assessment of the risks of irregularities;
the matters discussed among the audit engagement team and relevant specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud;
any matters we identified having obtained and reviewed the Company's documentation of their policies and procedures relating to:
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas: timing of recognition of commercial income, posting of unusual journals and complex transactions; and manipulating the Company's performance profit measures and other key performance indicators to meet remuneration targets and externally communicated targets. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included UK Companies Act, employment law, health and safety regulations, pensions legislation and tax legislation.
Audit response to risks identified
Our procedures to respond to risks identified included the following:
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
enquiring of management concerning actual and potential litigation and claims;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
reading minutes of meetings of those charged with governance and reviewing correspondence with HMRC; and
in addressing the identified risks of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
HANSON SPRINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HANSON SPRINGS LIMITED (CONTINUED)
- 8 -
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Nigel Wright BSc FCA
Senior Statutory Auditor
For and on behalf of PM+M Solutions for Business LLP
21 August 2024
Chartered Accountants
Statutory Auditor
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
HANSON SPRINGS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
30,486,815
27,563,263
Cost of sales
(19,439,891)
(17,607,678)
Gross profit
11,046,924
9,955,585
Distribution costs
(1,873,708)
(2,231,692)
Administrative expenses
(6,551,435)
(5,750,649)
Other operating income
180,388
200,000
Operating profit
4
2,802,169
2,173,244
Interest payable and similar expenses
7
(1,182,470)
(789,166)
Profit before taxation
1,619,699
1,384,078
Tax on profit
8
(315,917)
(331,847)
Profit for the financial year
1,303,782
1,052,231
Other comprehensive income
Actuarial gain on defined benefit pension schemes
138,000
5,381,000
Tax relating to other comprehensive income
(86,000)
(1,346,000)
Total comprehensive income for the year
1,355,782
5,087,231
The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.
HANSON SPRINGS LIMITED
BALANCE SHEET
AS AT
30 NOVEMBER 2023
30 November 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
11,699,299
12,076,650
Current assets
Stocks
11
13,965,446
12,989,158
Debtors
13
7,008,822
7,967,330
Cash at bank and in hand
801,714
1,015,179
21,775,982
21,971,667
Creditors: amounts falling due within one year
14
(19,132,550)
(19,616,712)
Net current assets
2,643,432
2,354,955
Total assets less current liabilities
14,342,731
14,431,605
Creditors: amounts falling due after more than one year
15
(2,792,870)
(3,592,831)
Provisions for liabilities
Deferred tax liability
18
1,364,074
1,306,769
Defined benefit pension liability
21
258,000
(1,364,074)
(1,564,769)
Net assets
10,185,787
9,274,005
Capital and reserves
Called up share capital
20
600
600
Revaluation reserve
22
1,978,658
2,019,992
Other reserves
23
400
400
Profit and loss reserves
8,206,129
7,253,013
Total equity
10,185,787
9,274,005
The financial statements were approved by the board of directors and authorised for issue on 21 August 2024 and are signed on its behalf by:
Mr Malcolm Hanson
Director
Company Registration No. 00911606
HANSON SPRINGS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 11 -
Share capital
Revaluation reserve
Other reserves
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 December 2021
600
2,062,169
400
2,435,605
4,498,774
Year ended 30 November 2022:
Profit for the year
-
-
-
1,052,231
1,052,231
Other comprehensive income:
Actuarial gain on defined benefit plans
-
-
-
5,381,000
5,381,000
Tax relating to other comprehensive income
-
-
(1,346,000)
(1,346,000)
Total comprehensive income for the year
5,087,231
5,087,231
Dividends
9
-
-
-
(312,000)
(312,000)
Transfers
-
(42,177)
-
42,177
-
Balance at 30 November 2022
600
2,019,992
400
7,253,013
9,274,005
Year ended 30 November 2023:
Profit for the year
-
-
-
1,303,782
1,303,782
Other comprehensive income:
Actuarial gain on defined benefit plans
-
-
-
138,000
138,000
Tax relating to other comprehensive income
-
-
(86,000)
(86,000)
Total comprehensive income for the year
1,355,782
1,355,782
Dividends
9
-
-
-
(444,000)
(444,000)
Transfers
-
(41,334)
-
41,334
-
Balance at 30 November 2023
600
1,978,658
400
8,206,129
10,185,787
HANSON SPRINGS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 12 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
30
2,936,230
1,266,902
Interest paid
(1,173,470)
(692,166)
Income taxes (paid)/refunded
(38,533)
147,706
Net cash inflow from operating activities
1,724,227
722,442
Investing activities
Purchase of tangible fixed assets
(314,410)
(327,361)
Proceeds from disposal of tangible fixed assets
300,973
347,591
Net cash (used in)/generated from investing activities
(13,437)
20,230
Financing activities
Repayment of borrowings
(456,265)
5,600
Repayment of bank loans
(445,046)
(687,629)
Payment of finance leases obligations
(416,707)
151,045
Dividends paid
(444,000)
(312,000)
Net cash used in financing activities
(1,762,018)
(842,984)
Net decrease in cash and cash equivalents
(51,228)
(100,312)
Cash and cash equivalents at beginning of year
(8,251,906)
(8,151,594)
Cash and cash equivalents at end of year
(8,303,134)
(8,251,906)
Relating to:
Cash at bank and in hand
801,714
1,015,179
Bank overdrafts included in creditors payable within one year
(9,104,848)
(9,267,085)
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 13 -
1
Accounting policies
Company information
Hanson Springs Limited is a private company limited by shares incorporated in England and Wales. The registered office is Hanson Place, Gorrells Way, Rochdale, Lancs, OL11 2PX.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties at fair value. The principal accounting policies adopted are set out below.
1.2
Basis of preparation
During the year ended 30 November 202true3 the company generated a profit before tax of £1.6m and as at 30 November 2023 had net current assets of £2.6m and net assets of £10.2m.
During the year, the company achieved a 11% increase in turnover with increased demand, despite being during a period of costs starting to increase.
The company has prepared detailed projections for the next 12 months making best estimates of increasing materials costs, significant rises in energy costs, as previous fixed rate contracts end, and the increased interest costs. The impact of increasing manufacturing and distribution costs are projected, and are required, to be reflected in increased sales prices in the next few months.
Uncertainties remain regarding, for example, the high level of UK energy prices and the impact that world events can quickly have on such costs. Any significant rises in future energy and material costs, will be reflected in sales prices.
Having considered the company’s detailed financial projections, the support of the company’s working capital finance provider and the facilities available, the ongoing strong sales demand, together with an indication that further funding, if required, may be available from the shareholders, the directors have concluded that it is appropriate for the financial statements to be prepared on a going concern basis.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
1
Accounting policies
(Continued)
- 14 -
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 property
2% straight line
Plant and equipment
15% reducing balance to 33% straight line
Motor vehicles
25% reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
All interest borrowing costs are recognised in the statement of comprehensive income in the year in which they are incurred.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
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.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.7
Cash at bank and in hand
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets 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.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors and bank loans 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.
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
1
Accounting policies
(Continued)
- 16 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.12
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
The cost of providing benefits under defined benefit plans is determined separately for each plan using the projected unit credit method, and is based on actuarial advice.
The change in the net defined benefit liability arising from employee service during the year is recognised as an employee cost. The cost of plan introductions, benefit changes, settlements and curtailments are recognised as an expense in measuring profit or loss in the period in which they arise.
The net interest element is determined by multiplying the net defined benefit liability by the discount rate, taking into account any changes in the net defined benefit liability during the period as a result of contribution and benefit payments. The net interest is recognised in profit or loss as other finance revenue or cost.
Remeasurement changes comprise actuarial gains and losses, the effect of the asset ceiling and the return on the net defined benefit liability excluding amounts included in net interest. These are recognised immediately in other comprehensive income in the period in which they occur and are not reclassified to profit and loss in subsequent periods.
The net defined benefit pension asset or liability in the balance sheet comprises the total for each plan of the present value of the defined benefit obligation (using a discount rate based on high quality corporate bonds), less the fair value of plan assets out of which the obligations are to be settled directly. Fair value is based on market price information, and in the case of quoted securities is the published bid price. The value of a net pension benefit asset is limited to the amount that may be recovered either through reduced contributions or agreed refunds from the scheme.
1.14
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 leases asset are consumed.
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
1
Accounting policies
(Continued)
- 18 -
1.15
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.
1.16
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 are included in the profit and loss account for the period.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the profit and loss account within 'finance income or costs'. All other foreign exchange gains and losses are presented in the statement of profit and loss account within administrative expenses.
1.17
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
1.18
Finance costs are charged to the profit and loss account over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
2
Judgements and key sources of estimation uncertainty
In the process of applying the accounting policies, which are described above, management has made some judgments that have an effect on the amounts recognised in the financial statements. These also include key assumptions concerning the future, including the impact on the company of the increases in energy prices and interest rates, the ongoing support of the company's funders and other key sources of estimation uncertainty at the balance sheet date. The main areas of judgment are in relation to stock and debtor provisions, useful lives of fixed assets and the company's defined benefit pension scheme.
The measurement of the defined benefit pension obligation or surplus, current service cost and net interest of the company's defined benefit pension scheme, depends on certain assumptions which include the discount rate, rate of pension increases, inflation rate and mortality. Further information regarding the assumptions made is disclosed in note 21.
The directors have carefully considered the extent to which the pension surplus should be recognised under FRS 102, which limits such recognition to the extent that the Company is able to recover the surplus either through reduced contributions in the future or through refunds from the pension scheme. The directors have concluded that such a recovery is considered unlikely in the foreseeable future, particularly while the company is required to make deficit funding contributions under the agreed Schedule of Contributions, and as such have not recognised the surplus within the company’s balance sheet.
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 19 -
3
Turnover and other revenue
The whole of the turnover is attributable to the principal activity of the company.
The analysis of turnover by geographical market required by the Companies Act 2006 has not been disclosed as, in the opinion of the directors, such disclosure would be seriously prejudicial to the interests of the company.
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gain) loss
402,198
(330,680)
Research and development costs
130,000
139,288
Government grants
(180,388)
(200,000)
Fees payable to the company's auditor for the audit of the company's financial statements
18,000
17,000
Depreciation of owned tangible fixed assets
656,304
616,703
Depreciation of tangible fixed assets held under finance leases
388,717
493,889
Profit on disposal of tangible fixed assets
(265,655)
(312,891)
Operating lease charges
326,433
301,058
The profit on disposal of fixed assets noted above is largely in respect of the insurance proceeds received in respect of certain plant and machinery that was destroyed in a fire.
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Administration
27
26
Production
200
200
Total
227
226
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
7,205,520
6,464,038
Social security costs
672,152
624,211
Pension costs
418,259
481,462
8,295,931
7,569,711
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 20 -
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
212,066
114,154
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2022 - 4).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
88,620
81,667
7
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
966,452
541,110
Other finance costs:
Interest on finance leases and hire purchase contracts
163,719
132,281
Net interest on the net defined benefit liability
9,000
97,000
Other interest
43,299
18,775
1,182,470
789,166
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
259,594
36,392
Adjustments in respect of prior periods
(45)
(1,659)
Double tax relief
(10,716)
(3,960)
Total UK current tax
248,833
30,773
Foreign current tax on profits for the current period
9,779
4,377
Total current tax
258,612
35,150
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
8
Taxation
2023
2022
£
£
(Continued)
- 21 -
Deferred tax
Origination and reversal of timing differences
57,291
294,251
Changes in tax rates
14
(172)
Adjustment in respect of prior periods
2,618
Total deferred tax
57,305
296,697
Total tax charge
315,917
331,847
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
1,619,699
1,384,078
Expected tax charge based on the standard rate of corporation tax in the UK of 23.01% (2022: 19.00%)
372,693
262,975
Tax effect of expenses that are not deductible in determining taxable profit
12,284
44,378
Adjustments in respect of prior years
(45)
Research and development tax credit
(30,114)
(34,404)
Deferred tax adjustments in respect of prior years
959
Fixed asset differences
19,942
(8,088)
Foreign tax credits
417
Deferred tax (charged)/credited directly to STRGL
(750)
Remeasurement of deferred tax for changes in tax rates
3,623
70,650
Other tax adjustments, reliefs and transfers
(91,594)
(36,856)
Chargeable gains/(losses)
29,128
32,566
Taxation charge for the year
315,917
331,847
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:
Actuarial differences recognised as other comprehensive income
86,000
1,346,000
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 22 -
9
Dividends
2023
2022
£
£
Final paid
444,000
312,000
10
Tangible fixed assets
Freehold property
Plant and equipment
Motor vehicles
Total
£
£
£
£
Cost or valuation
At 1 December 2022
5,500,000
26,288,616
48,840
31,837,456
Additions
646,220
56,768
702,988
Disposals
(160,658)
(160,658)
At 30 November 2023
5,500,000
26,774,178
105,608
32,379,786
Depreciation and impairment
At 1 December 2022
110,000
19,604,674
46,132
19,760,806
Depreciation charged in the year
107,800
936,423
798
1,045,021
Eliminated in respect of disposals
(125,340)
(125,340)
At 30 November 2023
217,800
20,415,757
46,930
20,680,487
Carrying amount
At 30 November 2023
5,282,200
6,358,421
58,678
11,699,299
At 30 November 2022
5,390,000
6,683,942
2,708
12,076,650
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Plant and equipment
2,610,136
3,140,267
Motor vehicles
56,768
3,193
2,666,904
3,143,460
Land and buildings were revalued in June 2022 by Sanderson Weatherall, independent valuers not connected with the company on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties. The directors believe this valuation is still a reasonable value to use in the accounts.
If revalued assets were stated on an historical cost basis rather than a fair value basis, the total amounts included would have been as follows:
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
10
Tangible fixed assets
(Continued)
- 23 -
Freehold property
2023
2022
£
£
Cost
3,952,482
3,952,482
Accumulated depreciation
(695,625)
(629,158)
Carrying value
3,256,857
3,323,324
11
Stocks
2023
2022
£
£
Raw materials and consumables
8,189,175
6,770,378
Work in progress
958,455
1,508,196
Finished goods and goods for resale
4,817,816
4,710,584
13,965,446
12,989,158
12
Financial instruments
2023
2022
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
6,914,322
7,862,127
Carrying amount of financial liabilities
Measured at amortised cost
21,441,849
22,858,950
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
6,849,558
7,797,264
Corporation tax recoverable
8,500
9,436
Other debtors
64,764
64,863
Prepayments and accrued income
86,000
95,767
7,008,822
7,967,330
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 24 -
14
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
16
11,630,762
11,862,254
Obligations under finance leases
17
762,705
822,929
Other borrowings
16
456,265
456,265
Trade creditors
4,435,111
4,751,599
Corporation tax
251,577
32,434
Other taxation and social security
231,994
137,771
Government grants
19
180,388
Other creditors
743,350
727,325
Accruals and deferred income
620,786
645,747
19,132,550
19,616,712
15
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
16
279,510
655,301
Obligations under finance leases
17
1,220,608
1,188,513
Other borrowings
16
1,292,752
1,749,017
2,792,870
3,592,831
16
Loans and overdrafts
2023
2022
£
£
Bank loans
2,805,424
3,250,470
Bank overdrafts
9,104,848
9,267,085
Other loans
1,749,017
2,205,282
13,659,289
14,722,837
Payable within one year
12,087,027
12,318,519
Payable after one year
1,572,262
2,404,318
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
16
Loans and overdrafts
(Continued)
- 25 -
The bank loans are secured by a debenture giving a fixed and floating charge over the company's assets, incorporating a first legal charge over the freehold property of the business.
A bank loan of £2,150,073 (2022 - £2,225,727 ) has been repaid in full, along with certain other loans, subsequent to the year end as explained in note 25.
A bank loan of £130,709 (2022 - £215,154) is repayable by 2025 by monthly instalments of £8,071 at a fixed interest rate of 7.35%. This loan is also secured by a director's personal guarantee up to a maximum of £500,000 plus interest and expenses.
A CBILS bank of £77,420 (2022 - £129,033) is repayable by 2025 by monthly instalments of £4,915 at an interest rate of 2.95%. This is an unsecured loan.
At 30 November 2023, a cash flow facility loan of £447,222 (2022 - £680,556) is due for repayment by 2025 by monthly instalments of £19,444, at an interest rate of 7.75% above base rate. This loan is also secured by a director's personal guarantee up to a maximum of £500,000 plus interest and expenses.
At 30 November 2023, a pension fund loan of £1,792,017 (2022 - £2,205,282) is secured by a fixed and floating charge. Interest is charged at a fixed rate of 4.75% on this loan. The loan is repayable by 2027 by monthly repayments of £38,022.
At 30 November 2023, bank overdrafts includes an amount due to the invoice discounting company of £5,603,176 (2022 - £6,129,878), which is secured by a fixed and floating charge over the trade debtors and the assets of the company. The overdraft of £3,501,672 (2022 - £3,137,207) is secured by a fixed and floating charge over the company's assets.
17
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
762,705
822,928
In two to five years
1,220,608
1,188,514
1,983,313
2,011,442
Obligations under finance leases and hire purchase contracts are secured on the assets to which they relate.
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
1,370,694
1,314,418
Tax losses
-
(1,625)
Other short term timing differences
(6,620)
(6,024)
1,364,074
1,306,769
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
18
Deferred taxation
(Continued)
- 26 -
2023
Movements in the year:
£
Liability at 1 December 2022
1,306,769
Charge to profit or loss
57,305
Liability at 30 November 2023
1,364,074
19
Government grants
2023
2022
£
£
Arising from government grants
-
180,388
20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of £1 each
352
354
352
354
Ordinary B shares of £1 each
232
234
232
234
Ordinary C shares of £1 each
2
2
2
2
Ordinary D shares of £1 each
2
2
2
2
Ordinary E shares of £1 each
2
2
2
2
Ordinary F shares of £1 each
2
2
2
2
Ordinary G shares of £1 each
2
2
2
2
Ordinary H shares of £1 each
2
2
2
2
Ordinary I shares of £1 each
2
-
2
-
Ordinary J shares of £1 each
2
-
2
-
600
600
600
600
21
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
213,259
141,462
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.
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
21
Retirement benefit schemes
(Continued)
- 27 -
Defined benefit schemes
The company operates a defined benefit scheme for qualifying employees providing retirement benefits to it's members based on final pensionable pay and to spouses/dependents in the event of a member's death before or after retirement.
The most recent actuarial valuations of plan assets and the present value of the defined benefit obligation were carried out at 30 November 2023 by Broadstone Corporate Benefits Limited. The present value of the defined benefit obligation, the related current service cost and past service cost were measured using the projected unit credit method.
The company expects to pay contributions in the region of £480,000 to the defined benefit scheme during the year ended 30 November 2024.
2023
2022
Key assumptions
%
%
Discount rate
5.0
4.25
Expected rate of increase of pensions in payment
2.75
2.80
Expected rate of salary increases
1.85
2.15
Inflation assumption - RPI
3.20
3.35
Mortality assumptions
2023
2022
Assumed life expectations on retirement at age 65:
Years
Years
Retiring today
- Males
85
86
- Females
87
88
Retiring in 20 years
- Males
86
86
- Females
89
89
2023
2022
Amounts recognised in the profit and loss account
£
£
Current service cost
108,000
212,000
Net interest on net defined benefit liability/(asset)
9,000
97,000
Other costs and income
97,000
128,000
Total costs
214,000
437,000
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
21
Retirement benefit schemes
(Continued)
- 28 -
2023
2022
Amounts taken to other comprehensive income
£
£
Actual return on scheme assets
407,000
1,587,000
Less: calculated interest element
502,000
228,000
Return on scheme assets excluding interest income
909,000
1,815,000
Actuarial changes related to obligations
(1,819,000)
(7,196,000)
Effect of changes in the amount of surplus that is not recoverable
772,000
-
Total costs/(income)
(138,000)
(5,381,000)
The amounts included in the balance sheet arising from the company's obligations in respect of defined benefit plans are as follows:
2023
2022
£
£
Present value of defined benefit obligations
10,611,000
12,069,000
Fair value of plan assets
(11,383,000)
(11,811,000)
(Surplus)/deficit in scheme
(772,000)
258,000
Restriction on scheme assets
772,000
-
Total liability recognised
-
258,000
2023
Movements in the present value of defined benefit obligations
£
Liabilities at 1 December 2022
12,069,000
Current service cost
108,000
Benefits paid
(392,000)
Contributions from scheme members
48,000
Actuarial gains and losses
(1,819,000)
Interest cost
511,000
Deferred tax movement
86,000
At 30 November 2023
10,611,000
The defined benefit obligations arise from plans which are wholly or partly funded.
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
21
Retirement benefit schemes
(Continued)
- 29 -
2023
Movements in the fair value of plan assets
£
Fair value of assets at 1 December 2022
11,811,000
Interest income
502,000
Return on plan assets (excluding amounts included in net interest)
(909,000)
Benefits paid
(392,000)
Contributions by the employer
420,000
Contributions by scheme members
48,000
Administrative expenses
(97,000)
At 30 November 2023
11,383,000
2023
2022
Fair value of plan assets at the reporting period end
£
£
Equity instruments
7,716,000
7,680,000
Property
470,000
499,000
Government bonds
1,502,000
1,762,000
Corporate bonds
1,616,000
1,773,000
Cash
79,000
97,000
11,383,000
11,811,000
22
Revaluation reserve
2023
2022
£
£
At the beginning of the year
2,019,992
2,062,169
Transfer to retained earnings
(41,334)
(42,177)
At the end of the year
1,978,658
2,019,992
23
Other reserves
2023
2022
£
£
At the beginning and end of the year
400
400
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 30 -
24
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
4,048
70,479
Between two and five years
4,728
9,016
8,776
79,495
25
Events after the reporting date
In August 2024 the company completed the sale of its freehold property to the Hanson Pension Fund at its market value of £5.5m. The proceeds received were used to repay the bank and other loans of approximately £4m with the remaining funds being used to assist with working capital funding.
26
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
At 30 November 2023, the company owed the directors £491,539 (2022 - £537,539).
During the period, the company leased a property which is owned by a pension scheme in which certain directors are trustees and members. During the year ended 30 November 2023, rent of £160,000 (2023 - £160,000) was payable to the pension scheme.
The company has a loan from the scheme, on which interest is charged, at a fixed rate of 4.75%. The loan is repayable by 2027. At 30 November 2023, the outstanding loan was £1,749,017 (2022 - £2,205,282). During the period, interest of £108,363 (2022 - £99,705) was payable on the loan.
27
Directors' transactions
Dividends totalling £444,000 (2022 - £312,000) were paid in the year to trusts in which certain directors and their families are beneficiaries..
28
Ultimate controlling party
The company is controlled by Mr M Hanson, a director of the company.
HANSON SPRINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 NOVEMBER 2023
- 31 -
29
Analysis of changes in net debt
1 December 2022
Cash flows
New finance leases
30 November 2023
£
£
£
£
Cash at bank and in hand
1,015,179
(213,465)
-
801,714
Bank overdrafts
(9,267,085)
162,237
-
(9,104,848)
(8,251,906)
(51,228)
(8,303,134)
Borrowings excluding overdrafts
(5,455,752)
901,311
-
(4,554,441)
Obligations under finance leases
(2,011,442)
416,707
(388,578)
(1,983,313)
(15,719,100)
1,266,790
(388,578)
(14,840,888)
30
Cash generated from operations
2023
2022
£
£
Profit for the year after tax
1,303,782
1,052,231
Adjustments for:
Taxation charged
315,917
331,847
Finance costs
1,182,470
789,166
Gain on disposal of tangible fixed assets
(265,655)
(312,891)
Depreciation and impairment of tangible fixed assets
1,045,021
1,110,592
Pension scheme non-cash movement
(215,000)
(100,000)
Movements in working capital:
Increase in stocks
(976,288)
(1,437,041)
Decrease/(increase) in debtors
957,572
(1,119,381)
(Decrease)/increase in creditors
(231,201)
1,152,379
Decrease in deferred income
(180,388)
(200,000)
Cash generated from operations
2,936,230
1,266,902
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