Company registration number 00591930 (England and Wales)
Dynamic EMS Limited
Annual report and financial statements
for the year ended 31 December 2023
Dynamic EMS Limited
Company information
Directors
J J Dignan
D Gray
(Appointed 4 July 2023)
Secretary
D Gray
Company number
00591930
Registered office
Winterhill House
Station Approach
Marlow
SL7 1NT
Auditor
Henderson Loggie LLP
11 - 15 Thistle Street
Edinburgh
EH2 1DF
Business address
Taxi Way
Hillend Industrial Estate
Dalgety Bay
Fife
KY11 9ET
Solicitors
MacRoberts LLP
Capella
60 York Street
Glasgow
G2 8JX
Dynamic EMS Limited
Contents
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 23
Dynamic EMS 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
Turnover increased with a profit before tax of £332,786 (2022: loss of £505,596).
The company anticipates similar levels of revenue and profitability in 2024 and the key performance indicators are:
- Profitable Revenue Growth
- Cash flow management
- EBITDA
- On time delivery to customer required date
- Zero returns under warranty
- Compliance as a minimum with employment, health & safety, and environmental legislation
Principal risks and uncertainties
Principal risks and uncertainties are:
Bad debt
Supply Chain
Energy cost increases
Macroeconomics
Cash flow
Currency fluctuations
Skills/Manpower
The company has reacted to these risks by:
Monitoring of customers' financial performance and payment of invoices.
Supply chain management and agreements with key suppliers of materials and adopted a strategy to secure material ahead of when it was required.
Energy Contracts in place which are the most competitive.
Macroeconomics
The company recognises that the war in Ukraine has had significant impact on energy costs, as well as increases in cost of living, higher employment costs and salary expectations for new positions. The subsequent raise on interest rates has also had an impact on the cost of borrowings.
The company has mitigated these costs with price increases to customers.
Stringent cost control
Currency
Dynamic EMS Limited
Strategic Report (continued)
for the year ended 31 December 2023
- 2 -
Development and performance
Last year we reported the geopolitical events that created an extremely challenging environment. Whilst we have seen some encouraging signs in the global shortage of semiconductors, the performance of the company to December 2023 must be taken in context to reflect that challenging environment. That said the company grew 34% in revenue terms to £12.2M turnover with inventory lower than previous year at £2.4M.
Profitability suffered following implementation of a new ERP system but that has been addressed and we see profitability improving in the coming year.
Our current order book remains strong with new organic opportunities and exciting opportunities with innovative new clients in multiple sectors. The company has also gone through a period of ceasing activity with its less profitable clients, but retains the longevity of its core customer base, as it embarks on a period of longer term growth.
Having resiliently navigated our way through world events that impacted the business, the company is well positioned to perform strongly in the coming years.
J J Dignan
Director
12 August 2024
Dynamic EMS 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 company's principal activity continues to be the supply of Electronic Manufacturing services comprising of PCB assembly and High Level (Complete Product) assembly and test. The directors do not envisage any change in the coming year.
Results and dividends
The results for the year are set out on page 8.
An interim ordinary dividend of £86,806 (2022: £153,917) was declared of which £86,806 (2022: £153,917) has been paid. The directors have not recommended a final dividend (2022: £Nil).
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
J J Dignan
J Watt
(Resigned 4 July 2023)
D Gray
(Appointed 4 July 2023)
Auditor
The auditor, Henderson Loggie LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
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
J J Dignan
Director
12 August 2024
Dynamic EMS Limited
Directors' responsibilities statement
for the year ended 31 December 2023
- 4 -
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.
Dynamic EMS Limited
Independent auditor's report
to the members of Dynamic EMS Limited
- 5 -
Opinion
We have audited the financial statements of Dynamic EMS Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Dynamic EMS Limited
Independent auditor's report (continued)
to the members of Dynamic EMS Limited
- 6 -
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.
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.
Dynamic EMS Limited
Independent auditor's report (continued)
to the members of Dynamic EMS Limited
- 7 -
As part of our planning process:
We enquired of management the systems and controls the company has in place, the areas of the financial statements that are mostly susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. Management informed us that there were no instances of known, suspected or alleged fraud;
We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: Health and Safety; employment law (including the Working Time Directive); and compliance with the UK Companies Act.
We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetrated, and tailored our risk assessment accordingly; and
Using our knowledge of the company, together with the discussions held with management at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Enquiring with management about any known or suspected instances of non-compliance with laws and regulations, including employment law, and fraud;
Review of correspondence with regulators including the Health & Safety Executive;
Review of legal fee expenditure;
Review of Board meeting minutes;
Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to provision for stock and the valuation of property; and
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness.
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.
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.
Diana Penny
Senior Statutory Auditor
For and on behalf of Henderson Loggie LLP
12 August 2024
Chartered Accountants
Statutory Auditor
11 - 15 Thistle Street
Edinburgh
EH2 1DF
Dynamic EMS Limited
Statement of comprehensive income
for the year ended 31 December 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
12,211,816
9,090,304
Cost of sales
(10,590,940)
(7,625,071)
Gross profit
1,620,876
1,465,233
Administrative expenses
(1,142,227)
(911,890)
Operating profit
4
478,649
553,343
Interest payable and similar expenses
7
(145,863)
(47,747)
Profit before taxation
332,786
505,596
Tax on profit
8
(81,011)
(96,639)
Profit for the financial year
251,775
408,957
Other comprehensive income
Revaluation of tangible fixed assets
291,936
Tax relating to other comprehensive income
(35,552)
Total comprehensive income for the year
251,775
665,341
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Dynamic EMS Limited
Balance sheet
as at 31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
1,866,122
1,452,235
Current assets
Stocks
12
2,447,564
2,873,587
Debtors
11
5,693,416
4,951,035
Cash at bank and in hand
280,201
45,416
8,421,181
7,870,038
Creditors: amounts falling due within one year
13
(4,524,926)
(4,040,682)
Net current assets
3,896,255
3,829,356
Total assets less current liabilities
5,762,377
5,281,591
Creditors: amounts falling due after more than one year
14
(222,146)
Provisions for liabilities
Deferred tax liability
17
(151,816)
(58,145)
(151,816)
(58,145)
Net assets
5,388,415
5,223,446
Capital and reserves
Called up share capital
19
1,505,603
1,505,603
Revaluation reserve
20
1,052,683
1,061,866
Profit and loss reserves
2,830,129
2,655,977
Total equity
5,388,415
5,223,446
The financial statements were approved by the board of directors and authorised for issue on 12 August 2024 and are signed on its behalf by:
J J Dignan
Director
Company Registration No. 00591930
Dynamic EMS Limited
Statement of changes in equity
for the year ended 31 December 2023
- 10 -
Share capital
Revaluation reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 January 2022
1,505,603
837,068
2,369,351
4,712,022
Year ended 31 December 2022:
Profit for the year
-
-
408,957
408,957
Other comprehensive income:
Revaluation of tangible fixed assets
-
291,936
-
291,936
Tax relating to other comprehensive income
-
(35,552)
(35,552)
Total comprehensive income for the year
256,384
408,957
665,341
Dividends
9
-
-
(153,917)
(153,917)
Transfers
-
(31,586)
31,586
-
Balance at 31 December 2022
1,505,603
1,061,866
2,655,977
5,223,446
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
-
251,775
251,775
Dividends
9
-
-
(86,806)
(86,806)
Transfers
-
(9,183)
9,183
-
Balance at 31 December 2023
1,505,603
1,052,683
2,830,129
5,388,415
Dynamic EMS Limited
Notes to the financial statements
for the year ended 31 December 2023
- 11 -
1
Accounting policies
Company information
Dynamic EMS Limited is a private company limited by shares incorporated in England and Wales. The registered office is Winterhill House, Station Approach, Marlow, SL7 1NT.
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 on the historical cost convention, modified to include the revaluation of freehold properties . The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Kaydanic Solutions Limited. These consolidated financial statements are available from Companies House, 4th Floor, Edinburgh Quay 2, 139 Fountainbridge, Edinburgh, EH3 9FF.
1.2
Going concern
At the time of approving the financial statements, the directors have not identified any material uncertainty in respect of going concern and therefore have a reasonable expectation that the company has adequate resources to continue in operational existence for at least 12 months from the date of approval of the financial statements. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.true
1.3
Turnover
Revenue is measured by reference to the fair value of consideration received or receivable for goods provided in the normal course of business, excluding trade discounts.
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.
Dynamic EMS Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
1
Accounting policies (continued)
- 12 -
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Land and buildings freehold
over 20 years (straight line)
Equipment
over 5 - 10 years (straight line)
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell, based on FIFO system. 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. Net realisable value is based on estimated normal selling price less further costs expected to be incurred on completion.
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.
Dynamic EMS Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
1
Accounting policies (continued)
- 13 -
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
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.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Trade debtors, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.
Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Dynamic EMS Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
1
Accounting policies (continued)
- 14 -
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.
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.
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
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.
Dynamic EMS Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
1
Accounting policies (continued)
- 15 -
1.12
Retirement benefits
The company operates a defined contribution pension scheme. Contributions are charged in the profit and loss account as they become payable in accordance with the rules of the scheme.
1.13
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.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Land and buildings valuation
In the year the directors have considered whether the value of land and buildings as stated in the accounts remains appropriate. They do not consider there to be any indications of impairment and as such the valuation of land and buildings is considered appropriate.
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.
Stock valuation
In arriving at the valuation of stock it may be necessary for management to make an assessment over the carrying value of stock items and where applicable apply a provision to amend this carrying value to a more accurate level. These provisions are arrived at using management's knowledge and understanding of the business and the industry in which it operates and focuses on potentially obsolete or old items for which the full value may no longer be recoverable.
Dynamic EMS Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 16 -
3
Turnover
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Product Sales
12,162,130
9,108,741
Foreign exchange movements
49,686
(18,437)
12,211,816
9,090,304
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
11,968,817
8,927,852
Other
242,999
162,452
12,211,816
9,090,304
4
Operating profit
2023
2022
Operating profit for the year is stated after charging:
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
16,000
16,956
Depreciation of owned tangible fixed assets
150,049
92,837
Operating lease charges
16,026
17,683
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Production
79
67
Administration and marketing
16
15
Total
95
82
Dynamic EMS Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
5
Employees (continued)
- 17 -
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
2,543,524
1,964,410
Social security costs
217,131
174,693
Pension costs
104,811
104,865
2,865,466
2,243,968
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
117,868
142,412
Company pension contributions to defined contribution schemes
13,365
14,403
131,233
156,815
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2).
7
Interest payable and similar expenses
2023
2022
£
£
Interest on invoice finance arrangements
136,449
47,747
Interest on finance leases and hire purchase contracts
9,414
-
145,863
47,747
Dynamic EMS Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 18 -
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
102,829
Adjustments in respect of prior periods
(12,660)
22
Total current tax
(12,660)
102,851
Deferred tax
Origination and reversal of timing differences
93,671
(6,212)
Total tax charge
81,011
96,639
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
332,786
505,596
Expected tax charge based on the standard rate of corporation tax in the UK of 24% (2022: 19%)
78,271
96,063
Tax effect of expenses that are not deductible in determining taxable profit
2,369
357
Chargeable gains
28,500
Adjustments in respect of prior years
(12,660)
22
Effect of change in corporation tax rate
5,543
7,510
Group relief
(3,010)
(5,167)
Depreciation on assets not qualifying for tax allowances
(15,963)
7,355
Super-deduction adjustment
(499)
Revaluation gain adjustment
(35,552)
Movements in deferred tax not recognised
(1,950)
Other tax adjustments, reliefs and transfers
26,461
Taxation charge for the year
81,011
96,639
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 property
-
35,552
Dynamic EMS Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 19 -
9
Dividends
2023
2022
£
£
Interim paid
86,806
153,917
10
Tangible fixed assets
Land and buildings freehold
Equipment
Total
£
£
£
Cost or valuation
At 1 January 2023
1,350,000
2,956,376
4,306,376
Additions
563,936
563,936
At 31 December 2023
1,350,000
3,520,312
4,870,312
Depreciation and impairment
At 1 January 2023
2,854,141
2,854,141
Depreciation charged in the year
45,000
105,049
150,049
At 31 December 2023
45,000
2,959,190
3,004,190
Carrying amount
At 31 December 2023
1,305,000
561,122
1,866,122
At 31 December 2022
1,350,000
102,235
1,452,235
No depreciation is provided in respect of freehold land, which is valued at:
2023
2022
£
£
Freehold
450,000
450,000
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
£
£
Equipment
418,762
The freehold land and buildings were valued at £1,350,000 at 21 March 2023 by Graham and Sibbald, independent valuers not connected with the company on the basis of market value. There were no differences in the value between 31 December 2023 and 21 March 2023 that would impact the valuation and therefore the directors have assessed the value at 31 December 2023 to be £1,350,000. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties. The directors are not aware of any subsequent material change in the value of freehold land and buildings on a depreciated replacement cost basis.
Dynamic EMS Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
10
Tangible fixed assets (continued)
- 20 -
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:
2023
2022
£
£
Cost
846,980
846,980
Accumulated depreciation
(601,523)
(594,399)
Carrying value
245,457
252,581
11
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
3,273,367
2,581,805
Amounts owed by group undertakings
2,378,336
2,336,100
Prepayments and accrued income
41,713
33,130
5,693,416
4,951,035
12
Stocks
2023
2022
£
£
Raw materials and consumables
1,809,567
2,222,420
Work in progress
637,997
651,167
2,447,564
2,873,587
13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
15
2,022,087
1,640,320
Obligations under finance leases
16
88,048
Trade creditors
1,609,616
1,865,036
Corporation tax
(12,638)
82,115
Other taxation and social security
428,348
228,268
Accruals and deferred income
389,465
224,943
4,524,926
4,040,682
Dynamic EMS Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 21 -
14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
16
222,146
15
Loans and overdrafts
2023
2022
£
£
Bank overdrafts
2,022,087
1,640,320
Payable within one year
2,022,087
1,640,320
Bank loans and overdrafts are secured by debenture and standard security over the assets of the company. They include £1,995,823 (2022: £1,640,320) of debts drawn against factored debts.
16
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Difference remains - please check
310,194
-
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
17
Deferred taxation
Liabilities
Liabilities
2023
2022
Balances:
£
£
ACAs
151,816
58,145
2023
Movements in the year:
£
Liability at 1 January 2023
58,145
Charge to profit or loss
93,671
Liability at 31 December 2023
151,816
Dynamic EMS Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 22 -
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
104,811
104,865
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.
19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of 50p each
2,983,206
2,983,206
1,505,603
1,505,603
Unclassified shares of £1 each
14,000
14,000
-
-
Both ordinary and unclassified shares carry full voting rights.
20
Revaluation reserve
The revaluation reserve consists of accumulated gains and losses on revaluation of freehold properties. An annual transfer is made between revaluation reserve and retained earnings to reflect the difference in depreciation charge between historical cost and revaluation model. Any change in deferred tax charge on revalued assets is also reflected through the revaluation reserve on an annual basis.
21
Financial commitments, guarantees and contingent liabilities
A guarantee for £285,837 (2022: £326,205) has been provided to the company's bankers in respect of its ultimate parent undertaking, Kaydanic Solutions Limited, in respect of loan funding.
22
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
19,970
24,063
Between two and five years
8,776
25,593
28,746
49,656
Dynamic EMS Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 23 -
23
Ultimate controlling party
The company is a wholly owned subsidiary of HW Manufacturing Limited which is a wholly owned subsidiary of Kaydanic Solutions Limited.
The ultimate controlling party is J J Dignan.
The smallest and largest groups into which the entity is included within group consolidated accounts is Kaydanic Solutions Limited. These are available from Companies House, 4th Floor, Edinburgh Quay 2, 139 Fountainbridge, Edinburgh, EH3 9FF.
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