Company registration number 02827565 (England and Wales)
SIERRA CP ENGINEERING LIMITED
ANNUAL REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
SIERRA CP ENGINEERING LIMITED
COMPANY INFORMATION
Directors
K Hansell
(Appointed 13 September 2023)
M Hird
J Schauer
Secretary
L Taiariol
Company number
02827565
Registered office
Sandy's Road
Malvern
Worcestershire
WR14 1JJ
Auditor
Moore
Oakley House
Headway Business Park
3 Saxon Way West
Corby
Northamptonshire
NN18 9EZ
SIERRA CP ENGINEERING LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Profit and loss account
9
Group statement of comprehensive income
10
Group balance sheet
11
Company balance sheet
12
Group statement of changes in equity
13
Company statement of changes in equity
14
Group statement of cash flows
15
Notes to the financial statements
16 - 34
SIERRA CP ENGINEERING LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present the strategic report for the year ended 31 December 2023.

Principal activities

The principal activity of the company and it's subsidiary undertaking is the design, manufacture and integration of test equipment including control and data acquisition systems to the Automotive and Industrial sectors and supporting tier 1 & 2 supplier base.

Fair review of the business

When comparing the previous year’s revenue and gross profit with 2023, the perceived shift in revenue and gross profit is a consequence of predominately two factors. Firstly, the revenue recognition of an exceptional “windfall” contract that was largely driven by 3rd party work contracts, which created an abnormal spike in revenue. The second event was the higher-than-expected escalations in sourced materials, impacting on the backlog project contracts we had in hand going into 2023.

 

When you factor the impact of the “windfall contract” in 2022 and compare with our normal trading from the UK in 2023, our gross profit performance for 2023 has held up well, despite higher investment in R&D and the increase in support costs through the year.

 

The supply chain pressures, although improving, have continued throughout 2023, meaning we have had to remain flexible and work with our partners to ensure we meet the needs of our customers.

 

The outlook for 2024 is expected to deliver a solid financial result due to the strong contract backlog for the year ended December 2023.

Principal risks and uncertainties

Exchange rate

The company trades in multiple currencies with contract orders in the USA and India. Exchange rate fluctuations remain a risk for trading and tendering for projects particularly in the USA due to the weakness of Sterling, and may impact on our future competitiveness against other European and local competitors should the situation not improve. Forward contracts are entered into for large non sterling projects which extend beyond our usual project length, should the currency situation change significantly from our original exchange estimate. The remainder of our non-sterling transactions are monitored and reviewed regularly.

 

Government

During 2024, Government elections will take place in our principal markets of the UK, India & USA. We would anticipate some softness in bookings in Q1 & Q2 whilst business’s assess the potential impacts of new administrations or direction, however we see this as a timing issue which may have an impact to revenue in the year but the backlog for 2025 is estimated to be higher than 2023 into 2024 as the booking’s activity strengthens in Q3 & Q4. We will monitor the situation and act accordingly as the need arises.

 

Global Supply

The impact of the global supply shortages has stabilised and although lead times remain higher than the historical norms, we have more certainty on lead times being met. Inflationary pressures on cost of materials have reduced albeit at a higher cost but the percentage increases have substantially reduced from the previous double digit high point. It is anticipated that this risk and situation will continue but ease throughout 2024. We will therefore need to constantly monitor the situation and adjust our business strategy accordingly.

 

Russian Invasion of Ukraine

The invasion of Ukraine by Russia has created further indirect pressures on the business but as yet we do not see any additional impact to the current global supply chain issues that are affecting all businesses. We do not export any goods to either the Ukraine or Russia therefore we do not have any direct ongoing risk or liabilities caused by this conflict.

Gaza

The conflict in Gaza adds further indirect pressure on the business, due to the increased potential for material delay and increased costs. Also, the potential for unrest in the middle east adds pressure to key resources such as fuel and gas impacting on costs. However, we do not import or export any goods from or to the region, so we don’t expect any direct impact.

SIERRA CP ENGINEERING LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Key performance indicators

The group measures its financial performance by:

 

                     2023         2022

 

Turnover                    £12,683,252    £14,120,616

Gross profit                £3,483,745    £4,314,431

Gross profit %                27%        31%

Profit before taxation            £800,830    £2,013,880

Profit before taxation %            6%        14%

On behalf of the board

M Hird
Director
30 August 2024
SIERRA CP ENGINEERING 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.

Results and dividends

The results for the year are set out on page 9. The profit after tax for the year amounted to £604,548 (2022 profit: £1,614,737).

Ordinary dividends were paid amounting to £807,170. 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:

K Hansell
(Appointed 13 September 2023)
M Hird
J Schauer
J T Mckenna II
(Resigned 13 September 2023)
Financial instruments

The group uses financial instruments which is primarily cash from retained earnings but can utilise intercompany loans if required. The main purpose of these instruments is to finance the business operations. The group has also utilised forward contracts for US dollars in the past due to the volatility of the exchange rates and the business activity in the US.

Research and development

The group has invested £417,533 (2022: £379,239) during the year on research and development activities. These activities include advancing core hardware technology and current software products which are fundamental to our ongoing and future business. All costs have been expensed as they have been incurred.

Auditor

The auditor, Moore, 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 auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

Going concern

The group continues to trade profitably and generate cash. The budget for 2024 was prepared based on an increase in revenue due to the high level of backlog being carried forward from 2023. A continued healthy growth and diversity in qualified enquires, in combination with the contract awards expected throughout 2024, underpin the revenue and backlog to be carried forward.

 

The budget is prepared assuming a positive cash flow throughout the year and does not anticipate relying on financial support from the group. However, should a short-term need arise for additional funding, this will be met by the group. The group has received a letter of support from Tac Holding Inc (the parent company of the TASI group), a division within the Berwind Corporation, which states that it will provide the necessary financial support to enable the group to trade and meet its liabilities for a period until the end of August 2025. The Directors have reviewed the TAC holdings group’s 3-year financial forecast for 2024-2026 which indicates that the group has sufficient cash and liquidity to provide the financial support to the group.

 

Accordingly, the directors have concluded that the accounts should be prepared on a going concern basis.

SIERRA CP ENGINEERING LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

On behalf of the board
M Hird
Director
30 August 2024
SIERRA CP ENGINEERING LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

SIERRA CP ENGINEERING LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SIERRA CP ENGINEERING LIMITED
- 6 -
Opinion

We have audited the financial statements of Sierra CP Engineering Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

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

Conclusions relating to going concern

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

 

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

 

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

Other information

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

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

SIERRA CP ENGINEERING LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SIERRA CP ENGINEERING LIMITED
- 7 -
Matters on which we are required to report by exception

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

 

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

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

SIERRA CP ENGINEERING LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SIERRA CP ENGINEERING LIMITED
- 8 -
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the company.

 

Our approach was as follows:

 

 

 

 

 

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

Use of our report

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

John Harvey
For and on behalf of
30 August 2024
Moore
Chartered Accountants
Statutory Auditor
Oakley House
Headway Business Park
3 Saxon Way West
Corby
Northamptonshire
NN18 9EZ
SIERRA CP ENGINEERING LIMITED
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
12,683,253
14,120,616
Cost of sales
(9,199,507)
(9,806,185)
Gross profit
3,483,746
4,314,431
Administrative expenses
(2,857,708)
(2,353,016)
Other operating income
165,000
50,500
Operating profit
4
791,038
2,011,915
Interest receivable and similar income
7
9,903
3,586
Interest payable and similar expenses
8
(111)
(1,621)
Profit before taxation
800,830
2,013,880
Tax on profit
9
(196,282)
(399,143)
Profit for the financial year
604,548
1,614,737
Profit for the financial year is all attributable to the owners of the parent company.
SIERRA CP ENGINEERING LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
£
£
Profit for the year
604,548
1,614,737
Other comprehensive income
Deficit on revaluation of other assets
(20,703)
(21,219)
Currency translation loss taken to retained earnings
(11,005)
-
0
Tax relating to other comprehensive income
1,768
5,305
Other comprehensive income for the year
(18,935)
(15,914)
Total comprehensive income for the year
585,613
1,598,823
Total comprehensive income for the year is all attributable to the owners of the parent company.
SIERRA CP ENGINEERING LIMITED
GROUP BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
1,034,354
1,006,868
Current assets
Stocks
14
652,764
799,894
Debtors
15
4,448,267
6,257,961
Cash at bank and in hand
2,737,890
1,254,213
7,838,921
8,312,068
Creditors: amounts falling due within one year
16
(3,183,311)
(3,403,852)
Net current assets
4,655,610
4,908,216
Total assets less current liabilities
5,689,964
5,915,084
Provisions for liabilities
Provisions
17
180,633
192,105
Deferred tax liability
18
195,338
197,127
(375,971)
(389,232)
Net assets
5,313,993
5,525,852
Capital and reserves
Called up share capital
20
2
2
Revaluation reserve
489,666
508,601
Capital redemption reserve
2
2
Profit and loss reserves
4,824,323
5,017,247
Total equity
5,313,993
5,525,852

These financial statements have been prepared in accordance with the provisions relating to medium-sized groups.

The financial statements were approved by the board of directors and authorised for issue on 30 August 2024 and are signed on its behalf by:
30 August 2024
M Hird
Director
Company registration number 02827565 (England and Wales)
SIERRA CP ENGINEERING LIMITED
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 12 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
1,025,140
997,384
Investments
12
120,160
120,160
1,145,300
1,117,544
Current assets
Stocks
14
608,677
782,265
Debtors
15
4,417,796
6,218,177
Cash at bank and in hand
2,493,071
1,036,046
7,519,544
8,036,488
Creditors: amounts falling due within one year
16
(3,176,538)
(3,316,153)
Net current assets
4,343,006
4,720,335
Total assets less current liabilities
5,488,306
5,837,879
Provisions for liabilities
Provisions
17
150,397
192,105
Deferred tax liability
18
205,216
198,954
(355,613)
(391,059)
Net assets
5,132,693
5,446,820
Capital and reserves
Called up share capital
20
2
2
Revaluation reserve
489,666
508,601
Capital redemption reserve
2
2
Profit and loss reserves
4,643,023
4,938,215
Total equity
5,132,693
5,446,820

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £491,275 (2022 - £1,606,350 profit).

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.

The financial statements were approved by the board of directors and authorised for issue on 30 August 2024 and are signed on its behalf by:
30 August 2024
M Hird
Director
Company registration number 02827565 (England and Wales)
SIERRA CP ENGINEERING LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
Share capital
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 January 2022
2
524,515
2
3,381,291
3,905,810
Year ended 31 December 2022:
Profit for the year
-
-
-
1,614,737
1,614,737
Other comprehensive income:
Tax relating to other comprehensive income
-
5,305
-
-
0
5,305
Total comprehensive income
-
5,305
-
1,614,737
1,620,042
Transfers
-
(21,219)
-
21,219
-
Balance at 31 December 2022
2
508,601
2
5,017,247
5,525,852
Year ended 31 December 2023:
Profit for the year
-
-
-
604,548
604,548
Other comprehensive income:
Currency translation differences
-
-
-
(11,005)
(11,005)
Tax relating to other comprehensive income
-
1,768
-
-
0
1,768
Total comprehensive income
-
1,768
-
593,543
595,311
Dividends
10
-
-
-
(807,170)
(807,170)
Transfers
-
(20,703)
-
20,703
-
Balance at 31 December 2023
2
489,666
2
4,824,323
5,313,993
SIERRA CP ENGINEERING LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
Share capital
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 January 2022
2
524,515
2
3,310,646
3,835,165
Year ended 31 December 2022:
Profit for the year
-
-
-
1,606,350
1,606,350
Other comprehensive income:
Tax relating to other comprehensive income
-
5,305
-
-
0
5,305
Total comprehensive income
-
5,305
-
1,606,350
1,611,655
Transfers
-
(21,219)
-
21,219
-
Balance at 31 December 2022
2
508,601
2
4,938,215
5,446,820
Year ended 31 December 2023:
Profit for the year
-
-
-
491,275
491,275
Other comprehensive income:
Tax relating to other comprehensive income
-
1,768
-
-
0
1,768
Total comprehensive income
-
1,768
-
491,275
493,043
Dividends
10
-
-
-
(807,170)
(807,170)
Transfers
-
(20,703)
-
20,703
-
Balance at 31 December 2023
2
489,666
2
4,643,023
5,132,693
SIERRA CP ENGINEERING LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 15 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
25
2,628,984
(1,491,634)
Income taxes paid
(215,432)
(195,879)
Net cash inflow/(outflow) from operating activities
2,413,552
(1,687,513)
Investing activities
Purchase of tangible fixed assets
(87,192)
(55,795)
Proceeds from disposal of tangible fixed assets
-
2,247
Interest received
9,903
3,586
Net cash used in investing activities
(77,289)
(49,962)
Financing activities
Repayment of borrowings
-
(24,860)
Interest paid
(111)
(1,621)
Dividends paid to equity shareholders
(807,170)
-
0
Net cash used in financing activities
(807,281)
(26,481)
Net increase/(decrease) in cash and cash equivalents
1,528,982
(1,763,956)
Cash and cash equivalents at beginning of year
1,254,213
3,018,169
Effect of foreign exchange rates
(45,305)
-
0
Cash and cash equivalents at end of year
2,737,890
1,254,213
SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
1
Accounting policies
Company information

Sierra CP Engineering Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Sandy's Road, Malvern, Worcestershire, WR14 1JJ.

 

The group consists of Sierra CP Engineering Limited and all of its subsidiaries.

1.1
Accounting convention

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

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

The financial statements have been prepared under the historical cost convention, [modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value]. The principal accounting policies adopted are set out below.

The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:

 

1.2
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company Sierra CP Engineering Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

 

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

 

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

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

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.

Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.

 

If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.

 

Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.

1.4
Going concern

At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.5
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

 

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

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.

SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -

Revenue from the design, manufacture and integration of test equipment is recognised by reference to the stage of completion. Stage of completion is measured by reference to the proportion of contract costs incurred at the balance sheet date to the estimated total contract costs.

 

Where the contract outcome cannot be measured reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.

 

Expected losses, if any, on such contracts are recognised as an expense immediately. Materials or services purchased in advance and not yet utilised on the contracts are recorded as stock or

prepayments, as appropriate.

1.6
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:

Freehold land and buildings
3% on revaluation
Leasehold land and buildings
10% straight line
Plant and equipment
12.5% straight line
Fixtures and fittings
12.5% straight line
Motor vehicles
20% straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.

1.7
Fixed asset investments

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

 

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

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

1.8
Impairment of fixed assets

At each reporting period end date, the group 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.

 

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

SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 19 -

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.

1.9
Stocks

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

 

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

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

1.10
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.

1.11
Financial instruments

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

 

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

 

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

Basic financial assets

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

SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 20 -
Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

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

 

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

 

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

Derecognition of financial assets

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

Classification of financial liabilities

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

Basic financial liabilities

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

 

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

 

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

SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 21 -
Other financial liabilities

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

 

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Derecognition of financial liabilities

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

1.12
Equity instruments

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

1.13
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

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

 

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

SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 22 -
1.14
Provisions

Provisions are recognised when the group has a legal or constructive present obligation as a result of a past event, it is probable that the group 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.

1.15
Employee benefits

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

 

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

 

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

1.16
Retirement benefits

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

1.17
Leases

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

1.18
Foreign exchange

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

 

The assets and liabilities of overseas subsidiaries denominated in foreign currencies are translated into pounds sterling at exchange rates prevailing at the date of the Consolidated Balance Sheet. Profits and losses are translated at average exchange rates for the year. Exchange differences arising are recognised in the Consolidated Statement of Comprehensive Income and are taken to the cumulative translation differences reserve.

 

2
Judgements and key sources of estimation uncertainty

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

 

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

SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Projects
11,538,473
13,043,008
Products and Services
1,144,780
1,077,608
12,683,253
14,120,616
2023
2022
£
£
Turnover analysed by geographical market
UK
8,187,210
6,681,374
Asia
2,421,149
2,140,529
USA
1,955,106
5,264,764
Rest of the world
119,788
33,949
12,683,253
14,120,616
2023
2022
£
£
Other revenue
Interest income
9,903
3,586
4
Operating profit
2023
2022
£
£
Operating profit for the year is stated after charging/(crediting):
Exchange losses
26,460
6,108
Fees payable to the group's auditor for the audit of the group's financial statements
71,500
38,400
Depreciation of owned tangible fixed assets
59,706
63,684
Profit on disposal of tangible fixed assets
-
(401)
Cost of stocks recognised as an expense
5,095,391
5,126,829
Operating lease charges
52,125
42,499
SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
5
Employees

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

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Management, admin and sales
29
23
25
19
Manufacturing
24
24
24
20
Engineering
32
27
23
23
Total
85
74
72
62

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
3,586,483
3,240,060
3,506,226
3,146,697
Pension costs
104,664
88,126
102,307
85,367
3,691,147
3,328,186
3,608,533
3,232,064
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
195,844
330,591
Company pension contributions to defined contribution schemes
35,000
9,900
230,844
340,491

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 1).

Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
195,844
330,591
Company pension contributions to defined contribution schemes
35,000
9,900
SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
9,903
3,586
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
111
1,621
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
160,291
375,215
Adjustments in respect of prior periods
(9,597)
-
0
UK income tax
-
363
Total UK current tax
150,694
375,578
Foreign current tax on profits for the current period
45,965
(10,321)
Adjustments in foreign tax in respect of prior periods
-
0
35,563
Total current tax
196,659
400,820
Deferred tax
Origination and reversal of timing differences
(377)
(1,677)
Total tax charge
196,282
399,143
SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
9
Taxation
(Continued)
- 26 -

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
800,830
2,013,880
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
188,355
382,637
Tax effect of expenses that are not deductible in determining taxable profit
15,286
19,701
Tax effect of income not taxable in determining taxable profit
(1,658)
(8,385)
Adjustments in respect of prior years
-
0
363
Effect of change in corporation tax rate
475
759
Permanent capital allowances in excess of depreciation
-
0
(1,326)
Effect of overseas tax rates
3,741
5,394
Under/(over) provided in prior years
(9,597)
-
0
Super-deduction
(320)
-
0
Taxation charge
196,282
399,143

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
(1,768)
(5,305)

Pillar Two

 

Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions the Berwind group operates. The legislation will be effective for the group’s financial year beginning 1 January 2024. The group is in scope of the enacted or substantively enacted legislation and has performed an assessment of the group’s potential exposure to Pillar Two income taxes.

 

The assessment of the potential exposure to Pillar Two income taxes is based on the most recent tax filings, country-by-country reporting, and financial statements for the constituent entities in the group. Based on the assessment, the Pillar Two effective tax rates in most of the jurisdictions in which the group operates are above 15%. However, there are a limited number of jurisdictions where the transitional safe harbour relief does not apply and the Pillar Two effective tax rate is close to 15%. The group does not expect a material exposure to Pillar Two income taxes in those jurisdictions.

SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 27 -
10
Dividends
2023
2022
Recognised as distributions to equity holders:
£
£
Final paid
807,170
-
11
Tangible fixed assets
Group
Freehold land and buildings
Leasehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 January 2023
911,826
-
0
158,494
280,940
12,645
1,363,905
Additions
11,533
18,829
22,903
33,927
-
0
87,192
At 31 December 2023
923,359
18,829
181,397
314,867
12,645
1,451,097
Depreciation and impairment
At 1 January 2023
47,115
-
0
121,467
176,232
12,223
357,037
Depreciation charged in the year
24,553
326
11,947
22,458
422
59,706
At 31 December 2023
71,668
326
133,414
198,690
12,645
416,743
Carrying amount
At 31 December 2023
851,691
18,503
47,983
116,177
-
0
1,034,354
At 31 December 2022
864,711
-
0
37,027
104,708
422
1,006,868
SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
11
Tangible fixed assets
(Continued)
- 28 -
Company
Freehold land and buildings
Leasehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 January 2023
911,826
-
0
158,494
262,150
12,645
1,345,115
Additions
11,533
18,829
22,903
33,053
-
0
86,318
At 31 December 2023
923,359
18,829
181,397
295,203
12,645
1,431,433
Depreciation and impairment
At 1 January 2023
47,115
-
0
121,467
166,926
12,223
347,731
Depreciation charged in the year
24,553
326
9,124
24,137
422
58,562
At 31 December 2023
71,668
326
130,591
191,063
12,645
406,293
Carrying amount
At 31 December 2023
851,691
18,503
50,806
104,140
-
0
1,025,140
At 31 December 2022
864,711
-
0
37,027
95,224
422
997,384

The freehold land and buildings has been subject to revaluation. If accounted for under the cost model as an alternative to the revaluation model which has been adopted, the freehold land and buildings would have a carrying value of £131,327 (2022: £121,097).

 

Revalued land cost included under freehold land and buildings of £100,000 (2022: £100,000) is not depreciated.

 

Revaluation

The most recent independent valuation of the building was carried out on the 25 May 2021 by Carolyn Quinn BA (Hons) MRICS of Harris Lamb Limited. This retrospective valuation was effective from the 31 December 2020 and the land & buildings was revalued to £875,000. The revaluation covered all assets within Land and Buildings with the valuation being assessed every 5 years. The Directors have chosen not to revalue the building this period and do not believe the value would have changed materially.

 

12
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
13
-
0
-
0
120,160
120,160
SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
12
Fixed asset investments
(Continued)
- 29 -
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 January 2023 and 31 December 2023
120,160
Carrying amount
At 31 December 2023
120,160
At 31 December 2022
120,160
13
Subsidiaries

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

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
CP India Test Systems Private Limited
India
Ordinary shares
99.99
14
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Raw materials and consumables
623,656
671,218
579,569
653,589
Work in progress
29,108
128,676
29,108
128,676
652,764
799,894
608,677
782,265
15
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
2,256,600
3,840,065
1,802,411
3,582,777
Amounts owed by group undertakings
16,586
242,169
448,503
487,285
Other debtors
407,708
223,239
399,582
196,276
Prepayments and accrued income
1,767,373
1,952,488
1,767,300
1,951,839
4,448,267
6,257,961
4,417,796
6,218,177
SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 30 -
16
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
£
£
£
£
Trade creditors
1,048,767
1,011,419
1,072,247
1,011,420
Amounts owed to group undertakings
12,252
146,012
54,934
159,045
Corporation tax payable
153,731
172,860
149,634
160,710
Other taxation and social security
295,028
409,167
295,027
409,167
Other creditors
31,138
31,493
31,137
31,493
Accruals and deferred income
1,642,395
1,632,901
1,573,559
1,544,318
3,183,311
3,403,852
3,176,538
3,316,153
17
Provisions for liabilities
Group
Company
2023
2022
2023
2022
£
£
£
£
Warranty provision
180,633
192,105
150,397
192,105
Movements on provisions:
Warranty provision
Group
£
At 1 January 2023
192,105
Additional provisions in the year
30,236
Utilisation of provision
(41,708)
At 31 December 2023
180,633
Company
£
At 1 January 2023
192,105
Utilisation of provision
(41,708)
At 31 December 2023
150,397
SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 31 -
18
Deferred taxation

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

Liabilities
Liabilities
2023
2022
Group
£
£
Accelerated capital allowances
201,658
201,338
Short term timing differences
(6,320)
(4,211)
195,338
197,127
Liabilities
Liabilities
2023
2022
Company
£
£
Accelerated capital allowances
211,196
203,165
Short term timing differences
(5,980)
(4,211)
205,216
198,954
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 1 January 2023
197,127
198,954
Charge to profit or loss
310
8,021
Effect of change in tax rate - other comprehensive income
(1,768)
(1,759)
Other
(331)
-
Liability at 31 December 2023
195,338
205,216

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

19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
104,664
88,126

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

SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 32 -
20
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of 0.1999872p each
1,024
1,024
2
2

Shares have equal voting rights, are there are no restrictions.

21
Financial commitments, guarantees and contingent liabilities

Bank guarantees are in place for advanced payments received against contracts in India £172,766 (2022 £145,159). These guarantees are held in deposit accounts until the commitment is fulfilled or the accounts reach their maturity date.

22
Operating lease commitments
Lessee

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

Group
Company
2023
2022
2023
2022
£
£
£
£
Within one year
113,562
27,898
113,562
27,898
Between two and five years
944,488
23,495
944,488
23,495
In over five years
1,087,680
-
1,087,680
-
2,145,730
51,393
2,145,730
51,393
23
Related party transactions
Transactions with related parties

 

Group

During the year the group entered into the following transactions with related parties who are wholly owned subsidiaries within the Berwind group:

Sales
Sales
Purchases
Purchases
2023
2022
2023
2022
£
£
£
£
Group
Other related parties
299,270
322,872
183,618
1,053,468
SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
23
Related party transactions
(Continued)
- 33 -

The following amounts were outstanding at the reporting end date:

Amounts due to related parties
2023
2022
£
£
Group
Other related parties
12,252
12,252

The following amounts were outstanding at the reporting end date:

Amounts due from related parties
2023
2022
Balance
Balance
£
£
Group
Other related parties
16,586
242,169
24
Controlling party

The immediate parent company is Cincinnati Test Systems, Inc. 10100 Progress Way, Harrison, Ohio 45030, a company incorporated in the USA.

 

The ultimate parent and controlling party is Berwind Corporation, a company incorporated in the USA.

25
Cash generated from/(absorbed by) group operations
2023
2022
£
£
Profit for the year after tax
604,548
1,614,737
Adjustments for:
Taxation charged
196,282
399,143
Finance costs
111
1,621
Investment income
(9,903)
(3,586)
Gain on disposal of tangible fixed assets
-
(401)
Depreciation and impairment of tangible fixed assets
59,706
63,684
Foreign exchange losses
34,300
6,108
Decrease in provisions
(11,472)
(48,549)
Movements in working capital:
Decrease/(increase) in stocks
147,130
(271,481)
Decrease/(increase) in debtors
1,809,694
(3,169,261)
Decrease in creditors
(201,412)
(83,649)
Cash generated from/(absorbed by) operations
2,628,984
(1,491,634)
SIERRA CP ENGINEERING LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 34 -
26
Analysis of changes in net funds - group
1 January 2023
Cash flows
Exchange rate movements
31 December 2023
£
£
£
£
Cash at bank and in hand
1,254,213
1,517,977
(34,300)
2,737,890
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