Company registration number 01721268 (England and Wales)
HSL MANUFACTURING LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
HSL MANUFACTURING LIMITED
COMPANY INFORMATION
Directors
Mr W J Burrows
Mrs D L Burrows
Ms V Hodgson
Mr J Cummins
(Appointed 26 June 2023)
Mrs L Eastwood
(Appointed 26 June 2023)
Mr B Waters
(Appointed 26 June 2023)
Secretary
Mr W J Burrows
Company number
01721268
Registered office
Units 1-3a Grange Road Industrial Estate
Grange Road
Batley
West Yorkshire
WF17 6LN
Auditor
Azets Audit Services Limited
12 King Street
Leeds
LS1 2HL
HSL MANUFACTURING 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 - 22
HSL MANUFACTURING LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

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

 

Review of the business

 

The company’s turnover increased by 12.8% during the year to £20.8m (2022: £18.4m) while gross margins held virtually flat at 14.0% (2022: 14.2%). Operating profits increased to £0.80m (2022: £0.61m), while underlying EBITDA increased to £0.99m (2022: £0.81m).

The results above were achieved in the face of significant headwinds in the post pandemic economy, which include the war in Ukraine, high inflation and interest rates, dampening UK consumer confidence and a slow housing market.

2023 was a year of change in the board of directors. After seven years of service that included overseeing the expansion of the retail estate of sister company High Seat Limited, and steering the business through the pandemic, Guy Critchlow and Paul Roberts took the decision to leave the business. After ten years’ service that saw him oversee the transformation of HSL’s manufacturing capabilities, Kevin Wall took early retirement in summer 2023. Leanne Eastwood and Ben Waters, representing the third generation of the founding family, both stepped up onto an operational board lead by Venessa Hodgson as Managing Director.

The directors are pleased with the performance delivered during the year and are optimistic about prospects for 2024 and beyond.

Principal risks and uncertainties

The company faces a number of risks in both its day-to-day operation, and in the implementation of its strategic plans. The board regularly reviews these risks and puts in place process improvements and mitigating actions, wherever possible, to manage its risk.

Risks that could potentially have the most significant impact on the company are outlined below, together with the mitigating actions taken. Other risks which are either not currently known or not considered material could also impact upon the company’s reported performance or net assets.

Business strategy

The company’s success depends upon the design and implementation of a successful strategy. The strategy for the group of which the company is a member is discussed at board meetings, including meetings specifically held to undertake longer term horizon-scanning and strategic planning.

Longer-term development is also addressed at regular operational meetings which include the extensive involvement of directors and HSL’s family board, the company’s senior management team and other colleagues. Each department’s objectives are closely aligned with the group’s strategy, and performance against those objectives is regularly reviewed throughout the year. Colleague incentive schemes are based upon the wider HSL group’s performance, to align all colleagues with delivering the company and group’s strategic and operational plans.

Economic conditions

During 2023, consumer confidence across much of the retail industry was negatively impacted by both geopolitical events and UK economic conditions, including high inflation and interest rates. The wider furniture industry can be considered to represent items of higher-value discretionary spend. However, the company designs and manufactures products focused on consumers with a need for specialist furniture which improves comfort, posture, and wellbeing. This offers protection against such negative economic conditions and, furthermore, should drive the fastest pace of recovery as market conditions improve.

HSL MANUFACTURING LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -

Supply chain

The company’s success is dependent upon a reliable, high quality supply chain. As with many other businesses currently, the company is exposed to risks of supply chain disruption and inflation in the purchase price of raw materials and bought-in services.

The company closely reviews quality from all sources of supply and maintains flexible supply arrangements. This enables switching between suppliers, to maintain quality levels and ensure competitiveness.

To ensure continuity of supply, the company continuously reviews future order expectations and works with its suppliers to ensure, wherever possible, that appropriate stock levels are held in or close to the UK to mitigate the risk of supply chain delays.

Key performance indicators

Key performance indicators used by the directors to monitor the company include the following:

 

 

 

2023

2022

 

 

 

 

 

 

£000

£000

 

 

 

 

Sales

 

20,810

18,443

 

 

 

 

EBITDA

 

987

809

 

 

 

 

EBITDA Margin %

4.7%

4.4%

 

 

 

 

 

 

 

EBITDA reconciliation

 

 

 

 

 

 

Profit before tax

801

605

 

 

 

Depreciation

 

183

201

 

 

 

 

Interest

 

3

3

 

 

 

 

 

 

 

EBITDA

 

987

809

 

On behalf of the board

Mr J Cummins
Director
7 June 2024
HSL MANUFACTURING LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

The directors present their annual report and financial statements for the year ended 31 December 2023.

Principal activities

The principal activity of the company continued to be the design and manufacture of fixed and motion furniture, predominantly for High Seat Limited, a fellow subsidiary of the parent company.

Results and dividends

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

Ordinary dividends were paid to the company's parent amounting to £500,000. The directors do not recommend payment of a final dividend.

Directors

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

Mr W J Burrows
Mrs D L Burrows
Mr G C Critchlow
(Resigned 20 January 2023)
Ms V Hodgson
Mr P R Roberts
(Resigned 23 June 2023)
Mr K M Wall
(Resigned 16 June 2023)
Mr J Cummins
(Appointed 26 June 2023)
Mrs L Eastwood
(Appointed 26 June 2023)
Mr B Waters
(Appointed 26 June 2023)
Auditor

The auditor, Azets Audit Services Limited, 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
Mr J Cummins
Director
7 June 2024
HSL MANUFACTURING 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:

 

 

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.

HSL MANUFACTURING LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF HSL MANUFACTURING LIMITED
- 5 -
Opinion

We have audited the financial statements of HSL Manufacturing 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:

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 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.

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:

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

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

 

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

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.

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.

HSL MANUFACTURING LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF HSL MANUFACTURING LIMITED
- 7 -

Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.

 

We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework.  Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.  This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

 

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

 

 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation.  This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.  The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Use of our report

This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.

Jessica Lawrence
Senior Statutory Auditor
For and on behalf of Azets Audit Services Limited
7 June 2024
Chartered Accountants
Statutory Auditor
12 King Street
Leeds
LS1 2HL
HSL MANUFACTURING LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
20,810,260
18,443,256
Cost of sales
(17,886,564)
(15,825,487)
Gross profit
2,923,696
2,617,769
Administrative expenses
(2,191,291)
(2,067,697)
Other operating income
71,973
57,765
Operating profit
4
804,378
607,837
Interest payable and similar expenses
6
(2,657)
(2,649)
Profit before taxation
801,721
605,188
Tax on profit
7
(4,500)
79,500
Profit for the financial year
797,221
684,688

The profit and loss account has been prepared on the basis that all operations are continuing operations.

HSL MANUFACTURING LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
9
1,008,136
773,100
Current assets
Stocks
10
2,424,229
3,769,057
Debtors
11
1,296,376
546,081
Cash at bank and in hand
1,848,455
960,778
5,569,060
5,275,916
Creditors: amounts falling due within one year
12
(1,976,889)
(1,783,309)
Net current assets
3,592,171
3,492,607
Total assets less current liabilities
4,600,307
4,265,707
Creditors: amounts falling due after more than one year
13
-
0
(33,621)
Provisions for liabilities
Deferred tax liability
15
144,000
73,000
(144,000)
(73,000)
Net assets
4,456,307
4,159,086
Capital and reserves
Called up share capital
17
52
52
Capital redemption reserve
48
48
Profit and loss reserves
4,456,207
4,158,986
Total equity
4,456,307
4,159,086
The financial statements were approved by the board of directors and authorised for issue on 7 June 2024 and are signed on its behalf by:
Mr J  Cummins
Director
Company Registration No. 01721268
HSL MANUFACTURING LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Capital redemption reserve
Profit and loss reserves
Total
Notes
£
£
£
£
Balance at 1 January 2022
52
48
3,874,298
3,874,398
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
684,688
684,688
Dividends
8
-
-
(400,000)
(400,000)
Balance at 31 December 2022
52
48
4,158,986
4,159,086
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
-
797,221
797,221
Dividends
8
-
-
(500,000)
(500,000)
Balance at 31 December 2023
52
48
4,456,207
4,456,307
HSL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information

HSL Manufacturing Limited is a private company limited by shares incorporated in England and Wales. The registered office is Units 1-3a Grange Road Industrial Estate, Grange Road, Batley, West Yorkshire, WF17 6LN.

1.1
Accounting convention

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

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £1.

The financial statements have been prepared under the historical cost convention. 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:

 

 

The financial statements of the company are consolidated in the financial statements of High Seat Holdings Limited. These consolidated financial statements are available from its registered office, Units 1-3a Grange Road Business Park, Grange Road, Batley, West Yorkshire, WF17 6LN.

1.2
Going concern

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

1.3
Turnover

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

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

1.4
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

HSL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Leasehold land and buildings
5 - 10 years
Plant and equipment
5 - 10 years
Fixtures and fittings
2 - 10 years

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 assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

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

 

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

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

1.6
Stocks

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

 

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.

1.7
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.

HSL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
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.

Other financial assets

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

Impairment of financial assets

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

 

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

 

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

Derecognition of financial assets

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

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.

HSL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Basic financial liabilities

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

 

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

 

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

Other financial liabilities

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

 

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

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.9
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.

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

1.12
Retirement benefits

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

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.

1.14
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.

HSL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
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.

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 provision

All goods are made to order and as a result provisions are typically low. An estimate is made by the directors as to the anticipated level of raw material and finished goods stock that is expected to become obsolete, and a provision made accordingly.

3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Sale of manufactured products
20,810,260
18,443,256

All turnover arose within the United Kingdom in both years.

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
11,900
11,650
Depreciation of owned tangible fixed assets
168,261
186,105
Depreciation of tangible fixed assets held under finance leases
14,943
14,943
Loss on disposal of tangible fixed assets
1,367
-
Operating lease charges
329,335
371,975
HSL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
5
Employees

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

2023
2022
Number
Number
Directors
6
6
Office and management
6
6
Manufacturing
130
132
Total
142
144

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
4,803,159
3,948,068
Social security costs
409,490
356,772
Pension costs
83,846
77,452
5,296,495
4,382,292
6
Interest payable and similar expenses
2023
2022
£
£
Interest on finance leases and hire purchase contracts
2,657
2,649
7
Taxation
2023
2022
£
£
Deferred tax
Origination and reversal of timing differences
4,500
(79,500)
HSL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
7
Taxation
(Continued)
- 18 -

The actual charge/(credit) 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
801,721
605,188
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
188,565
114,986
Depreciation on assets not qualifying for tax allowances
5,969
9,214
Patent box deduction
(198,068)
(150,590)
Other
8,034
(53,110)
Taxation charge/(credit) for the year
4,500
(79,500)

The UK corporation tax rate was 19% to 5 April 2023 and 25% from 6 April 2023.

8
Dividends
2023
2022
£
£
Interim paid
500,000
400,000
HSL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
9
Tangible fixed assets
Leasehold land and buildings
Assets under construction
Plant and equipment
Fixtures and fittings
Total
£
£
£
£
£
Cost
At 1 January 2023
651,686
6,255
708,483
1,372,663
2,739,087
Additions
49,057
-
0
168,317
204,883
422,257
Disposals
(17,441)
(2,650)
(181,104)
(67,337)
(268,532)
Transfers
-
0
(3,605)
-
0
3,605
-
0
At 31 December 2023
683,302
-
0
695,696
1,513,814
2,892,812
Depreciation and impairment
At 1 January 2023
574,377
-
0
639,604
752,006
1,965,987
Depreciation charged in the year
33,415
-
0
17,096
132,693
183,204
Eliminated in respect of disposals
(16,074)
-
0
(181,104)
(67,337)
(264,515)
At 31 December 2023
591,718
-
0
475,596
817,362
1,884,676
Carrying amount
At 31 December 2023
91,584
-
0
220,100
696,452
1,008,136
At 31 December 2022
77,309
6,255
68,879
620,657
773,100

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
£
£
Fixtures and fittings
112,071
127,014
10
Stocks
2023
2022
£
£
Raw materials and consumables
2,222,534
3,476,477
Work in progress
192,077
281,413
Finished goods and goods for resale
9,618
11,167
2,424,229
3,769,057
HSL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
11
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
15,281
16,225
Amounts owed by group undertakings
499,409
87,922
Other debtors
324,897
309,552
Prepayments and accrued income
344,789
86,882
1,184,376
500,581
Deferred tax asset (note 15)
112,000
45,500
1,296,376
546,081
12
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
14
33,621
44,829
Trade creditors
836,615
1,000,082
Amounts owed to group undertakings
554,893
400,974
Taxation and social security
119,620
92,045
Other creditors
74,285
53,690
Accruals and deferred income
357,855
191,689
1,976,889
1,783,309
13
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
14
-
0
33,621

Obligations under finance leases are secured against the assets to which they relate.

14
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
33,621
47,477
In two to five years
-
0
35,608
33,621
83,085
Less: future finance charges
-
0
(4,635)
33,621
78,450
HSL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
14
Finance lease obligations
(Continued)
- 21 -

Finance lease payments represent rentals payable by the company for certain items of fixtures and fittings. 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.

15
Deferred taxation

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

Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Balances:
£
£
£
£
Accelerated capital allowances
144,000
73,000
-
-
Tax losses
-
-
106,000
41,500
Provisions
-
-
6,000
4,000
144,000
73,000
112,000
45,500
2023
Movements in the year:
£
Liability at 1 January 2023
27,500
Charge to profit or loss
4,500
Liability at 31 December 2023
32,000

The deferred tax asset, in respect of provisions, set out above is expected to reverse within 12 months. The deferred tax liability set out above is expected to reverse within 12 months.

16
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
83,846
77,452

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.

 

Unpaid pension contributions at the year end were £21,883 (2022 - £15,796 ).

17
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of £1 each
52
52
52
52
HSL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
18
Financial commitments, guarantees and contingent liabilities

The company is party to an unlimited inter-company guarantee with High Seat Holdings Limited and High Seat Limited. The liability outstanding at the year end was £Nil (2022 - £1,000,000).

19
Operating lease commitments
Lessee

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

2023
2022
£
£
Within one year
396,333
328,960
Between two and five years
1,585,333
-
0
1,981,666
328,960
During the year HSL Manufacturing Limited entered into a new 10 year lease agreement in Novemeber 2023 for its main manufacturing premises.The lease includes a break clause dated 16 December 2028.
20
Related party transactions
Transactions with related parties

The company has taken advantage of the disclosure exemptions of Section 33.1A of FRS 102 which permit it to not present details of its transactions with members of the group headed by High Seat Holdings Limited where relevant group companies are all wholly owned. Details of outstanding balances as at the year end are given in note 11 and note 12.

21
Ultimate controlling party

The ultimate parent company is High Seat Holdings Limited, a company registered in England and Wales, whose registered office is Units 1-3a, Grange Road Business Park, Grange Road, Batley, West Yorkshire, WF17 6LN.

The ultimate controlling party is Mr W J Burrows and Mrs D L Burrows.

The smallest and largest group in which the results of the company are consolidated is that headed by High Seat Holdings Limited, incorporated in England and Wales. The consolidated accounts of this company are available to the public and may be obtained from its registered office. No other group accounts include the results of the company.

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