Company registration number 04416364 (England and Wales)
METELEC LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
METELEC LIMITED
COMPANY INFORMATION
DIRECTORS
Mr P Michel
Mr K Draper
COMPANY NUMBER
04416364
REGISTERED OFFICE
3 Hilton Cross Business Park
Featherstone
Wolverhampton
West Midlands
WV10 7QZ
AUDITOR
JW Hinks LLP
Chartered Accountants
19 Highfield Road
Edgbaston
Birmingham
B15 3BH
METELEC LIMITED
CONTENTS
PAGE
Strategic report
1 - 2
Directors' report
3 - 4
Directors' responsibilities statement
5
Independent auditor's report
6 - 8
Income statement
9
Statement of financial position
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 32
METELEC 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

We aim to present a balanced and comprehensive review of the development and performance of our business during the year and its position at the year end.

 

Our review is consistent with the size and non-complex nature of our business and is written in the context of the risks and uncertainties we face.

 

We consider that our key financial performance indicators are those that communicate the financial performance and strength of the company as a whole, these being turnover and gross margin.

 

Turnover and gross margin of the company were as follows:

 

     2023          2022

     £             £

Turnover          23,805,656         22,034,050

Gross margin     2,071,287     3,420,661

    (9%)          (16%)

 

The company continues to buy copper for sale to the electrical industries and also now sells component stocks. The business is very susceptible to market price fluctuations.

 

Trading Performance 2023

The year started with significant speculation that China’s economic activity would ‘kick-start’ after remaining COVID restrictions were lifted, raising the LME Copper value to >$9000/ tonne. However, from February the economic reality of weakened construction demand there and lower manufacturing activity meant that the LME lowered month on month to the $8000 level before a slight up-tick to the year-end. Consequently, this devaluation had a windfall loss effect on the Metelec stock affecting margins for the business. The UK and Ireland economy was generally flat with Residential and Commercial Construction weakening through the year. The bright spots of Electric Vehicle charging infrastructure and Data Centres were a focus for Metelec growth, with record combined deliveries for 2023. The business managed to relocate both the Ireland and UK operations during the year into larger premises to facilitate growth. The new UK HQ, Distribution and Manufacturing centre is BREEAM excellent rated for environmental performance and situated in an excellent position next to the M54 near Wolverhampton. The UK business delivered a small profit whilst absorbing a further Group price increase and substantial moving and investment costs without the need for loan capital.

 

Business Environment 2024

The UK is expected to be at very low single digit GDP growth verging on recession. Demand for Electric Vehicle charging infrastructure and data centres are likely to continue to grow as the clean energy transition gathers momentum together with the demand for AI drives these sectors. China’s construction sector is likely to remain subdued notwithstanding further stimulus there. An expected strengthening of LME is likely with supply side mining constraints together with Renewable and Clean Energy infrastructure demand led by the US Economy. Metelec starts the year in January with a combined record monthly volume delivered into UK and Ireland. New CAPEX for CNC Punching and Bending machines have been approved and ordered for implementation in the first half year. This gives greater scope for growth in added value products at the new UK Distribution and Manufacturing facility.

 

 

 

 

 

 

 

 

 

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

On behalf of the board

Mr K Draper
DIRECTOR
26 February 2024
METELEC 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 that of specialist suppliers of copper to the electrical industries.

RESULTS AND DIVIDENDS

The results for the year are set out on page 9.

The total distribution of dividends for the year ended 31 December 2023 will be £nil (2022: £1,000,000).

DIRECTORS

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

Mr P Michel
Mr K Draper
SUPPLIER PAYMENT POLICY

The company's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).

 

The company's current policy concerning the payment of trade creditors is to:

 

Trade creditors of the company at the year end were equivalent to 23 day's purchases, based on the average daily amount invoiced by suppliers during the year.

FINANCIAL INSTRUMENTS

The company's principal financial instruments comprise cash and commercial factoring finance. The main purpose of these financial instruments is to raise finance for the company's operations and expansion plans. The company has various other financial instruments such as trade debtors and trade creditors, which arise directly from its operations. The company does not enter into derivative transactions.

 

It is, and has been throughout the period under review, the company's policy that no trading in financial instruments shall be undertaken. The main risks arising from the company's financial instruments are interest rate risk, credit risk and liquidity risk. The board reviews and agrees policies for managing each of these risks and they are summarised below.

 

Interest rate risk

The company's exposure to market risk for changes in interest rates is limited to the company's commercial factoring finance. The additional requirement for medium to long term debt finance will be reviewed by the directors based on the company's forecast working capital requirements.

 

Credit risk

The company trades with only recognised, credit worthy third parties. It is the company policy that all customers who wish to trade on credit terms are subject to credit vetting procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the company's exposure to bad debts is minimal.

 

Liquidity risk

The company's objective is to maintain a balance between continuity of funding and flexibility through the use of cash and short term deposits.

AUDITOR

The auditors, J W Hinks LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

METELEC LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
STATEMENT OF DISCLOSURE TO AUDITOR

Each director in office at the date of approval of this annual report confirms that:

 

 

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

 

On behalf of the board
Mr K Draper
DIRECTOR
26 February 2024
METELEC 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 International Financial Reporting Standards (IFRSs) as adopted by the European Union. 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, International Accounting Standard 1 requires that directors:

 

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.

METELEC LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF METELEC LIMITED
- 6 -
OPINION

We have audited the financial statements of Metelec Limited (the 'company') for the year ended 31 December 2023 which comprise the income statement, the statement of financial position, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards.

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:

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 and the directors' report.

 

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

 

METELEC LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF METELEC LIMITED
- 7 -
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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements and discussed the policies and procedures regarding compliance.

Specific areas considered were as follows:

 

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected all irregularities including those leading to material misstatements in the financial statements or non-compliance with regulation, even though we have properly planned and performed our audit in accordance with auditing standards.

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

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

METELEC LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF METELEC LIMITED
- 8 -

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.

 

NEAL ASTON FCA FCCA (SENIOR STATUTORY AUDITOR)
FOR AND ON BEHALF OF JW HINKS LLP
CHARTERED ACCOUNTANTS
STATUTORY AUDITOR
19 Highfield Road
Edgbaston
Birmingham
B15 3BH
26 FEBRUARY 2024
26 February 2024
METELEC LIMITED
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Revenue
4
23,805,656
22,034,050
Cost of sales
(21,734,369)
(18,613,389)
GROSS PROFIT
2,071,287
3,420,661
Other operating income
107,472
84,709
Administrative expenses
(1,824,044)
(1,319,454)
OPERATING PROFIT
5
354,715
2,185,916
Investment revenues
8
13,842
-
0
Finance costs
9
(209,773)
(26,659)
PROFIT BEFORE TAXATION
158,784
2,159,257
Income tax expense
10
(113,749)
(430,174)
PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR
45,035
1,729,083

The income statement has been prepared on the basis that all operations are continuing operations.

METELEC LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
NON-CURRENT ASSETS
Property, plant and equipment
13
4,745,055
295,124
Investments
14
100
100
Deferred tax asset
23
805,966
-
0
5,551,121
295,224
CURRENT ASSETS
Inventories
16
9,029,946
7,416,349
Trade and other receivables
17
3,953,798
5,269,153
Current tax recoverable
99,412
-
0
Cash and cash equivalents
299,677
47,708
13,382,833
12,733,210
CURRENT LIABILITIES
Trade and other payables
21
4,325,411
3,092,738
Current tax liabilities
-
0
217,604
Borrowings
19
2,180,447
1,809,291
Lease liabilities
22
34,522
43,510
6,540,380
5,163,143
NET CURRENT ASSETS
6,842,453
7,570,067
NON-CURRENT LIABILITIES
Lease liabilities
22
3,563,534
-
0
Deferred tax liabilities
23
979,714
60,000
4,543,248
60,000
NET ASSETS
7,850,326
7,805,291
EQUITY
Called up share capital
25
700,000
700,000
Retained earnings
7,150,326
7,105,291
TOTAL EQUITY
7,850,326
7,805,291
The financial statements were approved by the board of directors and authorised for issue on 26 February 2024 and are signed on its behalf by:
Mr P Michel
Mr K  Draper
DIRECTOR
DIRECTOR
Company registration number 04416364 (England and Wales)
METELEC LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
Share capital
Retained earnings
Total
Notes
£
£
£
BALANCE AT 1 JANUARY 2022
700,000
6,376,208
7,076,208
YEAR ENDED 31 DECEMBER 2022:
Profit and total comprehensive income
-
1,729,083
1,729,083
Transactions with owners:
Dividends
11
-
(1,000,000)
(1,000,000)
BALANCE AT 31 DECEMBER 2022
700,000
7,105,291
7,805,291
YEAR ENDED 31 DECEMBER 2023:
Profit and total comprehensive income
-
45,035
45,035
BALANCE AT 31 DECEMBER 2023
700,000
7,150,326
7,850,326
METELEC LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
2023
2022
Notes
£
£
£
£
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from/(absorbed by) operations
29
1,541,332
(1,142,842)
Interest paid
(6,614)
(26,659)
Tax paid
(317,017)
(321,457)
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES
1,217,701
(1,490,958)
INVESTING ACTIVITIES
Purchase of property, plant and equipment
(1,378,575)
(75,318)
Proceeds on disposal of property, plant and equipment
23,750
7,250
Interest received
13,842
-
0
NET CASH USED IN INVESTING ACTIVITIES
(1,340,983)
(68,068)
FINANCING ACTIVITIES
Payment of lease liabilities
4,095
(97,545)
Dividends paid
-
(1,000,000)
NET CASH GENERATED FROM/(USED IN) FINANCING ACTIVITIES
4,095
(1,097,545)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(119,187)
(2,656,571)
Cash and cash equivalents at beginning of year
(1,761,583)
894,988
Cash and cash equivalents at end of year
(1,880,770)
(1,761,583)
RELATING TO:
Bank balances and short term deposits
299,677
47,708
Bank - invoice financing
(2,180,447)
(1,809,291)
METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
1
ACCOUNTING POLICIES
COMPANY INFORMATION

Metelec Limited is a private company limited by shares incorporated in England and Wales. The registered office and primary trading address is 3 Hilton Cross Business Park, Featherstone, Wolverhampton, West Midlands, WV10 7QZ.

1.1
ACCOUNTING CONVENTION

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.

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. The principal accounting policies adopted are set out below.

The company has taken advantage of the exemption under section 401 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

1.2
GOING CONCERN

The directors have at the time of approving the financial statements, a reasonable expectation that the truecompany 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
REVENUE

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
GOODWILL

Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less impairment losses.

 

The gain on a bargain purchase is recognised in profit or loss in the period of the acquisition.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not subsequently reversed.

1.5
PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment 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:

Leased property
Over period of lease
Leasehold improvements
Over period of lease
Fixtures and fittings
at varying rates on cost
Plant and equipment
20% on cost
Computers
33% on cost
Motor vehicles
20% on cost
METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
ACCOUNTING POLICIES
(Continued)
- 14 -

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 income statement.

1.6
NON-CURRENT INVESTMENTS

Investments in subsidiaries are stated at cost at the balance sheet date.

1.7
IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS

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

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

 

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

 

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.

1.8
INVENTORIES

Inventories 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 inventories to their present location and condition.

 

Inventories 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.

Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

Inventories are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

1.9
CASH AND CASH EQUIVALENTS

Cash and cash equivalents 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.

1.10
FINANCIAL ASSETS

Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

 

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.

METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
ACCOUNTING POLICIES
(Continued)
- 15 -
Financial assets at fair value through profit or loss

Financial assets are classified as at FVTPL when the financial asset is held for trading. This is the case if:

 

 

Financial assets at FVTPL are stated at fair value with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset. Interest and dividends are included in 'Investment income' and gains and losses on remeasurement included in 'other gains and losses' in the statement of comprehensive income.

Financial assets held at amortised cost

Financial assets with fixed or determinable payments and fixed maturity dates that the Company has the positive intent and ability to hold to maturity are classified as held to maturity investments.

 

Held to maturity investments are measured at amortised cost using the effective interest method less any impairment, with revenue recognised on an effective yield basis.

 

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.

Trade Receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.

 

Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.

Financial assets at fair value through other comprehensive income

Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.

Financial assets classified as available for sale are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income. Where an AFS financial asset is disposed of or determined to be impaired, the cumulative gain or loss previously recognised in other comprehensive income is reclassified to profit or loss.

 

Dividends and interest earned on AFS financial assets are included in the investment income line item in the statement of comprehensive income.

METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
ACCOUNTING POLICIES
(Continued)
- 16 -
Impairment of financial assets

Financial assets carried at amortised cost and FVOCI are assessed for indicators of impairment at each reporting end date.

 

The expected credit losses associated with these assets are estimated on a forward-looking basis. A broad range of information is considered when assessing credit risk and measuring expected credit losses, including past events, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

 

For trade receivables, the simplified approach permitted by IFRS 9 is applied, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.

1.11
FINANCIAL LIABILITIES

The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.

Financial liabilities at fair value through profit or loss

Financial liabilities are classified as measured at fair value through profit or loss when the financial liability is held for trading. A financial liability is classified as held for trading if:

 

 

Financial liabilities at fair value through profit or loss are stated at fair value with any gains or losses arising on remeasurement recognised in profit or loss.

Other financial liabilities

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Derecognition of financial liabilities

Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.

1.12
EQUITY INSTRUMENTS

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

1.13
DERIVATIVES

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

 

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are classified as current.

METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
ACCOUNTING POLICIES
(Continued)
- 17 -
1.14
TAXATION

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

Current tax

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

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary 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 income statement, 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.

1.15
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 inventories or non-current 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.

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to the income statement in the period to which they relate.

1.17
LEASES

At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.

The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.

 

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
ACCOUNTING POLICIES
(Continued)
- 18 -

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.

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.

METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
2
ADOPTION OF NEW AND REVISED STANDARDS AND CHANGES IN ACCOUNTING POLICIES

New and revised IFRSs applied with no material effect on the financial statements

 

The accounting policies adopted are consistent with those of the previous period’s financial period, except for the following amendments to IFRS effective for annual period beginning on or before January 1, 2023 which did not have a material effect on the financial statements;

 

Pronouncements applicable to entities applying IFRSs at the IASB effective dates

 

 

Standards

 

- IFRS 17 - Insurance Contracts

 

 

Amendments

 

- Amendments to IFRS 17

 

- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2

 

- Definition of Accounting Estimates (Amendments to IAS 8)

 

- Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)

 

- Initial Application of IFRS 17 and IFRS 9 — Comparative Information (Amendment to IFRS 17)

 

- International Tax Reform — Pillar Two Model Rules (Amendments to IAS 12) — Application of the exception and disclosure of that fact

 

- International Tax Reform — Pillar Two Model Rules (Amendments to the 'IFRS for SMEs' Standard) — Application of the exception and disclosure of that fact

METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
ADOPTION OF NEW AND REVISED STANDARDS AND CHANGES IN ACCOUNTING POLICIES
(Continued)
- 20 -

New and revised standards

 

The standards and interpretations that are issued, up to the date of issuance of the Company’s financial statements are disclosed below. The management anticipates that these standards and amendments will have no material effect on the financial statements. The Company intends to adopt these standards, if applicable, as they become effective.

 

 

Effective for annual periods

New and revised IFRSs

beginning on or after

 

New or revised pronouncement

 

 

- IFRS 17 - Insurance Contracts

 

 

01 January 2023 (Mandatory)

 

- IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information

 

01 January 2024 (Not yet endorsed)

- IFRS S2 Climate-related Disclosures

 

 

Amendments

 

New or revised pronouncement

 

- Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

 

- Amendments to IFRS 17

 

- Classification of Liabilities as Current or Non-current — Deferral of Effective Date (Amendment to IAS 1)

 

- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)

 

- Definition of Accounting Estimates (Amendments to IAS 8)

 

- Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12))

 

-Initial Application of IFRS 17 and IFRS 9 — Comparative Information (Amendment to IFRS 17)

 

- Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)

 

- Non-current Liabilities with Covenants (Amendments to IAS 1)

 

- International Tax Reform — Pillar Two Model Rules (Amendments to IAS 12)

 

- Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)

 

- Lack of Exchangeability (Amendments to IAS 21)

 

- International Tax Reform — Pillar Two Model Rules (Amendments to the 'IFRS for SMEs' Standard)

 

- Amendments to the SASB standards to enhance their international applicability

 

- Editorial Corrections (various)

01 January 2024 (Not yet endorsed)

 

 

 

 

 

 

01 January 2024 (Optional)

 

01 January 2023 (Mandatory)

 

Immediately available (Optional))

 

 

01 January 2023 (Partly endorsed)

 

 

01 January 2023 (Mandatory)

 

01 January 2023 (Mandatory)

 

 

01 January 2023 (Optional)

 

 

01 January 2024 (Optional)

 

01 January 2024 (Optional)

 

01 January 2023 (Mandatory)

 

01 January 2024 (Optional)

 

01 January 2025 (Optional)

 

01 January 2023 (Mandatory)

 

 

01 January 2025 (Optional)

 

Effective immediately applicable

Management anticipates that the adoption of the above standards in future years will have no material impact on the financial statements of the Company in the period of initial application.

METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
3
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

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

VALUATION OF LEASE LIABILITIES AND RIGHT-OF-USE ASSETS

The application of IFRS 16 requires the company to make judgments that affect the valuation of the lease liabilities and the valuation of right-of-use assets. These include: determining contracts in scope of IFRS 16, determining the contract term and determining the interest rate used for discounting of future cash flows.

 

Accounting policy 1.17 sets out the company's policy for accounting for leases within the scope of IFRS 16.

4
REVENUE

An analysis of the company's revenue is as follows:

2023
2022
£
£
REVENUE ANALYSED BY CLASS OF BUSINESS
Sale of copper and related goods
23,805,656
22,034,050
2023
2022
£
£
REVENUE ANALYSED BY GEOGRAPHICAL MARKET
United Kingdom
22,129,201
21,621,946
European Union
1,676,455
412,104
23,805,656
22,034,050
2023
2022
£
£
OTHER INCOME
Management charges
82,789
-
5
OPERATING PROFIT
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
74,936
(50,128)
Fees payable to the company's auditor for the audit of the company's financial statements
16,500
15,680
Depreciation of property, plant and equipment
259,165
161,005
Profit on disposal of property, plant and equipment
(6,979)
(7,250)
Cost of inventories recognised as an expense
21,287,411
18,255,957
METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
6
EMPLOYEES

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

2023
2022
Number
Number
Directors
1
1
Direct, sales and administration
28
26
Total
29
27

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
1,000,286
890,429
Social security costs
105,053
97,826
Pension costs
108,235
99,531
1,213,574
1,087,786
7
DIRECTORS' REMUNERATION
2023
2022
£
£
Remuneration for qualifying services
114,809
112,684
Company pension contributions to defined contribution schemes
53,240
54,390
168,049
167,074

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

8
INVESTMENT INCOME
2023
2022
£
£
INTEREST INCOME
Financial instruments measured at amortised cost:
Other interest income on financial assets
13,842
-
0
Income above relates to assets held at amortised cost, unless stated otherwise.
METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
9
FINANCE COSTS
2023
2022
£
£
Finance arrangements
-
0
24,000
Other interest payable
209,773
2,659
Total interest expense
209,773
26,659
10
INCOME TAX EXPENSE
2023
2022
£
£
CURRENT TAX
Current year taxation
-
0
412,174
DEFERRED TAX
Origination and reversal of temporary differences
113,749
18,000
Total tax charge
113,749
430,174

The charge for the year can be reconciled to the profit per the income statement as follows:

2023
2022
£
£
Profit before taxation
158,784
2,159,257
Expected tax charge/(credit) based on a corporation tax rate of 25.00%
39,696
410,259
Expenses not deductible in determining taxable profit
722
1,443
Unutilised tax losses carried forward
157,749
-
0
Permanent capital allowances in excess of depreciation
(198,167)
(8,034)
Deferred tax movement
113,749
18,000
Reversing timing differences
-
0
8,506
Tax charge for the year
113,749
430,174
11
DIVIDENDS
2023
2022
2023
2022
Amounts recognised as distributions:
per share
per share
Total
Total
£
£
£
£
ORDINARY
Interim dividend paid
-
1.43
-
0
1,000,000
METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
12
INTANGIBLE ASSETS
Goodwill
£
COST
At 1 January 2022
542,727
At 31 December 2022
542,727
At 31 December 2023
542,727
AMORTISATION AND IMPAIRMENT
At 1 January 2022
542,727
At 31 December 2022
542,727
At 31 December 2023
542,727
CARRYING AMOUNT
At 31 December 2023
-
0
At 31 December 2022
-
0
At 31 December 2021
-
METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
13
PROPERTY, PLANT AND EQUIPMENT
Leased property
Leasehold improvements
Fixtures and fittings
Plant and equipment
Computers
Motor vehicles
Total
£
£
£
£
£
£
£
COST
At 1 January 2022
337,681
1,325
97,829
594,513
31,451
112,805
1,175,604
Additions
23,412
-
0
687
-
0
1,996
72,635
98,730
Disposals
-
0
-
0
-
0
-
0
-
0
(56,500)
(56,500)
At 31 December 2022
361,093
1,325
98,516
594,513
33,447
128,940
1,217,834
Additions
-
0
82,946
1,025,038
208,894
-
0
-
0
1,316,878
Recognition of right-of-use asset
3,312,187
-
0
-
0
-
0
-
0
96,802
3,408,989
Disposals
(361,093)
-
0
(1,832)
(33,541)
-
0
-
0
(396,466)
At 31 December 2023
3,312,187
84,271
1,121,722
769,866
33,447
225,742
5,547,235
ACCUMULATED DEPRECIATION AND IMPAIRMENT
At 1 January 2022
225,120
1,325
97,829
408,355
31,451
54,125
818,205
Charge for the year
94,744
-
0
189
45,090
165
20,817
161,005
Eliminated on disposal
-
0
-
0
-
0
-
0
-
0
(56,500)
(56,500)
At 31 December 2022
319,864
1,325
98,018
453,445
31,616
18,442
922,710
Charge for the year
129,553
2,212
7,114
50,132
885
69,269
259,165
Eliminated on disposal
(361,092)
-
0
(1,832)
(16,771)
-
0
-
0
(379,695)
At 31 December 2023
88,325
3,537
103,300
486,806
32,501
87,711
802,180
CARRYING AMOUNT
At 31 December 2023
3,223,862
80,734
1,018,422
283,060
946
138,031
4,745,055
At 31 December 2022
41,229
-
498
141,068
1,831
110,498
295,124
At 31 December 2021
112,561
-
-
186,158
-
58,680
357,399

 

Property, plant and equipment includes right-of-use assets with a net book value at 31 December 2023 of £3,281,897 (31 December 2022 £41,229).

METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
14
INVESTMENTS
Current
Non-current
2023
2022
2023
2022
£
£
£
£
Investments in subsidiaries
-
0
-
0
100
100

The directors consider that the carrying amounts of financial assets carried at amortised cost in the financial statements approximate to their fair values.

15
SUBSIDIARIES

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

Name of undertaking
Registered office
Principal activities
Class of
% Held
shares held
Direct
Indirect
Metelec Ireland Limited
Ireland
Copper supplies
Ordinary
100.00
100.00
16
INVENTORIES
2023
2022
£
£
Raw materials
9,029,946
7,416,349
17
TRADE AND OTHER RECEIVABLES
Current
2023
2022
£
£
Trade receivables
3,470,014
4,748,008
Provision for bad and doubtful debts
(32,323)
(14,323)
3,437,691
4,733,685
Amounts due from fellow group undertakings
450,256
485,816
Prepayments
65,851
49,652
3,953,798
5,269,153

Trade debtors are stated net of a provision of £32,323 (2022: £14,323).

 

At 31 December 2023 trade debtors and amounts due from group undertakings included euro denominated balances of €nil (2022: €105,588) and €257,713 (2022: 179,687) respectively. All other receivables were sterling denominated.

 

Some of the unimpaired trade receivables are past due as at the reporting date.

 

METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 27 -
18
TRADE RECEIVABLES - CREDIT RISK
FAIR VALUE OF TRADE RECEIVABLES

The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.

 

The company's principal financial assets are bank balances, cash, trade receivables and other expenses.

 

Thee is no concentration of credit risk.

AGEING OF PAST DUE BUT NOT IMPAIRED RECEIVABLES
2023
2022
£
£
Not more than 3 months
3,428,695
4,679,274
More than 3 months, but not more than 6
41,320
68,734
3,470,015
4,748,008

No significant receivable balances are impaired at the reporting end date.

MOVEMENT IN THE ALLOWANCES FOR DOUBTFUL DEBTS
2023
2022
£
£
Balance as at 31 December
32,323
14,323
19
BORROWINGS
2023
2022
£
£
BORROWINGS HELD AT AMORTISED COST:
Bank - invoice financing
2,180,447
1,809,291

On 26 July 2022, a fixed and floating charge was created covering all the property or undertaking of the company. The charge contains a negative pledge.

METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 28 -
20
FINANCIAL INSTRUMENTS

Financial Risk Management

Financial risks include market risk, credit risk, liquidity risk and interest risk. The Group seeks to minimise the effect of these risks by developing and applying policies and procedures which are regularly reviewed for appropriateness and effectiveness. The Group's principal financial instruments comprise cash held in current accounts, trade receivables, amounts recoverable under contracts, trade payables and other payables that arise directly from its operations.

            

Credit Risk

Credit risk refers to the risk that a customer or counterparty to a financial instrument fails to meet its contractual obligations, resulting in financial loss to the company, and arises principally from the company's receivables from customers. Customers that wish to trade on credit terms are subject to credit verification procedures and receivable balances are monitored on an ongoing basis.

 

The concentration of credit risk is subject to ongoing monitoring in conjunction with the Group, The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet.

 

Liquidity Risk

The company needs to have access, at all times, to adequate financial resources not only to finance operations and the investments required to support its growth, but also to withstand the effects of any exceptional development. Liquidity is managed by the Group on behalf of subsidiaries and needs are met by long-term financing on the capital markets. Ensuring that all of the Group's net debt can be maintained over a long period, as well as through short-term commercial paper programs.

 

The company's intra-group debt, prior to any sales of receivables, is a key performance indicator and is subject to very close monitoring.

 

The company's financial obligations outside of the Group consist of trade creditors and other creditors - all of these are payable within 12 months.

 

Interest Risk

The Company is exposed to interest rate risk on its interest bearing liabilities. The sensitivity of the statement of comprehensive income is the effect of the assumed changes in interest rates on the Company's profit for one year, based on the floating rate financial assets and financial liabilities held at 31 December 2023.

 

Categories of financial instruments

                

                            

Financial assets    

Loans and receivables (including cash and cash equivalents and excluding inter-group) amounts to £3,525,717 (2022: £4,783,337).

            

Financial liabilities                                    

Trade payables amounts to £1,313,836 (2022: £440,971).

21
TRADE AND OTHER PAYABLES
2023
2022
£
£
Trade payables
1,313,836
440,971
Amounts owed to fellow group undertakings
2,220,035
1,903,968
Accruals
299,203
134,052
Social security and other taxation
447,879
577,098
Other payables
44,458
36,649
4,325,411
3,092,738
METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
21
TRADE AND OTHER PAYABLES
(Continued)
- 29 -

At 31 December 2023 trade creditors and amounts due to group undertakings included euro denominated balances of €1,074 (2022: 135,310) and €nil (2022: nil) respectively. Also, within trade creditors, a balance of ($293,629) (2022: $372,926) and amounts due to group undertakings of $nil (2022: $nil) remained on US dollar denominated balances. All other payables were sterling denominated.

 

The directors consider the carrying value of trade and other receivables to be an approximation of their fair value.

22
LEASE OBLIGATIONS
Minimum lease payments
Present value
2023
2022
2023
2022
Amounts payable under finance leases:
£
£
£
£
Within one year
34,522
43,510
34,522
43,510
In two to five years
48,678
-
-
-
In over five years
3,514,856
-
-
-
3,598,056
43,510
34,522
43,510
ANALYSIS OF LEASES

Lease obligations are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

2023
2022
£
£
Current liabilities
34,522
43,510
Non-current liabilities
3,563,534
-
0
3,598,056
43,510

Short term leases and low-value assets are accounted for in accordance with IFRS16.6 exemptions whereby lease payments are recognised as an expense over the lease term.

23
DEFERRED TAXATION
2023
2022
£
£
Deferred tax liabilities
979,714
60,000
Deferred tax assets
(805,966)
-
0
173,748
60,000
Deferred tax assets are expected to be recovered within one year
METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
23
DEFERRED TAXATION
(Continued)
- 30 -

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon during the current and prior reporting period.

ACAs
Tax losses
IFRS 16
Total
£
£
£
£
Liability at 1 January 2022
42,000
-
0
-
42,000
DEFERRED TAX MOVEMENTS IN PRIOR YEAR
Charge/(credit) to profit or loss
18,000
-
-
18,000
Liability at 1 January 2023
60,000
-
0
-
60,000
DEFERRED TAX MOVEMENTS IN CURRENT YEAR
Charge/(credit) to profit or loss
199,000
(158,000)
72,748
113,748
Liability at 31 December 2023
259,000
(158,000)
878,714
979,714
Asset at 31 December 2023
-
0
-
0
(805,966)
(805,966)

Deferred tax assets and liabilities are offset in the financial statements only where the company has a legally enforceable right to do so.

24
RETIREMENT BENEFIT SCHEMES
2023
2022
DEFINED CONTRIBUTION SCHEMES
£
£
Charge to profit or loss in respect of defined contribution schemes
108,235
99,531

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.

25
SHARE CAPITAL
2023
2022
2023
2022
ORDINARY SHARE CAPITAL
Number
Number
£
£
AUTHORISED
Ordinary of £1 each
700,000
700,000
700,000
700,000
ISSUED AND FULLY PAID
Ordinary of £1 each
700,000
700,000
700,000
700,000
26
CAPITAL RISK MANAGEMENT

The company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance,

 

The capital structure of the company consists of debt, cash and cash equivalents and equity comprising share capital, reserves and retained earnings. The company reviews the capital structure as necessary and as part of the review considers that cost of capital and the risks associated with each class of capital.

The company is not subject to any externally imposed capital requirements.

METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 31 -
27
RELATED PARTY TRANSACTIONS
OTHER TRANSACTIONS WITH RELATED PARTIES

During the year the company entered into the following transactions with companies, who are also members of the UMCOR Group of Companies:

 

Sale of goods
Purchase of goods
2023
2022
2023
2022
£
£
£
£
Parent company
-
0
-
0
13,106,840
11,937,502
Other related parties
1,701,391
418,909
2,091,955
1,498,976
1,701,391
418,909
15,198,795
13,436,478
Payroll recharges
Management charges
2023
2022
2023
2022
£
£
£
£
Parent company
77,076
64,756
-
-
Other related parties
19,652
22,826
61,668
38,905
96,728
87,582
61,668
38,905

The following amounts were outstanding at the reporting end date:

Amounts owed to related parties
2023
2022
£
£
Parent company
1,786,460
1,566,507
Other related parties
433,574
337,461
2,220,034
1,903,968

The following amounts were outstanding at the reporting end date:

Amounts owed by related parties
Amounts owed by related parties
2023
2022
Balance
Provision
Net
Balance
Provision
Net
£
£
£
£
£
£
Parent company
16,514
-
0
16,514
17,533
-
0
17,533
Other related parties
433,741
-
0
433,741
468,283
-
0
468,283
450,255
-
0
450,255
485,816
-
0
485,816

No guarantees have been given or received.

METELEC LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 32 -
28
CONTROLLING PARTY

The company is wholly owned by Gindre Duchavany SAS, a company incorporated in France.

 

In the director's opinion the company's ultimate parent company and controlling party is Umcor AG, a company incorporated in Switzerland.

 

The results of Metelec Limited are included in the consolidated financial statements of Umcor AG whose registered address is Steinstrasse 21, CH-8003, Zurich, Switzerland.

 

29
CASH GENERATED FROM OPERATIONS
2023
2022
£
£
Profit for the year after tax
45,035
1,729,083
ADJUSTMENTS FOR:
Taxation charged
113,749
430,174
Finance costs
209,773
26,659
Investment income
(13,842)
-
0
Gain on disposal of property, plant and equipment
(6,979)
(7,250)
Depreciation and impairment of property, plant and equipment
259,165
161,005
MOVEMENTS IN WORKING CAPITAL:
Increase in inventories
(1,613,597)
(1,675,630)
Decrease/(increase) in trade and other receivables
1,315,355
(849,148)
Increase/(decrease) in trade and other payables
1,232,673
(957,735)
CASH GENERATED FROM/(ABSORBED BY) OPERATIONS
1,541,332
(1,142,842)
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