Company registration number 12305735 (England and Wales)
CON MECH HOLDINGS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
CON MECH HOLDINGS LIMITED
COMPANY INFORMATION
Directors
Mr R H S Dilley
Mr R J Dilley
Dr J C Dilley
Mrs T L Heathcote
Company number
12305735
Registered office
C/O Henry Williams Group Limited
Henry Williams Site
Dodsworth Street
Darlington
DL1 2NJ
Auditor
Azets Audit Services Limited
Triune Court
Monks Cross Drive
York
YO32 9GZ
CON MECH HOLDINGS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
4
Directors' responsibilities statement
3
Independent auditor's report
5 - 7
Group statement of comprehensive income
8
Group balance sheet
9
Company balance sheet
10
Group statement of changes in equity
11
Company statement of changes in equity
12
Group statement of cash flows
13
Notes to the financial statements
14 - 35
CON MECH HOLDINGS 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

Group sales increased to £17.0m (2022 £15.9m). Con Mech Engineers Ltd sales declined by 16.8% as a result of a downturn in the construction industry in the second half of 2023 and are now beginning to recover in the second quarter of 2024. Henry Williams Ltd sales increased by 26.9%. Results for each company are discussed below with key performance indicators. At the year-end cash balances had increased from £0.70m to £2.51m. Profit and Loss Reserves had increased from £9.30m to £9.82m.

Principal risks and uncertainties

The Group transacts with a number of countries and hence is exposed to credit and currency risks, particularly against the euro and the US Dollar. These risks are mitigated to an acceptable level by use of strategic purchasing and the natural hedge by running foreign currency bank accounts.

The Group is exposed to significant credit risks in its manufacturing operations, which involve sales on credit terms, however this is managed through close monitoring of cash collections, maintenance of adequate working capital including stock and cash, and purchases being made on credit.

Each company has access to an overdraft facility as disclosed further in note 19. Each operating company has its own business model. All companies produce monthly management accounts which include KPIs. They show sales, main items of cost, gross and operating profit. The accounts also show cash flow and balance sheets. All figures are compared to a budget set annually by the directors and board meetings take place in each company between four and ten times a year. At these meetings the accounts are discussed together with other reports written by individual directors on sales, marketing and production. It is not our normal practice to buy or sell currency forwards because over a long period of time it saves money to take the risk ourselves but currency is carefully monitored and selling prices adjusted accordingly.

Trade debtors and creditors are reviewed as their effect on cash flow can be significant.

There is no significant impact of any of the companies on the environment and all processes are kept well inside laws and guidelines.

Henry Williams Ltd is a subsidiary of Con Mech Holdings Ltd. As a result of ceasing manufacturing in the forge divison at the end of 2023 exceptional costs arose in the year comprising of £542k redundancy and £286k impairment of fixed assets. Forge sales have continued into 2024 and accordingly a discontinued activity is not reported in the group statement of comprehensive income.

 

CON MECH HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Key performance indicators

The Group’s key performance indicators are sales and operating profit. The key performance indicators are actively monitored and acted upon as new trends are identified.

The main KPIs for the Group are as follows:

 

£000's

Sales

Operating Profit

Con Mech Engineers

6,277

-43

Henry Williams

10,988

968

Henry Williams Group

564

82

Con Mech Group

502

5

Unadjusted totals

18,331

1,012

Eliminate intercompany

-1,306

-37

 

17,025

975

 

In 2023 CME spent about half its selling price of ground engaging tools on steel. While steel prices were slowly declining during the year there was also a slowdown in demand owing to a quiet period in the construction industry so margins were under pressure. Demand has now increased again. The barriers to entry are still there as large and varied stocks of steel are required to meet all customers demands. There are several suppliers of steel, the main raw material so we are not totally dependent on one supplier.

CME heat treatment saw volumes improve during the year and still managed to buy energy at a reasonable price. Building furnaces cost large sums of money so any new entrants to the market would have to be well financed and need to employ specialist skills.

HWL ceased forge manufacturing at the end of the year and benefited in the last months from customers getting their last orders. There is still a large amount of finishing and machining work to do before the forgings are finally sold. The company is now going to concentrate on the railway signalling and highways sectors which although quiet at the moment expect to increase as the next railway spending cycle gains momentum.

Other information and explanations

The Group’s operations include heavy industry factories which by their nature have the potential for adverse impacts on the environment through high energy usage. The Group actively tried to mitigate this through the use of improved technologies and energy efficient fixed assets, as well as streamlining of operations through this the factory sites are ISO accredited to 14001.

 

On behalf of the board

Mr R H S Dilley
Director
29 August 2024
CON MECH HOLDINGS LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

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

 

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

 

 

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

CON MECH HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -

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

 

The financial statements comprise the results for the 52 week period to 29 December 2023.

Principal activities

The principal activity of the company continues to be that of a holding company. The group performs a variety of activities including the manufacture of construction, earth moving, and ground engaging tools, most of which are heat treated; heat treatment work for third parties; manufacture of forged components, sheet metal enclosures and electrical wiring; and property rental.

Results and dividends

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

Ordinary interim dividends were paid amounting to £180,073. The directors do not recommend payment of a further dividend.

Directors

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

Mr R H S Dilley
Mr R J Dilley
Dr J C Dilley
Mrs T L Heathcote
Mr D Neil
(Resigned 8 March 2024)
Mrs C Ames
(Resigned 31 August 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 auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

On behalf of the board
Mr R H S Dilley
Director
29 August 2024
CON MECH HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CON MECH HOLDINGS LIMITED
- 5 -
Opinion

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

In our opinion the financial statements:

Basis for opinion

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

Conclusions relating to going concern

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

 

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

 

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

Other information

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

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

CON MECH HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CON MECH HOLDINGS LIMITED
- 6 -
Matters on which we are required to report by exception

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

 

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

Responsibilities of directors

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

Auditor's responsibilities for the audit of the financial statements

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

 

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.

CON MECH HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CON MECH HOLDINGS 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 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.

Alan Sidebottom (Senior Statutory Auditor)
For and on behalf of Azets Audit Services Limited
9 September 2024
Chartered Accountants
Statutory Auditor
Triune Court
Monks Cross Drive
York
YO32 9GZ
CON MECH HOLDINGS LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
17,025,089
15,891,289
Cost of sales
(11,499,829)
(10,896,974)
Gross profit
5,525,260
4,994,315
Distribution costs
(231,806)
(329,825)
Administrative expenses
(3,490,518)
(3,562,976)
Other operating income
646
295,750
Exceptional item
4
-
0
369,631
Exceptional items
4
(829,126)
-
0
Operating profit
5
974,456
1,766,895
Interest receivable and similar income
9
14,621
1,009
Interest payable and similar expenses
10
(9,733)
(27,470)
Profit before taxation
979,344
1,740,434
Tax on profit
11
(278,038)
(104,409)
Profit for the financial year
701,306
1,636,025
Other comprehensive income
Revaluation of tangible fixed assets
-
0
811,723
Total comprehensive income for the year
701,306
2,447,748
Total comprehensive income for the year is all attributable to the owners of the parent company.

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

CON MECH HOLDINGS LIMITED
GROUP BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
13
17,418
26,990
Tangible assets
14
5,981,053
6,283,392
Investment property
15
350,000
350,000
6,348,471
6,660,382
Current assets
Stocks
17
4,773,188
5,399,820
Debtors
18
2,483,895
2,821,161
Cash at bank and in hand
2,509,575
702,317
9,766,658
8,923,298
Creditors: amounts falling due within one year
21
(3,238,776)
(3,295,503)
Net current assets
6,527,882
5,627,795
Total assets less current liabilities
12,876,353
12,288,177
Creditors: amounts falling due after more than one year
22
-
(81,867)
Provisions for liabilities
Deferred tax liability
23
693,250
544,440
(693,250)
(544,440)
Net assets
12,183,103
11,661,870
Capital and reserves
Called up share capital
25
792
792
Revaluation reserve
1,100,829
1,100,829
Other reserves
26
1,261,036
1,261,036
Profit and loss reserves
9,820,446
9,299,213
Total equity
12,183,103
11,661,870
The financial statements were approved by the board of directors and authorised for issue on 29 August 2024 and are signed on its behalf by:
29 August 2024
Mr R H S Dilley
Director
Company registration number 12305735 (England and Wales)
CON MECH HOLDINGS LIMITED
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Investments
16
1,221,906
1,221,906
Current assets
Debtors
18
5,278
-
0
Cash at bank and in hand
185,038
222,064
190,316
222,064
Creditors: amounts falling due within one year
21
(6,550)
(6,550)
Net current assets
183,766
215,514
Net assets
1,405,672
1,437,420
Capital and reserves
Called up share capital
25
792
792
Profit and loss reserves
1,404,880
1,436,628
Total equity
1,405,672
1,437,420

As permitted by s408 Companies Act 2006, the compnay has not presented its own profit and loss account and related notes. The company profit for the year was £148,325 (2022 - £1,614,920).

The financial statements were approved by the board of directors and authorised for issue on 29 August 2024 and are signed on its behalf by:
29 August 2024
Mr R H S Dilley
Director
Company registration number 12305735 (England and Wales)
CON MECH HOLDINGS LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
Share capital
Revaluation reserve
Merger reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 January 2022
792
552,890
1,261,036
7,714,462
9,529,180
Year ended 31 December 2022:
Profit for the year
-
-
-
1,636,025
1,636,025
Other comprehensive income:
Revaluation of tangible fixed assets
-
811,723
-
-
811,723
Total comprehensive income
-
811,723
-
1,636,025
2,447,748
Dividends
12
-
-
-
(315,058)
(315,058)
Transfers
-
(263,784)
-
263,784
-
Balance at 31 December 2022
792
1,100,829
1,261,036
9,299,213
11,661,870
Year ended 31 December 2023:
Profit and total comprehensive income
-
-
-
701,306
701,306
Dividends
12
-
-
-
(180,073)
(180,073)
Balance at 31 December 2023
792
1,100,829
1,261,036
9,820,446
12,183,103
CON MECH HOLDINGS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2022
792
136,766
137,558
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
1,614,920
1,614,920
Dividends
12
-
(315,058)
(315,058)
Balance at 31 December 2022
792
1,436,628
1,437,420
Year ended 31 December 2023:
Profit and total comprehensive income
-
148,325
148,325
Dividends
12
-
(180,073)
(180,073)
Balance at 31 December 2023
792
1,404,880
1,405,672
CON MECH HOLDINGS LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
32
2,680,362
414,271
Interest paid
(9,733)
(27,470)
Income taxes refunded
121,879
102,100
Net cash inflow from operating activities
2,792,508
488,901
Investing activities
Purchase of intangible assets
-
(1,750)
Proceeds from disposal of intangibles
673
-
Purchase of tangible fixed assets
(648,589)
(319,484)
Proceeds from disposal of tangible fixed assets
42,001
25,358
Interest received
14,621
1,009
Net cash used in investing activities
(591,294)
(294,867)
Financing activities
Repayment of borrowings
(195,191)
(514,944)
Payment of finance leases obligations
(25,411)
(31,124)
Dividends paid to equity shareholders
(180,073)
(315,058)
Net cash used in financing activities
(400,675)
(861,126)
Net increase/(decrease) in cash and cash equivalents
1,800,539
(667,092)
Cash and cash equivalents at beginning of year
31,863
698,955
Cash and cash equivalents at end of year
1,832,402
31,863
Relating to:
Cash at bank and in hand
2,509,575
702,317
Bank overdrafts included in creditors payable within one year
(677,173)
(670,454)
CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
1
Accounting policies
Company information

Con Mech Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is C/O Henry Williams Group Limited, Henry Williams Site, Dodsworth Street, Darlington, DL1 2NJ.

 

The group consists of Con Mech Holdings Limited and all of its subsidiaries.

1.1
Accounting convention

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

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

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

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

 

 

The company has taken advantage of the exemption conferred by section 33.11 of FRS 102 allowing it not to disclose transactions and balance within its group, on the grounds that those entities are related by virtue of having the same control as defined in 33.11(b).

1.2
Business combinations

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

 

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

CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.3
Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company Con Mech Holdings Limited together with all entities controlled by the parent company (its subsidiaries).

 

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

 

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

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

1.4
Going concern

The directors have considered all factors, including in the wider economy, as part of their assessment of going concern. Although the current economic climate creates both cashflow and profitability risks for the group, the group continues to trade profitably and is cash generative. Budgets and cashflows have been prepared using assumptions for customer demand and supply chain costs as well as expectations for legal and regulatory environmental impacts. These budgets and cashflows indicate continuing profitability and cash generation, consequently the directors believe on balance that they have sufficient resources to enable trading to continue for a period of at least one year from the date of approval of the financial statements. Accordingly, these financial statements have been prepared on the going concern basis.

1.5
Turnover

Turnover represents amounts receivable for goods and services net of VAT and trade discounts and is recognised as stated below.

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.

Turnover from contracts for the provision of services or construction contracts is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.

1.6
Research and development expenditure

Research and development expenditure is written off against profits in the year in which it is incurred.

1.7
Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

 

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.

CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -

Amortisation 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:

Software
The shorter of 5 years or the contract life
1.8
Tangible fixed assets

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

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

Freehold buildings
2% straight line
Plant and machinery
6.67%-20% reducing balance and 6.67%-25% straight line
Computer equipment
10% reducing balance and 20% straight line
Motor vehicles
25% reducing balance

Assets under construction are not depreciated until the completed asset is available for, or brought into, use.

 

Freehold land is not depreciated.

 

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

1.9
Investment property

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in profit or loss.

 

Property rented to a group entity is accounted for as tangible fixed assets.

1.10
Fixed asset investments

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

 

In the parent company financial statements, investments in subsidiarie are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

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

1.11
Impairment of fixed assets

At each reporting period end date, the group 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.

 

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

CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -

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.

1.12
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 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.

1.13
Construction contracts

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the reporting end date. Variations in contract work, claims and incentive payments are included to the extent that the amount can be measured reliably and its receipt is considered probable.

 

When it is probable that total contract costs will exceed total contract turnover, the expected loss is recognised as an expense immediately.

 

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred where it is probable that they will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When costs incurred in securing a contract are recognised as an expense in the period in which they are incurred, they are not included in contract costs if the contract is obtained in a subsequent period.

The “percentage of completion method” is used to determine the appropriate amount to recognise in a given period. The stage of completion is measured by the proportion of contract costs incurred for work performed to date compared to the estimated total contract costs. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion. These costs are presented as stocks, prepayments or other assets depending on their nature, and provided it is probable they will be recovered.

CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
1.14
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.15
Financial instruments

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

 

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

 

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

Basic financial assets

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

Other financial assets

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

Impairment of financial assets

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

 

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

 

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

Derecognition of financial assets

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

CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 19 -
Classification of financial liabilities

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

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, 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

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

Derecognition of financial liabilities

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

1.16
Equity instruments

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

1.17
Taxation

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

 

Certain of the activities of the group are eligible for the enhanced taxation reliefs available under the research and development tax regime. A tax asset is only recognised in respect of research and development tax credits when the amount can be reliably measured and receipt is considered probable, which is usually upon completion of the necessary tax return. Accordingly, the company at the balance sheet date may have entitlement to tax credits for which credit is not recognised in the balance sheet as the recognition criteria of the accounting policy have not been met.

CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 20 -
Current tax

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

 

Where the calculation of current tax includes significant uncertainties, the directors apply a point estimate in the calculation of the tax charge and associated asset or liability. This is calculated based on agreement with tax authorities over accepted estimates and adjustments to the Group's taxable profits, with the directors considering it probably that a similar outcome will be obtained in the current year by adopting the same estimation methodology, and accordingly have provided for the associated tax relief on the grounds that it is probable that this will be received.

Deferred tax

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

 

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

1.18
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.

1.19
Retirement benefits

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

1.20
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.

CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 21 -

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

1.21
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.

2
Judgements and key sources of estimation uncertainty

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

 

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

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Non-capitalisation of development costs

Although the group incurs significant costs in developing new products and processes, these have not been capitalised as intangible fixed assets as the directors do not believe this to be an appropriate accounting policy.

Recognition of profit on service and construction contracts

The company undertakes a number of contracts which run over an extended period on which turnover and profits are recognised as disclosed in notes 1.5 and 1.13 and on which there is a key judgement as to the stage of completion and the expected profitability of the contract.

CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 22 -
Key sources of estimation uncertainty

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

Stock valuation

The group converts raw materials to finished goods. Stock values include costs such as labour and overheads attributable to generating finished goods, as management believe this is the most suitable costing method to take into account the matching concept of accounting.

 

The group has a high reliance on metal commodities and is therefore exposed to fluctuations in the commodity market leaving its stock exposed to losses compared to replacement cost. Management also have regard to this exposure in calculating the net realisable value of stock, and make a suitable provision as necessary. Stock provisions also expense any absorbed overheads as necessary.

Internally generated tangible fixed assets and depreciation

The group incurs expenditure on creating tangible fixed assets for use in the primary trade. The cost is determined by reference to the direct attributable costs which bring the fixed asset to working condition for its intended use, with costs being incurred over several months. Management believe it is possible to segregate these costs into identifiable projects, and as such no depreciation is charged on that project until it is brought into use. This expenditure is therefore capitalised as a fixed asset and depreciated in line with the relevant depreciation policy.

 

The depreciation and amortisation policies have been set according to management's experience of the useful lives of a typical asset in each category, something which is reviewed annually. It is not considered practical to use a per unit basis to allocate depreciation without undue cost, and therefore amounts are charged annually. The depreciation and amortisation charged during the year was £624,547 which the directors feel is a fair reflection of the benefits derived from the consumption of the tangible fixed assets in use during the period.

Freehold land and buildings

Freehold land and buildings are within the accounts at fair value based on third party valuations. It is judged by the directors that the valuations obtained are not materially different to the values utilised in the accounts at the reporting date. The integrity of these figures is evidenced by the use of independent valuation specialists.

3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Manufacturing of goods
16,984,597
15,731,124
Rendering of services
40,492
160,165
17,025,089
15,891,289
CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Turnover and other revenue
(Continued)
- 23 -
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
15,035,855
14,188,077
Rest of Europe
1,152,687
1,085,923
Rest of the World
836,547
617,289
17,025,089
15,891,289
2023
2022
£
£
Other revenue
Interest income
14,621
1,009
4
Exceptional item
2023
2022
£
£
Expenditure
Legal fees
-
(369,631)
Impairment of property, plant and equipment
286,507
-
Redundancy costs
542,619
-
829,126
(369,631)

The exceptional expenditure incurred in the year relates to the closure of the Forge. The exceptional item in the prior year relates to a legal case in respect of the protection of intellectual property of the company which was settled in 2022.

5
Operating profit
2023
2022
£
£
Operating profit for the year is stated after charging/(crediting):
Exchange losses
11,363
22,563
Research and development costs
10,831
4,675
Depreciation of owned tangible fixed assets
624,547
681,027
Impairment of property, plant and equipment
286,507
-
0
(Profit)/loss on disposal of tangible fixed assets
(2,127)
1,175
Amortisation of intangible assets
8,899
14,761
Operating lease charges
92,593
75,423
CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
6
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
1,750
1,650
Audit of the financial statements of the company's subsidiaries
27,175
25,500
28,925
27,150
For other services
Taxation compliance services
8,600
7,700
All other non-audit services
13,085
12,275
21,685
19,975
7
Employees

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

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Directors
5
6
5
6
Admin and support
33
32
-
-
Production
97
99
-
-
Total
135
137
5
6

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
4,480,609
4,258,579
-
0
-
0
Social security costs
449,534
465,524
-
-
Pension costs
279,628
444,224
-
0
-
0
5,209,815
5,168,327
-
0
-
0

In addition to the above, redundancy costs were incurred in the year of £542,619 (2022: £Nil) which are included within exceptional items.

CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
8
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
274,382
308,332
Company pension contributions to defined contribution schemes
73,433
128,394
347,815
436,726
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
81,419
82,167
Company pension contributions to defined contribution schemes
52,149
69,161
9
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
11,307
1,002
Interest receivable from group companies
2,885
-
0
Other interest income
429
7
Total income
14,621
1,009
10
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
8,115
24,375
Interest on finance leases and hire purchase contracts
1,618
3,095
Total finance costs
9,733
27,470
11
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
99,361
167,225
Adjustments in respect of prior periods
29,867
(170,797)
UK income tax
-
(229)
Total current tax
129,228
(3,801)
CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
11
Taxation
2023
2022
£
£
(Continued)
- 26 -
Deferred tax
Origination and reversal of timing differences
148,810
108,210
Total tax charge
278,038
104,409

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Profit before taxation
979,344
1,740,434
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
230,342
330,682
Tax effect of expenses that are not deductible in determining taxable profit
8,198
7,841
Tax effect of income not taxable in determining taxable profit
(152)
(56,193)
Gains not taxable
-
0
(25,000)
Tax effect of utilisation of tax losses not previously recognised
-
0
(15,360)
Unutilised tax losses carried forward
-
0
19,580
Adjustments in respect of prior years
29,867
(170,797)
Permanent capital allowances in excess of depreciation
-
24,236
Depreciation on assets not qualifying for tax allowances
4,117
25,079
Research and development tax credit
-
0
(156,981)
Deferred tax adjustments in respect of prior years
-
0
133,210
Other
5,666
(11,888)
Taxation charge
278,038
104,409
12
Dividends
2023
2022
Recognised as distributions to equity holders:
£
£
Interim paid
180,073
315,058
CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 27 -
13
Intangible fixed assets
Group
Software
£
Cost
At 1 January 2023
387,812
Disposals
(231,563)
At 31 December 2023
156,249
Amortisation and impairment
At 1 January 2023
360,822
Amortisation charged for the year
8,899
Disposals
(230,890)
At 31 December 2023
138,831
Carrying amount
At 31 December 2023
17,418
At 31 December 2022
26,990
The company had no intangible fixed assets at 31 December 2023 or 31 December 2022.
CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 28 -
14
Tangible fixed assets
Group
Freehold buildings
Assets under construction
Plant and machinery
Computer equipment
Motor vehicles
Total
£
£
£
£
£
£
Cost or valuation
At 1 January 2023
3,448,898
81,225
11,995,036
733,168
115,123
16,373,450
Additions
1,062
501,983
81,892
5,583
58,069
648,589
Disposals
-
0
-
0
(987,487)
(163,622)
(71,083)
(1,222,192)
Transfers
-
0
(170,135)
163,087
7,048
-
0
-
0
At 31 December 2023
3,449,960
413,073
11,252,528
582,177
102,109
15,799,847
Depreciation and impairment
At 1 January 2023
360,715
-
0
9,008,585
647,606
73,152
10,090,058
Depreciation charged in the year
45,296
-
0
550,751
16,021
12,479
624,547
Impairment losses
-
0
-
0
286,507
-
0
-
0
286,507
Eliminated in respect of disposals
-
0
-
0
(960,478)
(166,754)
(55,086)
(1,182,318)
At 31 December 2023
406,011
-
0
8,885,365
496,873
30,545
9,818,794
Carrying amount
At 31 December 2023
3,043,949
413,073
2,367,163
85,304
71,564
5,981,053
At 31 December 2022
3,088,183
81,225
2,986,451
85,562
41,971
6,283,392
The company had no tangible fixed assets at 31 December 2023 or 31 December 2022.

The carrying value of non-depreciated land is:

Group
Company
2023
2022
2023
2022
£
£
£
£
Freehold
1,361,993
1,361,952
-
0
-
0

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Group
Company
2023
2022
2023
2022
£
£
£
£
Motor vehicles
-
0
13,732
-
0
-
0
Computers
118,031
145,403
-
0
-
0
118,031
159,135
-
-

More information on impairment movements in the year is given in note 4.

CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
14
Tangible fixed assets
(Continued)
- 29 -

The land and buildings are pledged as security to the Group's bankers, and are subject to a cross-company guarantee as disclosed in note 27.

 

Assets under construction relate to assets being generated which are not currently ready for use. Each asset generates a new product code which is monitored and once ready for use by the company is transferred to the relevant classification of asset, at a cost which includes all attributable expenditure. The asset is then depreciation in line with the relevant accounting policy.

Land and buildings with a carrying amount of £1,519,000 were revalued on 28 January 2022 by George F. White, independent chartered surveyors, not connected with the group, on the basis of market value. The valuation conforms to International Valuation Standards and was based on recent market transactions on arm's length terms for similar properties. The condition of the property at the date of valuation was equal to that at the year end. As such, it is reasonable that this valuation is reflected in the accounts at 31 December 2023.

Included in land and buildings are some assets carried at valuation. If these assets were measured using the cost model, the carrying amounts would be as follows:

2023
2022
£
£
Group
Cost
555,110
555,110
Accumulated depreciation
(282,704)
(274,850)
Carrying value
272,406
280,260
15
Investment property
Group
Company
2023
2023
£
£
Fair value
At 1 January 2023 and 31 December 2023
350,000
-

The investment property comprises rental units let out for general use. The Directors have assessed the market value at the balance sheet date. The historical cost of the investment property is £54,250.

 

The investment property has been pledged as security to the company's bankers, and is subject to a cross-company guarantee as disclosed in note 27

.

 

16
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
31
-
0
-
0
1,221,906
1,221,906
CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
16
Fixed asset investments
(Continued)
- 30 -
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 January 2023 and 31 December 2023
1,221,906
Carrying amount
At 31 December 2023
1,221,906
At 31 December 2022
1,221,906
17
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Raw materials and consumables
2,442,189
3,402,002
-
-
Work in progress
765,562
872,017
-
-
Finished goods and goods for resale
1,565,437
1,125,801
-
0
-
0
4,773,188
5,399,820
-
-
18
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
2,057,614
2,186,727
-
0
-
0
Corporation tax recoverable
-
0
318,972
-
0
-
0
Amounts owed by group undertakings
-
-
5,278
-
Other debtors
61,173
76,450
-
0
-
0
Prepayments and accrued income
365,108
239,012
-
0
-
0
2,483,895
2,821,161
5,278
-
CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 31 -
19
Loans and overdrafts
Group
Company
2023
2022
2023
2022
£
£
£
£
Bank overdrafts
677,173
670,454
-
0
-
0
Other loans
-
0
195,191
-
0
-
0
677,173
865,645
-
-
Payable within one year
677,173
802,438
-
0
-
0
Payable after one year
-
0
63,207
-
0
-
0

Bank loans are secured by fixed charges over certain of the Group's properties, plus an unlimited cross-company guarantee with some of the Group's subsidiaries (as explained further in note 27). Interest is payable at a current rate of 6.69%, with final repayments expected in 2024. Overdrafts are secured under the same unlimited cross-company guarantee.

20
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
21,060
27,605
-
0
-
0
In two to five years
-
0
20,116
-
0
-
0
21,060
47,721
-
-
Less: future finance charges
(206)
(1,456)
-
0
-
0
20,854
46,265
-
0
-
0

Finance leases are secured against the assets to which they relate.

CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 32 -
21
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
19
677,173
670,454
-
0
-
0
Obligations under finance leases
20
20,854
27,605
-
0
-
0
Other borrowings
19
-
0
131,984
-
0
-
0
Trade creditors
512,254
1,245,933
-
0
-
0
Corporation tax payable
99,360
167,225
-
0
-
0
Other taxation and social security
492,920
459,723
-
-
Other creditors
634,669
66,790
-
0
-
0
Accruals and deferred income
801,546
525,789
6,550
6,550
3,238,776
3,295,503
6,550
6,550
22
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Obligations under finance leases
20
-
0
18,660
-
0
-
0
Other borrowings
19
-
0
63,207
-
0
-
0
-
81,867
-
-
23
Deferred taxation

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

Liabilities
Liabilities
2023
2022
Group
£
£
Accelerated capital allowances
597,950
689,265
Provisions
(3,700)
(4,300)
Losses
99,000
(165,525)
Freehold property
-
25,000
693,250
544,440
The company has no deferred tax assets or liabilities.
CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
23
Deferred taxation
(Continued)
- 33 -
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 1 January 2023
544,440
-
Charge to profit or loss
148,810
-
Liability at 31 December 2023
693,250
-
24
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
279,628
444,224

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

 

At the year end £22,293 (2022 - £27,193) of pension contributions were accrued but unpaid.

25
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of 1p each
79,200
79,200
792
792
26
Reserves
Merger reserve

The merger reserve represents the difference between the book value of net assets, and the recognisable reserves, as at the date of creation of the group. The reserve is not distributable.

27
Financial commitments, guarantees and contingent liabilities

The group is party to a group guarantee over any bank overdrafts which may from time to time arise. At the year end, bank overdrafts of relevant group companies totalled £677,173 (2022 - £670,454 ), although at the year end the group as a whole had net cash at bank.

 

As at the date of approval of the financial statements, no default has occurred which would trigger the above liability, nor is one anticipated. As such, the directors consider that the fair value of this obligation is £nil, and as such there is no recognition of a liability on the balance sheet.

CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 34 -
28
Operating lease commitments
Lessee

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

Group
Company
2023
2022
2023
2022
£
£
£
£
Within one year
82,455
35,654
-
-
Between two and five years
233,936
26,791
-
-
In over five years
33,907
-
-
-
350,298
62,445
-
-
30
Directors' transactions

Dividends totalling £180,073 (2022 - £315,058) were paid in the year in respect of shares held by the company's directors and close family relatives.

31
Subsidiaries

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

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Indirect
Con Mech Group Limited (1)
England & Wales
Ordinary
100.00
-
Con Mech Engineers Limited (2)
England & Wales
Ordinary
0
100.00
Henry Williams Group Limited (1)
England & Wales
Ordinary
100.00
-
Henry Williams Limited (1)
England & Wales
Ordinary
0
100.00

The companies have the following registered offices:

(1)    Dodsworth Street, Darlington, County Durham, CL1 2NJ

(2)    Harelaw Industrial Estate, Stanley, County Durham, DH9 8UR

CON MECH HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 35 -
32
Cash generated from group operations
2023
2022
£
£
Profit for the year after tax
701,306
1,636,025
Adjustments for:
Taxation charged
278,038
104,409
Finance costs
9,733
27,470
Investment income
(14,621)
(1,009)
(Gain)/loss on disposal of tangible fixed assets
(2,127)
1,175
Fair value gain on investment properties
-
0
(295,750)
Amortisation and impairment of intangible assets
8,899
14,761
Depreciation and impairment of tangible fixed assets
911,054
681,027
Movements in working capital:
Decrease/(increase) in stocks
626,632
(1,439,020)
Decrease/(increase) in debtors
18,294
(301,780)
Increase/(decrease) in creditors
143,154
(13,037)
Cash generated from operations
2,680,362
414,271

 

33
Analysis of changes in net funds/(debt) - group
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
702,317
1,807,258
2,509,575
Bank overdrafts
(670,454)
(6,719)
(677,173)
31,863
1,800,539
1,832,402
Borrowings excluding overdrafts
(195,191)
195,191
-
Obligations under finance leases
(46,265)
25,411
(20,854)
(209,593)
2,021,141
1,811,548
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