Company Registration No. 10631183 (England and Wales)
THE ETHIKOS GROUP LTD
CONSOLIDATED ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
THE ETHIKOS GROUP LTD
COMPANY INFORMATION
Directors
Mr S M Davis
Ms G Davis
Mr M A Gare
Mr M C Beeston
(Appointed 9 January 2023)
Company number
10631183
Registered office
Unit 1 Prince William Avenue
Sandycroft
Flintshire
CH5 2QZ
Auditor
Xeinadin Audit Limited
2 Hilliards Court
Chester Business Park
Chester
Cheshire
CH4 9QP
Bankers
Barclays Bank plc
68-70 High Street
Rhyl
LL18 1EU
THE ETHIKOS GROUP LTD
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Profit and loss account
8
Group statement of comprehensive income
9
Group balance sheet
10
Company balance sheet
11
Group statement of changes in equity
12
Company statement of changes in equity
13
Group statement of cash flows
14
Notes to the financial statements
15 - 32
THE ETHIKOS GROUP LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

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

 

Group Structure

The Group is currently structured with one intermediary holding company, Gilks (Electrical Holdings) Ltd and three trading Operating Companies, those being Delta Rock Group Limited, Gilks (Nantwich) Limited and Print-Tech Solutions Ltd.

Each operating company retains its own heritage and identity and its own sector expertise.

Review of the Business

Group turnover reached £20.03m this year which is an improvement on the 2022 figure of £13.6m, this is attributable to the increase in multidisciplined contracts across the contracting natured businesses.

Gross profit for the year was £4.48m compared to £3.57m in 2022. The decrease in Gross profit margin has been fuelled by the significant increases experienced in raw materials and labour costs and a change in sales mix.

Operating profit for the period was £0.65m compared to £0.52m in 2022, but comparable in margin terms. We expect that profits will increase in the year ending December 2024.

Principal Risks and Activities

The health and safety of all our colleagues and other visitors to our sites is of paramount importance to the Company. We have designated health and safety colleagues, and we utilise the skills of outside contractors in many areas to ensure that all health and safety risks are adequately documented, and the risks minimised.

The Company continuously reviews and invests in its employees through training and appraisal and ensures that experienced and qualified senior management head up and run each of our operating companies so that Group standards of quality are maintained.

 

The economic climate, inflation and increase in many of the base material costs represents a principal risk to the continued erosion of Gross Profit Margin which we have seen during this financial year. The operating companies adopt a pricing mechanism that allows for price fluctuations to be captured within many of the contracts, reducing risk significantly. However there have been instances with contract delays that have resulted in the business delivering a lower margin across the board. Additionally the sales mix of the contracting businesses has been affected by a higher proportion of larger items of material costs and the necessity to utilise specialist sub-contractors to deliver the projects.

THE ETHIKOS GROUP LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Development and performance

Delta Rock Group Limited

I am pleased to report that Delta Rock Group has increased its skills capability with further engineering capacity in the Electrical Automation teams. With a focus on apprenticeships the business is investing heavily in recruiting at least four apprentices every year to build the team for the future.

With systems improvement in quotations, sales order tracking and job level efficiencies Delta Rock Group is in a strong position with an increasing order book to carry into the 2024 financial year.

Gilks (Nantwich) Ltd

Gilks delivered another solid set of results increasing profits from the last financial year and seeing top line growth, with a significant investment made in van fleet renewals as demonstrated by the increase in tangible assets and associated HP liabilities.

With further continuous improvements planned for the business and the security of the long-term order book the business is well positioned to enter 2024 on a strong footing.

Print-Tech Solutions Ltd

Print-Tech Solutions Ltd has delivered a solid set of financial results in a climate of increasing costs and staff changes.

Future Opportunities

We are exploring further opportunities within each of the operating companies to provide further stable and predictable re-occurring revenue and profit models. At Group we are actively looking for our next strategic acquisition into the Group with a focus on diversifying the investment portfolio.

Key Performance Indicators

The directors monitor performance through the production of a detailed budget and by comparing actual results against this and the previous year's performance.

Additionally, the directors monitor key performance indicators to ensure that they are within acceptable parameters. These key indicators include:

• Gross profit by Operating Company

• Earnings Before Interest and Depreciation and Amortisation (EBITDA) by Operating Company

• Consolidated EBITDA

• Cash Available for Debt Service (CFADS)

On behalf of the board

Mr S M Davis
Director
2 September 2024
THE ETHIKOS GROUP LTD
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 group continued to be that of electrical installation works.

Results and dividends

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

Ordinary dividends were paid amounting to £216,667. 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 S M Davis
Ms G Davis
Mr M A Gare
Mr C Higginson
(Resigned 31 May 2023)
Mr M C Beeston
(Appointed 9 January 2023)
Auditor

In accordance with the company's articles, a resolution proposing that Xeinadin Audit Limited be reappointed as auditor of the group will be put at a General Meeting.

Statement of directors' responsibilities

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.

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.

THE ETHIKOS GROUP LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
Medium-sized companies exemption

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

On behalf of the board
Mr S M Davis
Director
2 September 2024
THE ETHIKOS GROUP LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF THE ETHIKOS GROUP LTD
- 5 -
Opinion

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

In our opinion the financial statements:

Basis for opinion

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

Conclusions relating to going concern

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

 

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

 

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

Other information

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

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

THE ETHIKOS GROUP LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF THE ETHIKOS GROUP LTD
- 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.

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:

THE ETHIKOS GROUP LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF THE ETHIKOS GROUP LTD
- 7 -

The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the Company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including related companies legislation), distributable profits legislation and taxation legislation and we assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items. 

Secondly, the Company is subject to many other laws and regulations where the consequence of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance the imposition of fines or litigation or the loss of the Company’s license to operate.  Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and other management and inspection of regulatory and legal correspondence, if any. Therefore, if a breach of operational regulations is not disclosed to us or evident from relevant correspondence, an audit will not detect that breach.

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 is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

 

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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

Use of our report

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

Timothy Mitchell BSc FCA (Senior Statutory Auditor)
For and on behalf of Xeinadin Audit Limited
2 September 2024
Chartered Accountants
Statutory Auditor
2 Hilliards Court
Chester Business Park
Chester
Cheshire
CH4 9QP
THE ETHIKOS GROUP LTD
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
20,034,583
13,600,733
Cost of sales
(15,548,280)
(9,843,608)
Gross profit
4,486,303
3,757,125
Administrative expenses
(3,831,045)
(3,243,024)
Other operating income
1,000
15,832
Operating profit
4
656,258
529,933
Interest receivable and similar income
7
1
20
Interest payable and similar expenses
8
(209,016)
(214,740)
Profit before taxation
447,243
315,213
Tax on profit
9
(189,866)
(139,677)
Profit for the financial year
257,377
175,536
Profit for the financial year is all attributable to the owners of the parent company.
THE ETHIKOS GROUP LTD
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
£
£
Profit for the year
257,377
175,536
Other comprehensive income
-
-
Total comprehensive income for the year
257,377
175,536
Total comprehensive income for the year is all attributable to the owners of the parent company.
THE ETHIKOS GROUP LTD
GROUP BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
11
1,937,552
2,234,953
Other intangible assets
11
11,632
17,882
Total intangible assets
1,949,184
2,252,835
Tangible assets
12
714,622
653,881
2,663,806
2,906,716
Current assets
Stocks
15
295,787
450,659
Debtors
16
3,816,792
3,363,227
Cash at bank and in hand
1,374,245
423,486
5,486,824
4,237,372
Creditors: amounts falling due within one year
17
(5,829,854)
(4,394,939)
Net current liabilities
(343,030)
(157,567)
Total assets less current liabilities
2,320,776
2,749,149
Creditors: amounts falling due after more than one year
18
(1,695,502)
(2,192,472)
Provisions for liabilities
Deferred tax liability
21
100,947
73,060
(100,947)
(73,060)
Net assets
524,327
483,617
Capital and reserves
Called up share capital
24
25,000
25,000
Profit and loss reserves
499,327
458,617
Total equity
524,327
483,617

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

The financial statements were approved by the board of directors and authorised for issue on 2 September 2024 and are signed on its behalf by:
02 September 2024
Mr S M Davis
Director
Company registration number 10631183 (England and Wales)
THE ETHIKOS GROUP LTD
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
11
11,632
17,882
Tangible assets
12
7,959
2,409
Investments
13
5,177,056
5,177,056
5,196,647
5,197,347
Current assets
Debtors
16
-
0
3,915
Cash at bank and in hand
324,080
84,206
324,080
88,121
Creditors: amounts falling due within one year
17
(3,426,152)
(2,567,255)
Net current liabilities
(3,102,072)
(2,479,134)
Total assets less current liabilities
2,094,575
2,718,213
Creditors: amounts falling due after more than one year
18
(1,284,654)
(1,810,822)
Provisions for liabilities
Deferred tax liability
21
4,898
602
(4,898)
(602)
Net assets
805,023
906,789
Capital and reserves
Called up share capital
24
25,000
25,000
Profit and loss reserves
780,023
881,789
Total equity
805,023
906,789

As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £114,900 (2022 - £15,343 loss).

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

The financial statements were approved by the board of directors and authorised for issue on 2 September 2024 and are signed on its behalf by:
02 September 2024
Mr S M Davis
Director
Company registration number 10631183 (England and Wales)
THE ETHIKOS GROUP LTD
GROUP 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
25,000
433,081
458,081
Year ended 31 December 2022:
Profit and total comprehensive income
-
175,536
175,536
Dividends
10
-
(150,000)
(150,000)
Balance at 31 December 2022
25,000
458,617
483,617
Year ended 31 December 2023:
Profit and total comprehensive income
-
257,377
257,377
Dividends
10
-
(216,667)
(216,667)
Balance at 31 December 2023
25,000
499,327
524,327
THE ETHIKOS GROUP LTD
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2022
25,000
1,047,132
1,072,132
Year ended 31 December 2022:
Loss and total comprehensive income for the year
-
(15,343)
(15,343)
Dividends
10
-
(150,000)
(150,000)
Balance at 31 December 2022
25,000
881,789
906,789
Year ended 31 December 2023:
Profit and total comprehensive income
-
114,901
114,901
Dividends
10
-
(216,667)
(216,667)
Balance at 31 December 2023
25,000
780,023
805,023
THE ETHIKOS GROUP LTD
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
28
1,600,897
1,013,007
Interest paid
(209,016)
(214,740)
Income taxes paid
(113,126)
(67,023)
Net cash inflow from operating activities
1,278,755
731,244
Investing activities
Purchase of intangible assets
-
(1,219,703)
Purchase of tangible fixed assets
(293,073)
(399,539)
Proceeds from disposal of tangible fixed assets
6,483
-
Repayment of loans
-
(1,208)
Interest received
1
20
Net cash used in investing activities
(286,589)
(1,620,430)
Financing activities
Repayment of debentures
(412,168)
668,375
Repayment of bank loans
25,185
138,836
Payment of finance leases obligations
112,786
173,376
Dividends paid to equity shareholders
(216,667)
(150,000)
Net cash (used in)/generated from financing activities
(490,864)
830,587
Net increase/(decrease) in cash and cash equivalents
501,302
(58,599)
Cash and cash equivalents at beginning of year
423,486
482,085
Cash and cash equivalents at end of year
924,788
423,486
Relating to:
Cash at bank and in hand
1,374,245
423,486
Bank overdrafts included in creditors payable within one year
(449,457)
-
THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 15 -
1
Accounting policies
Company information

The Ethikos Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Unit 1 Prince William Avenue, Sandycroft, Flintshire, CH5 2QZ.

 

The group consists of The Ethikos Group Limited and all of its subsidiaries.

1.1
Accounting convention

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

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

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

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

 

1.2
Business combinations

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

 

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

THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 16 -
1.3
Basis of consolidation

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

 

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

 

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

1.4
Going concern

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

1.5
Turnover

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

 

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

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

1.6
Research and development expenditure

Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.

1.7
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

 

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.

THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.8
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.

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:

Website
25% straight line once complete
1.9
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:

Leasehold land and buildings
5% on cost
Leasehold improvements
20% on cost
Plant and equipment
15% reducing balance & 50% on cost
Fixtures and fittings
15% reducing balance
Computers
Between 25% & 33.33% on cost
Motor vehicles
25% reducing balance & 20% on cost

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.

1.10
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 subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.

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

1.11
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.

THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -

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 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
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.

1.14
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.

THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 19 -
Other financial assets

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

Impairment of financial assets

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

 

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

 

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

Derecognition of financial assets

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

Classification of financial liabilities

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

Basic financial liabilities

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

 

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

 

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

THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 20 -
Other financial liabilities

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

 

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

Derecognition of financial liabilities

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

1.15
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.

1.16
Taxation

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

Current tax

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

Deferred tax

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

 

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

THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 21 -
1.17
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.

1.18
Retirement benefits

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

1.19
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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

1.20
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

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.

THE ETHIKOS GROUP LTD
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.

Revenue and margin recognition

The group's revenue recognition and margin recognition policies are central to how the group values the work it has carried out in each financial year. These policies require forecasts to be made of the outcomes of construction contracts, which require assessments and judgements to be made. The group reviews and when necessary revises the estimates of revenue and costs as the contract progresses.

3
Turnover and other revenue
2023
2022
£
£
Other revenue
Interest income
1
20
Grants received
1,000
15,832

All turnover arose within the United Kingdom.

4
Operating profit
2023
2022
£
£
Operating profit for the year is stated after charging/(crediting):
Exchange losses
4,226
255
Research and development costs
181
-
Government grants
(1,000)
(15,832)
Fees payable to the group's auditor for the audit of the group's financial statements
24,000
24,000
Depreciation of owned tangible fixed assets
180,733
152,807
Loss on disposal of tangible fixed assets
45,116
46,136
Amortisation of intangible assets
303,651
268,198
Operating lease charges
244,719
150,790
THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
5
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
24,000
24,000
6
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
118
108
7
5

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
4,431,630
3,890,426
238,247
183,158
Social security costs
460,310
407,882
37,142
19,244
Pension costs
189,880
113,773
7,618
2,969
5,081,820
4,412,081
283,007
205,371
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
1
20
8
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
153,412
160,700
Interest on finance leases and hire purchase contracts
55,604
54,040
Total finance costs
209,016
214,740
THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
161,979
113,125
Adjustments in respect of prior periods
-
0
(35)
Total current tax
161,979
113,090
Deferred tax
Origination and reversal of timing differences
27,887
12,962
Changes in tax rates
-
0
13,625
Total deferred tax
27,887
26,587
Total tax charge
189,866
139,677

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
447,243
315,213
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
105,192
59,890
Tax effect of expenses that are not deductible in determining taxable profit
21,404
40,477
Permanent capital allowances in excess of depreciation
(76,350)
(58,864)
Depreciation on assets not qualifying for tax allowances
43,979
1,188
Amortisation on assets not qualifying for tax allowances
69,949
49,770
Under/(over) provided in prior years
-
0
20,629
Tax at marginal rate
(2,196)
-
0
Deferred tax
27,888
26,587
Taxation charge
189,866
139,677
10
Dividends
2023
2022
Recognised as distributions to equity holders:
£
£
Final paid
216,667
150,000
THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
11
Intangible fixed assets
Group
Goodwill
Website
Total
£
£
£
Cost
At 1 January 2023 and 31 December 2023
2,974,015
25,000
2,999,015
Amortisation and impairment
At 1 January 2023
739,062
7,118
746,180
Amortisation charged for the year
297,401
6,250
303,651
At 31 December 2023
1,036,463
13,368
1,049,831
Carrying amount
At 31 December 2023
1,937,552
11,632
1,949,184
At 31 December 2022
2,234,953
17,882
2,252,835
Company
Website
£
Cost
At 1 January 2023 and 31 December 2023
25,000
Amortisation and impairment
At 1 January 2023
7,118
Amortisation charged for the year
6,250
At 31 December 2023
13,368
Carrying amount
At 31 December 2023
11,632
At 31 December 2022
17,882
THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 26 -
12
Tangible fixed assets
Group
Leasehold land and buildings
Leasehold improvements
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
£
Cost
At 1 January 2023
32,079
8,850
28,197
16,119
60,079
825,316
970,640
Additions
-
0
8,500
3,253
-
0
-
0
281,320
293,073
Disposals
-
0
-
0
-
0
-
0
-
0
(102,749)
(102,749)
At 31 December 2023
32,079
17,350
31,450
16,119
60,079
1,003,887
1,160,964
Depreciation and impairment
At 1 January 2023
29,668
8,437
21,541
13,768
37,717
205,628
316,759
Depreciation charged in the year
1,327
1,003
3,979
1,421
7,669
165,334
180,733
Eliminated in respect of disposals
-
0
-
0
-
0
-
0
-
0
(51,150)
(51,150)
At 31 December 2023
30,995
9,440
25,520
15,189
45,386
319,812
446,342
Carrying amount
At 31 December 2023
1,084
7,910
5,930
930
14,693
684,075
714,622
At 31 December 2022
2,411
413
6,656
2,351
22,362
619,688
653,881
THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 27 -
Company
Leasehold improvements
Computers
Total
£
£
£
Cost
At 1 January 2023
-
0
2,409
2,409
Additions
5,550
-
0
5,550
At 31 December 2023
5,550
2,409
7,959
Depreciation and impairment
At 1 January 2023 and 31 December 2023
-
0
-
0
-
0
Carrying amount
At 31 December 2023
5,550
2,409
7,959
At 31 December 2022
-
0
2,409
2,409
13
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
14
-
0
-
0
5,177,056
5,177,056
Movements in fixed asset investments
Company
Shares in group undertakings
£
Cost or valuation
At 1 January 2023 and 31 December 2023
5,177,056
Carrying amount
At 31 December 2023
5,177,056
At 31 December 2022
5,177,056
14
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
Delta Rock Group Limited
Unit 1 Prince William Avenue, Sandycroft, Flintshire, CH5 2QZ
Ordinary
100.00
-
Gilks (Nantwich) Limited
10b Beam St, Nantwich, CW5 5LP
Ordinary
-
100.00
Gilks (Electrical Holdings) Limited
10b Beam St, Nantwich, CW5 5LP
Ordinary
100.00
-
Print-Tech Solutions Limited
Orient House, Newton Street, Hyde, Cheshire, SK14 4RY
Ordinary
100.00
-
THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 28 -
15
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Raw materials and consumables
14,118
229,349
-
-
Work in progress
281,669
221,310
-
-
295,787
450,659
-
-
16
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
3,244,327
2,338,954
-
0
-
0
Other debtors
297,022
480,959
-
0
3,915
Prepayments and accrued income
272,113
539,984
-
0
-
0
3,813,462
3,359,897
-
3,915
Deferred tax asset (note 21)
3,330
3,330
-
0
-
0
3,816,792
3,363,227
-
3,915
17
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
19
872,517
387,875
412,227
377,042
Obligations under finance leases
20
238,214
164,626
-
0
-
0
Trade creditors
2,844,006
1,727,137
13,631
5,807
Amounts owed to group undertakings
-
0
-
0
2,783,461
2,018,549
Corporation tax payable
161,978
113,125
41,271
-
0
Other taxation and social security
474,960
751,590
35,358
6,444
Deferred income
22
785,814
441,191
-
0
-
0
Other creditors
312,632
682,720
116,203
135,413
Accruals and deferred income
139,733
126,675
24,001
24,000
5,829,854
4,394,939
3,426,152
2,567,255
THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 29 -
18
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Debenture loans
19
1,170,654
1,582,822
1,170,654
1,582,822
Bank loans and overdrafts
19
16,667
26,667
-
0
-
0
Obligations under finance leases
20
394,181
354,983
-
0
-
0
Other creditors
114,000
228,000
114,000
228,000
1,695,502
2,192,472
1,284,654
1,810,822
19
Loans and overdrafts
Group
Company
2023
2022
2023
2022
£
£
£
£
Debenture loans
1,170,654
1,582,822
1,170,654
1,582,822
Bank loans
439,727
414,542
412,227
377,042
Bank overdrafts
449,457
-
0
-
0
-
0
2,059,838
1,997,364
1,582,881
1,959,864
Payable within one year
872,517
387,875
412,227
377,042
Payable after one year
1,187,321
1,609,489
1,170,654
1,582,822

The debenture loans represent the company's indebtedness to DBW Investments (14) Limited and is secured by both fixed and floating charges and a negative pledge over the assets and intellectual property now or in the future belonging to The Ethikos Group Limited and the debentures are guaranteed by its subsidiaries Delta Rock Group Limited, Gilks (Electrical Holdings) Limited and Gilks (Nantwich) Limited. There are 3 registrations of charge the first created on the 18 December 2019 and delivered on 3 January 2020, the second created and delivered on the 26 February 2020 and the final charge created on the 1 May 2020 and delivered on 5 May 2020.

 

There is also a registration of charge with Delta Rock Group Limited and Close Brothers Limited for invoice financing which is secured by an all asset debenture which contains a fixed and floating charge and negative pledge. This charge was created on the 4 May 2021 and delivered on 21 May 2021.

THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 30 -
20
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
238,215
164,626
-
0
-
0
In two to five years
296,310
188,309
-
0
-
0
534,525
352,935
-
-
Less: future finance charges
97,870
166,674
-
0
-
0
632,395
519,609
-
0
-
0

Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

21
Deferred taxation

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

Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Group
£
£
£
£
Accelerated capital allowances
100,947
73,060
3,330
3,330
Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Company
£
£
£
£
Accelerated capital allowances
4,898
602
-
-
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 1 January 2023
69,730
602
Charge to profit or loss
27,887
4,296
Liability at 31 December 2023
97,617
4,898

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

THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 31 -
22
Deferred income
Group
Company
2023
2022
2023
2022
£
£
£
£
Other deferred income
785,814
441,191
-
-
23
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
189,880
113,773

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

24
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
25,000
25,000
25,000
25,000
25
Financial commitments, guarantees and contingent liabilities

Bank guarantee

 

DBW Investments hold fixed and floating charges over all current and future assets of the group.

26
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
177,221
102,536
-
-
Between two and five years
248,484
93,991
-
-
425,705
196,527
-
-
27
Controlling party

The ultimate controlling party of The Ethikos Group is S M Davis.

THE ETHIKOS GROUP LTD
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 32 -
28
Cash generated from group operations
2023
2022
£
£
Profit for the year after tax
257,377
175,536
Adjustments for:
Taxation charged
189,866
139,677
Finance costs
209,016
214,740
Investment income
(1)
(20)
Loss on disposal of tangible fixed assets
45,116
46,136
Amortisation and impairment of intangible assets
303,651
268,198
Depreciation and impairment of tangible fixed assets
180,733
152,807
Movements in working capital:
Decrease/(increase) in stocks
154,872
(407,596)
Increase in debtors
(453,565)
(1,380,959)
Increase in creditors
369,209
1,363,297
Increase in deferred income
344,623
441,191
Cash generated from operations
1,600,897
1,013,007
29
Analysis of changes in net debt - group
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
423,486
950,759
1,374,245
Bank overdrafts
-
0
(449,457)
(449,457)
423,486
501,302
924,788
Borrowings excluding overdrafts
(1,997,364)
386,983
(1,610,381)
Obligations under finance leases
(519,609)
(112,786)
(632,395)
(2,093,487)
775,499
(1,317,988)
2023-12-312023-01-01falseCCH SoftwareCCH Accounts Production 2024.100Mr S M DavisMs G DavisMr M A GareMr C HigginsonMr M C 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