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COMPANY REGISTRATION NUMBER: 00175597
PARKINSON-SPENCER REFRACTORIES LIMITED
FINANCIAL STATEMENTS
31 December 2023
PARKINSON-SPENCER REFRACTORIES LIMITED
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2023
Contents
Pages
Officers and professional advisers 1
Strategic report 2
Directors' report 3 to 4
Independent auditor's report to the members 5 to 7
Statement of comprehensive income 8
Statement of financial position 9
Statement of changes in equity 10
Statement of cash flows 11
Notes to the financial statements 12 to 20
PARKINSON-SPENCER REFRACTORIES LIMITED
OFFICERS AND PROFESSIONAL ADVISERS
The board of directors
D E Parkinson
S Parkinson
J Parkinson
L J R Gaskell
Company secretary
J Parkinson
Registered office
Holmfield
Halifax
West Yorkshire
HX3 6SX
Auditor
Wheawill & Sudworth Limited
Chartered Accountants & Statutory Auditor
35 Westgate
Huddersfield
HD1 1PA
Bankers
HSBC Bank plc
7 Commercial Street
Halifax
West Yorkshire
HX1 1HN
PARKINSON-SPENCER REFRACTORIES LIMITED
STRATEGIC REPORT
YEAR ENDED 31 DECEMBER 2023
Activities
The principal activity of the company is the supply of refractories and engineered products for the glass manufacturing industry. There have not been any significant changes in the company's principal activities in the period under review.
Strategic review of the business and prospects
In 2023 the Company saw an increase in turnover, following a very poor result in 2022, to £10.3m and a return to a modest level of profitability with a pre tax profit circa £228k. This has been achieved through an increase in the Company's project business, securing several large contracts. Additionally, the Company was able to increase it's revenue from the regular sales of consumable refractories, in order to overcome the significant increases to raw material, energy and labour costs. This result is still significantly lower than the approximate forecasted turnover and profit levels of £11.1 m and £700k respectively. This is due to the incompletion of some of the previously mentioned large contracts during 2023, with some of the revenue and profit from these projects being pushed back to 2024. The Company continues to be impacted by high raw material, energy and labour costs, with consecutive large increases to National Living Wage having a direct impact on our labour costs. Additionally, the glass industry is impacted by the same factors, as well as an overcapacity in certain regions resulting in glass production lines being temporarily or permanently taken out of operation. This is impacting the demand for consumable refractories and the capital expenditure plans of glass industry decision makers. The Company's forecast for 2024 is therefore a stable level of turnover and another modest profit, depending on the confirmation of our project order pipeline.
Future development and performance
The Company continues to progress several projects and initiatives to further improve the sustainability and profitability of the business whilst reducing its carbon footprint. We are seeking further funding and collaborations to support R&D projects, to build on the Low-Carbon Refractories project completed in 2023, and to develop novel kiln loading techniques aimed at significantly increasing the volume of material which can be loaded onto our kilns.
This report was approved by the board of directors on 16 September 2024 and signed on behalf of the board by:
S Parkinson
Director
PARKINSON-SPENCER REFRACTORIES LIMITED
DIRECTORS' REPORT
YEAR ENDED 31 DECEMBER 2023
The directors present their report and the financial statements of the company for the year ended 31 December 2023 .
Directors
The directors who served the company during the year were as follows:
D E Parkinson
S Parkinson
J Parkinson
L J R Gaskell
Dividends
The directors have recommended dividends as set out at note 13.
Future developments
An indication of future developments of the business is included in the strategic report.
Events after the end of the reporting period
There have been no significant events affecting the company since the year end.
Research and development
The company incurred expenditure of £57,727 (2022: £85,811) on research and development appropriate to its trading activities.
Directors' responsibilities statement
The directors are responsible for preparing the strategic report, directors' report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the profit or loss of the company for that period. In preparing these financial statements, the directors are required to: - select suitable accounting policies and then apply them consistently; - make judgments and accounting estimates that are reasonable and prudent; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Auditor
Each of the persons who is a director at the date of approval of this report confirms that:
- so far as they are aware, there is no relevant audit information of which the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information.
This report was approved by the board of directors on 16 September 2024 and signed on behalf of the board by:
S Parkinson
Director
PARKINSON-SPENCER REFRACTORIES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PARKINSON-SPENCER REFRACTORIES LIMITED
YEAR ENDED 31 DECEMBER 2023
Opinion
We have audited the financial statements of Parkinson-Spencer Refractories Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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: - give a true and fair view of the state of the company's affairs as at 31 December 2023 and of its profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; - have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. 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. In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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 the audit:
- the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
- the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: - adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or - the financial statements are not in agreement with the accounting records and returns; or - certain disclosures of directors' remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: 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. As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: - 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. 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. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. - Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 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. 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.
David Butterworth
(Senior Statutory Auditor)
For and on behalf of
Wheawill & Sudworth Limited
Chartered Accountants & Statutory Auditor
35 Westgate
Huddersfield
HD1 1PA
16 September 2024
PARKINSON-SPENCER REFRACTORIES LIMITED
STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED 31 DECEMBER 2023
2023
2022
Note
£
£
Turnover
4
10,296,243
6,923,506
Cost of sales
( 5,702,046)
( 3,912,623)
-------------
------------
Gross profit
4,594,197
3,010,883
Administrative expenses
( 4,354,263)
( 4,331,929)
Other operating income
5
12,704
8,941
------------
------------
Operating profit/(loss)
6
252,638
( 1,312,105)
Other interest receivable and similar income
10
5
1
Interest payable and similar expenses
11
( 24,827)
( 6,695)
------------
------------
Profit/(loss) before taxation
227,816
( 1,318,799)
Tax on profit/(loss)
12
( 45,000)
369,034
------------
------------
Profit/(loss) for the financial year and total comprehensive income
182,816
( 949,765)
------------
------------
All the activities of the company are from continuing operations.
PARKINSON-SPENCER REFRACTORIES LIMITED
STATEMENT OF FINANCIAL POSITION
31 December 2023
2023
2022
Note
£
£
Fixed assets
Tangible assets
14
954,096
1,061,968
Current assets
Stocks
15
3,258,844
3,028,615
Debtors
16
2,215,375
2,209,552
Cash at bank and in hand
154,504
152,609
------------
------------
5,628,723
5,390,776
Creditors: amounts falling due within one year
18
( 2,627,526)
( 2,592,484)
------------
------------
Net current assets
3,001,197
2,798,292
------------
------------
Total assets less current liabilities
3,955,293
3,860,260
Creditors: amounts falling due after more than one year
19
( 235,078)
( 322,861)
------------
------------
Net assets
3,720,215
3,537,399
------------
------------
Capital and reserves
Called up share capital
23
151,120
151,120
Capital redemption reserve
24
121,960
121,960
Profit and loss account
24
3,447,135
3,264,319
------------
------------
Shareholders funds
3,720,215
3,537,399
------------
------------
These financial statements were approved by the board of directors and authorised for issue on 16 September 2024 , and are signed on behalf of the board by:
S Parkinson
J Parkinson
Director
Director
Company registration number: 00175597
PARKINSON-SPENCER REFRACTORIES LIMITED
STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 31 DECEMBER 2023
Called up share capital
Capital redemption reserve
Profit and loss account
Total
£
£
£
£
At 1 January 2022
151,120
121,960
4,232,219
4,505,299
Loss for the year
( 949,765)
( 949,765)
------------
------------
------------
------------
Total comprehensive income for the year
( 949,765)
( 949,765)
Dividends paid and payable
13
( 18,135)
( 18,135)
------------
------------
------------
------------
Total investments by and distributions to owners
( 18,135)
( 18,135)
At 31 December 2022
151,120
121,960
3,264,319
3,537,399
Profit for the year
182,816
182,816
------------
------------
------------
------------
Total comprehensive income for the year
182,816
182,816
------------
------------
------------
------------
At 31 December 2023
151,120
121,960
3,447,135
3,720,215
------------
------------
------------
------------
PARKINSON-SPENCER REFRACTORIES LIMITED
STATEMENT OF CASH FLOWS
YEAR ENDED 31 DECEMBER 2023
2023
2022
Note
£
£
Cash flows from operating activities
Profit/(loss) for the financial year
182,816
( 949,765)
Adjustments for:
Depreciation of tangible assets
157,060
143,712
Other interest receivable and similar income
( 5)
( 1)
Interest payable and similar expenses
24,827
6,695
Gains on disposal of tangible assets
( 414)
Tax on profit/(loss)
45,000
( 369,034)
Changes in:
Stocks
( 230,229)
( 533,893)
Trade and other debtors
( 50,823)
585,473
Trade and other creditors
142,621
505,129
------------
------------
Cash generated from operations
271,267
( 612,098)
Interest paid
( 24,827)
( 6,695)
Interest received
5
1
------------
------------
Net cash from/(used in) operating activities
246,445
( 618,792)
------------
------------
Cash flows from investing activities
Purchase of tangible assets
( 49,188)
( 429,676)
Proceeds from sale of tangible assets
1,350
------------
------------
Net cash used in investing activities
( 49,188)
( 428,326)
------------
------------
Cash flows from financing activities
Proceeds from borrowings
450,572
Payments of finance lease liabilities
( 78,854)
( 48,855)
Dividends paid
( 18,135)
------------
------------
Net cash (used in)/from financing activities
( 78,854)
383,582
------------
------------
Net increase/(decrease) in cash and cash equivalents
118,403
( 663,536)
Cash and cash equivalents at beginning of year
36,101
699,637
------------
------------
Cash and cash equivalents at end of year
17
154,504
36,101
------------
------------
PARKINSON-SPENCER REFRACTORIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2023
1. General information
The company is a private company limited by shares, registered in England and Wales. The address of the registered office is Holmfield, Halifax, HX3 6SX, West Yorkshire.
2. Statement of compliance
These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.
3. Accounting policies
Basis of preparation
The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through profit or loss.
The financial statements are prepared in sterling, which is the functional currency of the entity.
Research and development policy
Research expenditure is written off in the period in which it is incurred.
Development expenditure incurred is capitalised as an intangible asset only when all of the following criteria are met:
- It is technically feasible to complete the intangible asset so that it will be available for use or sale;
- There is the intention to complete the intangible asset and use or sell it;
- There is the ability to use or sell the intangible asset;
- The use or sale of the intangible asset will generate probable future economic benefits;
- There are adequate technical, financial and other resources available to complete the development and to use or sell the intangible asset; and
- The expenditure attributable to the intangible asset during its development can be measured reliably.
Expenditure that does not meet the above criteria is expensed as incurred.
Judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The items in the financial statements where those judgements and estimates have been made include stock valuation and provisioning, recoverability of debtors and the useful economic life of tangible assets.
Revenue recognition
Turnover is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods supplied and services rendered, stated net of discounts and of Value Added Tax. Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have transferred to the buyer, usually on despatch of the goods, the amount of revenue can be measured reliably, it is probable that the associated economic benefits will flow to the entity, and the costs incurred or to be incurred in respect of the transactions can be measured reliably. When the outcome of a transaction involving the rendering of services can be reliably estimated, revenue from the rendering of services is measured by reference to the stage of completion of the service transaction at the end of the reporting period. When the outcome of a transaction involving the rendering of services cannot be reliably estimated, revenue is recognised only to the extent that expenses recognised are recoverable.
Taxation
The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.
Foreign currencies
Foreign currency transactions are initially recorded in the functional currency, by applying the spot exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date, with any gains or losses being taken to the profit and loss account.
Operating leases
Lease payments are recognised as an expense over the lease term on a straight-line basis. The aggregate benefit of lease incentives is recognised as a reduction to expense over the lease term, on a straight-line basis. Lease income is recognised in profit or loss on a straight line basis over the lease term. The aggregate cost of lease incentives are recognised as a reduction to income over the lease term on a straight-line basis. Costs, including depreciation, incurred in earning the lease income are recognised as an expense. Any initial direct costs incurred in negotiating and arranging the operating lease are added to the carrying amount of the lease and recognised as an expense over the lease term on the same basis as the lease income.
Tangible assets
Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. An increase in the carrying amount of an asset as a result of a revaluation, is recognised in other comprehensive income and accumulated in equity, except to the extent it reverses a revaluation decrease of the same asset previously recognised in profit or loss. A decrease in the carrying amount of an asset as a result of revaluation, is recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity in respect of that asset. Where a revaluation decrease exceeds the accumulated revaluation gains accumulated in equity in respect of that asset, the excess shall be recognised in profit or loss.
Depreciation
Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:
Freehold property
-
5% straight line or 20% reducing balance
Plant and machinery
-
15 reducing balance or 10% and 20% straight line
Motor vehicles
-
25% reducing balance
Assets under construction are recorded separately and are then recategorised and depreciated once completed.
Impairment of fixed assets
A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets. For impairment testing of goodwill, the goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the company are assigned to those units.
Stocks
Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the stock to its present location and condition.
Finance leases and hire purchase contracts
Assets held under finance leases and hire purchase contracts are recognised in the statement of financial position as assets and liabilities at the lower of the fair value of the assets and the present value of the minimum lease payments, which is determined at the inception of the lease term. Any initial direct costs of the lease are added to the amount recognised as an asset. Lease payments are apportioned between the finance charges and reduction of the outstanding lease liability using the effective interest method. Finance charges are allocated to each period so as to produce a constant rate of interest on the remaining balance of the liability.
Long term contracts
Where the outcome of long term contracts can be reliably estimated, contract revenue and contract costs are recognised by reference to the stage of completion of the contract activity as at the period end. Where the outcome of long term contracts cannot be estimated reliably, revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable, and contract costs are recognised as an expense in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is expensed immediately, with a corresponding provision for an onerous contract being recognised. Where the collectability of an amount already recognised as contract revenue is no longer probable, the uncollectible amount is expensed rather than recognised as an adjustment to the amount of contract revenue. The entity uses the percentage of completion method to determine the amounts to be recognised in the period. The stage of completion is measured by reference to the contract costs incurred up to the end of the reporting period as a percentage of total estimated costs for each contract. Costs incurred for work performed to date do not include costs relating to future activity, such as for materials or prepayments.
Financial instruments
A financial asset or a financial liability is recognised only when the company becomes a party to the contractual provisions of the instrument. Basic financial instruments are initially recognised at the transaction price, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Debt instruments are subsequently measured at amortised cost. Where investments in non-convertible preference shares and non-puttable ordinary shares or preference shares are publicly traded or their fair value can otherwise be measured reliably, the investment is subsequently measured at fair value with changes in fair value recognised in profit or loss. All other such investments are subsequently measured at cost less impairment. Other financial instruments, including derivatives, are initially recognised at fair value, unless payment for an asset is deferred beyond normal business terms or financed at a rate of interest that is not a market rate, in which case the asset is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Other financial instruments are subsequently measured at fair value, with any changes recognised in profit or loss, with the exception of hedging instruments in a designated hedging relationship.
Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss immediately. For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets are either assessed individually or grouped on the basis of similar credit risk characteristics. Any reversals of impairment are recognised in profit or loss immediately, to the extent that the reversal does not result in a carrying amount of the financial asset that exceeds what the carrying amount would have been had the impairment not previously been recognised.
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund. When contributions are not expected to be settled wholly within 12 months of the end of the reporting date in which the employees render the related service, the liability is measured on a discounted present value basis. The unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
4. Turnover
Turnover arises from:
2023
2022
£
£
Sale of goods
10,296,243
6,923,506
-------------
------------
An analysis of turnover and profit before taxation by class of business and an analysis of turnover by geographical market have not been disclosed as the directors consider it to be seriously prejudical to the interests of the Company.
5. Other operating income
2023
2022
£
£
Rental income
12,704
8,941
------------
------------
6. Operating profit
Operating profit or loss is stated after charging/crediting:
2023
2022
£
£
Depreciation of tangible assets
157,060
143,712
Gains on disposal of tangible assets
( 414)
Impairment of trade debtors
726
Foreign exchange differences
( 116,701)
( 92,614)
------------
------------
7. Auditor's remuneration
2023
2022
£
£
Fees payable for the audit of the financial statements
16,000
16,000
------------
------------
8. Staff costs
The average number of persons employed by the company during the year, including the directors, amounted to:
2023
2022
No.
No.
Production staff
95
89
------------
------------
The aggregate payroll costs incurred during the year, relating to the above, were:
2023
2022
£
£
Wages and salaries
3,082,062
2,629,645
Social security costs
293,998
267,954
Other pension costs
158,611
122,065
------------
------------
3,534,671
3,019,664
------------
------------
9. Directors' remuneration
The directors' aggregate remuneration in respect of qualifying services was:
2023
2022
£
£
Remuneration
250,672
286,397
Company contributions to defined contribution pension plans
11,513
21,612
------------
------------
262,185
308,009
------------
------------
The number of directors who accrued benefits under company pension plans was as follows:
2023
2022
No.
No.
Defined contribution plans
3
4
------------
------------
Remuneration of the highest paid director in respect of qualifying services:
2023
2022
£
£
Aggregate remuneration
95,577
91,297
Company contributions to defined contribution pension plans
3,812
3,097
------------
------------
99,389
94,394
------------
------------
10. Other interest receivable and similar income
2023
2022
£
£
Interest on cash and cash equivalents
5
1
------------
------------
11. Interest payable and similar expenses
2023
2022
£
£
Interest on banks loans and overdrafts
1,950
792
Interest on obligations under finance leases and hire purchase contracts
22,877
5,903
------------
------------
24,827
6,695
------------
------------
12. Tax on profit/(loss)
Major components of tax expense/(income)
2023
2022
£
£
Current tax:
UK current tax income
( 35,785)
Adjustments in respect of prior periods
( 32)
------------
------------
Total current tax
( 35,817)
------------
------------
Deferred tax:
Origination and reversal of timing differences
45,000
( 333,217)
------------
------------
Tax on profit/(loss)
45,000
( 369,034)
------------
------------
Reconciliation of tax expense/(income)
The tax assessed on the profit/(loss) on ordinary activities for the year is lower than (2022: lower than) the standard rate of corporation tax in the UK of 25 % (2022: 19 %).
2023
2022
£
£
Profit/(loss) on ordinary activities before taxation
227,816
( 1,318,799)
------------
------------
Profit/(loss) on ordinary activities by rate of tax
56,954
( 250,572)
Adjustment to tax charge in respect of prior periods
( 32)
Effect of expenses not deductible for tax purposes
2,101
455
Effect of capital allowances and depreciation
352
( 23,810)
Utilisation of tax losses
( 35,785)
Unused tax losses
420,927
Rate difference - current year tax
( 46,111)
Deferred tax not recognised
( 408)
( 420,681)
Underprovided deferred tax prior year
7,770
Additional deduction for R&D expenditure
( 13,999)
( 21,195)
------------
------------
Tax on profit/(loss)
45,000
( 369,034)
------------
------------
13. Dividends
2023
2022
£
£
Dividends paid during the year (excluding those for which a liability existed at the end of the prior year )
18,135
------------
------------
14. Tangible assets
Freehold property
Plant and machinery
Motor vehicles
Assets under construction
Total
£
£
£
£
£
Cost
At 1 January 2023
1,619,541
5,760,965
22,084
6,073
7,408,663
Additions
6,720
39,818
2,650
49,188
------------
------------
------------
------------
------------
At 31 December 2023
1,626,261
5,800,783
24,734
6,073
7,457,851
------------
------------
------------
------------
------------
Depreciation
At 1 January 2023
1,554,528
4,785,188
6,979
6,346,695
Charge for the year
6,106
147,171
3,783
157,060
------------
------------
------------
------------
------------
At 31 December 2023
1,560,634
4,932,359
10,762
6,503,755
------------
------------
------------
------------
------------
Carrying amount
At 31 December 2023
65,627
868,424
13,972
6,073
954,096
------------
------------
------------
------------
------------
At 31 December 2022
65,013
975,777
15,105
6,073
1,061,968
------------
------------
------------
------------
------------
Finance leases and hire purchase contracts
Included within the carrying value of tangible assets are the following amounts relating to assets held under finance leases or hire purchase agreements:
Plant and machinery
£
At 31 December 2023
410,139
------------
At 31 December 2022
459,972
------------
15. Stocks
2023
2022
£
£
Raw materials and consumables
990,753
1,072,377
Work in progress
413,785
460,219
Finished goods and goods for resale
1,854,306
1,496,019
------------
------------
3,258,844
3,028,615
------------
------------
16. Debtors
2023
2022
£
£
Trade debtors
1,511,103
1,393,315
Amounts owed by customers on construction contracts
456,288
539,374
Deferred tax asset
151,000
196,000
Prepayments and accrued income
32,229
31,219
Other debtors
64,755
49,644
------------
------------
2,215,375
2,209,552
------------
------------
17. Cash and cash equivalents
Cash and cash equivalents comprise the following:
2023
2022
£
£
Cash at bank and in hand
154,504
152,609
Bank overdrafts
( 116,508)
------------
------------
154,504
36,101
------------
------------
18. Creditors: amounts falling due within one year
2023
2022
£
£
Bank loans and overdrafts
116,508
Payments received on account
912,035
901,984
Trade creditors
1,003,098
970,709
Accruals and deferred income
518,175
432,346
Social security and other taxes
81,488
69,047
Obligations under finance leases and hire purchase contracts
87,784
78,855
Other creditors
24,946
23,035
------------
------------
2,627,526
2,592,484
------------
------------
Bank facilities are secured by fixed and floating charges over the company's assets.
Obligations under finance leases and hire purchase contracts are secured over the underlying asset.
19. Creditors: amounts falling due after more than one year
2023
2022
£
£
Obligations under finance leases and hire purchase contracts
235,078
322,861
------------
------------
20. Finance leases and hire purchase contracts
The total future minimum lease payments under finance leases and hire purchase contracts are as follows:
2023
2022
£
£
Not later than 1 year
87,784
78,855
Later than 1 year and not later than 5 years
235,078
322,861
------------
------------
322,862
401,716
------------
------------
21. Deferred tax
The deferred tax included in the statement of financial position is as follows:
2023
2022
£
£
Included in debtors (note 16)
151,000
196,000
------------
------------
The deferred tax account consists of the tax effect of timing differences in respect of:
2023
2022
£
£
Accelerated capital allowances
204,025
227,242
Unused tax losses
( 351,699)
( 420,681)
Provisions
( 3,326)
( 2,561)
------------
------------
(151,000)
(196,000)
------------
------------
22. Employee benefits
Defined contribution plans
The amount recognised in profit or loss as an expense in relation to defined contribution pension plans was £ 147,098 (2022: £ 100,453 ).
23. Called up share capital
Issued, called up and fully paid
2023
2022
No.
£
No.
£
Ordinary A shares of £ 1 each
9,881
9,881
9,881
9,881
Ordinary B shares of £ 1 each
141,239
141,239
141,239
141,239
------------
------------
------------
------------
151,120
151,120
151,120
151,120
------------
------------
------------
------------
The ordinary B shares of £1 each do not carry voting rights.
24. Reserves
Capital redemption reserve - This reserve records the nominal value of shares repurchased by the company. Profit and loss account - This reserve records retained earnings and accumulated losses.
25. Analysis of changes in net debt
At 1 Jan 2023
Cash flows
At 31 Dec 2023
£
£
£
Cash at bank and in hand
152,609
1,895
154,504
Bank overdrafts
(116,508)
116,508
Debt due within one year
(78,855)
(8,929)
(87,784)
Debt due after one year
(322,861)
87,783
(235,078)
------------
------------
------------
( 365,615)
197,257
( 168,358)
------------
------------
------------
26. Operating leases
The total future minimum lease payments under non-cancellable operating leases are as follows:
2023
2022
£
£
Not later than 1 year
72,783
84,515
Later than 1 year and not later than 5 years
88,234
119,022
------------
------------
161,017
203,537
------------
------------
27. Related party transactions
During the year there were purchases from Parwell Limited of £15,848 (2022: £18,044). At 31 December 2023 a loan of £ 20,000 (2022: £nil) was owing from Parwell Limited , being payable on demand and interest-free . This company is related through common shareholders.
28. Controlling party
Mr S Parkinson is the company's controlling party by virtue of his shareholding.