Company Registration No. 04652734 (England and Wales)
FLUIDMASTER GB LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
PM+M Solutions for Business LLP
Chartered Accountants
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
FLUIDMASTER GB LTD
COMPANY INFORMATION
Directors
Mrs C Anderson Schoepe
Mr R Anderson Schoepe
Company number
04652734
Registered office
Twyford Road
Rotherwas Industrial Estate
Hereford
HR2 6JR
Auditor
PM+M Solutions for Business LLP
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
Bankers
Bank of Scotland Plc
33 Old Broad Street
London
BX2 1LB
Bank of America N.A.
2 King Edward Street
London
EC14 1HQ
FLUIDMASTER GB LTD
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 23
FLUIDMASTER GB LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present their strategic report together with the audited financial statements for the year ended 31 December 2023.
Principal activities
The company’s principal activity is the manufacture and distribution of plumbing products.
Review of the business
Results
2023 has seen sales decrease by 5.1% or £1.1m following a restructure of its customer base. The cost of sales was 13.3% lower driven by volume reduction following the customer restructure with a focus on margin improvement. The company continued to develop new products and invest significant sums in tooling and manufacturing equipment during the year.
The results for the year are shown in the statement of comprehensive income on page 6.
Future outlook
Further growth in sales and profits are expected as new products are introduced and new customers gained in both UK and overseas markets.
Principal risks and uncertainties
The business and its adopted strategies are subject to certain risks, including increasing overseas competition, product liability, the self-insurance of product liability (see note 15), and rising commodity prices. Continued capital investment, the adoption of more modern manufacturing techniques and further product development will help to mitigate these risks.
Key performance indicators
We have rationalised areas of the business in the period to achieve the company’s overall strategy There was no impact from COVID-19. The board monitors progress by reference to the following KPIs:
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| | | Definition and method of calculation |
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| | | Period on period growth as a %. |
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| | | Ratio of operating profit to sales expressed as a %. |
FLUIDMASTER GB LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Going Concern
As a business providing toilet repair sanitary ware to the construction market, a market which has remained broadly in line with 2022 levels. There are no current risks from COVID-19 or indeed any future risks as the construction market was very resilient to the pandemic. Having said that current year (2024) trading has seen a volume reduction broadly in line with the market average of c.5%. However, due to the companies streamlined cost structure this poses minimal risk to the underlying profitability of the business.
Brexit: This is considered a low risk for the company. Parts are sourced both locally, from China and Europe. Potential inflationary pressures of incremental tariffs on raw materials for sanitary ware are not considered significant within the overall product cost.
The Board of Directors has undertaken a recent thorough review of the groups budgets and forecasts and has produced detailed and realistic cash flow projections. Various scenarios have been run on the potential impact of COVID-19, including the modelling of worst-case scenarios. The company has the continued support from the Group and ultimate parent company Fluidmaster Inc and the ultimate parent company has provided written confirmation that it will provide financial support, if required, to enable the company to meet its liabilities as they fall due for a period of at least 12 months from the date of approval of the financial statements. The company has existing cash resources at the 31 August 2024 of £1.0m and there is a worldwide group line of credit facility of approximately $103m, of which c.$87m remains unused. This level of cash and support is considered enough to meet the worst-case stress test scenario, whereby trading cash flows are reduced. These cash flow projections, when considered in conjunction with the company’s existing cash balances and support from the group, demonstrate that the company has adequate resources to continue its operational existence. The company financial statements have accordingly been prepared on a going concern basis.
Mr R Anderson Schoepe
Director
16 September 2024
FLUIDMASTER GB 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.
Results and dividends
The results for the year are set out on page 9.
Ordinary dividends were paid amounting to £2,625,000. 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 W Oppenlander
(Resigned 28 July 2023)
Mrs C Anderson Schoepe
Mr R Anderson Schoepe
Auditor
The auditor, PM+M Solutions for Business LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
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 company and of 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 judgements 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.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
FLUIDMASTER GB LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
On behalf of the board
Mr R Anderson Schoepe
Director
16 September 2024
FLUIDMASTER GB LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF FLUIDMASTER GB LTD
- 5 -
Opinion
We have audited the financial statements of Fluidmaster GB Ltd (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
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; and
have been prepared in accordance with the requirements of the Companies Act 2006.
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.
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 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.
FLUIDMASTER GB LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF FLUIDMASTER GB LTD (CONTINUED)
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
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 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.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.
FLUIDMASTER GB LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF FLUIDMASTER GB LTD (CONTINUED)
- 7 -
Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we have considered the following:
the nature of the industry and sector, control environment and business performance including the design of the Company's remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
results of our enquiries of management about their own identification and assessment of the risks of irregularities;
the matters discussed among the audit engagement team and relevant specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud;
any matters we identified having obtained and reviewed the Company's documentation of their policies and procedures relating to:
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas: timing of recognition of commercial income, posting of unusual journals and complex transactions; and manipulating the Company's performance profit measures and other key performance indicators to meet remuneration targets and externally communicated targets. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included UK Companies Act, employment law, health and safety regulations, pensions legislation and tax legislation.
Audit response to risks identified
Our procedures to respond to risks identified included the following:
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
enquiring of management concerning actual and potential litigation and claims;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
reading minutes of meetings of those charged with governance and reviewing correspondence with HMRC; and
in addressing the identified risks of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
FLUIDMASTER GB LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF FLUIDMASTER GB LTD (CONTINUED)
- 8 -
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.
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.
Daniel Bowles FCCA
Senior Statutory Auditor
For and on behalf of PM+M Solutions for Business LLP
17 September 2024
Chartered Accountants
Statutory Auditor
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
FLUIDMASTER GB LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
19,487,081
20,543,361
Cost of sales
(12,038,659)
(13,885,904)
Gross profit
7,448,422
6,657,457
Distribution costs
(1,779,159)
(1,586,245)
Administrative expenses
(1,802,439)
(1,655,766)
Other operating (expenses)/income
(47,003)
13,282
Operating profit
4
3,819,821
3,428,728
Interest receivable and similar income
8
3,265
Profit before taxation
3,823,086
3,428,728
Tax on profit
9
(869,459)
(682,765)
Profit for the financial year
2,953,627
2,745,963
The profit and loss account has been prepared on the basis that all operations are continuing operations.
FLUIDMASTER GB LTD
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
11
1,495,254
1,772,458
Current assets
Stocks
12
3,203,734
4,824,554
Debtors
13
7,454,957
6,198,435
Cash at bank and in hand
2,912,752
933,233
13,571,443
11,956,222
Creditors: amounts falling due within one year
14
(7,018,368)
(5,890,964)
Net current assets
6,553,075
6,065,258
Total assets less current liabilities
8,048,329
7,837,716
Provisions for liabilities
Provisions
15
334,369
400,000
Deferred tax liability
16
278,372
330,755
(612,741)
(730,755)
Net assets
7,435,588
7,106,961
Capital and reserves
Called up share capital
18
162,000
162,000
Share premium account
19
129,000
129,000
Capital contribution reserve
19
18,561
18,561
Profit and loss reserves
19
7,126,027
6,797,400
Total equity
7,435,588
7,106,961
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 16 September 2024 and are signed on its behalf by:
Mr R Anderson Schoepe
Director
Company registration number 04652734 (England and Wales)
FLUIDMASTER GB LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
Share capital
Share premium account
Capital contribution reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 January 2022
162,000
129,000
18,561
6,151,437
6,460,998
Year ended 31 December 2022:
Profit and total comprehensive income
-
-
-
2,745,963
2,745,963
Dividends
10
-
-
-
(2,100,000)
(2,100,000)
Balance at 31 December 2022
162,000
129,000
18,561
6,797,400
7,106,961
Year ended 31 December 2023:
Profit and total comprehensive income
-
-
-
2,953,627
2,953,627
Dividends
10
-
-
-
(2,625,000)
(2,625,000)
Balance at 31 December 2023
162,000
129,000
18,561
7,126,027
7,435,588
FLUIDMASTER GB LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information
Fluidmaster GB Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Twyford Road, Rotherwas Industrial Estate, Hereford, HR2 6JR.
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.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Fluidmaster UK Limited. These consolidated financial statements are available from Twyford Road, Rotherwas Industrial Estate, Hereford, HR2 6JR
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
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:
Plant and equipment
8% - 20% straight line
FLUIDMASTER GB LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
FLUIDMASTER GB LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
FLUIDMASTER GB LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.11
Provisions
Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
1.12
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.
1.13
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.14
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.15
Foreign exchange
Transactions in currencies other than the functional currency (foreign currency) are initially recorded at the exchange rate prevailing on the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange rate prevailing on the date of the transaction.
FLUIDMASTER GB LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Product Liability Provision
The company has made a specific provision for claims received in respect of failure of product incorporating a specific component, all manufactured in the years prior to 2012. The directors have valued the provision based on their estimate of the most likely value of future payments. In making their assessment, the directors have considered factors such as the number and the value of actual claims received to date, average settlement amounts paid to settle claims, the level of insurance cover in place and an estimate of the volume of claims to be received. a discount rate of 4% has been applied for the purpose of valuing the provision, based on the group borrowing rate.
Tangible fixed assets
Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In reassessing asset lives, factors such as life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
The directors have considered whether there are indicators of impairment of the company's tangible and intangible assets. Factors taken into consideration in reaching such as a decision include the economic viability and expected future financial performance of the asset, and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.
Stock
At each reporting date, stock is assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to sell. The impairment loss is recognised immediately in profit and loss.
Trade Debtors
At each reporting date, trade debtors are assessed for recoverability. If there is any evidence of impairment, the carrying value of the debtor is reduced to its recoverable amount. The impairment loss is recognised immediately in profit and loss.
FLUIDMASTER GB LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Sales of goods
19,487,081
20,543,361
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
17,127,354
18,388,397
Europe
1,299,128
1,303,079
Rest of the World
1,060,599
851,886
19,487,081
20,543,362
2023
2022
£
£
Other revenue
Interest income
3,265
-
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
59,836
(5,687)
Depreciation of owned tangible fixed assets
321,441
398,268
Loss/(profit) on disposal of tangible fixed assets
3,952
(14,500)
Cost of stocks recognised as an expense
9,249,660
10,121,239
Operating lease charges
251,869
321,853
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 company
35,000
30,000
FLUIDMASTER GB LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Production
55
77
Administration
8
9
Sales
11
10
Total
74
96
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,119,567
3,373,845
Social security costs
333,982
335,702
Pension costs
193,179
202,978
3,646,728
3,912,525
7
Directors' remuneration
The directors are remunerated by the ultimate parent company and no recharges are made for their services.
No pension contributions are made in respect of directors.
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
3,265
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
966,428
724,189
Adjustments in respect of prior periods
(44,586)
1,889
Total current tax
921,842
726,078
FLUIDMASTER GB LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
9
Taxation
2023
2022
£
£
(Continued)
- 19 -
Deferred tax
Origination and reversal of timing differences
(52,383)
(68,178)
Adjustment in respect of prior periods
24,865
Total deferred tax
(52,383)
(43,313)
Total tax charge
869,459
682,765
From the 1 April 2023 the effective tax rate is 25%. During the year the effective tax rate was 23.5%.
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
3,823,086
3,428,728
Expected tax charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
899,190
651,458
Tax effect of expenses that are not deductible in determining taxable profit
14,521
22,644
Adjustments in respect of prior years
(44,587)
1,889
Permanent capital allowances in excess of depreciation
3,434
(1,728)
Deferred tax adjustments in respect of prior years
24,865
Remeasurement of deferred tax for changes in rates
(3,099)
(16,363)
Taxation charge for the year
869,459
682,765
10
Dividends
2023
2022
£
£
Final paid
2,625,000
2,100,000
FLUIDMASTER GB LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
11
Tangible fixed assets
Plant and equipment
£
Cost
At 1 January 2023
10,408,441
Additions
48,189
Disposals
(866,720)
At 31 December 2023
9,589,910
Depreciation and impairment
At 1 January 2023
8,635,983
Depreciation charged in the year
321,441
Eliminated in respect of disposals
(862,768)
At 31 December 2023
8,094,656
Carrying amount
At 31 December 2023
1,495,254
At 31 December 2022
1,772,458
12
Stocks
2023
2022
£
£
Raw materials and consumables
1,085,151
1,484,378
Work in progress
5,134
Finished goods and goods for resale
2,113,449
3,340,176
3,203,734
4,824,554
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
4,349,518
3,577,341
Corporation tax recoverable
82,483
37,136
Amounts owed by group undertakings
2,779,492
2,354,020
Prepayments and accrued income
243,464
229,938
7,454,957
6,198,435
Amounts owed from group undertakings are interest free and repayable on demand.
FLUIDMASTER GB LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
14
Creditors: amounts falling due within one year
2023
2022
£
£
Trade creditors
705,143
688,120
Amounts owed to group undertakings
3,932,218
3,572,093
Taxation and social security
400,341
181,680
Other creditors
66,265
189,278
Accruals and deferred income
1,914,401
1,259,793
7,018,368
5,890,964
The amount owed to group undertakings are interest free and have no fixed repayment date, however the directors do not expect that repayment will be required for at least 12 months from the date of approval of the financial statements.
15
Provisions for liabilities
2023
2022
£
£
Product Liability
334,369
400,000
Movements on provisions:
Product Liability
£
At 1 January 2023
400,000
Reversal of provision
(65,631)
At 31 December 2023
334,369
During 2012 the company encountered an unusual incidence of claims in respect of a failure of product incorporating a specific component, all manufactured in years prior to 2012. Claims of this type were covered by third party insurance up to 6 March 2013 which reduced the impact of claims received, but the company is now liable for substantially all the entire loss on future claims because the company now largely self-insures these losses, with only partial insurance in place for claims received with an "event date" subsequent to March 2018. The provision recognised is the directors' best estimate of the company's liability based on the information available, although they recognise the actual liability could be substantially different to the current provision.
The directors are not aware of the exact cause of the product failure, the dates of manufacture for failed products or the number of products installed in the field and the reason for the low level of claims actually received to date and therefore consider that it is possible that future claims could be significantly different to the figure included in the provision and could range from a negligible value to as much as £4m. The directors have included the provision at the amount specified as the most likely value of future payments based on information available to date. The incidence of claims will continue to be monitored and the provision established will be considered in future years as evidence of the level of claims received becomes available. The directors note that changes were made in the manufacturing process to remove the product failure issue.
FLUIDMASTER GB LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
16
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
278,372
330,755
2023
Movements in the year:
£
Liability at 1 January 2023
330,755
Credit to profit or loss
(52,383)
Liability at 31 December 2023
278,372
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
193,179
202,978
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund. There were outstanding contributions of £29,018 (2022: £131,379) at the end of the financial year.
18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
162,000
162,000
162,000
162,000
19
Reserves
Share premium
Amount subscribed for share capital in excess of the nominal value.
Capital contribution reserve
Cumulative funding advanced to increase the equity capital of the company.
Profit and loss account
Cumulative net gains and losses recognised in the statement of comprehensive income.
FLUIDMASTER GB LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
20
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
258,924
244,985
Between two and five years
881,663
838,035
In over five years
200,000
1,140,587
1,283,020
21
Related party transactions
Fluidmaster GB Limited has taken advantage of the exemption in FRS 102 (section 33) 'related party disclosure' not to disclose transactions with other members of the group,
22
Ultimate controlling party
The immediate parent of the company is Fluidmaster UK Limited, which heads the group of which the company is a member and for which group financial statements have been and/or will be prepared. The consolidated financial statements of this company may be obtained from Twyford Road, Rotherwas Industrial Estate, Hereford, HR2 6JR
The directors regard Fluidmaster Inc.a company incorporated in the United States of America, whose registered office is 30800 Rancho Viejo Road, San Juan Capistrano, California 92675 as the ultimate controlling party.
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