The directors present the strategic report for the year ended 31 December 2023.
Intec Microsystems has focused largely on Sales and Product Range diversification during 2023. Similarly, to the last few years, a continued focus has been placed on working with a wide range of new and different vendors and manufacturers in order to broaden the portfolio of products that could be offered to customers. Developing stronger partnerships that allow us to enhance and modernise our offerings is an ongoing drive and real focus for the business. Intec continues its goal to be as wide-ranging an IT Distributor as possible offering the best products and customer service it can.
System development has continued across the business to maintain strong IT product analysis and to try and really streamline, to make the business as efficient as possible. During 2023 and progressing into 2024 has seen Intec focus its efforts on planning around the online and Ecommerce IT channel as the Company looks to adapt to the opportunities in the ecommerce market.
On 7 July 2023 100% of the issued share capital of Intec Microsystems Limited was acquired by the Private Equity Firm Chiltern Capital Nominees Limited. The current management team have remained invested in the ongoing project and are as committed as ever to the Business.
The Company continued during the year to focus on the key Management's objectives which are to:
Meet budget and key performance indicators for the year.
Distribute products at lowest possible cost.
Develop IT product ranges and services offered to customers to increase diversity.
Maintain quality and continue to offer excellent level of customer service.
The Company’s Board has and will continue to evolve and review the strategic goals of the organisation with a vision Intec will do distribution differently in the UK with a differentiated focus on Tier 2 vendor growth, providing new product set and solution in to the Top 50 VAR’s and continuing to develop deep relationships with both current and developing MPS partners. Behind this vision there are a range of initiatives spanning technology, vendor growth with existing and new partners and ensuring the business has a talented and motivated workforce. Intec strives to offer real focus and support to Vendor Partners and customers to be able to enjoy a mutually beneficial growth journey.
Future Developments
In looking to the future, development plans include continued organic growth from IT distribution. Intec continues to explore more opportunities with established and newly up and coming vendors, who Intec can partner with to share a journey of progression. Other plans for the business focus largely on the expansion of engineering, technical, warranty and support services which go hand in hand with the ever-widening product portfolio on offer. Ecommerce, automation and increased efficiency will also be huge areas for Intec as the business moves with the times to ensure they can offer a wide range of facilities in the ever-changing IT sector. Customers and our relationships we value, along with our reputation of exemplary customer service will always remain at the forefront of our thoughts.
Key elements of our strategic roadmap are noted below:
Vendor Relationship Strategy will involve partnering largely with Tier 2 vendors in the UK IT distribution channel in order to deliver significant growth in the UK Market. Intec will leverage new products and services to enhance and build our customer base. Product and technical specialists will work closely with vendors and sales to help lead initiatives.
E Commerce Strategy will involve partnering with a leading supplier of IT distribution ecommerce/webstores to launch a new offering at the back end of 2024/early 2025. The onboarding of new Tier 2 vendor products will go hand in hand with the ecommerce launch as the ecommerce platform will provide customers with a rounded, modern all in one ordering and customer service experience.
IT Roadmap will continue to develop key projects that will improve our business tools to improve our operational efficiency, CRM management, stock management across all functions. Furthermore, we aim to achieve Cyber Essentials Certification and file server data will be migrated to SharePoint to improve collaboration across the Intec business.
The Company’s board reviews the risks facing the Company on a weekly basis and work to mitigate risks. Processes are designed to identify, mitigate and manage the risk and the ultimate responsibility for risk management is owned by the Executive Board. The principal risks facing the business and the key controls in place to mitigate are as follows:
Business performance risk: Business performance risk is the risk that the company may not perform as expected either due to internal factors or due to competitive pressures in the market in which they operate. This risk is managed through several measures: ensuring the appropriate management team is in place; budget and business planning; monthly reporting and variance analysis; financial controls; key performance indicators; and regular forecasting; product and stock price management.
Retention of key functional and technical skills: The Company is committed to an investment programme in both onboarding and subsequent training and evaluation of all its employees and recognises the importance of this critical stakeholder relationship. Long term growth of the business depends on the company’s ability to retain and attract personnel of high quality. This risk is managed through development and training plans which are regularly reviewed and updated. These are accompanied by specific policies in areas such as training, management development and performance management.
Business continuity risk: Business continuity risk planning is regarded with significant importance to the managers and director. A business continuity plan has been drawn up (and subject to periodic review) to ensure supply can be met in the event of a significant negative impact on the business.
Health and safety risk: The company is committed to ensuring a safe working environment. The risks arising from inadequate management of health and safety matters are the exposure of employees and third parties to the risk of injury, potential liability and/or loss of reputation. These risks are managed by the company through the strong promotion of a health and safety culture, and well-defined health and safety policies. Quality processes are managed via our ISO 9001 accreditation and framework.
Financial and business control: Strong financial and business controls are necessary to ensure the integrity and reliability of financial and other information on which the company relies for day-to-day operations, external reporting and for longer term planning. The company exercises financial and business control through a combination of qualified and experienced financial teams; performance analysis; budgeting and cash flow forecasting; and clearly defined approval limits. The external auditors provide advice on specific accounting and tax issues as they arise.
Social, ethical and environmental risk: Due to the company’s nature and size no significant social, ethical or environmental risks have been identified by the management.
Data Protection and Cyber Security: The current IT strategy for Intec involves continuing the focus on cyber security by ensuring we have the best tools in place to protect against modern day threats. Our implementation of employee security awareness training and advanced impersonation protection via email during the first half of 2024 has improved our posture. Further improvements have been made around general network management and performance by the replacement of all network switches over 5 years old. Also new wireless access points have been installed across the site to improve employee and guest performance on the WiFi
Regulatory Compliance: The Company is subject to a range of industry specific regulations which could expose the company to risks from a failure to comply with relevant codes of practice, law or regulation. Failure to comply could result in fines, cessation of some business activities and/or public reprimand. This risk is mitigated through close monitoring of regulatory compliance and ongoing training.
The director has determined that the following financial key performance indicators (KPIs) based on continuing activities, are the most effective measure of progress towards achieving the company's objectives:
2023 2022
Turnover £70,721,900 £74,814,675
Operating (loss)/profit (£1,601,805) £2,103,500
During the year certain costs were incurred post-acquisition that, whilst directly connected with the company's operations were not recurring in nature. It was therefore deemed necessary for the understanding of the financial statements to analyse these costs separately on the face of the Statement of Comprehensive Income. A breakdown of the costs can be found in Note 4.
In addition to the above results, the company is managed using extensive KPI’s at both a business and operational level with regular reviews held weekly and monthly executive board reviews. The following are a list of the key KPI’s in operation.
EBITDA: measured as an operating profit before interest, depreciation and amortisation
Number of employees: the average number of employees remained stable during the period.
Gross Margin by Salesperson and by Day: gross margin is measured by deducting the cost of material and direct attributable costs
Aged Debt: this measures all aged debt greater than 30 days overdue and is subject to a weekly executive review and is a critical part of the credit control team and engagement with our sales team to address any collection issues on a timely basis
The board of Intec Microsystems Limited consider that they have acted in good faith and in a manner likely to promote the success of the company for the benefit of all its members (having regard to the stakeholders and matters set out in s172(1)(a)-(f) of the Companies Act 2006) in the decisions taken during the year ended 31 December 2023. Our primary considerations and decisions are designed to have a long-term beneficial impact on the company and one that focuses on delivering high quality service across all components of the business.
Fundamental to the ultimate success and delivery of this service are our team members. The health, safety and well-being of our team members is one of our primary considerations in the way we conduct business. We aim to be a responsible employer in our approach to the pay and benefits our team members receive. We believe part of the key to our success is the way in which we engage with suppliers and our customers. We meet and have regular dialogue with our commercial partners throughout the year. We constantly review certain key areas to prevent involvement in modern slavery, corruption, bribery and breaches of competition law.
On a wider scale, we take into account the impact of the company’s operations on the community and environment as our social responsibilities – in particular how we comply with environmental legislation. At every opportunity we pursue waste-savings and react promptly to local community concerns.
The board is felt to behave responsibly and ensure that management operate in an equally responsible manner. The company operates within high standards of ethics, business conduct and sound governance expected for a business such as ours. In doing so we will contribute to the delivery of our plans to meet and exceed our expectations and nurture our excellent reputation.
It is the boards, intention to behave responsibly towards our shareholders, treating them both fairly and equally, so that they may benefit from the success of the business.
Business Ethos
An ongoing priority of the business will be to consolidate our position by providing a total customer experience from the initial sales process through to customer service, support and satisfaction. We will continue our comprehensive training and coaching programs in order to further support our aims in providing a great customer experience for all our customers.
Engagement with suppliers, customers
We will continue to maintain and strengthen relationships with our manufacturer, customers and suppliers through this trying and uncertain period. We will adapt to change where we have to and work to a “new normal” months ahead.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 13.
Ordinary dividends were paid amounting to £280,000. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The company’s liquidity requirement for a day-to day operating cash flow continues to be supported by Secure Trust Bank Asset Based £19m Lending Facility executed in July 2023 and provide full facility cover through to December 2025. The facility is based on receivables and inventory which provides significant headroom during the working capital cycle supporting on time payments to our suppliers
The company has a normal level of exposure to price, credit, liquidity and cash flow risks arising from its trading activities which are conducted primarily in sterling, US Dollars and Euros. The company is exposed to changes in the price of commodities used for manufacture and also changes in the exchange rates it trades in. The company does not enter into any complex financial instruments or forwards as hedging transactions to mitigate these risks
Credit risk arises principally on direct sales to customers. Company policy is aimed at minimising such risk and requires that deferred terms are granted only to customers who demonstrate an appropriate payment history and satisfy creditworthiness procedures. Credit Insurance is also used to protect the business. Individual exposures are monitored with customers subject to credit limits to ensure that the company’s exposure to bad debts is not significant. In addition, the CFO conducts a weekly review of all overdue debt. Accounts overdue are put on credit hold and timely legal action is taken to ensure full debt collection.
Engagement with our stakeholders
The Board seeks to understand the respective interests of key stakeholder groups so that these may be properly considered in the Board’s decisions. As part of its ongoing engagement with its key stakeholder the directors have undertaken the following activities
Shareholders
Our ultimate shareholder is Chiltern Capital Nominees Limited which is a proactive and supportive investor in small and medium sized businesses. Intec's Board meet and present monthly the Health and Safety, financial and commercial performances and discuss the strategic roadmap alongside acquisitive opportunities. In addition, the Shareholder has a permanent representative on the Executive Board which provides excellent support on both key projects and strategic value creation initiatives.
Employees
Fundamental to the ultimate success and delivery of our service is our team members. The health, safety and mental wellbeing of our workforce is our primary consideration in the way we conduct our business. We aim to be a responsible employer in our approach to the pay and benefits our employees receive.
Vendors
The Company continues to focus heavily on its supply chain and procurement function carrying out quarterly reviews with our key partners to drive continuous improvement and in return we strive to abide by the payment terms agreed with suppliers in full support of the code of Payment Practices Reporting. We constantly review certain key areas of the supply chain to prevent involvement in modern slavery, corruption, infringement, bribery and breaches of competition law.
Customers
Key to our success is how we engage with our customers, and we meet and have regular dialogue with our commercial partners through the year to gain a full understanding of the market and their needs. An ongoing priority of the business to consolidate our position in the market is to provide a total customer experience from the initial sales process through to customer service, support and satisfaction. We continue, with the support of our vendor partners, to invest in comprehensive training and coaching programs to provide a first-class experience for all our customers.
Environment, Sustainability and Communities
On a wider scale we take into account the impact of the company operations on the community and environment as our social responsibilities, in particular how we comply with environmental legislation. At every opportunity we pursue waste savings and react promptly to our local community concerns. We will continue to recognise our Duty of Care towards the environment and place extreme importance on complying with both legal and moral obligations towards the environment and our local community.
The auditor, UHY Hacker Young Manchester LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
This section includes our mandatory reporting of energy and greenhouse gas emissions for the period 1 January 2023 to 31 December 2023, pursuant to the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, implementing the government’s Streamlined Energy and Carbon Reporting (SECR) policy.
The table below includes total energy consumption (reported as kWh) and greenhouse gas emissions for the sources required by the regulations, along with our intensity ratio.
Our methodology to calculate our greenhouse gas emissions is based on the 'Environmental Reporting Guidelines: Including streamlined energy and carbon reporting guidance (March 2019)’ issued by DEFRA, using DEFRA's 2021 and 2022 conversion factors as appropriate. In some cases, consumption has been extrapolated from available data or direct comparison made to a comparable period.
We report using a financial control approach to define our organisational boundary. We have reported all material emission sources required by the regulations for which we deem ourselves to be responsible and have maintained records of all source data and calculations.
The intensity ratio chosen was tCO2e per £million turnover. This was chosen as it was deemed to be the best metric which could be constantly used over time and would best reflect changes in our energy consumption, but also reflect changes in our operations.
During the reporting period, no new energy efficiency actions have been taken however, our energy management programme is ongoing, including monitoring and targeted reporting of energy consumption on a daily basis at all sites. The energy management programme we run enables us to identify and address any consumption issues as and when they arrive, allowing us to eliminate unnecessary energy waste.
At 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.
Basis for 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
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.
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.
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.
The extent to which our procedures are 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.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non- compliance with laws and regulations, we 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 internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and
- the matters discussed among the audit engagement team regarding how and where fraud might occur in the Financial Statements and any potential indicators of fraud.
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: revenue recognition. 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 the UK Companies Act, pensions legislation and tax legislation in all relevant jurisdictions where the company operates.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the Financial Statements but compliance with which may be fundamental to the company’s ability to operate or to avoid a material penalty.
In addition to the above, 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 risk 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.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
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.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
Intec Microsystems Ltd is a private company limited by shares incorporated in England and Wales. The registered office is C/O UHY Hacker Young, St James' Building, 79 Oxford Street, Manchester, M1 6HT.
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 £.
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 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Eris Topco Limited. These consolidated financial statements are available from its registered office, C/O UHY Hacker Young, St James' Building, 79 Oxford Street, Manchester, M1 6HT.
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.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Basic financial liabilities, including creditors, bank loans, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
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.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The company reviews its inventory to assess for potential loss on account of obsolescence on a regular basis. In determining whether provision for obsolescence should be recorded in the profit or loss, the company makes judgments as to whether there is any observable data indicating that there is any future saleability of the product and the estimated net realisable value for such product. Accordingly, provision for impairment is made where the net realisable value is anticipated to be less than the cost based on best estimates by the management. The provision for obsolescence of inventory is based on the aged profile of the stock. The provision for obsolete inventory in the current year is £520,026.
An analysis of the company's turnover is as follows:
During the year certain costs were incurred post acquisition that, whilst directly connected with the company's operations were not recurring in nature. It was therefore deemed necessary for the understanding of the financial statements to analyse these costs separately.
These costs comprise one off post deal related fees totalling £391,665, one off inventory adjustments reflecting current market conditions totalling £637,389 and IT development expenditures totalling £243,207.
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 6 (2022 - 0).
The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
The applicable tax rate for the current year is 23.52% (2022 - 19%). An increase to 25% (effective 1 April 2023) was enacted on 24 May 2021 and deferred tax at the balance sheet date has been measured using rates between 19% and 25% depending on the anticipated timing of the reversal.
Other creditors includes an invoice discounting facility totalling £7,953,945 (2022: £2,903,107) which is secured by way of the trade debtors to which they relate.
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
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.
The company was operating a share option scheme. Options had been granted over 294 ordinary shares in the company and as at 1 January 2023 these options were valued at £102,166. On the 7 July 2023 the option holders simultaneously exercised their options and sold the shares to the new parent company.
On 7 July 2023 the company issued 294 Ordinary C shares, after which the company then passed an ordinary resolution re-designating the existing shares into 2,099 Ordinary shares.
The profit and loss account includes all current and prior period retained profits and losses, net of dividends paid.
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:
At the reporting end date the company had contracted with tenants for the following minimum lease payments:
Dividends totalling £280,000 (2022 - £410,000) were paid in the year in respect of shares held by the company's directors.