Company registration number 12250895 (England and Wales)
NELES UK LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
NELES UK LTD
COMPANY INFORMATION
Directors
A Kovanen
R Rotsun
D Brooks
Secretary
D Brooks
Company number
12250895
Registered office
3 Elmwood
Crockford Lane
Chineham
Basingstoke
Hampshire
RG24 8WG
Auditor
Mercer & Hole LLP
21 Lombard Street
London
EC3V 9AH
NELES UK LTD
CONTENTS
Page
Directors' report
1 - 2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Income statement
7
Statement of financial position
8
Statement of changes in equity
9
Notes to the financial statements
10 - 21
NELES UK LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company continued to be that of the sale, servicing and distribution of processing equipment and related parts predominantly in the oil and gas, pulp and paper and chemical industries.
On 1 September 2024, this trade was transferred to a fellow group undertaking.
Results and dividends
The results for the year are set out on page 7.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
A Kovanen
R Rotsun
D Brooks
Supplier payment policy
The company's current policy concerning the payment of trade creditors is to follow the CBI's Prompt Payers Code (copies are available from the CBI, Centre Point, 103 New Oxford Street, London WC1A 1DU).
The company's current policy concerning the payment of trade creditors is to:
settle the terms of payment with suppliers when agreeing the terms of each transaction;
ensure that suppliers are made aware of the terms of payment by inclusion of the relevant terms in contracts; and
pay in accordance with the company's contractual and other legal obligations.
Trade creditors of the company at the year end were equivalent to 4.3 day's purchases, based on the average daily amount invoiced by suppliers during the year.
Post reporting date events
On 1 September 2024, the operations and net assets of the company were transferred to a fellow group undertaking by way of an intercompany transfer. The directors intend to liquidate the company once all outstanding amounts have been settled.
Auditor
The auditor, Mercer & Hole LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the 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.
Small companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
NELES UK LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
On behalf of the board
D Brooks
Director
24 September 2024
NELES UK LTD
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the 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;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. 1.2 to the financial statements, the directors do not consider the going concern basis to be appropriate and these financial statements have therefore not been prepared on that basis.
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.
NELES UK LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF NELES UK LTD
- 4 -
Opinion
We have audited the financial statements of Neles UK Ltd (the 'company') for the year ended 31 December 2023 which comprise the income statement, the statement of financial position, 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 101 Reduced Disclosure Framework (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.
We draw attention to note 1.2 to the financial statements which explains that the directors intend to liquidate the company and therefore do not consider it to be appropriate to adopt the going concern basis of accounting in preparing the financial statements. Accordingly the financial statements have been prepared on a basis other than a going concern as described in note 1.2. Our opinion is not modified in respect of this matter.
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 directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the directors' report has been prepared in accordance with applicable legal requirements.
NELES UK LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NELES UK LTD
- 5 -
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 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.
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.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. These included, but were not limited to, the Companies Act 2006, employment law and tax legislation.
We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements and the financial report (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate entries including journals to overstate revenue or understate expenditure and management bias in accounting estimates.
Audit procedures performed by the engagement team included:
discussions with management, including considerations of known or suspected instances of non- compliance with laws and regulations and fraud;
gaining an understanding of management's controls designed to prevent and detect irregularities; and
identifying and testing journal entries.
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.
NELES UK LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NELES UK LTD
- 6 -
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.
Andrew Turner (Senior Statutory Auditor)
For and on behalf of Mercer & Hole LLP
26 September 2024
Chartered Accountants
Statutory Auditor
21 Lombard Street
London
EC3V 9AH
NELES UK LTD
INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
2023
2022
Notes
£
£
Revenue
3
11,051,539
9,361,938
Cost of sales
(7,185,054)
(5,968,532)
Gross profit
3,866,485
3,393,406
Distribution costs
(256,409)
(299,066)
Administrative expenses
(2,974,588)
(2,952,989)
Operating profit
4
635,488
141,351
Investment income
7
10,941
-
Finance costs
8
(32,912)
(57,241)
Profit before taxation
613,517
84,110
Tax on profit
9
(147,266)
(31,711)
Profit and total comprehensive income for the financial year
466,251
52,399
NELES UK LTD
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 8 -
2023
2022
Notes
£
£
ASSETS
Non-current assets
Property, plant and equipment
10
-
493,473
Property, plant and equipment held for sale
11
318,069
318,069
493,473
Current assets
Inventories
12
482,558
292,615
Trade and other receivables
13
2,747,790
3,477,248
Cash and cash equivalents
237,357
42,781
3,467,705
3,812,644
Total assets
3,785,774
4,306,117
EQUITY
Called up share capital
19
1
1
Share premium account
20
499,999
499,999
Retained earnings
672,185
205,934
Total equity
1,172,185
705,934
LIABILITIES
Non-current liabilities
14
-
1,010,848
Current liabilities
14
2,613,589
2,589,335
Total equity and liabilities
3,785,774
4,306,117
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements were approved by the board of directors and authorised for issue on 24 September 2024 and are signed on its behalf by:
D Brooks
Director
Company registration number 12250895 (England and Wales)
NELES UK LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
Share capital
Share premium account
Retained earnings
Total
£
£
£
£
Balance at 1 January 2022
1
499,999
153,535
653,535
Year ended 31 December 2022:
Profit and total comprehensive income
-
-
52,399
52,399
Balance at 31 December 2022
1
499,999
205,934
705,934
Year ended 31 December 2023:
Profit and total comprehensive income
-
-
466,251
466,251
Balance at 31 December 2023
1
499,999
672,185
1,172,185
NELES UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
1
Accounting policies
Company information
Neles UK Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 3 Elmwood, Crockford Lane, Chineham, Basingstoke, Hampshire, RG24 8WG. The company's principal activities and nature of its operations are disclosed in the directors' report.
1.1
Accounting convention
The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company has taken advantage of the following disclosure exemptions from the requirements of IFRS, as permitted by FRS 101 "Reduced Disclosure Framework":
presentation of a cash flow statement and related notes;
disclosure of the objectives, policies and processes for managing capital;
Inclusion of an explicit and unreserved statement of compliance with IFRS;
disclosure of the categories of financial instrument and the nature and extent of risks arising on these financial instruments;
the effect of financial instruments on the statement of comprehensive income;
disclosure of the future impact of new International Financial Reporting Standards in issue but not yet effective at the reporting date;
comparative narrative information;
related party disclosures for transactions with the parent or wholly owned members of the group.
the requirements of IFRS 7 Financial Instruments: Disclosures;
the requirements of paragraphs 91 to 99 of IFRS 13 Fair Value Measurement;
the requirements of the second sentence of paragraph 110 and paragraphs 113(a), 114, 115, 118, 119(a) to (c), 120 to 127 and 129 of IFRS 15 Revenue from Contracts with Customers;
the requirement of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D and 111 of IAS 1 Presentation of Financial Statements;
the requirements of paragraphs 134 to 136 of IAS 1 Presentation of Financial Statements;
the requirements of paragraphs 134(d) to 134(f) and 135(c) to 135(e) of IAS 36 Impairment of Assets.
1.2
Going concern
On 1 September 2024, the operations and net assets of the company were transferred to a fellow group undertaking by way of an intercompany transfer. The directors intend to liquidate the company once all outstanding amounts have been settled. The financial statements have therefore been prepared on a basis other than that of a going concerntrue. Property, plant and equipment has been reclassified as assets held for sale and non-current liabilities have been reclassified as due within 12 months.
1.3
Revenue
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognises revenue when it transfers control of a product or service to a customer.
NELES UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 11 -
1.4
Property, plant and equipment
Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Leasehold land and buildings
Length of Lease
Plant and equipment
3-5 years
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.
1.5
Impairment of tangible and intangible assets
At each reporting 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.
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
Inventories
Inventories 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 inventories to their present location and condition.
Inventories 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.
Net realisable value is the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
NELES UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -
1.7
Non-current assets held for sale
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
1.8
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
Financial assets
Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.
At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.
Financial assets at fair value through profit or loss
When any of the above-mentioned conditions for classification of financial assets is not met, a financial asset is classified as measured at fair value through profit or loss. Financial assets measured at fair value through profit or loss are recognized initially at fair value and any transaction costs are recognised in profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognised in profit or loss, and is included within finance income or finance costs in the statement of income for the reporting period in which it arises.
Financial assets held at amortised cost
Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.
Financial assets at fair value through other comprehensive income
Debt instruments are classified as financial assets measured at fair value through other comprehensive income where the financial assets are held within the company’s business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A debt instrument measured at fair value through other comprehensive income is recognised initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognised through other comprehensive income are directly transferred to profit or loss when the debt instrument is derecognised.
NELES UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
The company has made an irrevocable election to recognize changes in fair value of investments in equity instruments through other comprehensive income, not through profit or loss. A gain or loss from fair value changes will be shown in other comprehensive income and will not be reclassified subsequently to profit or loss. Equity instruments measured at fair value through other comprehensive income are recognized initially at fair value plus transaction cost directly attributable to the asset. After initial recognition, each asset is measured at fair value, with changes in fair value included in other comprehensive income. Accumulated gains or losses recognized through other comprehensive income are directly transferred to retained earnings when the equity instrument is derecognized or its fair value substantially decreased. Dividends are recognized as finance income in profit or loss.
Impairment of financial assets
Financial assets carried at amortised cost and FVOCI ("Fair Value through Other Comprehensive Income") are assessed for indicators of impairment at each reporting end date.
The expected credit losses associated with these assets are estimated on a forward-looking basis. A broad range of information is considered when assessing credit risk and measuring expected credit losses, including past events, current conditions, and reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
1.10
Financial liabilities
The company recognises financial debt when the company becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
Other financial liabilities
Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.12
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 income statement 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.
NELES UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary 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 income statement, 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.
1.13
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 inventories or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
At inception, the company assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the company recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
NELES UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The company has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
1.16
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Critical accounting estimates and judgements
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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.
Critical judgements
Right-of-use assets and lease liabilities
In determining the lease term the company assesses whether it is reasonably certain to exercise, or not to exercise, options to extend or terminate a lease. This assessment is made at the start of the lease and is re-assessed if significant events of changes in circumstances occur that are within the lessee's control.
Assets and liabilities arising from a lease are initially measured on a present value basis. The lease payments are discounted using the interest rate implicit in the lease(s), if that rate can be determined, or the company's incremental borrowing rate if not. The company has used a rate of 1.947% for its leases in the calculations based on the estimated rate of interest that they would have to pay to borrow over a similar term, and with similar security, the funds necessary to obtain assets of similar value to the right-of-use assets in a similar economic environment.
NELES UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
3
Revenue
2023
2022
£
£
Revenue analysed by class of business
Sale and service of parts
11,051,539
9,361,938
2023
2022
£
£
Revenue analysed by geographical market
United Kingdom
10,915,620
9,361,938
Rest of the World
135,919
-
11,051,539
9,361,938
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(10,341)
144,557
Fees payable to the company's auditor for the audit of the company's financial statements
23,500
23,000
Depreciation of property, plant and equipment
175,404
186,866
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
29
26
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,601,065
1,460,433
Social security costs
172,686
176,794
Pension costs
127,956
121,244
1,901,707
1,758,471
NELES UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
94,274
87,244
Company pension contributions to defined contribution schemes
7,615
7,032
101,889
94,276
7
Investment income
2023
2022
£
£
Interest income
Interest on bank deposits
10,941
8
Finance costs
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest payable to group undertakings
25,225
Interest on lease liabilities
7,687
10,948
Interest on other loans
46,293
32,912
57,241
9
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
147,266
31,711
The charge for the year can be reconciled to the profit per the income statement as follows:
2023
2022
£
£
Profit before taxation
613,517
84,110
Expected tax charge based on a corporation tax rate of 23.50% (2022: 19.00%)
144,176
15,981
Effect of expenses not deductible in determining taxable profit
22
13,644
Adjustment in respect of prior years
(1,228)
(1,141)
Unpaid pension contributions
4,296
3,227
Taxation charge for the year
147,266
31,711
NELES UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
10
Property, plant and equipment
Leasehold land and buildings
Plant and equipment
Total
£
£
£
Cost
At 1 January 2023
711,219
139,379
850,598
Disposals
(6,095)
(6,095)
Transfer to held for sale
(711,219)
(133,284)
(844,503)
At 31 December 2023
Accumulated depreciation and impairment
At 1 January 2023
316,397
40,728
357,125
Charge for the year
141,136
34,268
175,404
Eliminated on disposal
(6,095)
(6,095)
On assets reclassified as held for sale
(457,533)
(68,901)
(526,434)
At 31 December 2023
Carrying amount
At 31 December 2023
At 31 December 2022
394,822
98,651
493,473
Property, plant and equipment includes right-of-use assets, as follows:
Right-of-use assets
2023
2022
£
£
Net values at the year end
Property
-
399,619
Plant and equipment
-
93,760
-
493,379
The directors intend to transfer the trade and assets to a group company and to liquidate the company once all outstanding amounts have been settled. As outlined further in note 11, property, plant and equipment has been reclassified to assets held for sale.
11
Assets and liabilities classified as held for sale
2023
2022
£
£
Property, plant and equipment
318,069
NELES UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
11
Assets and liabilities classified as held for sale
(Continued)
- 19 -
On 1 September 2024, the operations of the company were transferred to a fellow group undertaking. The directors intend to liquidate the company once all outstanding amounts have been settled. The financial statements have therefore been prepared on a basis other than that of a going concern. Property, plant and equipment has been reclassified as assets held for sale on the basis that this 'sale' will occur within 12 months from approving these financial statements. The assets will be transferred at their net book value which the directors consider equal to their recoverable amount.
Included within these amounts are right of use assets with a net book value of £318,069 (2022: £nil).
12
Inventories
2023
2022
£
£
Raw materials
5,038
1,268
Work in progress
21,540
24,000
Finished goods
455,980
267,347
482,558
292,615
13
Trade and other receivables
2023
2022
£
£
Trade receivables
2,567,461
3,233,929
Provision for bad and doubtful debts
(89,269)
(208,386)
2,478,192
3,025,543
Amounts owed by fellow group undertakings
90,200
260,275
Other receivables
397
-
Prepayments and accrued income
179,001
191,430
2,747,790
3,477,248
14
Liabilities
Current
Non-current
2023
2022
2023
2022
Notes
£
£
£
£
Borrowings
15
802,689
1,246,353
700,000
Trade and other payables
16
1,009,497
591,113
Corporation tax
148,626
32,852
-
-
Other taxation and social security
329,546
466,179
-
-
Derivative financial instruments
6,331
69,539
Lease liabilities
17
316,900
183,299
-
310,848
2,613,589
2,589,335
-
1,010,848
NELES UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
15
Borrowings
Current
Non-current
2023
2022
2023
2022
£
£
£
£
Borrowings held at amortised cost:
Bank overdrafts
81,994
504,962
-
-
Loans from fellow group undertakings
720,695
741,391
-
700,000
During a prior period, Neles UK Ltd entered into a loan agreement as the borrower with its ultimate parent, Valmet Corporation (previously Neles Corporation and Metso Corporation), a public limited liability company incorporated and existing in Finland (register number 1538032-5).
The loan is an unsecured term loan in a principal amount of £3,500,000. The remaining loan balance is repayable in 1 annual installment of £700,000. The company pays interest on the loan at a fixed rate interest of 3.28%. Interest accrues daily is payable annually in arrears. The interest remaining on the borrowings amounts to £41,391.
16
Trade and other payables
2023
2022
£
£
Trade payables
40,341
36,062
Amounts owed to fellow group undertakings
630,775
93,839
Accruals and deferred income
251,347
318,461
Other payables
87,034
142,751
1,009,497
591,113
17
Lease liabilities
2023
2022
Maturity analysis
£
£
Within one year
181,413
183,299
In two to five years
135,488
310,848
Total undiscounted liabilities
316,901
494,147
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
2023
2022
£
£
Current liabilities
316,900
183,299
Non-current liabilities
-
310,848
316,900
494,147
NELES UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
17
Lease liabilities
(Continued)
- 21 -
2023
2022
Amounts recognised in profit or loss include the following:
£
£
Interest on lease liabilities
7,687
10,948
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
127,956
121,244
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.
19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
1
1
1
1
20
Share premium account
2023
2022
£
£
At the beginning and end of the year
499,999
499,999
21
Events after the reporting date
On 1 September 2024, the operations and net assets of the company were transferred to a fellow group undertaking by way of an intercompany transfer. The directors intend to liquidate the company once all outstanding amounts have been settled.
22
Related party transactions
During the year the Company entered into transactions in the ordinary course of business, with related parties. The Company has taken advantage of the exemption under paragraph 8(k) of FRS 101 not to disclose transactions with the parent and its fellow wholly owned subsidiaries.
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