Company registration number 06009924 (England and Wales)
WINCH SOLUTIONS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
WINCH SOLUTIONS LIMITED
COMPANY INFORMATION
Directors
J P Bimson
J Bimson
M J Cullen
D Norman
(Appointed 8 February 2023)
L A Marriott
(Appointed 8 February 2023)
Company number
06009924
Registered office
Unit 17-18, Bradley Hall Trading Estate
Bradley Lane
Standish
Wigan
WN6 0XQ
Auditor
JS. Audit Limited
James House
Stonecross Business Park
Yew Tree Way
Warrington
Cheshire
WA3 3JD
Business address
Unit 17-18, Bradley Hall Trading Estate
Bradley Lane
Standish
Wigan
WN6 0XQ
Bankers
HSBC Bank PLC
2-4 St Ann's Square
Manchester
M2 7HD
Handelsbanken PLC
3 Thomas More Square
London
E1W 1WY
WINCH SOLUTIONS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2 - 3
Independent auditor's report
4 - 6
Statement of income and retained earnings
7
Balance sheet
8
Notes to the financial statements
9 - 23
WINCH SOLUTIONS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 APRIL 2023
- 1 -
The directors present the strategic report for the year ended 30 April 2023.
Review of the business
Turnover for the year ended 30 April 2023 was £12.7m (2022: £13.3m). Loss for the year ended 30 April 2023 was £193,363 (2022: Profit of £365,561). The company's Balance Sheet position as of 30 April 2023 shows a positive net asset position amounting to £0.9m (2022: £1.6m).
From February 2023 UK mobile power generator sales saw a downturn because end consumer demand had been saturated and our customers were therefore left with excess stock. This downturn has continued into 2024. Please refer to note 1.2 for further details.
Principal risks and uncertainties
A brief summary of the main business risks and mitigations in place for these are detailed below:
1.Sales demand reduction – the business mitigates this risk by operating in multiple product categories in both business to business and direct to consumer markets via its own websites, Amazon and eBay.
2.Shipping delays on products from our suppliers in China – the business mitigates this risk by carrying adequate inventory cover
3.The weakening of GBP against the USD, impacting on the cost of our product – the business mitigates this risk via a currency hedging strategy
4.Increased container shipping costs – the business protects its margin by frequent product costing reviews and implementing selling price increases
Key performance indicators
The group monitors progress using the below key performance indicators:
2023 2022
£000's % of sale £000's % of sale
Turnover 12,680 13,342
Gross Profit 3,113 24.6% 3,203 24.0%
Distribution costs (888) -7% (1,190) -8.9%
Administrative expenses (2,301) -18.1% (1,627) -12.2%
Op (Loss)/Profit (77) -0.6% 399 3.0%
M J Cullen
Director
24 September 2024
WINCH SOLUTIONS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 APRIL 2023
- 2 -
The directors present their annual report and financial statements for the year ended 30 April 2023.
Principal activities
Results and dividends
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £502,837. 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:
J P Bimson
J Bimson
M J Cullen
D Norman
(Appointed 8 February 2023)
L A Marriott
(Appointed 8 February 2023)
Financial instruments
Liquidity risk
The company manages its cash to minimise its borrowing requirements to minimise interest costs, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
Interest rate risk
The company is exposed to base interest rate risk on the three-year, fixed term, repayment loan. The Directors monitor changes in the interest rate and take appropriate action as and when deemed necessary.
Foreign currency risk
The company undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through exchange rate fluctuations. The Directors have mitigated the forecasted currency exchange requirements for the next 12 months in full, with fixed rate, forward hedging contracts. The only foreign currency risk therefore lies in there being a larger requirement for currency exchange than forecasted, as the forecasted currency exchange requirements are fully hedged.
Credit risk
Debtors of all customers who trade on credit terms are insured via a credit insurance policy held. Credit terms and limits are set after approval, which involves the insurer conducting a credit search on the customer.
Future developments
During 2024, the company started to expand its product portfolio into different categories outside of its core, which is mobile power generators, winches and hoists. The company is testing the market for these product categories via its online channels.
Auditor
JS. Audit Limited were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
WINCH SOLUTIONS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 3 -
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.
Strategic report
The company has chosen in accordance with Companies Act 2006, s.414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report.
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.
On behalf of the board
M J Cullen
Director
24 September 2024
WINCH SOLUTIONS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF WINCH SOLUTIONS LIMITED
- 4 -
Opinion
We have audited the financial statements of Winch Solutions Limited (the 'company') for the year ended 30 April 2023 which comprise the statement of income and retained earnings, the balance sheet 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 30 April 2023 and of its loss 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.
WINCH SOLUTIONS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF WINCH SOLUTIONS LIMITED (CONTINUED)
- 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 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, included within the directors' report, 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 and 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.
Based on our understanding of the company and sector, we identified that the principal risks of non-compliance with laws and regulations related to, but were not limited to, the Companies Act 2006, UK tax, employment, pension and health and safety legislation and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to management bias in accounting estimates and judgements, and the risk of fraud in revenue recognition.
WINCH SOLUTIONS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF WINCH SOLUTIONS LIMITED (CONTINUED)
- 6 -
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 about actual and potential litigation and claims, their policies and procedures to prevent and detect fraud as well as whether they have knowledge of any actual, suspected or alleged fraud;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
obtaining an understanding of provisions and holding discussions with management to understand the basis of recognition or non-recognition of tax provisions;
reviewing the basis of valuation for stock and reviewing post year end activity to determine the net realisable value; and
in addressing the risk of fraud through management override of controls: testing the appropriateness of journal entries; assessing whether the accounting estimates, judgements and decisions made by management 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.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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.
The prior period financial statements were unaudited.
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.
Christopher Moss BSc F.C.A.
Senior Statutory Auditor
For and on behalf of JS. Audit Limited
24 September 2024
Chartered Accountants
Statutory Auditor
James House
Stonecross Business Park
Yew Tree Way
Warrington
Cheshire
WA3 3JD
WINCH SOLUTIONS LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 30 APRIL 2023
- 7 -
2023
2022
Notes
£
£
Turnover
3
12,679,857
13,341,559
Cost of sales
(9,567,180)
(10,138,956)
Gross profit
3,112,677
3,202,603
Distribution costs
(888,225)
(1,189,652)
Administrative expenses
(2,301,105)
(1,627,192)
Other operating income
12,754
Operating (loss)/profit
4
(76,653)
398,513
Interest payable and similar expenses
7
(152,439)
(19,604)
(Loss)/profit before taxation
(229,092)
378,909
Tax on (loss)/profit
8
35,729
(13,348)
(Loss)/profit for the financial year
(193,363)
365,561
Retained earnings brought forward
1,621,813
1,839,766
Dividends
9
(502,837)
(583,514)
Retained earnings carried forward
925,613
1,621,813
The profit and loss account has been prepared on the basis that all operations are continuing operations.
WINCH SOLUTIONS LIMITED
BALANCE SHEET
AS AT 30 APRIL 2023
30 April 2023
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
10
84,882
73,818
Tangible assets
11
155,120
88,170
240,002
161,988
Current assets
Stocks
13
2,767,766
1,798,978
Debtors
14
6,673,071
4,608,509
Cash at bank and in hand
1,054,652
687,991
10,495,489
7,095,478
Creditors: amounts falling due within one year
15
(9,556,139)
(5,614,009)
Net current assets
939,350
1,481,469
Total assets less current liabilities
1,179,352
1,643,457
Provisions for liabilities
Provisions
17
253,639
Deferred tax liability
18
21,544
(253,639)
(21,544)
Net assets
925,713
1,621,913
Capital and reserves
Called up share capital
20
100
100
Profit and loss reserves
925,613
1,621,813
Total equity
925,713
1,621,913
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 24 September 2024 and are signed on its behalf by:
M J Cullen
Director
Company registration number 06009924 (England and Wales)
WINCH SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
- 9 -
1
Accounting policies
Company information
Winch Solutions Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 17-18, Bradley Hall Trading Estate, Bradley Lane, Standish, Wigan, WN6 0XQ.
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, modified to include certain financial instruments at fair value. 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 BPE Holdings Limited. These consolidated financial statements are available from Companies House, Crown Way, Maindy, Cardiff, CF14 3UZ.
1.2
Going concern
The directors have received confirmation that BPE Holdings Limited intends to support the company financially for at least 12 months from the date of approval of these financial statements (the “Assessment Period”) to enable it to meet its liabilities as they fall due. The directors have also received confirmation that BPE Holdings Limited will not call upon the company to repay, during the Assessment Period, the loans it has advanced to the company if this would conflict with the above undertaking. true
The group’s working capital requirements are provided through HSBC short term trade loans secured against the stock to which they relate. At 30 April 2023 the total amount advanced to the group was £6,753,758.
After the year end there was a reduction in sales resulting in a cash shortfall.
In June 2023 and November 2023 the above trade loans could not be settled as the amounts were falling due.
In June 2023 the bank extended the repayment dates by 150 days and in November 2023 further extensions were applied to the trade loans repayment periods, which were specific to each loan.
WINCH SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 10 -
In January 2024 the business was not in a position to settle the trade loans, despite the extensions granted by HSBC.
On 23 September 2024 the group agreed a new medium term repayment loan facility with HSBC of £5,600,000 to 30 April 2027 at an interest rate of 3.9% per annum above the Bank of England base rate.
In order to prepare the group’s financial statements on a going concern basis, the directors have considered detailed financial projections covering a period of at least 12 months from the date of approval of the group financial statements. These projections are based on the group’s business plan for the year ended 30 April 2025 as well as the group’s anticipated activity for the period to December 2026. The directors have considered these financial projections in conjunction with the group’s available loan facilities described above.
The directors have also considered sensitivity analysis performed on these forecasts to model the impact of potential reductions in sales of 10%.
The sensitised forecasts indicate that the group can continue to operate within its new loan facilities and remain compliant with associated loan covenants during the Assessment Period.
After considering the confirmations received and the forecast information the directors have concluded that there is 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 these financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for power products and winches provided in the normal course of business, and is shown net of VAT and other sales related taxes.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
1.4
Intangible fixed assets - goodwill
Goodwill represents the excess of the cost of acquisition of an unincorporated business in 2007, over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and has been amortised on a systematic basis over its expected life which was 10 years. Goodwill has been fully amortised.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Amortisation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Software
10% per annum straight line basis
1.6
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
WINCH SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 11 -
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:
Plant and equipment
25% per annum on reducing balance basis
Fixtures and fittings
25% per annum on reducing balance basis
Computers
25% per annum on reducing balance basis
Motor vehicles
25% per annum on reducing balance basis
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.
1.7
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
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.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.
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.
1.9
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.10
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.
WINCH SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 12 -
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.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the 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.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
WINCH SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 13 -
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
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.
1.12
Derivatives
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.
1.13
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.
WINCH SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 14 -
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.
1.14
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.
1.15
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.16
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.17
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 leased asset are consumed.
1.18
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
WINCH SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 15 -
1.19
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the 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 directors consider the critical judgements made in preparing the financial statements to be in relation to their assessment of the recoverability of investment balances and related party loans, including the estimation of any required provisions and their assessment of going concern in note 1.2.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Power products and winches
12,679,857
13,341,559
2023
2022
£
£
Turnover analysed by geographical market
UK
6,061,973
4,707,936
Europe
5,424,539
5,484,502
Canada
1,064,445
2,965,063
Rest of the World
128,900
184,058
12,679,857
13,341,559
2023
2022
£
£
Other revenue
Grants received
-
12,754
WINCH SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 16 -
4
Operating (loss)/profit
2023
2022
Operating (loss)/profit for the year is stated after charging/(crediting):
£
£
Exchange losses
253,843
232,649
Forward currency contract gains
(138,411)
Government grants
-
(12,754)
Fees payable to the company's auditor for the audit of the company's financial statements
17,000
Depreciation of owned tangible fixed assets
51,609
33,171
Provision for contractual damages included in purchases (see note 17)
253,639
-
Amortisation of intangible assets
10,323
647
Operating lease charges
91,529
91,726
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Administration
19
15
Production
7
5
Sales
3
2
Total
29
22
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
1,053,017
721,959
Social security costs
123,206
79,612
Pension costs
53,316
59,330
1,229,539
860,901
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
209,930
57,320
Company pension contributions to defined contribution schemes
31,577
37,029
241,507
94,349
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2022 - 3).
WINCH SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
6
Directors' remuneration
(Continued)
- 17 -
Remuneration disclosed above include the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
137,805
n/a
Company pension contributions to defined contribution schemes
1,321
n/a
As total directors' remuneration was less than £200,000 in the prior year, no disclosure is provided for that year.
7
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
143,439
-
Other interest on financial liabilities
9,000
18,000
Other interest
1,604
152,439
19,604
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
6,219
Deferred tax
Origination and reversal of timing differences
(53,801)
7,129
Adjustment in respect of prior periods
18,072
Total deferred tax
(35,729)
7,129
Total tax (credit)/charge
(35,729)
13,348
WINCH SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
8
Taxation
(Continued)
- 18 -
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:
2023
2022
£
£
(Loss)/profit before taxation
(229,092)
378,909
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 19.49% (2022: 19.00%)
(44,650)
71,993
Tax effect of expenses that are not deductible in determining taxable profit
9,195
10,860
Adjustments in respect of prior years
18,072
Effect of change in corporation tax rate
9,509
Group relief
(54,208)
Permanent capital allowances in excess of depreciation
(6,488)
(6,734)
Deferred tax not provided
(18,072)
Difference in corporation and deferred tax rates
(11,858)
Taxation (credit)/charge for the year
(35,729)
13,348
A UK corporation tax rate of 25% was announced in the Chancellor’s Budget of 3 March 2021 and applied from 1 April 2023. Deferred tax has been calculated at this rate.
9
Dividends
2023
2022
£
£
Interim paid
502,837
583,514
WINCH SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 19 -
10
Intangible fixed assets
Goodwill
Software
Total
£
£
£
Cost
At 1 May 2022
211,399
81,544
292,943
Additions
21,387
21,387
At 30 April 2023
211,399
102,931
314,330
Amortisation and impairment
At 1 May 2022
211,399
7,726
219,125
Amortisation charged for the year
10,323
10,323
At 30 April 2023
211,399
18,049
229,448
Carrying amount
At 30 April 2023
84,882
84,882
At 30 April 2022
73,818
73,818
The amortisation of intangible assets is included within administration expenses.
11
Tangible fixed assets
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 May 2022
71,522
130,212
68,905
13,200
283,839
Additions
38,464
29,949
50,146
118,559
At 30 April 2023
109,986
160,161
119,051
13,200
402,398
Depreciation and impairment
At 1 May 2022
53,567
89,776
39,126
13,200
195,669
Depreciation charged in the year
14,105
17,574
19,930
51,609
At 30 April 2023
67,672
107,350
59,056
13,200
247,278
Carrying amount
At 30 April 2023
42,314
52,811
59,995
155,120
At 30 April 2022
17,955
40,436
29,779
88,170
12
Financial instruments
2023
2022
£
£
Carrying amount of financial assets
Forward currency contracts measured at fair value through profit or loss
138,411
-
WINCH SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 20 -
13
Stocks
2023
2022
£
£
Finished goods and goods for resale
2,767,766
1,798,978
14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
1,381,916
2,694,237
Amounts owed by group undertakings
3,934,290
1,782,382
Derivative - forward currency contracts
138,411
-
Other debtors
142,195
66,361
Prepayments and accrued income
1,062,074
65,529
6,658,886
4,608,509
2023
2022
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 18)
14,185
Total debtors
6,673,071
4,608,509
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans
16
6,753,758
2,576,092
Trade creditors
558,325
2,328,444
Amounts owed to group undertakings
396,319
161,812
Corporation tax
107,187
Other taxation and social security
217,983
24,981
Other creditors
30,180
25,469
Accruals and deferred income
1,599,574
390,024
9,556,139
5,614,009
WINCH SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 21 -
16
Loans and overdrafts
2023
2022
£
£
Bank loans
6,753,758
2,576,092
Payable within one year
6,753,758
2,576,092
The bank loans are short term trade loans, secured against the group stock. Interest is charged on the trade loans at 3.25% above bank base rate.
17
Provisions for liabilities
2023
2022
£
£
Other provision
253,639
-
Movements on provisions:
Other provision
£
At 1 May 2022
-
Provision in the year
253,639
At 30 April 2023
253,639
Other provisions relate to a claim for contractual damages.
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Balances:
£
£
£
£
Accelerated capital allowances
-
22,043
(57,296)
-
Tax losses
-
-
70,837
-
Short term timing differences
-
(499)
644
-
-
21,544
14,185
-
WINCH SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
18
Deferred taxation
(Continued)
- 22 -
2023
Movements in the year:
£
Liability at 1 May 2022
21,544
Credit to profit or loss
(35,729)
Asset at 30 April 2023
(14,185)
The deferred tax asset set out above is expected to reverse within 3 years and mostly relates to the utilisation of tax losses against future expected profits of the same period.
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
53,316
59,330
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.
At the year-end accrued pension contributions amounted to £4,915 (2022: £3,892).
20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
A Ordinary shares of £1 each
55
55
55
55
B Ordinary shares of £1 each
30
30
30
30
C Ordinary shares of £1 each
10
10
10
10
D Ordinary shares of £1 each
5
5
5
5
100
100
100
100
WINCH SOLUTIONS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 23 -
21
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
88,940
97,759
Between two and five years
299,233
318,174
In over five years
29,166
99,166
417,339
515,099
22
Related party transactions
During the year loan interest amounting to £9,000 (2022: £18,000) was paid to the directors.
At the balance sheet date the company owed the directors £Nil (2022: £21,577).
23
Ultimate controlling party
The ultimate parent company is BPE Holdings Limited, a company registered in England and Wales. The parent company is preparing consolidated group accounts, which include those of Winch Solutions Limited. Copies of the consolidated financial statements of BPE Holdings Limited can be obtained from Companies House, Crown Way, Maindy, Cardiff CF14 3UZ.
The ultimate controlling party is considered to be Mr J Bimson by virtue of his majority shareholding in the ultimate parent company.
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