Company registration number 00775765 (England and Wales)
TEES COMPONENTS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
TEES COMPONENTS LIMITED
COMPANY INFORMATION
Directors
Mrs J Wood
Ms S Lane
Secretary
Mrs J Wood
Company number
00775765
Registered office
Bolckow Street
North Skelton
Saltburn-By-The-Sea
United Kingdom
TS12 2AP
Auditor
Azets Audit Services
Wynyard Park House
Wynyard Avenue
Wynyard
United Kingdom
TS22 5TB
Bankers
Barclays Bank PLC
12 Station Street
Saltburn-By-The-Sea
United Kingdom
TS12 1AB
Solicitors
Merritt & Company
The Manor House
83 High Street
Yarm
United Kingdom
TS15 9BG
TEES COMPONENTS LIMITED
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Statement of cash flows
10
Notes to the financial statements
11 - 24
TEES COMPONENTS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present the strategic report for the year ended 31 December 2023.

Fair review of the business

In 2023 the company continued to trade well, with strong demand in both subcontract engineering services and Tees White Gill pump-jet thrusters. Revenue increased to £5.01m (2022: £4.2m), which included some significant export contracts. Margins remained healthy and profit before tax was £495k (2022: £300k). The company’s cash position was some £450k higher at the end of the year, albeit after heavy investments in new assets.

At the time of writing, 2024 has been rather slower in the UK manufacturing sector and general economic climate, but the directors are satisfied with a strong long-term order book and steady margins.

Principal risks and uncertainties

The directors do not consider there to be any immediate risks likely to have a significant impact on the short- or long-term value of the business. Risks identified by the Board are summarised below, along with their respective controls in place.

Market risks are managed by ensuring that subcontract work is carried out for a range of clients and sectors. Whilst the company undertakes contracts for others in the supply chain, such as fabricators and foundries, it also supplies direct to OEMs, and these are operating across various sectors including rail, water processing, marine defence, renewable energy, traditional power generation, and nuclear decommissioning.

Operational risks are predominantly those of health, safety and environmental performance. These are managed through the ISO 14001 environmental management system, and the in-house systems for health and safety. These continue to be led and managed in a top-down approach. Skills shortages and a tight labour market are a challenge across the manufacturing sector, and the strong apprentice training provision mitigates this.

Financial risk included those of defaulting creditors, fraud and exchange rate losses. There is an effective credit control system in place which limits exposure and identifies problems early, and the company's IT system, staff training and input from banking professionals reduces the risk of loss through fraud. Delayed and defaulted payments from creditors were and continue to be risks which the business works to mitigate with its systems.

Development and performance

New investments in 2023 included additional small lathes and milling machines to further expand the apprentice training facility and enable larger cohorts to be trained; new blast room equipment; new goods inwards and outgoing storage; and new multi-functional CNC machining capacity.

During 2023 the company celebrated its 60th year, and also opened a large new extension, providing new reception, office, canteen, meeting space, and welfare facilities. The commemorations were tempered by the death of the company Chairman, Clive Wood MBE in March 2023 following a short illness. The board of directors and shareholders, Sharon Lane and Jean Wood, are committed to building on the legacy left by Clive and ensuring the long-term success of the company.

In 2024 the company will launch its two-year Digital Strategy and Carbon Reduction plan. New subcontract services will be commissioned and marketed, and as always the senior team will continue to focus on skills. New precision CNC machining capacity is also planned.

 

On behalf of the board

Ms S Lane
Director
24 September 2024
TEES COMPONENTS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -

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 engineering, machining, fabrication and design.

Results and dividends

The results for the year are set out on page 7.

Ordinary dividends were paid amounting to £67,570. The directors do not recommend payment of a further dividend.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

Mrs J Wood
Ms S Lane
Mr C Wood (Deceased)
(Deceased 23 March 2023)
Future developments

Additional machining capacity is planned for 2024. The company is embarking on a two-year digital transformation strategy which will improve its resilience and productivity, as well as aligning with its net zero goals. The board and senior team’s focus on skills development and retention will continue as in previous years.

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.

On behalf of the board
Mrs J Wood
Director
24 September 2024
TEES COMPONENTS LIMITED
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:

 

 

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.

TEES COMPONENTS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF TEES COMPONENTS LIMITED
- 4 -
Opinion

We have audited the financial statements of Tees Components Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows 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:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information 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:

TEES COMPONENTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TEES COMPONENTS LIMITED
- 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:

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.

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.

TEES COMPONENTS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TEES COMPONENTS LIMITED
- 6 -

Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.

 

We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework.  Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.  This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

 

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

 

 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation.  This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.  The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Joanne Regan FCA
Senior Statutory Auditor
For and on behalf of Azets Audit Services
26 September 2024
Chartered Accountants
Statutory Auditor
Wynyard Park House
Wynyard Avenue
Wynyard
United Kingdom
TS22 5TB
TEES COMPONENTS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 7 -
2023
2022
Notes
£
£
Turnover
3
5,011,842
4,203,431
Cost of sales
(3,139,732)
(2,826,679)
Gross profit
1,872,110
1,376,752
Administrative expenses
(1,413,104)
(1,093,232)
Other operating income
33,302
21,214
Operating profit
4
492,308
304,734
Interest receivable and similar income
7
7,280
172
Interest payable and similar expenses
8
(4,268)
(4,335)
Profit before taxation
495,320
300,571
Tax on profit
9
(130,689)
108,363
Profit for the financial year
364,631
408,934

The Profit And Loss Account has been prepared on the basis that all operations are continuing operations.

TEES COMPONENTS LIMITED
BALANCE SHEET
AS AT
31 DECEMBER 2023
31 December 2023
- 8 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
12
4,318,519
3,123,051
Investment property
13
63,860
-
0
4,382,379
3,123,051
Current assets
Debtors
14
1,212,158
1,845,740
Cash at bank and in hand
1,504,902
1,050,983
2,717,060
2,896,723
Creditors: amounts falling due within one year
15
(1,585,656)
(984,850)
Net current assets
1,131,404
1,911,873
Total assets less current liabilities
5,513,783
5,034,924
Creditors: amounts falling due after more than one year
16
(106,896)
(55,787)
Provisions for liabilities
Deferred tax liability
18
193,222
62,533
(193,222)
(62,533)
Net assets
5,213,665
4,916,604
Capital and reserves
Called up share capital
21
1,100
1,100
Profit and loss reserves
5,212,565
4,915,504
Total equity
5,213,665
4,916,604
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:
Ms S Lane
Director
Company Registration No. 00775765
TEES COMPONENTS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 9 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2022
1,100
4,590,223
4,591,323
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
408,934
408,934
Dividends
10
-
(83,653)
(83,653)
Balance at 31 December 2022
1,100
4,915,504
4,916,604
Year ended 31 December 2023:
Profit and total comprehensive income for the year
-
364,631
364,631
Dividends
10
-
(67,570)
(67,570)
Balance at 31 December 2023
1,100
5,212,565
5,213,665
TEES COMPONENTS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
26
2,057,379
(104,235)
Interest paid
(4,268)
(4,335)
Income taxes (paid)/refunded
(26)
182,798
Net cash inflow from operating activities
2,053,085
74,228
Investing activities
Purchase of tangible fixed assets
(1,462,964)
(533,071)
Proceeds from disposal of tangible fixed assets
25,130
-
0
Purchase of investment property
(63,860)
-
0
Repayment of loans
2,819
439
Interest received
7,280
172
Net cash used in investing activities
(1,491,595)
(532,460)
Financing activities
Payment of finance leases obligations
(40,001)
(40,001)
Dividends paid
(67,570)
(83,653)
Net cash used in financing activities
(107,571)
(123,654)
Net increase/(decrease) in cash and cash equivalents
453,919
(581,886)
Cash and cash equivalents at beginning of year
1,050,983
1,632,869
Cash and cash equivalents at end of year
1,504,902
1,050,983
TEES COMPONENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
1
Accounting policies
Company information

Tees Components Limited is a private company limited by shares incorporated in England and Wales. The registered office is Bolckow Street, North Skelton, Saltburn-By-The-Sea, United Kingdom, TS12 2AP.

1.1
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

1.2
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

 

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

Revenue from contracts for the provision of services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

1.4
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of unincorporated businesses 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 is amortised on a systematic basis over its expected life, which is 5 years. Goodwill is fully amortised at the balance sheet date.

1.5
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

TEES COMPONENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 12 -

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:

Freehold land and buildings
4% straight line
Plant and equipment
8 - 15% reducing balance
Fixtures and fittings
15% reducing balance
Solar panels
4% straight line
Motor vehicles
25% reducing balance

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.

1.6
Investment property

Investment property, which is property held to earn rentals and/or for capital appreciation, is initially recognised at cost, which includes the purchase cost and any directly attributable expenditure. Subsequently it is measured at fair value at the reporting end date. Changes in fair value are recognised in 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
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.

1.9
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.

TEES COMPONENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
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.

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.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

TEES COMPONENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.10
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.

1.11
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.12
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

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.

1.13
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.14
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

TEES COMPONENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.15
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.

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
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.

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Amounts recoverable on long term contracts

The principal estimation technique used by the company in attributing profit on contracts to a particular period is the preparation of forecasts on a contract-by-contract basis. These focus on revenue and costs to complete and enable an assessment to be made of the final outturn on each contract, Variations during contracts are taken into account where it is highly probable that the related income will not reverse.

3
Turnover and other revenue

An analysis of the company's turnover is as follows:

2023
2022
£
£
Turnover analysed by class of business
Sale of goods and services
5,011,842
4,203,431
TEES COMPONENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Turnover and other revenue
(Continued)
- 16 -
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
3,582,059
3,496,431
Overseas
1,429,783
707,000
5,011,842
4,203,431
2023
2022
£
£
Other revenue
Interest income
7,280
172
Grants received
15,071
16,958
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange gains
(1,729)
(71,588)
Government grants
(15,071)
(16,958)
Fees payable to the company's auditor for the audit of the company's financial statements
9,230
6,300
Depreciation of owned tangible fixed assets
232,398
230,647
Depreciation of tangible fixed assets held under finance leases
27,285
29,658
(Profit)/loss on disposal of tangible fixed assets
(17,317)
216
5
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2023
2022
Number
Number
Manufacturing
42
42
Office and management
16
15
Total
58
57
TEES COMPONENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
5
Employees
(Continued)
- 17 -

Their aggregate remuneration comprised:

2023
2022
£
£
Wages and salaries
2,209,504
1,912,645
Social security costs
223,584
203,381
Pension costs
89,918
114,830
2,523,006
2,230,856
6
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
154,669
133,268
Company pension contributions to defined contribution schemes
26,625
56,500
181,294
189,768

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2022 - 2).

7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
7,280
172
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
7,280
172
8
Interest payable and similar expenses
2023
2022
£
£
Other finance costs:
Interest on finance leases and hire purchase contracts
4,198
4,198
Other interest
70
137
4,268
4,335
TEES COMPONENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 18 -
9
Taxation
2023
2022
£
£
Current tax
Adjustments in respect of prior periods
-
0
(182,798)
Deferred tax
Origination and reversal of timing differences
130,689
74,435
Total tax charge/(credit)
130,689
(108,363)

The actual charge/(credit) for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
Profit before taxation
495,320
300,571
Expected tax charge based on the standard rate of corporation tax in the UK of 23.50% (2022: 19.00%)
116,400
57,108
Tax effect of expenses that are not deductible in determining taxable profit
260
76
Adjustments in respect of prior years
46
(182,798)
Effect of change in corporation tax rate
7,835
15,019
Permanent capital allowances in excess of depreciation
(1,962)
(406)
Depreciation on assets not qualifying for tax allowances
8,110
2,684
Deferred tax adjustments in respect of prior years
-
0
(46)
Taxation charge/(credit) for the year
130,689
(108,363)
10
Dividends
2023
2022
£
£
Final paid
67,570
83,653
TEES COMPONENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
11
Intangible fixed assets
Goodwill
£
Cost
At 1 January 2023 and 31 December 2023
32,000
Amortisation and impairment
At 1 January 2023 and 31 December 2023
32,000
Carrying amount
At 31 December 2023
-
0
At 31 December 2022
-
0
12
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2023
1,475,567
7,087,334
257,249
170,407
8,990,557
Additions
634,078
722,026
106,860
-
0
1,462,964
Disposals
-
0
(187,542)
(48,422)
-
0
(235,964)
At 31 December 2023
2,109,645
7,621,818
315,687
170,407
10,217,557
Depreciation and impairment
At 1 January 2023
829,449
4,736,127
182,939
118,991
5,867,506
Depreciation charged in the year
36,468
194,911
15,452
12,852
259,683
Eliminated in respect of disposals
-
0
(181,677)
(46,474)
-
0
(228,151)
At 31 December 2023
865,917
4,749,361
151,917
131,843
5,899,038
Carrying amount
At 31 December 2023
1,243,728
2,872,457
163,770
38,564
4,318,519
At 31 December 2022
646,118
2,351,207
74,310
51,416
3,123,051

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

2023
2022
£
£
Plant and equipment
313,780
341,065
TEES COMPONENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 20 -
13
Investment property
2023
£
Fair value
At 1 January 2023
-
0
Additions through external acquisition
63,860
At 31 December 2023
63,860

Investment property comprises a property which is held for capital appreciation. The fair value of the investment property has been arrived at on the basis of its cost of acquisition in year and reviewed by the directors at the balance sheet date as a fair reflection of its fair value at that date.

14
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
461,205
604,547
Gross amounts owed by contract customers
420,184
1,016,487
Corporation tax recoverable
32,712
32,686
Other debtors
120,304
123,123
Prepayments and accrued income
177,753
68,897
1,212,158
1,845,740
15
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
17
42,543
40,877
Payments received on account
447,031
294,980
Trade creditors
553,441
215,551
Amounts owed to group undertakings
163,099
163,099
Taxation and social security
119,971
192,010
Government grants
19
26,907
-
0
Other creditors
143,510
58,855
Accruals and deferred income
89,154
19,478
1,585,656
984,850

Finance lease liabiltiies are secured against the assets to which they relate.

TEES COMPONENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
16
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
17
14,120
55,787
Government grants
19
92,776
-
0
106,896
55,787

Finance lease liabiltiies are secured against the assets to which they relate.

17
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
42,543
40,877
In two to five years
14,120
55,787
56,663
96,664

Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 5 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

18
Deferred taxation

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
501,562
432,328
Tax losses
(276,927)
(367,023)
Retirement benefit obligations
(1,492)
(2,772)
Deferred income taxable on receipt
(29,921)
-
193,222
62,533
2023
Movements in the year:
£
Liability at 1 January 2023
62,533
Charge to profit or loss
130,689
Liability at 31 December 2023
193,222
TEES COMPONENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
19
Government grants
2023
2022
£
£
Arising from government grants
119,683
-
Included in the financial statements as follows:
Current liabilities
26,907
-
0
Non-current liabilities
92,776
-
0
119,683
-
0
20
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
89,918
114,830

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.

Unpaid pension contributions at the balance sheet date total £16,575 (2022 - £11,084) and are included within other creditors.

21
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of £1 each
1,000
1,000
1,000
1,000
Ordinary B shares of £1 each
100
100
100
100
1,100
1,100
1,100
1,100

The company has two classes of ordinary shares which carry no right to fixed income. The A ordinary shares carry full voting, dividend and capital distribution rights. The B ordinary shares carry only dividend rights. These shares do not carry voting or capital distribution rights.

22
Financial commitments, guarantees and contingent liabilities

During the year the company received grants totalling £134,754. Grant conditions imply there is course for repayment if the assets to which the grants relate to are disposed of within a 5 year period. Management have advised this would be unlikley given the nature of the assets. Income is being released over the 5 year period.

TEES COMPONENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
23
Related party transactions
Transactions with related parties

During the year the company entered into the following transactions with related parties:

Sales
Sales
Purchases
Purchases
2023
2022
2023
2022
£
£
£
£
Other related parties
192
130
20,940
12,017

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due to related parties
£
£
Other related parties
2,039
49

The following amounts were outstanding at the reporting end date:

2023
2022
Amounts due from related parties
£
£
Entities with control, joint control or significant influence over the company
163,099
163,099
24
Directors' transactions

Dividends totalling £39,400 (2022 - £40,453) were paid in the year in respect of shares held by the company's directors.

Advances or credits have been granted by the company to its directors as follows:

Description
% Rate
Opening balance
Amounts advanced
Amounts repaid
Closing balance
£
£
£
£
Advances
-
120,187
22,874
(25,692)
117,369
120,187
22,874
(25,692)
117,369
25
Ultimate controlling party

The company's immediate parent company is Tees Components (Holdings) Limited and its ultimate parent company is Jeave 2 Limited. Both companies have a registered office at Bolckow Street, North Skelton, Saltburn-by-the-Sea, TS12 2AP.

The ultimate controlling party of Tees Components Limited is Mrs S Lane.

Jeave 2 Limited is the smallest and largest group in which Tees Components Limited is consolidated. Copies of the consolidated acounts are available to the public via Companies House.

TEES COMPONENTS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 24 -
26
Cash generated from/(absorbed by) operations
2023
2022
£
£
Profit for the year after tax
364,631
408,934
Adjustments for:
Taxation charged/(credited)
130,689
(108,363)
Finance costs
4,268
4,335
Investment income
(7,280)
(172)
(Gain)/loss on disposal of tangible fixed assets
(17,317)
216
Depreciation and impairment of tangible fixed assets
259,683
260,305
Movements in working capital:
Decrease/(increase) in debtors
630,789
(794,478)
Increase in creditors
572,233
124,988
Increase in deferred income
119,683
-
Cash generated from/(absorbed by) operations
2,057,379
(104,235)
27
Analysis of changes in net funds
1 January 2023
Cash flows
31 December 2023
£
£
£
Cash at bank and in hand
1,050,983
453,919
1,504,902
Obligations under finance leases
(96,664)
40,001
(56,663)
954,319
493,920
1,448,239
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