The directors present the strategic report for the period ended 29 June 2024.
The sole purpose of the Company is that of a holding company and as such the directors intend to develop the existing products and markets of the subsidiaries.
Set out below are the Company's seven major business risks, together with the systems and initiatives in place to address them:
Market risk
The electro-mechanical products market is subject to fluctuations in demand by customers. These fluctuations are linked to the economic cycle. The Company actively seeks to manage its exposure to these fluctuations by monitoring stock levels, restricting its dependence on large customers and maintaining close relationships with suppliers.
Operational risk
This relates to the risk of financial loss and damage to reputation resulting from inadequate or failed internal processes and systems and from the actions of people or external events. The Company manages this risk through appropriate controls and loss mitigation actions. Examples include:
(a) Taking out sufficient insurance cover, including for business interruption;
(b) Maintaining a detailed disaster recovery plan for all major sites;
(c) Maintaining rigorous data backup procedures;
(d) Performing regular risk assessments at each of the Company's locations;
(e) Carrying out a regular review of the principal suppliers and customers of the Company, and how each impacts on the company's business;
(f) Regularly reviewing actual performance against budgets and forecasts; and
(g) Establishing clearly defined procedures for the authorisation of major new investments and commitments.
In addition, specialist support functions provide expertise in ensuring the company adheres to local regulatory and legal requirements.
Credit risk
The Company assesses the creditworthiness of new customers before commencing trade with them. Based on this, authorised limits of credit are set. A proactive approach to the identification and control of bad and doubtful debts is maintained and significant credit risks are highlighted to the board.
Liquidity risk
This relates to the risk that the Company is unable to fund its requirements due to insufficient banking facilities. During the period under review the Company funded its day-to-day operations through a mixture of retained profits and inter-company current account facilities, and its long term assets through inter-company financing.
The Company's policy on liquidity is to ensure that there are sufficient medium and long term committed borrowing facilities to meet funding requirements. It is company policy not to enter into speculative transactions.
Interest Rate Risk
The Company has taken out interest bearing loans with a mixture of fixed and floating interest rates. The proportion of the Company's debt subject to fixed rates is 53%.
Exchange Rate Risk
The Company sells its products and purchases its material primarily in sterling. In addition, there are some transactions undertaken in US dollars and Euros. The Company manages its exchange exposure through natural hedging and keeps under review further risk mitigation through forward contracts.
Inflation Risk
The Company manages inflation risks through passing on material price increases where possible and by monitoring input costs closely.
Going concern
The directors have at the time of approving the financial statements, a reasonable expectation that Inspirit Carey Topco Limited and its subsidiary undertakings, (the “Group”), has adequate resources to continue in operational existence for the foreseeable future.
The Group has prepared operating entity forecasts and projections up to 30 November 2025 which cover at least 12 months from the date of approval of the financial statements. The assumptions used in these forecasts are believed to be reasonable and prudent, include cost savings from fully completed restructuring programmes within the Group and show that the Group is now cashflow positive.
The Group has debt facilities from a third-party lender. Subsequent to the period end the third-party covenants have been re-set providing additional liquidity and headroom for the Group. In addition, Inspirit Capital, the ultimate owner of the Group has provided a letter indicating that it remains supportive of the business and that its current intention is to support the Group should additional funding be required (subject to Inspirit Capital Investment committee approval).
The directors have therefore concluded that they have an expectation that the company has adequate resources to continue in the near future. As such, they therefore continue to adopt the going concern basis of accounting in preparing the annual financial statements.
The sole purpose of the Company is that of a holding company and as such the directors monitor the performance of its subsidiaries.
The directors anticipate that the business environment will remain competitive. However, the focus on developing its presence in aerospace, defence, medical, industrial and space markets is beginning to deliver margin benefits. This focus, combined with improving operational performance, underpins the board’s confidence in improved business performance in the short and medium term.
On behalf of the board
The directors present their annual report and financial statements for the period ended 29 June 2024.
The results for the period are set out on page 9.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
The auditor, Azets Audit Services Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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.
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:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias; and
Performing audit work over the timing and recognition of revenue and in particular whether it has been recorded in the correct accounting period.
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.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Inspirit Carrey Bidco Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 2, Hargreaves Way, Sawcliffe Industrial Park, Scunthorpe, DN15 8RF.
The parent company was incorporated on 28 April 2022 therefore the prior year financial statements present the 14 months to 1 July 2023 and hence cannot be accurately compared to the current year.
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 £1,000.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Inspirit Carrey Topco Limited. These consolidated financial statements are available from its registered office, 2 Babmaes Street London SW1Y 6HD.
The directors have, at the time of approving the financial statements, a reasonable expectation that Inspirit Carey Topco Limited and its subsidiary undertakings, which include Inspirit Carey Bidco, (the “Group”), has adequate resources to continue in operational existence for the foreseeable future.
The Group has prepared operating entity forecasts and projections up to 30 November 2025 which cover at least 12 months from the date of approval of the financial statements. The assumptions used in these forecasts are believed to be reasonable and prudent, include cost savings from fully completed restructuring programmes within the Group and show that the Group is now cashflow positive.
The Group has debt facilities from a third-party lender. Subsequent to the period end the third party covenants have been re-set providing additional liquidity and headroom for the Group. In addition, Inspirit Capital, the ultimate owner of the Group has provided a letter indicating that it remains supportive of the business and that its current intention is to support the Group should additional funding be required (subject to Inspirit Capital Investment committee approval).
The directors have therefore concluded that they have an expectation that the company has adequate resources to continue in the near future. As such, they therefore continue to adopt the going concern basis of accounting in preparing the annual financial statements.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
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, 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.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Investments are assessed each year for indicators of impairment against the carrying value of the investment. Where indicators are identified the discounted future cash flows of the investments are considered in assessing whether the valuation of the investment is supported or whether impairment is required. Future cash flows and the discount rate used are significant estimates in this situation.
Auditor remuneration for the audit of the financial statements amounts to £1k (2023 - £1k). The cost was borne by Alpha 3 Manufacturing Limited.
The average monthly number of persons (including directors) employed by the company during the period was:
Other movements relate to a repayment from the vendor in respect of the company’s acquisition of it’s subsidiaries in the previous period.
Details of the company's subsidiaries at 29 June 2024 are as follows:
Upon incorporation, 800 Class A Ordinary shares and 115 Class B Ordinary shares were issued at par for cash consideration. Both Class A and Class B shares carry one vote and rank pari passu in respect to dividends and capital distributions.
During the year an additional 80 B Ordinary shares of 10p each were issued. These rank pari passu with the other shares in issue.