The directors present the strategic report for the period ended 31 December 2023.
Introduction and business review
The group results reflect the trade of H E Simm Group Limited, H E Simm & Son Limited, HESIS Limited and Sheq-Aspen Thorn Limited.
During the reporting period, the group changed its accounting reference date to 31 December. These financial statements cover a 17-month period ending 31 December 2023.
The main trading subsidiary in the group is HE Simm & Son Limited, which has recorded a loss before taxation of £10.3m (2022: profit £0.9) for the extended financial period ending 31 December 2023. This company was significantly impacted by high inflationary pressures on fixed price contracts, whilst also experiencing performance issues on a number of legacy projects located in London. The loss was partially offset by profits generated in HESIS Limited and Sheq-Aspen Thorn Limited during the period.
During the period, the Directors' and their family converted outstanding loans due to them amounting to £2.1m into share capital to recapitalise the group balance sheet.
In addition, the Directors and their family transferred a separately owned investment property company, HES Property Company Limited, into the group through a share for share exchange on 31 December 2023 to further strengthen the group balance sheet. This company owns investment property which was valued at £4.58m and had net assets totalling £1.86m at the period end.
The property investments are being sold to inject £4m of cash into the group in 2024. So far, £2.5m has been received and a further £1.5m is expected to be received before the end of 2024. The remaining mortgage debt on these properties which was transferred into the group following the share for share exchange will be settled in 2024 as the properties are sold, with the group having no exposure to bank debt at this point.
Trading performance for the 8 months to 31 August 2024 shows a significant improvement and a return to profitability for the group. The directors have produced forecasts to 31 December 2025 which show continued profitability during the financial years ended 31 December 2024 and 31 December 2025. The group consolidated balance sheet has returned to a positive net asset position following the year end with further increases in net assets forecast at the end of the financial years ended 31 December 2024 and 31 December 2025.
The key financial and other performance indicators during the year were as follows:
The principal activity of the company continued to be that of a holding company.
The principal activity of the group included that of the provision of engineering services to the construction industry, the installation and testing of advanced fire, security and monitoring systems, along with mechanical and electrical maintenance, and the provision of health and safety training and consultancy services.
The group has a class leading reputation for delivering its services and projects responsibly and sustainably. Through building exceptional client relationships, consistently delivering high performance, the business has a strong forward order book and a robust pipeline of future opportunities across a balanced portfolio of resilient sectors.
Health and Safety
There are many inherent risks for all companies currently operating in the contractor sector of the construction industry however, health and safety remains a primary and constant focus for the company. Our zero tolerance attitude to poor health and safety behaviours enables us to influence our workforce, customers and supply chain, through positive leadership, to act in a way that prioritises safety. This is bound by our Safety Comes First initiative, where nothing we do is worth getting hurt for, no matter how urgent or important it may be.
Market Conditions
During the reporting period the operating environment of the group's main subsidiary, H E Simm & Son Limited, has experienced significant levels of hyperinflation and shortages of materials and labour. As this company typically contracts on a fixed price basis this has had a significant impact on performance and profitability of the business. We have learnt from this experience and have adjusted our strategy accordingly.
A strategic restructuring of the business has now been implemented leading to a streamlining of management structures and reporting processes, a more selective approach to tendering and a strong focus on working capital management. Rigorous management reviews have been undertaken to ensure any operational performance issues have been identified and recognised.
The directors manage risk associated with general market conditions through regular meetings of senior management. The company has rigid financial and operational controls and robust governance supported by an overarching integrated management system containing frameworks of policies and procedures designed to manage and minimise avoidable risk. Alongside these policies and procedures sits the company’s matrix which defines responsibility levels for delegated authority, when key decisions or approvals to take certain actions are required.
Financial instruments
We do not actively use financial instruments as part of our financial risk management and we are not exposed to foreign exchange risk. We are subject to the usual credit and cash flow risks associated with selling on credit and we manage this through credit control procedures.
The strategic actions taken during the period mean that the group is now well positioned to return to profitability. Our focus will be on de-risking the business by targeting quality work winning opportunities, with customers who we trust and have long-term relationships with, in sectors where we have a clear customer advantage and a proven track record of delivery. However, this selectivity will initially result in lower levels of turnover but with improved profitability.
The group uses conventional forms of working capital to finance its day to day activities and as such the figures appearing in the accounts reflect the absolute value of amounts recoverable and payable.
As directors, we have a legal responsibility under section 172 of the Companies Act 2006 to act in the way we consider, in good faith, will be most likely to promote the group’s success for the benefit of its members as a whole, having regard to the long-term effect of our decisions on the group and its stakeholders. This statement outlines how we deliver this responsibility.
The oldest trading subsidiary in the group, H E Simm & Son Limited, was established in 1948. We therefore have a proud heritage and a proven track record of achievement that has seen the group go from strength to strength. Whilst the group has changed significantly over the years, our focus has always been on safety, delivering outstanding levels of performance and customer satisfaction.
We make strategic decisions aligned to our long-term objectives. Recent years have seen us investing significantly in resources that enable us to deliver high-quality, innovative solutions and efficiencies for our customers.
Moving forward, we need to ensure that our size aligns to our pipeline while enabling us to continue delivering exceptional project quality. We will continue to seek profitable business in our core markets through established client relationships.
We remain strongly focused at all times on maintaining exceptional relationships with our group’s key stakeholders: our employees, customers, suppliers and within the communities in which we operate.
Our talented workforce
We rely on skilled teams throughout HE Simm Group. The recruitment, development and retention of staff is business-critical. We engage all colleagues by rewarding performance, developing individuals by providing training and support. We also ensure that all team members participate and collaborate in business activities.
Mental and physical wellbeing continues to be an important part of our people policy, and we operate a number of initiatives to support our talented team.
Our customers and suppliers
We continually invest in innovation to deliver continuous improvement and a high-quality, efficient service, under agreed project terms. Honesty and integrity are key to the strong, positive relationships we build with our customers, which is reflected in the fact that the majority of our work is repeat business. We maintain a reputation for transparency and fair dealing in our interaction with both customers and suppliers.
Our community
As a family-owned-and-run company we have invested in our community since we were established. We constantly monitor and review how we can best support the areas in which we operate through practical projects and charitable initiatives. This focus has expanded in recent times to ensure we look after those around us in all operating regions From a wider perspective, we are always mindful of, and aim to minimise, the impact of our work on the environment.
On behalf of the board
The directors present their annual report and financial statements for the period ended 31 December 2023.
The results for the year are set out on page 11.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
No preference dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the period and up to the date of signature of the financial statements were as follows:
The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.
There is no employee share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.
The auditor, Mitchell Charlesworth (Audit) Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting.
The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e equivalent per emplyee the recommended ratio for the sector.
HE Simm have undertaken the following energy efficiency actions during the financial reporting period:
Ongoing carbon pledges for existing employees (which form part of performance appraisals and Annual review process);
Carbon pledges from new employees;
Continuation of Tusker car salary sacrifice, limited to specific CO 2 limits; and
Ongoing training modules via the Supply Chain Sustainability School.
We have audited the financial statements of H E Simm Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 31 December 2023 which comprise the group statement of comprehensive income, the group balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group 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).
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 group and parent 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 group's and parent 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:
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.
In the light of the knowledge and understanding of the group and the parent company and their 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
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 parent 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 parent 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.
Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:
the nature of the industry and sector, control environment and business performance;
the company's own assessment of the risks that irregularities may occur either as a result of fraud or error;
the results of our enquiries of management of their own identification of and assessment of the risks of irregularities;
any matters we identified having obtained and reviewed the company's documentation of their policies and procedures relating to:
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; and
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and
the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas:
(i) The presentation of the Profit and Loss Account, (ii) the accounting policy for revenue recognition (iii) amounts recoverable on long term contracts, (iv) understatement of creditors. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory framework that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company’s ability to operate or to avoid a material penalty.
Our procedures to respond to risks identified included the following:
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with relevant laws and regulations described above as having a direct effect on the financial statements;
enquiring of management concerning actual and potential litigation and claims;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £402,715 (2022 - £5,800 profit).
H E Simm Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Spinnaker House, 141 Sefton Street, Liverpool, Merseyside, L8 5SN.
The group consists of H E Simm Holdings Limited and all of its subsidiaries as detailed in the note 15.
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.
The consolidated group financial statements consist of the financial statements of the parent company H E Simm Holdings Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Upon acquisition of subsidiaries in which there is no monetary consideration, other reserves reflect the value of assets over liabilities acquired.
The Board of Directors is required to consider the group's ability to continue as a going concern over a period of at least 12 months from the date of approval of the financial statements.
Following a difficult trading period arising due to the conditions noted in the strategic report, the group has incurred a loss before taxation of £9.8m (2022: profit £0.8m) during the extended period ended 31 December 2023. At the period end, the group had liabilities in excess of total assets of £0.7m.
Due to the losses, there was an inevitable tightening in liquidity and the group has had to manage its working capital carefully.
During the period, the Directors' and their family converted outstanding loans due to them amounting to £2.1m into share capital to recapitalise the group balance sheet.
In addition, the Directors and their family transferred a separately owned investment property company, HES Property Company Limited, into the group through a share for share exchange on 31 December 2023 to further strengthen the group balance sheet. This company owns investment property which was valued at £4.58m and had net assets totalling £1.86m at the period end.
The investment properties are being sold to inject £4m of cash into the group in 2024. So far, £2.5m has been received and a further £1.5m is expected to be received before the end of 2024. The remaining mortgage debt on these properties which was transferred into the group following the share for share exchange will be settled in 2024 as the properties are sold, with the group having no exposure to bank debt at this point.
Trading performance for the 8 months to 31 August 2024 shows a significant improvement and a return to profitability for the group. The directors have produced forecasts to 31 December 2025 which show continued profitability during the financial years ended 31 December 2024 and 31 December 2025. The group consolidated balance sheet has returned to a positive net asset position following the year end with further increases in net assets forecast at the end of the financial years ended 31 December 2024 and 31 December 2025.
As various legacy projects come to an end and with the cash injection noted above, the liquidity challenge is easing and the outlook for working capital is substantially improved.
As a result, the Board is satisfied that the company and Group has sufficient financial resources to continue to operate for a period of at least 12 months and therefore has adapted the going concern basis in the preparation of the 2023 financial statements.
Construction contracts
Turnover represents construction contracts with third parties as detailed in the 'Construction Contracts' accounting policy.
All other services
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 profit recognised reflects the proportion of work completed to date on the contract determined by reference to the proportion of the value of work completed to total contract value.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the group 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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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.
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, 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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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 group after deducting all of its liabilities.
Basic financial liabilities, including creditors,and loans from fellow group companies 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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group 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 group.
The tax expense represents the sum of the tax currently payable and deferred 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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 if, and only if, there is 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.
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.
The group operates a number of defined contribution pension schemes and the pension charge represents the amounts payable by the group to the funds in respect of the year.
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.
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.
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.
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.
In the application of the group’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 average monthly number of persons (including directors) employed by the group and company during the period was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2022 - 4).
The actual (credit)/charge for the period can be reconciled to the expected (credit)/charge for the period based on the profit or loss and the standard rate of tax as follows:
Investment properties held by the company have been valued on an open market value basis during the period ended 31 December 2023 by Bruton Knowles, being surveyors and property consultants,
The long-term loans represent amounts brought into the group from the business combinations with HES Property Company Limited. The mortgages are secured by fixed charges over a number of freehold and leasehold investment properties held by the group.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
HES Property Company Limited
HES Property Company Limited is a company in which Mr. G A Simm, Mr. G M Simm, Mr. M R Simm, Mrs. V Brereton, Mr. A Simm, Mr G Simm and Mrs J Simm were shareholders prior to a share for share exchange with H E Simm Holdings Limited on 31 December 2024, and in which Mr. G.A. Simm and Mr. M R Simm are directors.
During the period ended 31 December 2023 the group paid rent of £162,260 (31 July 2022 - £108,184), and received interest of £273,361 (31 July 2022 £nil).
At the period end the group was owed £1,728,359 (31 July 2022 – £224,556) by HES Property Company Limited.
Cu-Plas Supplies Limited
Cu-Plas Supplies Limited is a company in which Mr. G A Simm, Mr. G M Simm, Mr. M R Simm and Mrs. V Brereton, have an interest as shareholders in the parent company Alma Supplies Limited.
During the period ended 31 December 2023 the group made purchases of £4,641,298 (31 July 2022 - £1,707,572), recharged costs of £31,706 (31 July 2022 £45,582) and a management charge of £129,397 (31 July 2022 £Nil).
At the period end the company owed £764,380 (31 July 2022 – £534,234) to Cu-Plas Supplies Limited.
Cu-Plas Supplies (Manchester) Limited
Cu-Plas Supplies (Manchester) Limited is a company in which Mr. G A Simm, Mr. G M Simm, Mr. M R Simm and Mrs. V Brereton, have an interest as shareholders in the parent company Alma Supplies Limited.
During the period ended 31 December 2023 the group made purchases of £680,833 (31 July 2022 - £17,519), and recharged costs of £2,983 (31 July 2022 £2,684).
At the period end the company owed £185,178 (31 July 2022 – £3,494) to Cu-Plas Supplies Limited.
Alma Supplies Limited
Alma Supplies Limited is a company in which Mr. G A Simm is a director, and Mr. G M Simm, Mr. M R Simm and Mrs. V Brereton, have an interest as shareholders.
At the period end the group was owed £1,132,587 (31 July 2022 – £588,967) from Alma Supplies Limited.
HES Developments Limited
HES Developments Limited is a company in which Mr. G A Simm, Mr. G M Simm, Mr. M R Simm and Mrs. V Brereton, are directors and shareholders.
At the period end the group was owed £566,173 (31 July 2022 – £Nil) from HES Developments Limited.
HES Investments Limited
HES Investments Limited is a company in which Mr. G A Simm, Mr. G M Simm, Mr. M R Simm and Mrs. V Brereton, are directors and shareholders.
At the period end the group was owed £1,517 (31 July 2022 – £Nil) from HES Developments Limited.
Teknikal Design Solutions Limited
Teknikal Design Solutions Limited is a company in which Mr. G A Simm, Mr. G M Simm, Mr. M R Simm are directors and shareholders and Mrs. V Brereton, has an interest as a shareholder.
At the period end the group owed £855 (31 July 2022 – £855) to Teknikal Design Solutions Limited.