Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2023
Whitings LLP
Chartered Accountants
Greenwood House
Greenwood Court
Skyliner Way
Bury St Edmunds
Suffolk
IP32 7GY
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SHEARLINE PRECISION ENGINEERING LIMITED
COMPANY INFORMATION
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SHEARLINE PRECISION ENGINEERING LIMITED
CONTENTS
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SHEARLINE PRECISION ENGINEERING LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present their strategic report for the year ended 31 December 2023. The aim is to present a balanced and comprehensive review of the development and performance of the business during the period and its position at the year end. The review is consistent with the size of the business and is written in the context of the risks and uncertainties we face.
The principal activity of the company during the year continued to be the manufacturing of metal based products to customer specifications, selling predominantly in the UK.
Revenue continued to improve in the year, but more of our customers are moving away from holding stock to a Just in Time policy. This is impacting our revenue during the transition process, as customers are consuming the stock they hold before placing further orders with us. Gross profit has unfortunately seen a reduction due to fluctuating material prices and our own increased energy charges. We have continued to invest in accordance with the planned capital investment programme in order to maintain and exceed customer service levels. At the time of reporting the company have experienced a light order book for 2024, but a much improved order book for 2025 and the directors are confident for the future prospects of the company as it continues to build on the strong net asset position reported at the balance sheet date. We have assessed that the company is able to continue to meet its debts as they fall due and therefore have prepared the accounts under the going concern basis. Further detail regarding our assessment can be found in note 2.4.
The key business risks and uncertainties affecting the company are those relating to price competition from competitors within the industry and liquidity.
To minimise exposure, processes within our business are regularly challenged to remain competitive, without eroding margins. The company actively maintains a mix of long term and short term debt finance that ensures there are sufficient funds available for both daily operations and continued investment. Regular cash flow forecasts are produced in order to monitor the Group’s cash flow requirements and the liquidity of the business.
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SHEARLINE PRECISION ENGINEERING LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
There are a number of performance indicators that are used to monitor the business on a regular basis. The key indicators for the purpose of the strategic report are detailed below.
This report was approved by the board and signed on its behalf.
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SHEARLINE PRECISION ENGINEERING LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present their report and the financial statements for the year ended 31 December 2023.
The directors are responsible for preparing the Strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to 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.
The loss for the year, after taxation, amounted to £126,522 (2022 - profit £245,598).
The directors have not recommended payment of a dividend.
The directors who served during the year were:
As well as continuing to invest in the company infrastructure and our people, investment will also be made in raising the company profile.
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SHEARLINE PRECISION ENGINEERING LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
There have been no significant events affecting the Company since the year end.
The auditors, Whitings LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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SHEARLINE PRECISION ENGINEERING LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SHEARLINE PRECISION ENGINEERING LIMITED
We have audited the financial statements of Shearline Precision Engineering Limited (the 'Company') for the year ended 31 December 2023, which comprise the Statement of income and retained earnings, the Statement of financial position and the related notes, including a summary of 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).
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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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.
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.
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SHEARLINE PRECISION ENGINEERING LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SHEARLINE PRECISION ENGINEERING LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' 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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
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.
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SHEARLINE PRECISION ENGINEERING LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SHEARLINE PRECISION ENGINEERING LIMITED (CONTINUED)
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 Auditors' 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:
∙Enquiry of management about any known or suspected instances of non-compliance with laws and regulations, accidents in the workplace, and fraud;
∙Enquiry of management around actual and potential litigation and claims;
∙Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
∙Challenging assumptions and judgements made by management in their significant accounting estimates, such as stock valuation and useful economic lives of tangible assets; and
∙Performing audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, and evaluating the business rationale of significant transactions outside the course of normal business.
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 is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' report.
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SHEARLINE PRECISION ENGINEERING LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF SHEARLINE PRECISION ENGINEERING LIMITED (CONTINUED)
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 Auditors' 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.
for and on behalf of
Chartered Accountants
Statutory Auditors
Greenwood House
Greenwood Court
Skyliner Way
Suffolk
IP32 7GY
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SHEARLINE PRECISION ENGINEERING LIMITED
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 31 DECEMBER 2023
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SHEARLINE PRECISION ENGINEERING LIMITED
REGISTERED NUMBER: 00976052
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 11 to 30 form part of these financial statements.
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Shearline Precision Engineering Limited is a private limited company incorporated in England. Its registered office is Precision House, Cambridgeshire Business Park, Ely, Cambridgeshire CB7 4EX.
The principal activity of the company during the period was the manufacturing and machining of metal products.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d).
This information is included in the consolidated financial statements of Shearline Holdings Limited as at 31 December 2023 and these financial statements may be obtained from Companies House.
The Company is a parent company that is also a subsidiary included in the consolidated financial statements of a larger group by a parent undertaking established under the law of any part of the United Kingdom and is therefore exempt from the requirement to prepare consolidated financial statements under section 400 of the Companies Act 2006.
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
The Company’s parent has a bank loan due for repayment within 12 months of the approval of these financial statements of which the Company is party to a cross-guarantee, further details of which can be found in the consolidated group accounts of Shearline Holdings Limited filed at Companies House. The Company does not have the ability to settle amounts that could arise under a cross guarantee should they fall due and the cross guarantee be enforced.
The Company has reported a loss before tax of £168,311 (2022 – profit before tax £235,370). This, along with the cross guarantee in respect of the parent company bank loan, has created uncertainty about the Company’s ability to continue to meet its debts as they fall due. The directors have prepared cash flow forecasts which have provided the directors with sufficient comfort that the financial statements should be prepared on the going concern basis. These forecasts are highly sensitive to the level of sales forecast, and are reliant on the continued support of the Company’s banker, financial support of a director, and the parent company being able to repay its debts as they fall due. A director has also provided a letter of support to indicate his intention to support the company if required. As a result the directors are satisfied that the company remains a going concern and will be able to pay its debts as they fall due for a period of at least 12 months from the date of signing these financial statements.
Functional and presentation currency
Transactions and balances
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Expenditure on research and development is written off against profit in the year in which it is incurred.
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Grants of a revenue nature are recognised in the Statement of income and retained earnings in the same period as the related expenditure.
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Company's Statement of financial position 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.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
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 the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below. Stock valuation:- The company manufactures items to order and as a result it is necessary to consider the recoverability of the cost of the stock and the associated provisioning required. When calculating stock provision, management considers evidence of impairment, such as the ageing of stock and the expectation of eventual use or sale. Useful economic lives of tangible assets:- The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of assets. The useful economic lives and residual values are reassessed annually. They are amended when necessary to reflect current estimates, based on technological advancements, future investments, economic utilisation and the physcial condition of the asset.
The whole of the turnover is attributable to manufacturing and machining of metal products.
Analysis of turnover by country of destination:
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
12.Taxation (continued)
The main rate of UK corporation tax increased from 19% to a rate between 19% and 25% with effect from 1 April 2023. The deferred tax liability reflects these rates.
The company has trade related tax losses of £1,355,305 (2022 - £1,124,831) available for offset against future taxable profits.
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
Profit and loss account
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SHEARLINE PRECISION ENGINEERING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
There is a cross guarantee and debenture given by Shearline Precision Engineering Limited and Hybrid Laser Tech Limited in respect of bank borrowings. The balance at the period end is £Nil (2022 - £Nil). The debt is secured by a debenture over all assets of the company.
The company has provided a guarantee for Shearline Holdings Limited of £1.4m and a debenture in respect of bank borrowings.
The company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £159,668 (2022 - £116,033). Contributions totalling £27,619 (2022 - £22,477) were payable to the fund at the balance sheet date and are included in creditors.
A director has provided a guarantee of £1,850,000 in respect of bank borrowings of the company.
The company owed £175,911 (2022 - £107,160) to a director at the balance sheet date. Interest has been charged at an average rate of 6%. During the year rent of £276,000 (2022 - £276,000) has been paid to a director by the company.
The immediate parent undertaking is Shearline Holdings Limited a company registered in England and Wales.
The ultimate controlling party is D H Littlechild.
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