Company Registration No. 0640305 (England and Wales)
WALLWORK HEAT TREATMENT LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
PM+M Solutions for Business LLP
Chartered Accountants
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
WALLWORK HEAT TREATMENT LIMITED
COMPANY INFORMATION
Directors
Mr S P Collins
Mr I C Griffin
Mr M Jarvis
Mr T J Pelari
Mr H A Wallwork
Miss S J Wallwork
Mr L A Collins
Mr J R Bailey
(Appointed 1 April 2023)
Secretary
Mr I Charleston
Company number
0640305
Registered office
Lodge Bank Works
Lord Street
Bury
Lancashire
BL9 0RE
Auditor
PM+M Solutions for Business LLP
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
WALLWORK HEAT TREATMENT LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 24
WALLWORK HEAT TREATMENT LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 1 -
The directors present the strategic report for the year ended 31 March 2024.
Review of the business
The year ending 31 March 2024 saw an increase in gross profit on the previous year. Power costs did start to reduce but are still high compared to before the start of the conflict in Ukraine and this is still pushing up the costs of consumables, including process gasses within the business. The high inflation seen in this period lead to larger than planned increases to salaries which adversely effected profits. HIP (hot isostatic pressing) got underway on the site towards the close of 2023 and this is producing good revenue and confidence for the process for the future is high. Machine Build, which was mainly for the pharmaceutical sector saw the delivery of 3 machines with expectation for further orders in the coming years; this further enhanced the balance sheet.
Principal risks and uncertainties
The Directors believe that there is a low level of risk associated with the business, it operates in a stable market mainly in the UK. Risks that have been identified are as follows:
Change of government in the UK with yet unknown consequences to the manufacturing sector.
Presidential elections in the USA, where the change in president could lead to greater separation with the USA from Europe
Continued conflict in Ukraine and the possible escalation in to greater Europe
Global supply issues if China invades Taiwan
Development and performance
The directors have always striven for growth and profitability that is sustainable and this is being achieved, they are therefore very happy with the current position. New processes and new people have been brought successfully in to the business in this trading period further increasing the directors’ positivity for the future.
Future developments
The site is continuing to evolve, the HIP Centre was opened at the end of 2023 and new and existing customers have been quick to take advantage of this state of the art processing capability. Due to this successful launch plans for further investment in HIP have been brought forward and more processing capability will start to be brought on line before the close to the 2024 – 2025 financial year.
Carburising through sealed quench furnaces is roughly one third of the business, investment is therefore being made in new furnace controls which will further enhance our commercial and aerospace processing capability.
Future staffing needs are being further addressed with a year on year drive to bring graduate interns and newly qualified graduates in to the business.
Key performance indicators
The directors use the Key Performance Indicators defined to manage the business. The key performance indicators are sales growth, operating profit and operating profit margins. The directors consider that the performance of the business in accordance with these metrics increasing slightly in 2023 over 2022.
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Operating Profit Margin (%) | | | |
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The directors consider this performance satisfactory. |
WALLWORK HEAT TREATMENT LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 2 -
Mr I C Griffin
Director
15 August 2024
WALLWORK HEAT TREATMENT LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2024
- 3 -
The directors present their annual report and financial statements for the year ended 31 March 2024.
Principal activities
The principal activity of the company continued to be that of heat treatment specialists.
Results and dividends
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Mr S P Collins
Mr I C Griffin
Mr M Jarvis
Mr T J Pelari
Mr H A Wallwork
Miss S J Wallwork
Mr L A Collins
Mr J R Bailey
(Appointed 1 April 2023)
Auditor
The auditor, PM+M Solutions for Business LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
WALLWORK HEAT TREATMENT LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 4 -
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
Mr I C Griffin
Director
15 August 2024
WALLWORK HEAT TREATMENT LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF WALLWORK HEAT TREATMENT LIMITED
- 5 -
Opinion
We have audited the financial statements of Wallwork Heat Treatment Limited (the 'company') for the year ended 31 March 2024 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 31 March 2024 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
WALLWORK HEAT TREATMENT LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF WALLWORK HEAT TREATMENT LIMITED (CONTINUED)
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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, 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.
WALLWORK HEAT TREATMENT LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF WALLWORK HEAT TREATMENT LIMITED (CONTINUED)
- 7 -
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 have considered the following:
the nature of the industry and sector, control environment and business performance including the design of the Company's remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
results of our enquiries of management about their own identification and assessment of the risks of irregularities;
the matters discussed among the audit engagement team and relevant specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud;
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;
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations.
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: timing of recognition of commercial income, posting of unusual journals and complex transactions. 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 frameworks 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 UK Companies Act, employment law, health and safety, pensions legislation and tax legislation.
Audit response to risks identified
Our procedures to respond to risks identified included the following:
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;
enquiring of management 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;
reading minutes of meetings of those charged with governance and reviewing correspondence with HMRC; and
in addressing the identified risks 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.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
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.
WALLWORK HEAT TREATMENT LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF WALLWORK HEAT TREATMENT LIMITED (CONTINUED)
- 8 -
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.
Ceri Dixon BSc (Hons) FCA
Senior Statutory Auditor
For and on behalf of PM+M Solutions for Business LLP
15 August 2024
Chartered Accountants
Statutory Auditor
New Century House
Greenbank Technology Park
Challenge Way
Blackburn
Lancashire
BB1 5QB
WALLWORK HEAT TREATMENT LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2024
- 9 -
2024
2023
Notes
£
£
Turnover
3
13,734,831
10,841,230
Cost of sales
(8,326,448)
(6,899,874)
Gross profit
5,408,383
3,941,356
Distribution costs
(852,141)
(827,580)
Administrative expenses
(3,400,237)
(3,003,141)
Other operating income
616,858
547,486
Operating profit
4
1,772,863
658,121
Interest receivable and similar income
8
56,290
50,613
Interest payable and similar expenses
9
(6,805)
Profit before taxation
1,822,348
708,734
Tax on profit
10
(467,861)
(58,021)
Profit for the financial year
1,354,487
650,713
The profit and loss account has been prepared on the basis that all operations are continuing operations.
WALLWORK HEAT TREATMENT LIMITED
BALANCE SHEET
AS AT
31 MARCH 2024
31 March 2024
- 10 -
2024
2023
Notes
£
£
£
£
Fixed assets
Tangible assets
11
10,914,090
6,691,077
Current assets
Stocks
12
245,166
453,032
Debtors
13
5,953,861
4,901,973
Cash at bank and in hand
3,109,563
3,135,916
9,308,590
8,490,921
Creditors: amounts falling due within one year
14
(7,737,069)
(5,457,145)
Net current assets
1,571,521
3,033,776
Total assets less current liabilities
12,485,611
9,724,853
Provisions for liabilities
Deferred tax liability
15
2,656,244
1,585,226
(2,656,244)
(1,585,226)
Net assets
9,829,367
8,139,627
Capital and reserves
Called up share capital
17
2,629
2,629
Profit and loss reserves
9,826,738
8,136,998
Total equity
9,829,367
8,139,627
The financial statements were approved by the board of directors and authorised for issue on 15 August 2024 and are signed on its behalf by:
Mr I C Griffin
Director
Company registration number 0640305 (England and Wales)
WALLWORK HEAT TREATMENT LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2024
- 11 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 April 2022
2,629
7,005,896
7,008,525
Year ended 31 March 2023:
Profit and total comprehensive income
-
650,713
650,713
Credit to equity for equity settled share-based payments
-
480,389
480,389
Balance at 31 March 2023
2,629
8,136,998
8,139,627
Year ended 31 March 2024:
Profit and total comprehensive income
-
1,354,487
1,354,487
Credit to equity for equity settled share-based payments
-
335,253
335,253
Balance at 31 March 2024
2,629
9,826,738
9,829,367
WALLWORK HEAT TREATMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2024
- 12 -
1
Accounting policies
Company information
Wallwork Heat Treatment Limited is a private company limited by shares incorporated in England and Wales. The registered office is Lodge Bank Works, Lord Street, Bury, Lancashire, BL9 0RE.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
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 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 WHT Holdings Limited. These consolidated financial statements are available from its registered office, 69 Hacking Street, Bury, Lancashire, BL9 0RG.
1.2
Going concern
Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of processed goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
WALLWORK HEAT TREATMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 13 -
Revenue from contracts for the manufacturing of machines is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the costs recognised that it is probable will be recovered.
Contract to manufacture
Revenue is recognised as production progresses provided:
- the amount of revenue can be measured reliably;
- it is probable that the Company will receive the consideration due under the transaction;
- the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Recognition is based on the percentage of costs incurred against the expected total.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Plant and equipment
over useful economic life straight line 5 to 20 years
Fixtures and fittings
5 years straight line
Computers
2 years straight line
Motor vehicles
10 years HGV and 5 years LGV
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
WALLWORK HEAT TREATMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 14 -
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
WALLWORK HEAT TREATMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 15 -
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans and loans from fellow group companies, 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.
Other financial liabilities
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
WALLWORK HEAT TREATMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 16 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Share-based payments
Equity-settled share based payments are satisfied in equity shares of the parent company. There are no compensating payments to the parent company for these equity shares.
The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
1.14
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
WALLWORK HEAT TREATMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
1
Accounting policies
(Continued)
- 17 -
1.15
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods. The main areas of judgement are in relation to revenue recognition, stock and debtor provisions, and the useful economic lives and residual values of the company's fixed assets.
There are no material judgements or key sources of estimation uncertainty.
3
Turnover and other revenue
2024
2023
£
£
Turnover analysed by class of business
Processing sales
11,643,396
10,497,289
Machine sales
2,091,435
343,941
13,734,831
10,841,230
2024
2023
£
£
Turnover analysed by geographical market
Rest of World
216,583
201,281
UK
13,518,248
10,639,949
13,734,831
10,841,230
2024
2023
£
£
Other revenue
Interest income
56,290
50,613
Rental income from surplus trading premises
34,858
37,486
Group management charges
582,000
510,000
WALLWORK HEAT TREATMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 18 -
4
Operating profit
2024
2023
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
49,159
(11,798)
Depreciation of owned tangible fixed assets
262,579
177,533
Profit on disposal of tangible fixed assets
(5,662)
Share-based payments
493,797
422,227
Operating lease charges
619,736
581,571
5
Auditor's remuneration
2024
2023
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
8,000
8,000
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Management
7
6
Administration
21
22
Production
75
73
Total
103
101
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
4,353,546
4,146,855
Social security costs
412,395
387,144
Pension costs
566,599
498,351
5,332,540
5,032,350
WALLWORK HEAT TREATMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 19 -
7
Directors' remuneration
2024
2023
£
£
Remuneration for qualifying services
740,285
602,560
Company pension contributions to defined contribution schemes
116,210
109,245
856,495
711,805
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2023 - 4).
The number of directors who are entitled to receive shares under long term incentive schemes during the year was 5 (2023 - 5).
Remuneration disclosed above include the following amounts paid to the highest paid director:
2024
2023
£
£
Remuneration for qualifying services
191,706
168,733
Company pension contributions to defined contribution schemes
30,997
32,177
The highest paid director has been entitled to receive shares under a long term incentive scheme during the year.
8
Interest receivable and similar income
2024
2023
£
£
Interest income
Interest on bank deposits
56,290
50,613
9
Interest payable and similar expenses
2024
2023
£
£
Interest on bank overdrafts and loans
6,805
10
Taxation
2024
2023
£
£
Current tax
UK corporation tax on profits for the current period
(33,594)
(261,229)
Adjustments in respect of prior periods
(11,614)
(15,768)
Group tax relief
(493,289)
Total current tax
(538,497)
(276,997)
WALLWORK HEAT TREATMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
10
Taxation
2024
2023
£
£
(Continued)
- 20 -
Deferred tax
Origination and reversal of timing differences
1,001,515
289,543
Adjustment in respect of prior periods
4,843
45,475
Total deferred tax
1,006,358
335,018
Total tax charge
467,861
58,021
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2024
2023
£
£
Profit before taxation
1,822,348
708,734
Expected tax charge based on the standard rate of corporation tax in the UK of 25.00% (2023: 19.00%)
455,587
134,659
Tax effect of expenses that are not deductible in determining taxable profit
3,621
2,962
Adjustments in respect of prior years
(11,614)
(15,768)
Group relief
493,289
244,554
Permanent capital allowances in excess of depreciation
(171,623)
Deferred tax adjustments in respect of prior years
4,843
45,475
Remeasurement of deferred tax for changes in tax rates
69,491
Payment/(receipt) for group relief
(493,289)
(244,554)
Surrender tax losses for R&D credit
50,390
5,175
Additional deduction for R&D expenditure
(38,831)
(12,350)
Adjustments to brought forward values
3,865
Taxation charge for the year
467,861
58,021
WALLWORK HEAT TREATMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 21 -
11
Tangible fixed assets
Assets under construction
Plant and equipment
Fixtures and fittings
Computers
Motor vehicles
Total
£
£
£
£
£
£
Cost
At 1 April 2023
5,105,146
7,504,890
548,763
410,755
647,060
14,216,614
Additions
726,613
3,745,880
10,695
2,404
4,485,592
Transfers
(5,105,146)
5,105,146
At 31 March 2024
726,613
16,355,916
559,458
410,755
649,464
18,702,206
Depreciation and impairment
At 1 April 2023
6,188,111
508,690
410,755
417,981
7,525,537
Depreciation charged in the year
185,214
30,177
47,188
262,579
At 31 March 2024
6,373,325
538,867
410,755
465,169
7,788,116
Carrying amount
At 31 March 2024
726,613
9,982,591
20,591
184,295
10,914,090
At 31 March 2023
5,105,146
1,316,779
40,073
229,079
6,691,077
12
Stocks
2024
2023
£
£
Raw materials and consumables
232,012
200,889
Work in progress
13,154
252,143
245,166
453,032
13
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
2,239,305
1,856,947
Corporation tax recoverable
555,161
16,664
Amounts owed by group undertakings
1,823,219
1,898,806
Other debtors
52,982
37,869
Prepayments and accrued income
357,306
230,459
5,027,973
4,040,745
WALLWORK HEAT TREATMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
13
Debtors
(Continued)
- 22 -
2024
2023
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 15)
925,888
861,228
Total debtors
5,953,861
4,901,973
Amounts owed by group undertakings within one year are unsecured, interest free and repayable on demand.
14
Creditors: amounts falling due within one year
2024
2023
Notes
£
£
Trade creditors
715,634
641,204
Amounts owed to group undertakings
6,077,177
3,734,674
Taxation and social security
311,935
147,322
Deferred income
45,367
437,245
Other creditors
9,175
6,060
Accruals and deferred income
577,781
490,640
7,737,069
5,457,145
Amounts owed to group undertakings within one year are unsecured, interest free and repayable on demand.
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
Assets
Assets
2024
2023
2024
2023
Balances:
£
£
£
£
Accelerated capital allowances
2,656,244
1,585,226
-
-
Tax losses
-
-
457,268
525,377
Short term timing differences
-
-
468,620
335,851
2,656,244
1,585,226
925,888
861,228
WALLWORK HEAT TREATMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
15
Deferred taxation
(Continued)
- 23 -
2024
Movements in the year:
£
Liability at 1 April 2023
723,998
Charge to profit or loss
1,006,358
Liability at 31 March 2024
1,730,356
16
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
566,599
498,351
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
17
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
2,629
2,629
2,629
2,629
18
Financial commitments, guarantees and contingent liabilities
The company has an ongoing obligation to pay 1% of its annual turnover to its parent company, WHT Holdings Limited, as a licence fee for the use of intellectual property and 1% for Trademarks. In addition, £27,308 (2023: £27,308) is payable monthly to the parent company in relation to property costs.
19
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2024
2023
£
£
Within one year
40,762
43,113
Between two and five years
38,174
37,482
78,936
80,595
WALLWORK HEAT TREATMENT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2024
- 24 -
20
Capital commitments
Amounts contracted for but not provided in the financial statements:
2024
2023
£
£
Acquisition of tangible fixed assets
6,317,400
-
21
Other Financial Commitments
At the year end, the company was committed to purchasing 1,500,000 Euros (2023 - nil Euros) by way of foreign currency contracts.
22
Ultimate controlling party
The company is a wholly owned subsidiary of WHT Holdings Limited, whose registered office is at:
Wallwork Offices
69 Hacking Street
Bury
BL9 0RG
The ultimate controlling parties are trusts for the benefit of the Wallwork family and the full time working directors of Wallwork Heat Treatment Limited.
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