The directors present the strategic report for the year ended 31 December 2023.
The company was incorporated in the prior period on 28 July 2021. On 29 July 2021, the company acquired shares in Surfaceprep UK Limited. Subsequently on 24 September 2021 and 1 October 2021, the entire shareholding of Hodge Clemco Holdings Limited and Surface Finishing Equipment Group Limited were respectively acquired.
Surface Preparation UK Holdings Limited and its subsidiaries are part of the USA based SurfacePrep Group, a world leading distributor of surface enhancement solutions. With over 30 facilities and job shops worldwide, each run by skilled experts who work closely with local manufacturers to develop the best possible solution for every customer.
The group includes 3 trading subsidiaries, namely Hodge Clemco Limited, Hogg Blasting and Finishing Equipment Limited and Abraclean Limited. These companies are individually considered leaders in the manufacture and supply of abrasive blasting (sandblasting) equipment and surface treatment equipment.
This corporate body, continues to provide exciting opportunities for all trading entities, including increased access to the sectors in which they operate and the potential additional growth through economies of scale and continuing group strategic support.
All trading subsidiaries continue to perform well despite challenging global inflationary pressures impacting all costs from raw materials, staff costs, utilities, and fuel to name a few.
Group turnover for the year amounted to £27.0m compared to £30.7m for the comparative period which effectively included 15 months of trading activity. This equates to a £2.4m increase in turnover for the group on the prior period, illustrating a 9.9% growth in group business. Each trading subsidiary has contributed in-line with directors’ expectations. Growth is expected to continue for the group as a whole in 2024.
The profit before tax, reported for the group of £1.5m (2022: £3.9m loss), is principally due to increased trading profits, which includes a favourable profit on foreign exchange of £1.2m (2022: £2.4m foreign exchange loss). The profit on foreign exchange is unrealised and has fundamentally arisen on the year end re-translation of USD group funding based on the year end USD exchange rate. Although technically the USD group debts and interest charges are due on demand, they will not be sought for repayment until cash flow permits.
Management continue to focus on effectively managing trading costs within all elements of operations, in order to support the continued and future profitability of each trading company with the group.
At the year end the group has net liabilities of £2.6m (2022: £4.0m). This highlights the groups return to profitability in the year, with a corresponding improvement in the balance sheet as profits are retained within the group. The management board are satisfied that the group has significant group financial support to enable opportunities to be taken as they arise, facilitating the group to expand in-line with the longer-term growth strategy.
The group has an effective risk-based quality management system (ISO9001), which supports a culture of risk reduction to drive improvements.
Key risks faced by the group include:
Change in legislation and tariffs due to political instability
Inflationary pressures reducing growth outlook
Availability of stock from Asia
Resurgence of pandemic lockdowns
Reduced sales due to new competition
The group uses various financial instruments such as debtors and creditors that arise directly from its operations. The existence of these financial instruments exposes the company to a number of financial risks, which are described in more detail below. The directors review and agree policies for managing these risks. These policies have remained unchanged from previous years.
Liquidity risk
The group seeks to manage financial risk by ensuring liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.
Interest rate risk
The group finances its operations through a combination of retained profits, wider group funding, finance leases and hire purchase contracts. The group exposure to interest rate fluctuations on its borrowings is managed by the use of both fixed and floating facilities.
Foreign currency risk
The groups principal foreign currency exposures arise from trading with overseas companies. Group policy permits but does not demand that these exposures may be hedged in order to fix the cost in sterling.
Credit risk
The principal credit risk arises from the group's trade debtors.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
Being part of the USA based SurfacePrep Group, continues to provide exciting opportunities for all UK group companies. This includes, increased access to the sectors in which it operates and the potential additional growth through economies of scale and wider group strategic support which have not previously not been been available to the business.
The group expects to strengthen its financial position by delivering the following objectives:
Understanding the collective strengths/ weaknesses of the wider corporate group and identifying opportunities
Improving efficiency and reporting, by replacing the company's ERP system with a modern solution to be used throughout the group
Adopting the Avidian Prophet CRM solution to improve the sales management pipeline
Strengthening staff relationships
Investing in the group's engineering design team to update our product portfolio
Developing the group's marketing strategy and ensure we have the correct resources in place to meet objectives
Recruiting dynamic individuals to strengthen the team
The group reviews and monitors its performance against a number of key performance indicators both financial and non-financial. The principal measures for the trading entities within the group, include sales growth, gross margin, EBITDA, net current assets and net assets. These are reviewed by the management team and reported to the board on a monthly basis.
Other performance measure indicators considered by management include:
sales order pipeline
monthly financial results compared to budget
customer satisfaction using monthly data
The directors have and will continue to monitor all of the KPI’s and daily operating controls and maintain a strong focus on increasing performance in all aspects of the business.
The main group KPI’s and corresponding results are as follows:
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| 2023 |
| 2022 |
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Turnover |
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| £27.0m |
| £30.7m |
Gross margin % |
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| 39.3% |
| 31.6% | |
EBITDA (adjusted for unrealised foreign exchange losses) |
| £2.5m |
| £1.0m | ||||
Net current assets (excluding wider group debt) |
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| £7.7m |
| £6.5m | |||
Net assets (excluding wider group debt) |
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| £17.6m |
| £17.8m |
The group has secured a satisfactory growth in sales on a 12 month comparison to 2022, of £2.4m, representing a 9.9% growth in group turnover. This is in-line with expectations.
The increase in gross profit margin achieved in 2023 illustrates the effective cost management strategies implemented by the management board, including the mitigation of rising haulage costs from abrasive imports from Asia following strategic management decisions made.
As with many businesses, EBITDA in 2022 was impacted by global inflationary cost increases. Following successful initiatives implemented to effectively manage EBITDA, a notable improvements have been achieved in 2023 in respect of profitability. EBITDA has been adjusted for unrealised foreign exchange losses associated with the wider group funding, illustrating the underlying profitability of the groups trading subsidiaries, once wider group costs are removed. Ultimately group funding costs will need to be covered, however the new UK corporate group is in its infancy, with growth opportunities expected to benefit future years.
The group has no bank debt and is funding entirely by its wider worldwide group.
The adjusted net current assets and net assets above illustrates the financial strength of the underlying trading subsidiaries and discounts the wider group debt in-line with agreed group financial support which will not require repayment in the near future.
The adjusted net assets of the group illustrate the strong financial strength, as a direct result of significant group funding. This will enable opportunities to taken as they arise.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
The results for the year are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The directors continue to consider future trading opportunities, seeking growth through both existing customers and securing new opportunities as they arise. Consideration is made of industry sectors, product ranges and service offerings, applying our years of experience in order to remain blasting sector industry leaders in aerospace, automotive, marine, medical and rail.
The management board are satisfied that the group has significant financial reserves as a result of wider group funding provided by the worldwide SurfacePrep Group. This provides financial strength and permits opportunities in respect of further expansion to be facilitated in-line with the longer-term growth strategy.
Sumer Auditco Limited were appointed as auditor to the group and is deemed to be reappointed under section 487(2) of the Companies Act 2006.
We have audited the financial statements of Surface Preparation UK Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company 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
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
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.
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 identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussions with the directors (as required by auditing standards) and discussed with the directors the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably.
Firstly, the group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation and taxation legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.
Secondly, the group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: laws related to employment, health & safety and data protection.
Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and inspection of regulatory and legal correspondence, if any. Through these procedures we did not become aware of any actual or suspected non-compliance.
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.
We design procedures in line with our responsibilities, outlined below to detect material misstatement due to fraud:
Matters are discussed amongst the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud
Identifying and assessing the design and effectiveness of controls that management have in place to prevent and detect fraud
Detecting and responding to the risks of fraud following discussions with management and enquiring as to whether management have knowledge of any actual, suspected or alleged fraud;
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 £356,835 (2022 - £0 profit).
Surface Preparation UK Holdings Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 36 Orgreave Drive, Sheffield, S13 9NR.
The group consists of Surface Preparation UK Holdings Limited and all of its subsidiaries.
The company was incorporated on 28 July 2021.
In the prior period, the directors extended the company's first accounting period from 31 July 2022 to 31 December 2022 in order to align with fellow group companies. Consequently, the comparative amounts presented in the financial statements (including the related notes) are not entirely comparable.
The comparative period is a 17 month period, though due to timing of acquisitions of trading subsidiaries, includes 15 months of group trading activity.
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 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 for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Surface Preparation UK Holdings Limited together with all entities controlled by the parent company (its subsidiaries).
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.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. This is based on the continued financial support by fellow group undertakings, outside this UK group. At the year-end date, creditors includes £20,207,193 (2022: £21,765,545) owed to group undertakings. Although technically these group debts are due on demand, repayment will not be sought from the wider worldwide group unless cash flow permits. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
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 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.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
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 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.
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.
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.
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, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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.
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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The useful economic life of tangible fixed assets has to be estimated by the directors of the company to ensure an appropriate depreciation charge is recognised in the year. The value of the assets ultimately depends on the condition of the assets and whether economic income can be derived from the asset. The directors undertake a periodic review of the assets to ensure the value of the assets is fairly stated within the financial statements.
During the year, depreciation of £530,662 (2022: £523,774) has been charged.
Refer to note 13 for the carrying value of tangible fixed assets impacted by this key accounting estimate.
The group considers it necessary to evaluate the recoverability of the cost stock. The stock levels are constantly reviewed and should there be an indication of obsolescence, the stock is written down to its assessed net realisable value. The movement in provision is recognised in cost of sales.
The stock provision as at the balance sheet date was £167,588 (2022: £275,429).
Refer to note 16 for the carrying value of stock impacted by this key accounting estimate.
The useful economic life of acquired goodwill has been estimated by the directors of the group to ensure an appropriate amortisation charge is recognised each year.
During the year, amortisation of £1,164,538 (2022: £1,455,672) has been charged.
Refer to note 12 for the carrying value of tangible fixed assets impacted by this key accounting estimate.
A prior year adjustment has been made to correct the recognition of purchases from oversea suppliers, including associated goods in transit and the supplier liability, when the terms of business evidence ownership of the goods has passed to the company irrespective of the timing of goods actually being received.
This prior year adjustment has increased stock by £215,921, increases supplier payments on accounts (within prepayments) by £231,670, increased trade creditors by £519,554 and reduced accruals by £71,963.
There is no impact on previously reported profits or net assets.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amount to 2 (2022: 1).
The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
Deferred tax has been recognised at a rate of 25%. In October 2022, the government announced an increase in the corporation tax main rate from 19% to 25% for companies with profit over £250,000. There is a small company rate of 19% for taxable profits under £50,000 and marginal relief available for profits falling between £50,000 - £250,000 with effect from 1 April 2023.
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
Details of the company's subsidiaries at 31 December 2023 are as follows:
Registered office addresses (all UK unless otherwise indicated):
Net obligation under finance leases are secured by fixed charges on the assets concerned.
Net obligation under finance leases are secured by fixed charges on the assets concerned.
Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax liability set out above predominately relates to accelerated capital allowances which are expected to release over the useful economic life of the associated tangible fixed assets. Other short term timing differences such as pension obligations attract corporation tax relief when paid.
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.
As at the year-end, contributions due to the schemes in respect of the current reporting year were £20,395 (2022: £19,496).
Contingent liabilities in respect of bonds and documentary credits entered into by the group were £120,000 (2022: £120,000).
The group has given a guarantee in favour of HMRC amounting to £50,000 (2022: £50,000).
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:
The group has taken advantage of the exemption available in accordance with FRS 102 section 1.12(e) 'Related party disclosures' not to disclose transactions entered into between two or more members of a group, as the group is a wholly owned subsidiary undertaking of the wider group to which it is party to the transactions.