Company registration number 13535395 (England and Wales)
SURFACE PREPARATION UK HOLDINGS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
SURFACE PREPARATION UK HOLDINGS LIMITED
COMPANY INFORMATION
Directors
M Currie
K Yang
J R Dodge
C Twibell
(Appointed 21 August 2023)
C Pierce
(Appointed 2 February 2024)
S Wieland
(Appointed 2 February 2024)
Secretary
Oakwood Corporate Secretary Limited
Company number
13535395
Registered office
36 Orgreave Drive
Sheffield
S13 9NR
Auditor
Sumer Auditco Limited
Fourth Floor
Unit 5B, The Parklands
Bolton
BL6 4SD
SURFACE PREPARATION UK HOLDINGS LIMITED
CONTENTS
Page
Strategic report
1 - 4
Directors' report
5 - 6
Independent auditor's report
7 - 9
Group statement of comprehensive income
10
Group balance sheet
11
Company balance sheet
12
Group statement of changes in equity
13
Company statement of changes in equity
14
Group statement of cash flows
15
Notes to the financial statements
16 - 34
SURFACE PREPARATION UK HOLDINGS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

The directors present the strategic report for the year ended 31 December 2023.

Review of the business

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.

SURFACE PREPARATION UK HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Principal risks and uncertainties

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:

 

 

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.

Development and performance

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:

 

SURFACE PREPARATION UK HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
Key performance indicators

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:

 

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:

 

 

 

 

 

 

2023

 

2022

 

 

 

 

 

 

 

 

 

Turnover

 

 

 

£27.0m

 

£30.7m

Gross margin %

 

 

 

 

39.3%

 

31.6%

EBITDA (adjusted for unrealised foreign exchange losses)

 

£2.5m

 

£1.0m

Net current assets (excluding wider group debt)

 

 

£7.7m

 

£6.5m

Net assets (excluding wider group debt)

 

£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.

SURFACE PREPARATION UK HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -

On behalf of the board

J R Dodge
Director
2 December 2024
SURFACE PREPARATION UK HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -

The directors present their annual report and financial statements for the year ended 31 December 2023.

Principal activities

The company was incorporated on 28 July 2021.

 

The principal activity of the company is that of a non trading parent holding company. The principal activity of the wider group is that of manufacturing, sales and hire of abrasive blast cleaning equipment and the supply of abrasive blasting machines and accessories, blast rooms and cabinets.

Results and dividends

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.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

M Currie
K Yang
J R Dodge
C Twibell
(Appointed 21 August 2023)
C Pierce
(Appointed 2 February 2024)
S Wieland
(Appointed 2 February 2024)
Future developments

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.

Auditor

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.

SURFACE PREPARATION UK HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 6 -
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 group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and 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 group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

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 auditor of the company 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 auditor of the company is aware of that information.

On behalf of the board
J R Dodge
Director
2 December 2024
SURFACE PREPARATION UK HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF SURFACE PREPARATION UK HOLDINGS LIMITED
- 7 -
Opinion

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).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

SURFACE PREPARATION UK HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SURFACE PREPARATION UK HOLDINGS LIMITED
- 8 -
Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

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 parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.

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.

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.

 

 

SURFACE PREPARATION UK HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF SURFACE PREPARATION UK HOLDINGS LIMITED
- 9 -

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:

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.

Caroline Snape (Senior Statutory Auditor)
For and on behalf of Sumer Auditco Limited
2 December 2024
Statutory Auditor
Fourth Floor
Unit 5B, The Parklands
Bolton
BL6 4SD
SURFACE PREPARATION UK HOLDINGS LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Year
Period
ended
ended
31 December
31 December
2023
2022
Notes
£
£
Turnover
4
26,961,316
30,672,114
Cost of sales
(16,374,633)
(20,968,355)
Gross profit
10,586,683
9,703,759
Distribution costs
42,179
34,579
Administrative expenses
(8,601,911)
(13,108,196)
Other operating income
10,199
3,260
Operating profit/(loss)
5
2,037,150
(3,366,598)
Interest receivable and similar income
9
6,434
-
0
Interest payable and similar expenses
10
(496,204)
(515,850)
Profit/(loss) before taxation
1,547,380
(3,882,448)
Tax on profit/(loss)
11
(141,568)
(113,833)
Profit/(loss) for the financial year
1,405,812
(3,996,281)
Profit/(loss) for the financial year is all attributable to the owners of the parent company.
Total comprehensive income for the year is all attributable to the owners of the parent company.
SURFACE PREPARATION UK HOLDINGS LIMITED
GROUP BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 11 -
2023
2022
as restated
Notes
£
£
£
£
Fixed assets
Goodwill
12
9,025,168
10,189,706
Tangible assets
13
1,117,600
1,218,899
10,142,768
11,408,605
Current assets
Stocks
16
3,780,396
4,392,254
Debtors
17
5,032,727
5,048,860
Cash at bank and in hand
3,742,059
2,408,317
12,555,182
11,849,431
Creditors: amounts falling due within one year
18
(25,046,311)
(27,114,722)
Net current liabilities
(12,491,129)
(15,265,291)
Total assets less current liabilities
(2,348,361)
(3,856,686)
Creditors: amounts falling due after more than one year
19
(114,801)
(139,594)
Provisions for liabilities
Deferred tax liability
21
127,306
-
0
(127,306)
-
Net liabilities
(2,590,468)
(3,996,280)
Capital and reserves
Called up share capital
23
1
1
Profit and loss reserves
(2,590,469)
(3,996,281)
Total equity
(2,590,468)
(3,996,280)
The financial statements were approved by the board of directors and authorised for issue on 2 December 2024 and are signed on its behalf by:
02 December 2024
J R Dodge
Director
Company registration number 13535395 (England and Wales)
SURFACE PREPARATION UK HOLDINGS LIMITED
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 12 -
2023
2022
Notes
£
£
£
£
Fixed assets
Investments
14
1
1
Current assets
Debtors
17
230,831
1
Cash at bank and in hand
143,846
-
0
374,677
1
Creditors: amounts falling due within one year
18
(17,842)
(1)
Net current assets
356,835
-
Net assets
356,836
1
Capital and reserves
Called up share capital
23
1
1
Profit and loss reserves
356,835
-
Total equity
356,836
1

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).

The financial statements were approved by the board of directors and authorised for issue on 2 December 2024 and are signed on its behalf by:
02 December 2024
J R Dodge
Director
Company registration number 13535395 (England and Wales)
SURFACE PREPARATION UK HOLDINGS LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
As restated for the period ended 31 December 2022:
Balance at 28 July 2021
-
0
-
0
-
Period ended 31 December 2022:
Loss and total comprehensive income
-
(3,996,281)
(3,996,281)
Issue of share capital
23
1
-
1
Balance at 31 December 2022
1
(3,996,281)
(3,996,280)
Year ended 31 December 2023:
Profit and total comprehensive income
-
1,405,812
1,405,812
Balance at 31 December 2023
1
(2,590,469)
(2,590,468)
SURFACE PREPARATION UK HOLDINGS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
As restated for the period ended 31 December 2022:
Balance at 28 July 2021
-
0
-
0
-
Period ended 31 December 2022:
Profit and total comprehensive income for the period
-
-
-
0
Issue of share capital
23
1
-
1
Balance at 31 December 2022
1
-
0
1
Year ended 31 December 2023:
Profit and total comprehensive income
-
356,835
356,835
Balance at 31 December 2023
1
356,835
356,836
SURFACE PREPARATION UK HOLDINGS LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 15 -
2023
2022
as restated
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
28
2,260,735
21,262,809
Interest paid
(496,204)
(515,850)
Income taxes paid
(19,848)
(448,684)
Net cash inflow from operating activities
1,744,683
20,298,275
Investing activities
Purchase of business
-
(17,444,416)
Purchase of tangible fixed assets
(439,322)
(438,421)
Proceeds from disposal of tangible fixed assets
109,350
139,669
Interest received
6,434
-
0
Net cash used in investing activities
(323,538)
(17,743,168)
Financing activities
Proceeds from issue of shares
-
1
Payment of finance leases obligations
(87,403)
(146,791)
Net cash used in financing activities
(87,403)
(146,790)
Net increase in cash and cash equivalents
1,333,742
2,408,317
Cash and cash equivalents at beginning of year
2,408,317
-
0
Cash and cash equivalents at end of year
3,742,059
2,408,317
SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
1
Accounting policies
Company information

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.

1.1
Reporting period

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.

1.2
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.

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:

 

SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 17 -
1.3
Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries are accounted for at cost less impairment.

 

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

1.4
Basis of consolidation

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.

1.5
Going concern

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.

1.6
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 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.

SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
1.7
Research and development expenditure

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.

1.8
Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

 

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

1.9
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:

Leasehold land and buildings
Over the lease term
Plant and equipment
15-25% p.a. straight line basis and 10-20% p.a. reducing balance basis
Fixtures and fittings
25-33% p.a. straight line basis and 15-33% p.a. reducing balance basis
Motor vehicles
25% p.a. straight line basis and 25% p.a. reducing balance basis

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.

1.10
Fixed asset investments

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.

SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 19 -
1.11
Impairment of fixed assets

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.

1.12
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.

1.13
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.

1.14
Financial instruments

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.

SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 20 -
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.

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 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.

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 group after deducting all of its liabilities.

Basic financial 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.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 21 -
1.15
Equity instruments

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.

1.16
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 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

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.

1.17
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.

 

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.

1.18
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.19
Leases

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.

SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 22 -

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.

1.20
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 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.

Key sources of estimation uncertainty

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.

Tangible fixed assets

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.

Stock provisions

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.

Intangible fixed assets

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.

SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
3
Prior period adjustment

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.

Changes to the balance sheet - group
As previously reported
Adjustment
As restated at 31 Dec 2022
£
£
£
Current assets
Stocks
4,176,333
215,921
4,392,254
Debtors due within one year
4,817,190
231,670
5,048,860
Creditors due within one year
Other creditors
(26,090,061)
(447,591)
(26,537,652)
Net assets
(3,996,280)
-
(3,996,280)
Capital and reserves
Total equity
(3,996,280)
-
(3,996,280)
Reconciliation of changes in equity - group
The prior period adjustments do not give rise to any effect upon equity.
Reconciliation of changes in equity - company
The prior period adjustments do not give rise to any effect upon equity.
4
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Engineering products
9,037,358
7,579,759
Abrasive grit
17,923,958
23,092,355
26,961,316
30,672,114
SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
4
Turnover and other revenue
(Continued)
- 24 -
2023
2022
£
£
Turnover analysed by geographical market
United Kingdom
24,812,293
28,210,554
Middle East
342,345
393,032
Far East
288,241
200,241
North America
39,748
37,004
European Union and Easterm Europe
1,424,625
1,797,310
Rest of the world
54,064
33,973
26,961,316
30,672,114
2023
2022
£
£
Other revenue
Interest income
6,434
-
5
Operating profit/(loss)
2023
2022
£
£
Operating profit/(loss) for the year is stated after charging/(crediting):
Exchange (gains)/losses
(1,208,984)
2,444,323
Research and development costs
2,084
1,297
Depreciation of owned tangible fixed assets
518,665
462,331
Depreciation of tangible fixed assets held under finance leases
11,997
61,443
Profit on disposal of tangible fixed assets
(29,630)
(62,532)
Amortisation of intangible assets
1,164,538
1,455,672
Operating lease charges
512,580
497,762
SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 25 -
6
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the group and company
6,500
6,500
Audit of the financial statements of the company's subsidiaries
41,764
41,820
48,264
48,320
7
Employees

The average monthly number of persons (including directors) employed by the group and company during the year was:

Group
Company
2023
2022
2023
2022
Number
Number
Number
Number
Administration
15
18
-
-
Production
64
62
-
-
Sales
40
40
-
-
Total
119
120
-
-

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
4,788,656
5,041,696
-
0
-
0
Social security costs
450,495
565,650
-
-
Pension costs
266,336
343,915
-
0
-
0
5,505,487
5,951,261
-
0
-
0
8
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
252,292
70,000
Company pension contributions to defined contribution schemes
76,063
56,967
328,355
126,967
SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
8
Directors' remuneration
(Continued)
- 26 -
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
221,667
N/A
Company pension contributions to defined contribution schemes
73,000
N/A

The number of directors for whom retirement benefits are accruing under defined contribution schemes amount to 2 (2022: 1).

9
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
6,319
-
0
Other interest income
115
-
Total income
6,434
-
0
10
Interest payable and similar expenses
2023
2022
£
£
Interest on bank overdrafts and loans
6,811
5,506
Interest payable to group undertakings
475,648
494,914
Interest on finance leases and hire purchase contracts
13,745
15,430
Total finance costs
496,204
515,850
11
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
-
0
(8,242)
Deferred tax
Origination and reversal of timing differences
150,101
115,810
Adjustment in respect of prior periods
(8,533)
6,265
Total deferred tax
141,568
122,075
Total tax charge
141,568
113,833
SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
11
Taxation
(Continued)
- 27 -

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:

2023
2022
£
£
Profit/(loss) before taxation
1,547,380
(3,882,448)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
386,845
(737,665)
Tax effect of expenses that are not deductible in determining taxable profit
13,515
273,188
Unutilised tax losses carried forward
(550,166)
465,933
Adjustments in respect of prior years
-
0
(8,242)
Effect of change in corporation tax rate
-
38,279
Permanent capital allowances in excess of depreciation
(227)
(6,237)
Depreciation on assets not qualifying for tax allowances
11,074
16,175
Amortisation on assets not qualifying for tax allowances
291,135
-
0
Other non-reversing timing differences
-
0
104,882
Other permanent differences
(2,075)
(38,745)
Deferred tax adjustments in respect of prior years
(8,533)
-
0
-
0
6,265
Taxation charge
141,568
113,833

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.

SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 28 -
12
Intangible fixed assets
Group
Goodwill
£
Cost
At 1 January 2023 and 31 December 2023
11,645,378
Amortisation and impairment
At 1 January 2023
1,455,672
Amortisation charged for the year
1,164,538
At 31 December 2023
2,620,210
Carrying amount
At 31 December 2023
9,025,168
At 31 December 2022
10,189,706
The company had no intangible fixed assets at 31 December 2023 or 31 December 2022.
13
Tangible fixed assets
Group
Leasehold land and buildings
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 January 2023
47,210
933,141
83,347
489,193
1,552,891
Additions
11,212
241,808
73,700
182,363
509,083
Disposals
(207)
(273,277)
(36,716)
(123,384)
(433,584)
Transfers
-
0
1,200
(1,200)
-
0
-
0
At 31 December 2023
58,215
902,872
119,131
548,172
1,628,390
Depreciation and impairment
At 1 January 2023
8,562
246,294
22,270
56,866
333,992
Depreciation charged in the year
18,536
290,634
25,195
196,297
530,662
Eliminated in respect of disposals
(33)
(233,415)
(29,585)
(90,831)
(353,864)
Transfers
-
0
866
(866)
-
0
-
0
At 31 December 2023
27,065
304,379
17,014
162,332
510,790
Carrying amount
At 31 December 2023
31,150
598,493
102,117
385,840
1,117,600
At 31 December 2022
38,648
686,847
61,077
432,327
1,218,899
The company had no tangible fixed assets at 31 December 2023 or 31 December 2022.
SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
13
Tangible fixed assets
(Continued)
- 29 -

The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.

Group
Company
2023
2022
2023
2022
£
£
£
£
Plant and equipment
76,896
30,056
-
0
-
0
Motor vehicles
239,474
257,407
-
0
-
0
316,370
287,463
-
-
14
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
15
-
0
-
0
1
1
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 January 2023 and 31 December 2023
1
Carrying amount
At 31 December 2023
1
At 31 December 2022
1
SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 30 -
15
Subsidiaries

Details of the company's subsidiaries at 31 December 2023 are as follows:

Name of undertaking
Address
Nature of business
Class of
% Held
shares held
Direct
Indirect
Surfaceprep UK Limited
1
Intermediate holding company
Ordinary
100.00
-
Hodge Clemco Holdings Limited
1
Intermediate holding company
Ordinary
-
100.00
Surface Finishing Equipment Group Limited
2
Intermediate holding company
Ordinary
-
100.00
Hodge Clemco Limited
1
Supply of abrasive blasting machines and accessories, blast rooms and cabinets
Ordinary
-
100.00
Abraclean Limited
2
Manufacturing, sales and hire of abrasive blast cleaning equipment
Ordinary
-
100.00
Hogg Blasting & Finishing Equipment Limited
2
Manufacturing, sales and hire of abrasive blast cleaning equipment
Ordinary
-
100.00

Registered office addresses (all UK unless otherwise indicated):

1
36 Orgreave Drive, Sheffield, S13 9NR
2
4 Kelbrook Road, Openshaw, Manchester, M11 2QA
16
Stocks
Group
Company
2023
2022
2023
2022
as restated
£
£
£
£
Raw materials and consumables
371,897
654,966
-
-
Work in progress
302,592
466,571
-
-
Finished goods and goods for resale
3,105,907
3,270,717
-
0
-
0
3,780,396
4,392,254
-
-
SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 31 -
17
Debtors
Group
Company
2023
2022
2023
2022
as restated
Amounts falling due within one year:
£
£
£
£
Trade debtors
3,852,375
4,243,316
-
0
-
0
Corporation tax recoverable
19,733
-
0
-
0
-
0
Amounts owed by group undertakings
45,149
1
230,831
1
Other debtors
14,534
41,812
-
0
-
0
Prepayments and accrued income
1,100,936
749,469
-
0
-
0
5,032,727
5,034,598
230,831
1
Deferred tax asset (note 21)
-
0
14,262
-
0
-
0
5,032,727
5,048,860
230,831
1
18
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
as restated
Notes
£
£
£
£
Obligations under finance leases
20
88,802
81,651
-
0
-
0
Trade creditors
2,829,688
2,963,800
-
0
-
0
Amounts owed to group undertakings
20,207,193
21,765,545
-
0
1
Corporation tax payable
-
0
115
-
0
-
0
Other taxation and social security
307,313
495,304
17,842
-
Other creditors
437,324
735,999
-
0
-
0
Accruals and deferred income
1,175,991
1,072,308
-
0
-
0
25,046,311
27,114,722
17,842
1

Net obligation under finance leases are secured by fixed charges on the assets concerned.

19
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Obligations under finance leases
20
114,801
139,594
-
0
-
0

Net obligation under finance leases are secured by fixed charges on the assets concerned.

SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 32 -
20
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
88,802
81,651
-
0
-
0
In two to five years
114,801
139,594
-
0
-
0
203,603
221,245
-
-

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.

21
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:

Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Group
£
£
£
£
Accelerated capital allowances
132,475
-
-
(160,420)
Tax losses
-
-
-
7,007
Retirement benefit obligations
(5,169)
-
-
167,675
127,306
-
-
14,262
The company has no deferred tax assets or liabilities.
Group
Company
2023
2023
Movements in the year:
£
£
Asset at 1 January 2023
(14,262)
-
Charge to profit or loss
141,568
-
Liability at 31 December 2023
127,306
-

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.

SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 33 -
22
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
266,336
343,915

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).

23
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of 1p each
100
100
1
1
24
Financial commitments, guarantees and contingent liabilities

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).

25
Operating lease commitments
Lessee

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:

Group
Company
2023
2022
2023
2022
£
£
£
£
Within one year
461,546
458,211
-
-
Between two and five years
1,307,333
1,394,354
-
-
In over five years
825,000
1,125,000
-
-
2,593,879
2,977,565
-
-
SURFACE PREPARATION UK HOLDINGS LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 34 -
26
Related party transactions

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.

27
Controlling party

The immediate parent company is COP GNAP Holdings, Inc., a company registered in Delaware, United States.

 

The ultimate parent company is COP Grand Rapids Investment, LLC, a company registered in Delaware, United States.

28
Cash generated from group operations
2023
2022
£
£
Profit/(loss) for the year after tax
1,405,812
(3,996,281)
Adjustments for:
Taxation charged
141,568
113,833
Finance costs
496,204
515,850
Investment income
(6,434)
-
0
Gain on disposal of tangible fixed assets
(29,630)
(62,532)
Amortisation and impairment of intangible assets
1,164,538
1,455,672
Depreciation and impairment of tangible fixed assets
530,662
523,774
Movements in working capital:
Decrease/(increase) in stocks
611,858
(182,799)
Decrease/(increase) in debtors
21,604
(86,318)
(Decrease)/increase in creditors
(2,075,447)
22,981,610
Cash generated from operations
2,260,735
21,262,809
29
Analysis of changes in net funds - group
1 January 2023
Cash flows
New finance leases
31 December 2023
£
£
£
£
Cash at bank and in hand
2,408,317
1,333,742
-
3,742,059
Obligations under finance leases
(221,245)
87,403
(69,761)
(203,603)
2,187,072
1,421,145
(69,761)
3,538,456
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