REGISTERED NUMBER: 14926558 (England and Wales) |
RED ARCH HOLDINGS LIMITED |
GROUP STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
AUDITED |
CONSOLIDATED FINANCIAL STATEMENTS |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
REGISTERED NUMBER: 14926558 (England and Wales) |
RED ARCH HOLDINGS LIMITED |
GROUP STRATEGIC REPORT, REPORT OF THE DIRECTORS AND |
AUDITED |
CONSOLIDATED FINANCIAL STATEMENTS |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
CONTENTS OF THE CONSOLIDATED FINANCIAL STATEMENTS |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
Page |
Company Information | 1 |
Group Strategic Report | 2 | to | 4 |
Report of the Directors | 5 | to | 6 |
Report of the Independent Auditors | 7 | to | 10 |
Consolidated Statement of Comprehensive Income | 11 |
Consolidated Balance Sheet | 12 |
Company Balance Sheet | 13 |
Consolidated Statement of Changes in Equity | 14 |
Company Statement of Changes in Equity | 15 |
Consolidated Cash Flow Statement | 16 |
Notes to the Consolidated Cash Flow Statement | 17 | to | 18 |
Notes to the Consolidated Financial Statements | 19 | to | 31 |
RED ARCH HOLDINGS LIMITED |
COMPANY INFORMATION |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
DIRECTORS: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Chartered Accountants |
and Statutory Auditors |
22-24 Harborough Road |
Kingsthorpe |
Northampton |
NN2 7AZ |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
GROUP STRATEGIC REPORT |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
The directors present their strategic report of the company and the group for the period 9 June 2023 to 31 July 2024. |
Red Arch Holdings Limited (RAH) was incorporated in June 2023 to facilitate the management buyout of Red Arch Manufacturing Limited (RAM). This restructuring allowed for the seamless retirement of key former shareholders. RAH now owns 100% of RAM's shares. |
The acquisition was funded through a combination of loan notes and a share-for-share exchange, with contingent consideration payable based on future performance. |
The handover process ensured continuity, with RAH leveraging RAM's established customer base and operational expertise, setting a strong foundation for future growth. |
We aim to present a balances and comprehensive review of the development and performance of our business during the year and its position at the year end. Our review is consistent with the size and non-complex nature of our business and is written in the context of the risks and uncertainties we face. |
REVIEW OF BUSINESS |
The Group's overall performance for the year has been highly encouraging. Turnover in RAM increased by 37%, from £9M to £12.4M, while operating profit rose by 58%, from £0.91M to £1.44M. The balance sheet also saw a marked improvement reflecting the profitability. No dividends were paid for the period. The directors remain confident in the Group's ability to sustain profitability and drive further growth in the coming years. |
The financial year 2023/24 saw robust growth, fuelled by a rebound in the global economy and a resurgence in demand for new vehicles after a prolonged period of contraction and component shortages. |
RAM continued its strategic pivot away from its reliance on Original Equipment (OE) accessory components-primarily for BMW, MINI, and Rolls-Royce (RR)-towards supplying lineside exhaust systems for Lotus Cars and Jaguar Land Rover (JLR). This transition marked a significant milestone, as 2023/24 was the first full year of volume manufacturing for both Lotus and JLR. Supply to Lotus reached peak volumes for nearly the entire year, while JLR's production stabilised at approximately 50% of the forecasted rate. |
A major achievement during the year was the realisation of RAM's long-term strategic goal of diversifying its customer base. The company's three primary customers now each account for approximately 30% of overall turnover. This balanced distribution across the automotive sector and geographic split enhances business stability, reduces dependency on any single client, and improves the accuracy of future forecasting. |
The shift towards a smaller range of higher-volume products has allowed RAM to focus on manufacturing efficiency, resulting in a more cost-effective product offering without compromising on quality or margins. Despite ongoing cost pressures and rising labour expenses, the company has successfully streamlined processes, enabling it to continue delivering value to customers while maintaining profitability. |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
GROUP STRATEGIC REPORT |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
PRINCIPAL RISKS AND UNCERTAINTIES |
The principal financial risks faced by the company and their objectives and policies in relation to those risks are as follows: |
Cash flow risk |
The company closely monitor and manage cash flow. Cash flow forecasts are prepared with the objective of alerting the directors to potential future risks. It is the company's policy to ensure that forecast funding requirements can be met from available facilities. |
Credit risk |
Credit risk is the financial exposure generated by the potential default of third parties in fulfilling their obligations. Credit risk arises for the company if it is unable to recover sums due from customers. Setting maximum levels of credit tolerance for more significant customers and regularly reviewing these levels mitigate this. |
KEY PERFORMANCE INDICATORS |
We consider our key performance indicators are those that communicate the financial performance and strength of the Group, these being turnover, profits and return on net assets. |
The overall results continue to improve and remain encouraging. |
Turnover has increased by 37% to £12.4m. |
Operating profit for the year was £1.39m. |
Return on net assets for the year was 31.3%. Return on net assets is calculated as profit on ordinary activities for the year before taxation as a percentage of net assets. |
These KPIs demonstrate significant growth and improvement in the Group's financial health. The increase in turnover and profit, along with a healthy return on net assets, are all very encouraging. |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
GROUP STRATEGIC REPORT |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
FUTURE DEVELOPMENTS |
Despite global government initiatives to curb or halt internal combustion engine (ICE) vehicle production by 2030 or 2035, RA remains optimistic about its prospects. The company anticipates stable forecasts and demand for its current product portfolio well into 2030 and has a robust developed five-year business plan leveraging current core competencies. |
RA is also strategically exploring opportunities to expand its customer base, prioritising higher-margin, potentially lower-volume projects to enhance profitability. |
Demand for exhausts and related products remains strong, albeit with expectations of lower volumes compared to previous years. The small to medium series supply chain continues to demonstrate resilience. Similarly, demand for heatshield and bracket components remains robust, reinforcing RA's confidence in its product offerings. |
In light of the automotive industry's uncertain trajectory regarding vehicle powertrains, RA is committed to working closely with its current customers to support their transitions to new propulsion technologies. This collaborative approach will allow RA to adapt to evolving market demands and remain a trusted partner, regardless of the direction customers pursue. |
Furthermore, RA aims to diversify its business portfolio by increasing the share of non-ICE-related products by 10% year-on-year, ensuring long-term sustainability and reduced dependency on internal combustion-driven products. By staying agile, innovative, and customer-focused, RA is well-positioned to navigate the challenges of this transitional period in the automotive industry. |
ON BEHALF OF THE BOARD: |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
REPORT OF THE DIRECTORS |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
The directors present their report with the financial statements of the company and the group for the period 9 June 2023 to 31 July 2024. |
INCORPORATION |
The group was incorporated on 9 June 2023 . |
PRINCIPAL ACTIVITY |
The principal activity of the group in the period under review was that of manufacturing in the motor industry. |
DIVIDENDS |
No dividends will be distributed for the period ended 31 July 2024. |
DIRECTORS |
The directors who have held office during the period from 9 June 2023 to the date of this report are as follows: |
All the directors who are eligible offer themselves for election at the forthcoming first Annual General Meeting. |
STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Group Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations. |
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to: |
- | select suitable accounting policies and then apply them consistently; |
- | make judgements and accounting estimates that are reasonable and prudent; |
- | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditors are aware of that information. |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
REPORT OF THE DIRECTORS |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
AUDITORS |
The auditors, Phipps Henson McAllister, will be proposed for re-appointment at the forthcoming Annual General Meeting. |
ON BEHALF OF THE BOARD: |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
RED ARCH HOLDINGS LIMITED |
Opinion |
We have audited the financial statements of Red Arch Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 31 July 2024 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice). |
In our opinion the financial statements: |
- | give a true and fair view of the state of the group's and of the parent company affairs as at 31 July 2024 and of the group's profit for the period then ended; |
- | have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and |
- | have been prepared in accordance with the requirements of the Companies Act 2006. |
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 Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 the 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 directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon. |
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. |
In connection with our audit of the financial statements, 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 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. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
RED ARCH HOLDINGS LIMITED |
Opinions on other matters prescribed by the Companies Act 2006 |
In our opinion, based on the work undertaken in the course of the audit: |
- | the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. |
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 its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors. |
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: |
- | adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or |
- | the parent company financial statements are not in agreement with the accounting records and returns; or |
- | certain disclosures of directors' remuneration specified by law are not made; or |
- | we have not received all the information and explanations we require for our audit. |
Responsibilities of directors |
As explained more fully in the Statement of Directors' Responsibilities set out on page five, 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 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 group's and 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 group or the parent company or to cease operations, or have no realistic alternative but to do so. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
RED ARCH HOLDINGS LIMITED |
Auditors' 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 a Report of the Auditors 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. |
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
- | We obtained an understanding of the legal and regulatory frameworks applicable to the group and the sector in which they operate. We determined that the following laws and regulations were most significant: the Companies Act 2006, and UK corporate taxation laws. |
- | We obtained an understanding of how the Group is complying with those legal and regulatory frameworks by making inquiries to the management. We corroborated our inquiries through our review of board minutes and other papers. |
- | We assessed the susceptibility of the Group's financial statements to material misstatement, including how fraud might occur. Audit procedures performed by the engagement team included: |
- | identifying and assessing the design effectiveness of controls management has in place to prevent and detect fraud; |
- | understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process; |
- | challenging assumptions and judgments made by management in its significant accounting estimates; |
- | identifying and testing journal entries, in particular any journal entries posted with unusual account combinations; and |
- | assessing the extent of compliance with the relevant laws and regulations. |
These audit procedures were designed to provide reasonable assurance that the financial statements were free from fraud or error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error and detecting irregularities that result from fraud is inherently more difficult than detecting those that result from an error, as fraud may involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also, the further removed non-compliance with laws and regulations is from events and transactions reflected in the financial statements, the less likely we would become aware of it. |
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
RED ARCH HOLDINGS LIMITED |
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 a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. |
for and on behalf of |
Chartered Accountants |
and Statutory Auditors |
22-24 Harborough Road |
Kingsthorpe |
Northampton |
NN2 7AZ |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
CONSOLIDATED |
STATEMENT OF COMPREHENSIVE |
INCOME |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
Notes | £ |
TURNOVER | 4 | 12,392,445 |
Cost of sales | 8,943,627 |
GROSS PROFIT | 3,448,818 |
Administrative expenses | 2,054,632 |
OPERATING PROFIT | 6 | 1,394,186 |
Interest payable and similar expenses | 7 | 22,860 |
PROFIT BEFORE TAXATION | 1,371,326 |
Tax on profit | 8 | 326,709 |
PROFIT FOR THE FINANCIAL PERIOD |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
CONSOLIDATED BALANCE SHEET |
31 JULY 2024 |
Notes | £ | £ |
FIXED ASSETS |
Intangible assets | 10 | 418,059 |
Tangible assets | 11 | 1,031,575 |
Investments | 12 | - |
1,449,634 |
CURRENT ASSETS |
Stocks | 13 | 2,029,618 |
Debtors | 14 | 2,015,428 |
Cash at bank | 1,503,777 |
5,548,823 |
CREDITORS |
Amounts falling due within one year | 15 | 4,078,575 |
NET CURRENT ASSETS | 1,470,248 |
TOTAL ASSETS LESS CURRENT LIABILITIES | 2,919,882 |
CREDITORS |
Amounts falling due after more than one year |
16 |
(1,652,568 |
) |
PROVISIONS FOR LIABILITIES | 20 | (222,686 | ) |
NET ASSETS | 1,044,628 |
CAPITAL AND RESERVES |
Called up share capital | 21 | 11 |
Retained earnings | 22 | 1,044,617 |
SHAREHOLDERS' FUNDS | 1,044,628 |
The financial statements were approved by the Board of Directors and authorised for issue on 21 January 2025 and were signed on its behalf by: |
Dr M Gore - Director |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
COMPANY BALANCE SHEET |
31 JULY 2024 |
Notes | £ | £ |
FIXED ASSETS |
Intangible assets | 10 |
Tangible assets | 11 |
Investments | 12 |
CURRENT ASSETS |
Debtors | 14 |
CREDITORS |
Amounts falling due within one year | 15 |
NET CURRENT LIABILITIES | ( |
) |
TOTAL ASSETS LESS CURRENT LIABILITIES |
CREDITORS |
Amounts falling due after more than one year |
16 |
NET ASSETS |
CAPITAL AND RESERVES |
Called up share capital | 21 |
Retained earnings |
SHAREHOLDERS' FUNDS |
Company's profit for the financial year | 91 |
The financial statements were approved by the Board of Directors and authorised for issue on |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Changes in equity |
Issue of share capital | 11 | - | 11 |
Total comprehensive income | - | 1,044,617 | 1,044,617 |
Balance at 31 July 2024 | 11 | 1,044,617 | 1,044,628 |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
COMPANY STATEMENT OF CHANGES IN EQUITY |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
Called up |
share | Retained | Total |
capital | earnings | equity |
£ | £ | £ |
Changes in equity |
Issue of share capital | - |
Total comprehensive income | - |
Balance at 31 July 2024 |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
CONSOLIDATED CASH FLOW STATEMENT |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
Notes | £ |
Cash flows from operating activities |
Cash generated from operations | 1 | 2,388,410 |
Interest paid | (22,860 | ) |
Net cash from operating activities | 2,365,550 |
Cash flows from investing activities |
Purchase of tangible fixed assets | (146,622 | ) |
Acquisition of subsidiary | (3,591,070 | ) |
Cash on acquisition of subsidiary | 355,136 |
Net cash from investing activities | (3,382,556 | ) |
Cash flows from financing activities |
New loans in year | 3,550,000 |
Loan repayments in year | (90,000 | ) |
Repayment of loan notes | (1,000,000 | ) |
Amount introduced by directors | 43,822 |
Share issue | 8 |
Interest | 16,953 |
Net cash from financing activities | 2,520,783 |
Increase in cash and cash equivalents | 1,503,777 |
Cash and cash equivalents at beginning of period |
2 |
- |
Cash and cash equivalents at end of period | 2 | 1,503,777 |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
1. | RECONCILIATION OF PROFIT BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS |
£ |
Profit before taxation | 1,371,326 |
Depreciation charges | 132,388 |
Amortisation charges | 46,451 |
Movement in AROC | 260,574 |
Finance costs | 22,860 |
1,833,599 |
Increase in stocks | (733,059 | ) |
Decrease in trade and other debtors | 1,456,400 |
Decrease in trade and other creditors | (168,530 | ) |
Cash generated from operations | 2,388,410 |
2. | CASH AND CASH EQUIVALENTS |
The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts: |
Period ended 31 July 2024 |
31/7/24 | 9/6/23 |
£ | £ |
Cash and cash equivalents | 1,503,777 | - |
3. | ANALYSIS OF CHANGES IN NET DEBT |
At 9/6/23 | Cash flow | At 31/7/24 |
£ | £ | £ |
Net cash |
Cash at bank | - | 1,503,777 | 1,503,777 |
- | 1,503,777 | 1,503,777 |
Debt |
Debts falling due within 1 year | - | (1,094,383 | ) | (1,094,383 | ) |
Debts falling due after 1 year | - | (1,652,568 | ) | (1,652,568 | ) |
- | (2,746,951 | ) | (2,746,951 | ) |
Total | - | (1,243,174 | ) | (1,243,174 | ) |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
4. | ACQUISITION OF BUSINESS |
On 1 August 2023, Red Arch Holdings Limited acquired the subsidiary Red Arch Manufacturing Limited. Net assets acquired of £3,126,560 included cash at bank of £355,136. Movements in the consolidated cash flow statement are adjusted for other assets and liabilities acquired. |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
1. | STATUTORY INFORMATION |
Red Arch Holdings Limited is a |
The presentation currency of the financial statements is the Pound Sterling (£). |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
The directors have reviewed the future liquidity requirements for the company and are confident that there is sufficient flexibility such that it continues to be appropriate to prepare the financial statements on a going concern basis. |
Turnover |
Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. |
Goodwill |
Intangible assets |
Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. |
Tangible fixed assets |
Plant and machinery | - |
Fixtures and fittings | - |
Motor vehicles | - |
Computer equipment | - |
Stocks |
Stocks and work in progress are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. |
Cost is calculated using the first-in, first-out method and includes all purchase, transport, and handling costs in bringing stocks to their present location and condition. |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
2. | ACCOUNTING POLICIES - continued |
Taxation |
Taxation for the period comprises current and deferred tax. Tax is recognised in the Consolidated Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. |
Current or deferred taxation assets and liabilities are not discounted. |
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. |
Deferred tax |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. |
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the period end and that are expected to apply to the reversal of the timing difference. |
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
Hire purchase and leasing commitments |
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease. |
Pension costs and other post-retirement benefits |
The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to profit or loss in the period to which they relate. |
Debtors and creditors |
Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the profit and loss account in other administrative expenses. |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
3. | CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY |
To be able to prepare financial statements in accordance with FRS102, the Directors must make certain estimates and judgements that have an impact on the policies and the amounts reported in the annual accounts. The estimates and judgement are based on historical experiences and other factors including expectations of future events that are believed to be reasonable at the time such estimates and judgements are made. Actual experience may vary from these estimates. |
The estimates and assumptions which have the most significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are discussed below: |
Tangible Assets |
The Directors determine the estimated useful lives, residual values and related depreciation charges for its property, plant and equipment with reference to the estimated periods that the company intends to derive future economic benefits from the use of these assets. Management will revise the depreciation charge where useful lives or residual values are materially different from those previously estimated. Actual economic lives may differ from estimated useful lives and actual residual values may differ from estimated residual values. Periodic review could result in a change in depreciable lives and residual values and therefore depreciation expenses in the future periods. |
Inventory Provisions |
The Directors writes down inventories to net realisable value based on an estimate of the realisability of inventories.Write downs on inventories are recorded where events or changes in circumstances indicate that the current carrying values may not realised. The write down will be recognised in the income statements in the year the change in estimate occurs. |
Warranty Provisions |
Under the terms of supply to certain customers, warranties are provided against defective products. The Directors review the level of warranty claims in order to arrive at the best estimate of potential future economic costs. |
4. | TURNOVER |
The turnover and profit before taxation are attributable to the one principal activity of the group. |
An analysis of turnover by geographical market is given below: |
£ |
United Kingdom | 9,259,367 |
Europe | 3,133,079 |
12,392,446 |
**TURNOVER ENTERED ON CLIENT SCREEN - CURRENT YEAR | 12,392,446 |
**DOES NOT AGREE TO TURNOVER PER TRIAL BALANCE | 12,392,445 |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
5. | EMPLOYEES AND DIRECTORS |
£ |
Wages and salaries | 1,995,939 |
Social security costs | 174,665 |
Other pension costs | 75,563 |
2,246,167 |
The average number of employees during the period was as follows: |
Management | 11 |
Admin | 5 |
Engineering | 9 |
Production | 38 |
The average number of employees by undertakings that were proportionately consolidated during the period was 63 . |
£ |
Directors' remuneration | 132,030 |
Directors' pension contributions to money purchase schemes | 6,461 |
The number of directors to whom retirement benefits were accruing was as follows: |
Money purchase schemes | 2 |
6. | OPERATING PROFIT |
The operating profit is stated after charging/(crediting): |
£ |
Hire of plant and machinery | 25,521 |
Depreciation - owned assets | 132,387 |
Goodwill amortisation | 46,451 |
Auditors' remuneration | 14,952 |
Foreign exchange differences | (4,550 | ) |
7. | INTEREST PAYABLE AND SIMILAR EXPENSES |
£ |
Bank loan interest | 20,841 |
Loan | 2,019 |
22,860 |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
8. | TAXATION |
Analysis of the tax charge |
The tax charge on the profit for the period was as follows: |
£ |
Current tax: |
UK corporation tax | 244,978 |
Adjustment re prior years | 70,444 |
Total current tax | 315,422 |
Deferred tax | 11,287 |
Tax on profit | 326,709 |
UK corporation tax has been charged at 25 % . |
Reconciliation of total tax charge included in profit and loss |
The tax assessed for the period is lower than the standard rate of corporation tax in the UK. The difference is explained below: |
£ |
Profit before tax | 1,371,327 |
Profit multiplied by the standard rate of corporation tax in the UK of 25 % | 342,832 |
Effects of: |
Expenses not deductible for tax purposes | 11,670 |
Capital allowances in excess of depreciation | (11,298 | ) |
Utilisation of tax losses | (98,226 | ) |
Adjustments to tax charge in respect of previous periods | 70,444 |
Deferred taxation | 11,287 |
Total tax charge | 326,709 |
** | PROFIT BEFORE TAX FOR CURRENT YEAR ON CLIENT SCREEN OF | 1,371,327 |
DOES NOT AGREE TO AMOUNT ON STATEMENT OF COMPREHENSIVE INCOME OF | 1,371,326 |
9. | INDIVIDUAL STATEMENT OF COMPREHENSIVE INCOME |
As permitted by Section 408 of the Companies Act 2006, the Statement of Comprehensive Income of the parent company is not presented as part of these financial statements. |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
10. | INTANGIBLE FIXED ASSETS |
Group |
Goodwill |
£ |
COST |
Additions | 464,510 |
At 31 July 2024 | 464,510 |
AMORTISATION |
Amortisation for period | 46,451 |
At 31 July 2024 | 46,451 |
NET BOOK VALUE |
At 31 July 2024 | 418,059 |
11. | TANGIBLE FIXED ASSETS |
Group |
Improvements | Fixtures |
to | Plant and | and |
property | machinery | fittings |
£ | £ | £ |
COST |
At 9 June 2023 | 24,371 | 1,678,971 | 270,127 |
Additions | 6,070 | 109,407 | - |
At 31 July 2024 | 30,441 | 1,788,378 | 270,127 |
DEPRECIATION |
At 9 June 2023 | 12,185 | 740,365 | 210,275 |
Charge for period | 5,399 | 111,015 | 11,970 |
At 31 July 2024 | 17,584 | 851,380 | 222,245 |
NET BOOK VALUE |
At 31 July 2024 | 12,857 | 936,998 | 47,882 |
At 8 June 2023 | 12,186 | 938,606 | 59,852 |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
11. | TANGIBLE FIXED ASSETS - continued |
Group |
Motor | Computer |
vehicles | equipment | Totals |
£ | £ | £ |
COST |
At 9 June 2023 | 24,645 | 66,564 | 2,064,678 |
Additions | 11,875 | 19,270 | 146,622 |
At 31 July 2024 | 36,520 | 85,834 | 2,211,300 |
DEPRECIATION |
At 9 June 2023 | 20,121 | 64,392 | 1,047,338 |
Charge for period | 3,357 | 646 | 132,387 |
At 31 July 2024 | 23,478 | 65,038 | 1,179,725 |
NET BOOK VALUE |
At 31 July 2024 | 13,042 | 20,796 | 1,031,575 |
At 8 June 2023 | 4,524 | 2,172 | 1,017,340 |
12. | FIXED ASSET INVESTMENTS |
Company |
Shares in |
group |
undertakings |
£ |
COST |
Additions |
At 31 July 2024 |
NET BOOK VALUE |
At 31 July 2024 |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
12. | FIXED ASSET INVESTMENTS - continued |
The group or the company's investments at the Balance Sheet date in the share capital of companies include the following: |
Subsidiary |
Registered office: March House, Long March Industrial Estate, Daventry, Northamptonshire NN11 4NR |
Nature of business: |
% |
Class of shares: | holding |
2024 |
£ |
Aggregate capital and reserves |
Profit for the period |
On 1 August 2023 the company acquired 100% of the share capital of Red Arch Manufacturing Limited as part of a management buy-out of certain shareholders.This acquisition was funded by loan notes and a share for share exchange. Net assets acquired were £3,126,560. |
13. | STOCKS |
Group |
£ |
Raw materials | 1,628,348 |
Work-in-progress | 288,278 |
Finished goods | 112,992 |
2,029,618 |
14. | DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
Group | Company |
£ | £ |
Trade debtors | 1,648,064 |
Amounts recoverable on contract | 30,753 |
Other debtors | 20,251 |
Prepayments and accrued income | 316,360 |
2,015,428 |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
15. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
Group | Company |
£ | £ |
Bank loans and overdrafts (see note 17) | 94,383 |
Other loans (see note 17) | 1,000,000 |
Trade creditors | 2,125,385 |
Amounts owed to group undertakings | - |
Corporation tax | 244,978 |
Social security and other taxes | 47,341 |
VAT | 193,482 | - |
Other creditors | 13,078 |
Directors' current accounts | 43,822 | 43,822 |
Accruals and deferred income | 316,106 |
4,078,575 |
16. | CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |
Group | Company |
£ | £ |
Bank loans (see note 17) | 102,568 |
Other loans (see note 17) | 1,550,000 |
1,652,568 |
17. | LOANS |
An analysis of the maturity of loans is given below: |
Group | Company |
£ | £ |
Amounts falling due within one year or on | demand: |
Bank loans | 94,383 |
Other loans | 1,000,000 |
1,094,383 |
Amounts falling due between one and two | years: |
Bank loans - 1-2 years | 102,568 |
Other loans - 1-2 years | 1,550,000 | 1,550,000 |
1,652,568 |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
18. | LEASING AGREEMENTS |
Minimum lease payments fall due as follows: |
Group |
Non- | cancellable | operating | leases |
£ |
Within one year | 161,849 |
Between one and five years | 23,590 |
185,439 |
19. | SECURED DEBTS |
The following secured debts are included within creditors: |
Group |
£ |
Bank loans | 196,951 |
Loan notes | 1,800,000 |
1,996,951 |
Bank loans are secured by way of fixed and floating charges over the assets of the company. |
Certain loan notes (included in Other loans) are secured by way of a debenture in favour of M Theaker. |
20. | PROVISIONS FOR LIABILITIES |
Group |
£ |
Deferred tax | 222,686 |
Group |
Deferred |
tax |
£ |
On acquisition of subsidiary | 211,399 |
Provided during year | 11,287 |
Balance at 31 July 2024 | 222,686 |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
21. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
The following shares were allotted and fully paid for cash at par during the period: |
900 Ordinary A shares of .01 each |
50 Ordinary B shares of .01 each |
50 Ordinary C shares of .01 each |
22. | RESERVES |
Group |
Retained |
earnings |
£ |
Profit for the period | 1,044,617 |
At 31 July 2024 | 1,044,617 |
23. | ULTIMATE CONTROLLING PARTY |
The ultimate controlling party is Dr M Gore by virtue of his majority shareholding. |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
24. | BUSINESS COMBINATION |
On 1 August 2023 the Group acquired the entire share capital of Red Arch Manufacturing Limited, a component manufacturer in the automotive supply chain. The acquisition was accounted for using the purchase method. |
Recognised amounts of identifiable assets acquired and liabilities assumed |
Book value | Fair value |
£ | £ |
Tangible fixed assets | 1,017,340 | 1,017,340 |
Current assets |
Stock | 1,296,559 | 1,296,559 |
Debtors | 3,802,846 | 3,802,846 |
Cash at bank | 355,136 | 355,136 |
Total assets | 6,471,881 | 6,471,881 |
Creditors |
Borrowings | 270,000 | 270,000 |
Trade creditors | 2,396,401 | 2,396,401 |
Other creditors | 254,219 | 254,219 |
Accruals | 213,302 | 213,302 |
Deferred taxes | 211,399 | 211,399 |
Total identifiable net assets | 3,126,560 | 3,126,560 |
Goodwill | 464,510 |
Total purchase consideration | 3,591,070 |
Consideration |
£ |
Consideration paid (loan notes due in less than one year) | 1,000,000 |
Consideration paid (loan notes due in more than one year) | 1,000,000 |
Contingent consideration (due in more than one year) | 1,550,000 |
Costs of business combination | 41,070 |
Total purchase consideration | 3,591,070 |
Goodwill on acquisition is attributable to know how and customer relationships. The useful life is estimated as 10 years. There were no separately identifiable intangible assets. |
The purchase agreement included an additional consideration payable if the three year aggregate turnover for 1 August 2023 to 31 July 2026 exceeds £34m. The recognised contingent consideration liability of £1,550,000 represents the best estimate of the amount that will be payable. |
RED ARCH HOLDINGS LIMITED (REGISTERED NUMBER: 14926558) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
FOR THE PERIOD 9 JUNE 2023 TO 31 JULY 2024 |
The results of Red Arch Manufacturing Limited since acquisition are as follows: |
Current period since acquisition |
£ |
Turnover | 12,392,441 |
Profit before tax for the period since acquisition | 1,417,681 |