Company registration number 10084565 (England and Wales)
HYDRACHEM GROUP LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
HYDRACHEM GROUP LIMITED
COMPANY INFORMATION
Directors
W P Miro
T Hanslip
Secretary
W P Miro
Company number
10084565
Registered office
2 Leman Street
London
E1W 9US
Auditor
Gravita Audit II Limited
Algdate Tower
2 Leman Street
London
E1 8FA
HYDRACHEM GROUP LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 8
Group statement of comprehensive income
9
Group statement of financial position
10
Company statement of financial position
11
Group statement of changes in equity
12
Company statement of changes in equity
13
Group statement of cash flows
14
Company statement of cash flows
15
Notes to the financial statements
16 - 36
HYDRACHEM GROUP LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 1 -
The directors present the strategic report for the year ended 31 October 2023.
Review of the business
The trading results for the year ended 31 October 2023 and the group's financial position at the end of the same period are shown in the attached audited financial statements.
The results for the year show an operating loss before tax of £139,642 (2022: profit of £4,594), a loss before tax of £214,622 (2022: £20,483) and EBITDA of £10,876 (2022: £300,383).
Turnover increased by 4.9% (2022: 11.5%) compared to the prior year, while gross margin increased to 45.3% (2022: 39.8%) of revenues and pre-tax loss is 1.6% of revenue (2022: 0.2% of revenue).
The Group statement of financial position as at 31 October 2023 shows closing stock of raw materials and consumables have increased by 1.4% to £879,193 (2022 - £867,397).
Principal risks and uncertainties
The directors consider the key business risks facing the group's business to be the general economic and competitive business environment, liquidity and cash flow, credit risks and the fluctuating currency exchange rates. While management has developed specific plans to deal with each of those risk areas and the directors consider such plans to be adequate, not all risk factors are within management’s control.
Development and performance
The group's turnover increased compared to the previous year, driven by the lifting of Covid-19 restrictions and the resulting rise in demand for its products. As of the signing date of these accounts, confirmed sales orders are significantly higher than in the same period last year. For the year ending 31 October 2024, sales volume is projected to grow by more than 10% compared to 2023, restoring the company to a post-tax profitability position and strengthening its net asset base.
To support this growth, the group has continued its strategic investment program, backed by shareholder support, with targeted spending on machinery and human resources to enhance production capacity, productivity, and efficiency. Additionally, the renewal of the group's Goods Manufacturing Practice (GMP) certificate in 2022 has unlocked further opportunities, fostering new orders from both existing customers and emerging markets.
Looking ahead, the group remains well-positioned for sustained growth. Stronger relationships with existing customers, new business acquisitions, and the ability to navigate an evolving market reinforce the group’s competitive edge. For these reasons, the directors remain optimistic about the future.
Key performance indicators
The key performance indicators used by the directors to monitor the performance of the business include like-for like turnover, gross margin, operating profit margin, wage cost, EBITDA and cash flow. Other non-financial measures are also regularly reviewed including health and safety audits and staff turnover. The Directors constantly review the product mix, systems and processes and training to our teams to ensure we continue to deliver the best possible product.
The group aims to grow its revenue year on year and have the company’s debtors and cash balance grow in line with the sales while also restricting the increase in administrative expenses. The group also aims to reduce the use of unrecycled plastic packaging year on year as it replaces the virgin plastics with 30%-50% recycled plastics.
To achieve the target of increasing revenue, the group has increased its production capacity, expanded its product line and improved its marketing efforts.
To reduce the use of unrecycled plastic packaging the group has decreased the size of its packaging and explored the use biodegradable packaging so that the group can reduce the environmental impact of plastic waste.
The group continuously considers other non-financial measures such as health and safety audits, staff turnover, product mix, systems, processes, and training to ensure that it continues to deliver the best possible product.
HYDRACHEM GROUP LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 2 -
T Hanslip
Director
19 March 2025
HYDRACHEM GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 OCTOBER 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 October 2023.
Principal activities
The principal activity of the group continued to be that of the manufacturing and distribution of specialised chemicals and associated products, while the principal activity of the company continued to be that of the holding company of Hydrachem Limited.
Branches
All branches of the group are domiciled within the UK.
Results and dividends
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a 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:
W P Miro
T Hanslip
Financial instruments
Liquidity risk
The group manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the group has sufficient liquid resources to meet the operating needs of the business.
Interest rate risk
The group is exposed to fair value interest rate risk on its fixed rate borrowings and cash flow interest rate risk on floating rate deposits, bank overdrafts and loans.
Foreign currency risk
The group's principal foreign currency exposures arise from trading with overseas companies. To mitigate this risk, the group aims to minimise transactions and holdings of non-functional currencies unless there are specific reasons to do so.
Credit risk
Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board. 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.
Post reporting date events
These have been disclosed within the notes attached to these financial statements.
Future developments
The directors continue to grow the business both organically and through the identification and development of new products and markets and confidently expect an increase in revenue and trading profits in future years.
Auditor
There was a change in auditor during the period with Gravita Audit II Limited being appointed as auditor following the resignation of Gravita Audit Limited on 12 March 2025.
HYDRACHEM GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 4 -
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:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the ;
prepare the on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.
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 and group 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 and group is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
T Hanslip
Director
19 March 2025
HYDRACHEM GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF HYDRACHEM GROUP LIMITED
- 5 -
We have audited the financial statements of Hydrachem Group Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 October 2023 which comprise the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, the company 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, except for the possible effects of the matter described in the Basis for Qualified Opinion paragraph of our report, the financial statements:
give a true and fair view of the state of the company's affairs as at 31 October 2023 and of its loss for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for qualified opinion
In respect of the long term receivables due from Hydrachem DST Limited included in the company and group statement of financial position at £nil (2022 - £464,153), our audit opinion on the financial statements for the year ended 31 October 2022 was qualified because we were unable to obtain sufficient and appropriate evidence to confirm the recoverability of the net loan balance at that date. In the current year, the group advanced a further loan of £38,000 to Hydrachem DST Limited but later assessed that the net loan balance of £517,309 should be fully impaired at the balance sheet date. Consequently, we are unable to determine whether the impairment provision of £517,309 (2022 – £0) charged to the company and group statement of comprehensive income is accurate and whether an adjustment is necessary. Our opinion on the current period’s financial statements is also modified because of the possible effect of this matter on the comparability of the current period’s figures and the corresponding figures. In addition, were any adjustment to the impairment provision be required, the strategic report would also need to be amended.
In respect of the long term receivables due from Alexandra Miro Limited included in the group statement of financial position at £nil (2022 - £429,036), our audit opinion on the financial statements for the year ended 31 October 2022 was qualified because we did not consider there were conditions in place to support the unwinding of the present value discount resulting in a gain and corresponding increase to the loan balance of £103,245. Consequently, our opinion on the current period’s financial statements is modified because of the effect of this matter on the comparability of current period’s figures and the corresponding amounts. In addition, any reference to the reported performance relating to corresponding amounts is materially misstated.
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 qualified 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.
HYDRACHEM GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HYDRACHEM GROUP LIMITED
- 6 -
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.
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 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.
As described in the basis for qualified opinion section of our report, for the comparative year, we were unable to satisfy ourselves concerning the recoverability of a long term receivable of £0 (2022 - £464,153) held at 31 October 2022 and the accuracy of the impairment provision in the current and previous periods. Where the other information refers to long term receivables or financial performance, it may be materially misstated for the same reason.
Furthermore, as also we are of the opinion that the reported comparative value of another long term receivable of £nil (2022: £429,036) and related finance income was overstated by £103,245. Where the other information refers to long term receivables or financial performance, it is materially misstated for the same reason.
Opinions on other matters prescribed by the Companies Act 2006
Except for the matters described in the basis for qualified opinion section of our report, in our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
Except for the effects of the matters described in the basis for qualified opinion section of our report, in our opinion, 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.
Arising solely from the limitation on our work relating to recoverability of a long term receivable and impairment provision, referred to above:
we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and
we were unable to determine whether adequate accounting records have been maintained.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept 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 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.
HYDRACHEM GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HYDRACHEM GROUP LIMITED
- 7 -
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.
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the senior statutory auditor ensured the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations.
we identified the laws and regulations applicable to the company through discussions with directors and other management.
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including taxation legislation, data protection, anti-bribery, employment, environmental, health and safety legislation and anti-money laundering regulations.
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence.
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit; and
we assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates set out in note 2 of the company financial statements were indicative of potential bias;
investigated the rationale behind significant or unusual transactions; and
in response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC and the company’s legal advisors.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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.
HYDRACHEM GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF HYDRACHEM GROUP LIMITED
- 8 -
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Sarah Wilson FCA (Senior Statutory Auditor)
For and on behalf of Gravita Audit II Limited
19 March 2025
Chartered Accountants
Statutory Auditor
Aldgate Tower
2 Leman Street
London
E1 8FA
HYDRACHEM GROUP LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 OCTOBER 2023
- 9 -
2023
2022
Notes
£
£
Turnover
3
13,073,115
12,457,359
Cost of sales
(7,149,935)
(7,498,925)
Gross profit
5,923,180
4,958,434
Administrative expenses
(6,062,822)
(4,953,840)
Operating (loss)/profit
4
(139,642)
4,594
Interest receivable and similar income
8
37,394
149,899
Interest payable and similar expenses
9
(112,374)
(174,976)
Loss before taxation
(214,622)
(20,483)
Tax on loss
10
(76,446)
(347,875)
Loss for the financial year
(291,068)
(368,358)
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.
HYDRACHEM GROUP LIMITED
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 31 OCTOBER 2023
31 October 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
11
65,191
53,929
Tangible assets
12
3,646,292
2,844,491
3,711,483
2,898,420
Current assets
Stocks
15
879,193
867,397
Debtors falling due after more than one year
16
100,330
893,189
Debtors falling due within one year
16
3,000,789
4,315,750
Cash at bank and in hand
496,016
581,018
4,476,328
6,657,354
Creditors: amounts falling due within one year
17
(4,379,314)
(4,482,339)
Net current assets
97,014
2,175,015
Total assets less current liabilities
3,808,497
5,073,435
Creditors: amounts falling due after more than one year
18
(480,050)
(1,686,353)
Provisions for liabilities
Provisions
21
327,687
309,138
Deferred tax liability
22
827,236
613,352
(1,154,923)
(922,490)
Net assets
2,173,524
2,464,592
Capital and reserves
Called up share capital
24
5,001
5,001
Other reserves
29,999
29,999
Profit and loss reserves
2,138,524
2,429,592
Total equity
2,173,524
2,464,592
These financial statements have been prepared in accordance with the provisions relating to medium-sized groups.
The financial statements were approved by the board of directors and authorised for issue on 19 March 2025 and are signed on its behalf by:
19 March 2025
T Hanslip
Director
Company registration number 10084565 (England and Wales)
HYDRACHEM GROUP LIMITED
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 OCTOBER 2023
31 October 2023
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Investments
13
34,900
34,900
Current assets
Debtors falling due after more than one year
16
464,153
Debtors falling due within one year
16
985,076
1,165,400
Cash at bank and in hand
1,028
986,104
1,629,553
Creditors: amounts falling due within one year
17
(1,945,456)
(1,216,064)
Net current (liabilities)/assets
(959,352)
413,489
Total assets less current liabilities
(924,452)
448,389
Creditors: amounts falling due after more than one year
18
-
(791,666)
Net liabilities
(924,452)
(343,277)
Capital and reserves
Called up share capital
24
5,001
5,001
Profit and loss reserves
(929,453)
(348,278)
Total equity
(924,452)
(343,277)
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £581,175 (2022 - £107,242 loss).
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 19 March 2025 and are signed on its behalf by:
19 March 2025
T Hanslip
Director
Company registration number 10084565 (England and Wales)
HYDRACHEM GROUP LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2023
- 12 -
Share capital
Merger reserve
Profit and loss reserves
Total
£
£
£
£
Balance at 1 November 2021
5,001
29,999
2,797,950
2,832,950
Year ended 31 October 2022:
Loss and total comprehensive income
-
-
(368,358)
(368,358)
Balance at 31 October 2022
5,001
29,999
2,429,592
2,464,592
Year ended 31 October 2023:
Loss and total comprehensive income
-
-
(291,068)
(291,068)
Balance at 31 October 2023
5,001
29,999
2,138,524
2,173,524
HYDRACHEM GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 OCTOBER 2023
- 13 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 November 2021
5,001
(241,036)
(236,035)
Year ended 31 October 2022:
Loss and total comprehensive income for the year
-
(107,242)
(107,242)
Balance at 31 October 2022
5,001
(348,278)
(343,277)
Year ended 31 October 2023:
Profit and total comprehensive income
-
(581,175)
(581,175)
Balance at 31 October 2023
5,001
(929,453)
(924,452)
HYDRACHEM GROUP LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2023
- 14 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
31
1,842,509
559,002
Interest paid
(60,368)
(62,039)
Net cash inflow from operating activities
1,782,141
496,963
Investing activities
Purchase of intangible assets
(28,380)
-
Purchase of tangible fixed assets
(1,085,158)
(104,277)
Proceeds from disposal of tangible fixed assets
-
14,992
Repayment of loans
-
9,765
Interest received
37,394
-
Net cash used in investing activities
(1,076,144)
(79,520)
Financing activities
Proceeds from borrowings
-
1,833,333
Repayment of bank loans
(218,674)
(1,041,666)
Payment of finance leases obligations
(401,549)
(471,359)
Interest paid
(38,152)
Net cash (used in)/generated from financing activities
(620,223)
282,156
Net increase in cash and cash equivalents
85,774
699,599
Cash and cash equivalents at beginning of year
410,242
(289,357)
Cash and cash equivalents at end of year
496,016
410,242
Relating to:
Cash at bank and in hand
496,016
581,018
Bank overdrafts included in creditors payable within one year
-
(170,776)
HYDRACHEM GROUP LIMITED
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 OCTOBER 2023
- 15 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
32
375,322
(44,735)
Interest paid
(22,238)
(122,348)
Net cash inflow/(outflow) from operating activities
353,084
(167,083)
Investing activities
Repayment of loans
4,164
Interest received
37,394
25,431
Net cash generated from investing activities
37,394
29,595
Financing activities
Repayment of bank loans
(218,674)
791,666
Net cash (used in)/generated from financing activities
(218,674)
791,666
Net increase in cash and cash equivalents
171,804
654,178
Cash and cash equivalents at beginning of year
(170,776)
(824,954)
Cash and cash equivalents at end of year
1,028
(170,776)
Relating to:
Cash at bank and in hand
1,028
Bank overdrafts included in creditors payable within one year
-
(170,776)
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 OCTOBER 2023
- 16 -
1
Accounting policies
Company information
Hydrachem Group Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 2 Leman Street, London, E1W 9US.
The group consists of Hydrachem Group Limited and Hydrachem Limited, the company's sole subsidiary. The place of business of the group is Gillmans Industrial Estate, Natts Ln, Billingshurst RH14 9EZ.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 except for disclosure of turnover analysed by geographical market as required by Companies Act 2006 under SI 2008/410,1Sch 68 (1-5) unless this is seriously prejudicial to the interests of the group.
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.
1.2
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, joint ventures and associates 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.
1.3
Basis of consolidation
The consolidated group financial statements consist of the financial statements of the parent company Hydrachem Group Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 October 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.
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 17 -
1.4
Going concern
These group financial statements are prepared on a going concern basis because the directors have a reasonable expectation that the company and group will continue in operational existence for the foreseeable future for the following reasons:
- The directors have prepared detailed cashflow projections to March 2026. Based on board scrutiny of these projections and the assumptions used in preparing these forecasts, as well as the working capital overdraft facility of £200,000 available to the group, the directors are satisfied that the group has sufficient resources to meet its liabilities as they fall due for a period of at least twelve months from date of signing of these financial statements.
- In respect of a £1,000,000 loan facility obtained by the parent company from Coutts & Co which had an outstanding balance of £624,998 (2022: £791,667) at the reporting date and was due to be repaid to the bank by 31 July 2024, the group was able to obtain a refinancing of the loan, prior to the approval of these financial statements, such that the outstanding balance is now to be repaid in quarterly instalments until the final repayment date of 31 August 2027. Hence, there are no longer any material uncertainties regarding going concern to note regarding the group's ability to repay this loan as and when due.
- The group is also dependent for its working capital based on funds provided to it by Victoria Miro Gallery Limited, a related company, in respect of a loan of £1,384,020 (2022: £1,122,902) which is repayable on demand. However, Victoria Miro Gallery Limited has provided the group with an undertaking that for at least 12 months from the date of approval of these financial statements, it will not seek repayment of the amounts currently owed to it by the group.
Hence, if the support from Victoria Miro Gallery Limited should cease, the group will have to seek alternative finance in order to be able to remain as a going concern if the loan is called in. These group financial statements do not include any adjustments if the above support is withdrawn.
1.5
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.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
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.
1.6
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 20 years. The goodwill shown in these accounts was recognised on acquisition of the business from Gourmet & Co Limited by the subsidiary and is fully amortised.
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 18 -
1.7
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation 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:
Software
20% Straight line
Patents & licences
10% Straight line
1.8
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 improvements
10% straight line
Plant and equipment
10% - 33% straight line
Fixtures and fittings
20% straight line
Motor vehicles
20% straight line
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 income statement.
1.9
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, associates and jointly controlled entities 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.
1.10
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.
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 19 -
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.
1.11
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.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
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.
1.12
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.
1.13
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 statement of financial position when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
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.
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 20 -
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
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.
Other financial liabilities
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 21 -
Derecognition of financial liabilities
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
1.14
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.
1.15
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 income statement 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 income statement, 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.
1.16
Provisions
Provisions are recognised when the group has a legal or constructive present obligation as a result of a past event, it is probable that the group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
1
Accounting policies
(Continued)
- 22 -
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 statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
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.
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 23 -
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.
In preparing these financial statements, the directors have made the following judgements and estimates:
Determining whether leases entered into by the group either as a lessor or a lessee are operating lease or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis.
Determining whether there are indicators of impairment of the group's fixed asset investments and tangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.
Determining whether there are indicators of impairment in the amounts owed by debtors of the group. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.
Inventories are valued at the lower cost and net realisable value. Net realisable value includes, where necessary, provisions for slow moving and obsolete stocks. Calculation of these provisions requires judgements to be made, which include forecast consumer demand, the promotional, competitive and economic environment and inventory loss trends.
Provision is made for dilapidations. This requires management's best estimate of the expenditure that will be incurred based on the contractual requirements. In addition, the timing of the cash flows and the discount rates used to establish net present value of the obligations require management judgement.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Sale of goods
13,073,115
12,457,359
2023
2022
£
£
Other revenue
Interest income
37,394
149,899
The directors are of the opinion that the disclosure of the geographical turnover of the group would be prejudicial to the group's interest. Hence, such disclosure has therefore been omitted.
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 24 -
4
Operating (loss)/profit
2023
2022
£
£
Operating (loss)/profit for the year is stated after charging/(crediting):
Exchange losses/(gains)
44,158
(4,296)
Depreciation of owned tangible fixed assets
283,357
282,455
(Profit)/loss on disposal of tangible fixed assets
-
9,200
Amortisation of intangible assets
17,118
13,334
Operating lease charges
488,508
483,444
5
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
9,000
6,781
Audit of the financial statements of the company's subsidiaries
24,000
46,050
33,000
52,831
6
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
6
7
-
-
74
72
-
-
Total
80
79
Their aggregate remuneration comprised:
Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
2,890,351
2,713,701
Social security costs
327,252
275,692
-
-
Pension costs
97,930
68,622
3,315,533
3,058,015
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 25 -
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
320,466
308,937
Company pension contributions to defined contribution schemes
53,200
52,200
373,666
361,137
Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
159,906
130,666
Company pension contributions to defined contribution schemes
53,200
52,200
8
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
37,394
149,899
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
37,394
25,431
9
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
52,006
83,046
Other interest on financial liabilities
22,238
39,302
74,244
122,348
Other finance costs:
Interest on finance leases and hire purchase contracts
38,130
52,628
Total finance costs
112,374
174,976
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 26 -
10
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
17,115
48,451
Adjustments in respect of prior periods
(54,222)
(157,029)
Total current tax
(37,107)
(108,578)
Deferred tax
Origination and reversal of timing differences
213,883
154,771
Changes in tax rates
147,205
Tax losses carried forward
(100,330)
154,477
Total deferred tax
113,553
456,453
Total tax charge
76,446
347,875
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Loss before taxation
(214,622)
(20,483)
Expected tax credit based on the standard rate of corporation tax in the UK of 22.50% (2022: 19.00%)
(48,290)
(3,892)
Tax effect of expenses that are not deductible in determining taxable profit
193,424
90,358
Tax effect of income not taxable in determining taxable profit
(9,999)
Tax effect of utilisation of tax losses not previously recognised
29,505
Unutilised tax losses carried forward
110,849
8,382
Adjustments in respect of prior years
(54,222)
(157,029)
Permanent capital allowances in excess of depreciation
(280,890)
(36,398)
Deferred tax current year
113,553
456,453
Tax payable under s455 CTA 2010
17,115
Change in tax rate
(4,598)
Taxation charge
76,446
347,875
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 27 -
11
Intangible fixed assets
Group
Goodwill
Software
Patents & licences
Total
£
£
£
£
Cost
At 1 November 2022
52,540
61,370
10,603
124,513
Additions
28,380
28,380
At 31 October 2023
52,540
89,750
10,603
152,893
Amortisation and impairment
At 1 November 2022
52,540
16,365
1,679
70,584
Amortisation charged for the year
16,058
1,060
17,118
At 31 October 2023
52,540
32,423
2,739
87,702
Carrying amount
At 31 October 2023
57,327
7,864
65,191
At 31 October 2022
45,005
8,924
53,929
The company had no intangible fixed assets at 31 October 2023 or 31 October 2022.
More information on impairment movements in the year is given in note .
12
Tangible fixed assets
Group
Leasehold improvements
Plant and equipment
Fixtures and fittings
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 November 2022
340,729
5,088,904
222,580
7,643
5,659,856
Additions
7,988
1,065,028
12,142
1,085,158
At 31 October 2023
348,717
6,153,932
234,722
7,643
6,745,014
Depreciation and impairment
At 1 November 2022
178,513
2,468,689
165,105
3,058
2,815,365
Depreciation charged in the year
24,525
237,766
19,538
1,528
283,357
At 31 October 2023
203,038
2,706,455
184,643
4,586
3,098,722
Carrying amount
At 31 October 2023
145,679
3,447,477
50,079
3,057
3,646,292
At 31 October 2022
162,216
2,620,215
57,475
4,585
2,844,491
The company had no tangible fixed assets at 31 October 2023 or 31 October 2022.
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
12
Tangible fixed assets
(Continued)
- 28 -
Plant and machinery with a carrying value of £1.5 million (2022: £1.8million) are held under hire purchase agreements.
13
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
14
34,900
34,900
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 November 2022 and 31 October 2023
34,900
Carrying amount
At 31 October 2023
34,900
At 31 October 2022
34,900
14
Subsidiaries
Details of the company's subsidiaries at 31 October 2023 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Hydrachem Limited
2 Leman Street, London, E1W 9US
Ordinary
100.00
15
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Raw materials and consumables
879,193
867,397
-
-
Stocks are stated after provisions for slow moving and obsolete stock of £28,049 (2022: £16,514).
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 29 -
16
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
2,609,953
2,764,413
Amounts owed by group undertakings
-
-
934,365
1,085,401
Other debtors
130,700
368,849
50,711
79,999
Prepayments and accrued income
260,136
1,182,488
3,000,789
4,315,750
985,076
1,165,400
Amounts falling due after more than one year:
Amount owed by related parties
893,189
464,153
Deferred tax asset (note 22)
100,330
100,330
893,189
-
464,153
Total debtors
3,101,119
5,208,939
985,076
1,629,553
Trade debtors are stated net of an allowance of £132,409 (2022: £nil).
Other debtors balance includes a loan with Alexandra Miro Limited, a company controlled by a director of the company. During the year, the loan amount is transferred to Victoria Miro Gallery Limited, a related party under same ownership as the company, amounting to £80,000 which is interest-free and unsecured.
The balance in amounts falling due after more than one year includes:
a) During the year, a loan of £429,033 due from Alexandra Miro Limited, a company controlled by a director of the parent's subsidiary company, was transferred to Victoria Miro Gallery Limited, a related party under same ownership as the company. Outstanding balance as at year end amounts to £nil (2022: £429,033)
b) The outstanding balance of £0 (2022: £464,153) represents the present value of the total sum of £703,191 (2022: £665,191) loaned to Hydrachem DST Limited, a company controlled by a director of the company, which is recognised at amortised cost following the directors of the company's decision to amend the loan repayment terms from repayable on demand to repayable over 10 equal instalments ending in October 2033. The terms of the contractual loan is interest free and unsecured.
The directors have acknowledged that due to Hydrachem DST Limited being a new start-up business and the recoverability of the loan significantly depends on the landing of business cases and pitches to new investors, there is material uncertainty in the ability of the company to repay the loan with the agreed terms.
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 30 -
17
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
19
624,998
170,776
624,998
170,776
Obligations under finance leases
20
358,120
345,032
Trade creditors
1,589,613
2,554,836
481
481
Corporation tax payable
17,115
54,222
17,115
Other taxation and social security
94,171
87,624
-
-
Other creditors
1,467,423
1,154,534
1,287,332
1,030,657
Accruals and deferred income
227,874
115,315
15,530
14,150
4,379,314
4,482,339
1,945,456
1,216,064
The directors consider that the carrying amount of creditors falling due within one year approximate to their fair values.
Amounts owed to group undertakings are unsecured, interest free, and payable on demand.
18
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
19
791,666
791,666
Obligations under finance leases
20
480,050
894,687
480,050
1,686,353
-
791,666
19
Loans and overdrafts
Group
Company
2023
2022
2023
2022
£
£
£
£
Bank loans
624,998
791,666
624,998
791,666
Bank overdrafts
170,776
170,776
624,998
962,442
624,998
962,442
Payable within one year
624,998
170,776
624,998
170,776
Payable after one year
791,666
791,666
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
19
Loans and overdrafts
(Continued)
- 31 -
In 2019, a bank overdraft facility of £1.2million was obtained from Coutts & Co by the company which is reviewed periodically and bears an interest rate of 4.25% p.a. This loan was repaid during the year.
The outstanding bank loans is a variable rate loan obtained from Coutts & Co by the company during the year and bears an interest of 3.25% over the bank's base rate. This loan was initially due to be repaid on or before 31 July 2024. However, prior to the approval of these financial statements Coutts & Co granted a refinance of this loan such that the outstanding balance is to be repaid in quarterly instalments until the final repayment date of 31 August 2027 also at 3.25% over the bank's base rate.
The loan is secured by fixed and floating charges over all the assets of the group including book debts, a negative pledge, a cross guarantee with Hydrachem Limited and a personal guarantee from W Miro, a director of the company, in favour of the company.
20
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
358,120
345,032
In two to five years
480,050
894,687
838,170
1,239,719
-
-
Finance lease payments represent rentals payable by the 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 remaining is 2.1 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
21
Provisions for liabilities
Group
Company
2023
2022
2023
2022
£
£
£
£
327,687
309,138
-
-
Movements on provisions:
Group
£
At 1 November 2022
309,139
Additional provisions in the year
18,548
At 31 October 2023
327,687
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
21
Provisions for liabilities
(Continued)
- 32 -
The above provisions represent the dilapidations provisions on the future expected repair and removal costs required to restore the group's leased buildings to their fair and original condition at the end of their respective lease terms.
22
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the group and movements thereon:
Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Group
£
£
£
£
Accelerated capital allowances
827,236
613,352
-
-
Tax losses
-
-
100,330
-
827,236
613,352
100,330
-
The company has no deferred tax assets or liabilities.
Group
Company
2023
2023
Movements in the year:
£
£
Liability at 1 November 2022
613,352
-
Charge to profit or loss
113,554
-
Liability at 31 October 2023
726,906
-
The deferred tax liability set out above is expected to reverse over a period of more than one year and relates to accelerated capital allowances that are expected to mature within the same period.
23
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
97,930
68,622
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.
24
Share capital
Group and company
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of 1p each
500,100
500,100
5,001
5,001
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
24
Share capital
(Continued)
- 33 -
There is a single class of ordinary shares. There are no restrictions on the distribution of dividends and the repayment of capital.
25
Financial commitments, guarantees and contingent liabilities
In respect of both a £1,000,000 loan facility and an overdraft facility of £200,000 obtained by the company from Coutts & Company, the group provided the below security:
(a) Cross Guarantee between the Hydrachem Group Limited and Hydrachem Limited dated 21 August 2019;
(b) Mortgage Debenture executed by the company and Hydrachem Limited dated 22 August 2019 incorporating fixed and floating charges over all its assets including book debts.
(c) a personal guarantee provided by a director of the company.
The charges were outstanding as at the date of approval of these financial statements.
26
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
478,475
431,021
-
-
Between two and five years
2,053,289
810,358
-
-
In over five years
40,000
16,000
-
-
2,571,764
1,257,379
-
-
27
Events after the reporting date
After the reporting date, the group exchanged on five commercial properties worth £4.4million and also leased an additional warehouse resulting in a total expected future lease payments of £1.44million spread over 5 years from the reporting date. The directors have assessed and have concluded that there are no other significant adjusting or non-adjusting events between the 31 October 2023 reporting date and the date of authorisation of these financial statements to disclose.
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 34 -
28
Related party transactions
Remuneration of key management personnel
The remuneration of key management personnel is as follows.
2023
2022
£
£
Aggregate compensation
702,742
691,016
Other information
At the year end, the group was owed £nil (2022: £509,036) by Alexandra Miro Limited, a company owned by a director respectively of the company's subsidiary, Hydrachem Limited. The terms of the loan have been disclosed in Note 16.
During the year, a provision of £517,309 was made in respect of the loan of £703,191 (2022: £665,191) due to the group by Hydrachem DST Limited, a company controlled by W Miro, a director of the group. Hence, at the year end, the group was owed £0 (2022: £464,153). The terms of the loan have been disclosed in Note 16.
During the year, the group advanced a loan of £50,711 (2022: £0) to Alexandra Miro, a shareholder of the company. Hence, at the year end, the group was owed £50,711 (2022: £0).
At the year end, the group owed £1,384,020 (2022: £1,122,902) to Victoria Miro Gallery Limited, a company controlled by W Miro, a director of the group.
Balances and transactions between the company and its subsidiary, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
29
Directors' transactions
At the year end, the group was owed £47,717 to (2022: owed £1,724 from) A Miro, a director of the subsidiary, in respect of an unsecured, interest bearing loan which is repayable on demand.
At the year end, the group owed £2,275 (2022: £3,699) to W Miro, a director of the group, in respect of an unsecured, interest bearing loan which is repayable on demand.
During the year, the group approved that the outstanding loan amount of £34,553 (2022: £0) due by D Soong, a former director of the company's subsidiary, be written off. Hence, at the year end, the group was owed £nil (2022: £34,553) in respect of this unsecured, interest bearing loan which is repayable on demand.
30
Controlling party
The ultimate controlling party is Mr W P Miro who owns a majority of the shares of Hydrachem Group Limited.
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 35 -
31
Cash generated from group operations
2023
2022
£
£
Loss after taxation
(291,068)
(368,358)
Adjustments for:
Taxation charged
76,446
347,875
Finance costs
112,374
174,976
Investment income
(37,394)
(149,899)
(Gain)/loss on disposal of tangible fixed assets
-
9,200
Amortisation and impairment of intangible assets
17,118
13,334
Depreciation and impairment of tangible fixed assets
283,357
282,455
Increase in provisions
687,697
17,498
Movements in working capital:
Increase in stocks
(11,796)
(198,520)
Decrease/(increase) in debtors
1,080,677
(1,651,337)
(Decrease)/increase in creditors
(74,902)
2,081,778
Cash generated from operations
1,842,509
559,002
32
Cash generated from/(absorbed by) operations - company
2023
2022
£
£
Loss after taxation
(581,175)
(107,242)
Adjustments for:
Taxation charged
17,115
Finance costs
74,244
122,348
Investment income
(37,394)
(25,431)
Increase in provisions
502,153
-
Movements in working capital:
Increase in debtors
(316,000)
(862,147)
Increase in creditors
716,379
827,737
Cash generated from/(absorbed by) operations
375,322
(44,735)
HYDRACHEM GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 OCTOBER 2023
- 36 -
33
Analysis of changes in net debt - group
1 November 2022
Cash flows
Market value movements
31 October 2023
£
£
£
£
Cash at bank and in hand
581,018
(85,002)
-
496,016
Bank overdrafts
(170,776)
170,776
-
410,242
85,774
-
496,016
Borrowings excluding overdrafts
(791,666)
114,662
52,006
(624,998)
Obligations under finance leases
(1,239,719)
401,549
-
(838,170)
(1,621,143)
601,985
52,006
(967,152)
34
Analysis of changes in net debt - company
1 November 2022
Cash flows
Market value movements
31 October 2023
£
£
£
£
Cash at bank and in hand
-
1,028
-
1,028
Bank overdrafts
(170,776)
170,776
-
(170,776)
171,804
-
1,028
Borrowings excluding overdrafts
(791,666)
114,662
52,006
(624,998)
(962,442)
286,466
52,006
(623,970)
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