Company registration number 04319848 (England and Wales)
PURPLE SURGICAL MANUFACTURING LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
PURPLE SURGICAL MANUFACTURING LIMITED
COMPANY INFORMATION
Director
R Sharpe
Company number
04319848
Registered office
2 Chestnut House
Farm Close
Shenley
Herts
WD7 9AD
Auditor
Landau Morley LLP
325-327 Oldfield Lane North
Greenford
Middlesex
UB6 0FX
PURPLE SURGICAL MANUFACTURING LIMITED
CONTENTS
Page
Strategic report
1 - 2
Director's report
3
Director's responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Statement of financial position
9
Statement of changes in equity
10
Notes to the financial statements
11 - 23
PURPLE SURGICAL MANUFACTURING LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2024
- 1 -
The director presents the strategic report for the year ended 30 June 2024.
The principal activities
The principal activity of the company continued to be that of the manufacture and sale of medical and surgical instruments and devices.
The company is the manufacturing and purchasing arm of the Purple Surgical group. All purchases are channelled through the company and passed onto fellow subsidiaries at agreed margins. There are also some sales to third parties.
Review of the business
2024 was a challenging year for our manufacturing business given reduced revenues from our international distributors. Revenues declined by 3.4% year on year.
Key performance indicators
ln the opinion of the director the key financial performance indicators are the following:
Turnover
2024: £11,190,477 (2023: £11,585,056)
Turnover is a key measure of the company's economic output.
Gross profit
2024: £360,657 (2023: £791,802)
Gross profit provides an indication of the company's sales quality and service efficiency. In FY2024, the gross profit declined as a result of reduced sales to our international distributors.
The principal risks and uncertainties facing the company
The medical equipment market is highly competitive. The company is subject to UK government policy and the effect of the general state of the world economy.
The company has in place a risk management programme that seeks to manage its financial exposure.
Foreign exchange risk
The company is exposed to foreign exchange rate risk in the normal course of business, principally on purchases and sales in Euros and USD which act as a natural FX hedge.
Credit risk
The company has implemented policies that require appropriate checks on potential customers before sales are made. The amount of exposure to any individual company is subject to a limit which is assessed regularly by the company.
Liquidity risk
The group maintains a consistent and appropriate level of cash, which is generated from retained earnings and profits. The director considers that the group has the appropriate funding to meet the immediate needs of the business.
PURPLE SURGICAL MANUFACTURING LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 2 -
Fraud and litigation
It is highly regrettable that during the urgent search for reputable suppliers of PPE during the COVID-19 crisis, Purple Surgical were introduced to a number of unscrupulous, dishonest and fraudulent individuals and organisations.
Whilst Purple Surgical had success in locating, diligencing and contracting with legitimate, high quality suppliers, the company also fell victim to others who purported to be able to supply but did not.
As at 30 June 2024, the company has provided £1,700,870 (2023: £1,700,870) for non-recovery of advanced payments to suppliers of PPE and potential costs.
Going concern
The director has adopted the going concern basis in preparing these accounts after assessing the principal risks and having considered the impact of a severe but plausible downside scenario. The director has considered the impact of the current economic environment on the business for the next 12 months.
The director has assumed that the Company will continue to be able to support our customers and sell to new clients.
The director believes that the Company is well placed to manage its financing and other business risks satisfactorily, and have a reasonable expectation that the Company will have adequate resources to continue in operation for at least 12 months from the signing date of these financial statements.
The director has not identified any material uncertainties to the Company's ability to continue as a going concern. He therefore considers it appropriate to adopt the going concern basis of accounting in preparing the financial statements.
R Sharpe
Director
17 March 2025
PURPLE SURGICAL MANUFACTURING LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 30 JUNE 2024
- 3 -
The director presents his annual report and financial statements for the year ended 30 June 2024.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
R Sharpe
Matters covered in the strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of its financial risk management objectives and the likely future developments of the business.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
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
R Sharpe
Director
17 March 2025
PURPLE SURGICAL MANUFACTURING LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2024
- 4 -
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is 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 director is responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
PURPLE SURGICAL MANUFACTURING LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PURPLE SURGICAL MANUFACTURING LIMITED
- 5 -
Opinion
We have audited the financial statements of Purple Surgical Manufacturing Limited (the 'company') for the year ended 30 June 2024 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 30 June 2024 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.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. We draw your attention to note 1.2 of the financial statements in this regard.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
PURPLE SURGICAL MANUFACTURING LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PURPLE SURGICAL MANUFACTURING LIMITED (CONTINUED)
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations - this responsibility lies with management with the oversight of the directors.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
PURPLE SURGICAL MANUFACTURING LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PURPLE SURGICAL MANUFACTURING LIMITED (CONTINUED)
- 7 -
Except for any known or possible non-compliance, and as required by auditing standards, our work in respect of these included enquiry of management about company's policies, procedures, and related controls regarding compliance with laws and regulations and if there are any known instances of non-compliance.
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements of the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK).
The potential effects of inherent limitations are particularly significant in the case of misstatement resulting from fraud because fraud may involve sophisticated and carefully organized schemes designed to conceal it, including deliberate failure to record transactions, collusion or intentional misrepresentations being made to us.
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.
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.
Paul Faber FCA
Senior Statutory Auditor
For and on behalf of Landau Morley LLP
17 March 2025
Chartered Accountants
Statutory Auditor
325-327 Oldfield Lane North
Greenford
Middlesex
UB6 0FX
PURPLE SURGICAL MANUFACTURING LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2024
- 8 -
2024
2023
Notes
£
£
Turnover
3
11,190,477
11,585,056
Cost of sales
(10,829,820)
(10,793,254)
Gross profit
360,657
791,802
Administrative expenses
(2,708,821)
(2,342,614)
Other operating income
560,000
590,000
Operating loss
4
(1,788,164)
(960,812)
Interest receivable and similar income
7
4,846
Interest payable and similar expenses
8
(9,649)
(8,898)
Loss before taxation
(1,792,967)
(969,710)
Tax on loss
9
(9,905)
(49,813)
Loss for the financial year
(1,802,872)
(1,019,523)
The income statement has been prepared on the basis that all operations are continuing operations.
PURPLE SURGICAL MANUFACTURING LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
30 June 2024
- 9 -
2024
2023
Notes
£
£
£
£
Fixed assets
Intangible assets
10
2,287,866
1,634,153
Tangible assets
11
1,649,548
1,744,000
3,937,414
3,378,153
Current assets
Stocks
12
6,031,834
8,341,937
Debtors
13
5,835,792
5,246,646
Cash at bank and in hand
50,318
103,323
11,917,944
13,691,906
Creditors: amounts falling due within one year
14
(25,368,211)
(24,985,099)
Net current liabilities
(13,450,267)
(11,293,193)
Total assets less current liabilities
(9,512,853)
(7,915,040)
Creditors: amounts falling due after more than one year
15
(205,049)
Provisions for liabilities
Deferred tax liability
17
200,876
200,866
(200,876)
(200,866)
Net liabilities
(9,918,778)
(8,115,906)
Capital and reserves
Called up share capital
19
100,100
100,100
Profit and loss reserves
(10,018,878)
(8,216,006)
Total equity
(9,918,778)
(8,115,906)
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved and signed by the director and authorised for issue on 17 March 2025
R Sharpe
Director
Company registration number 04319848 (England and Wales)
PURPLE SURGICAL MANUFACTURING LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2024
- 10 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 July 2022
100,100
(7,196,483)
(7,096,383)
Year ended 30 June 2023:
Loss and total comprehensive income
-
(1,019,523)
(1,019,523)
Balance at 30 June 2023
100,100
(8,216,006)
(8,115,906)
Year ended 30 June 2024:
Loss and total comprehensive income
-
(1,802,872)
(1,802,872)
Balance at 30 June 2024
100,100
(10,018,878)
(9,918,778)
PURPLE SURGICAL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
- 11 -
1
Accounting policies
Company information
Purple Surgical Manufacturing Limited is a private company limited by shares incorporated in England and Wales. The registered office is 2 Chestnut House, Farm Close, Shenley, Herts, WD7 9AD.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of Purple Surgical Holdings Limited. These consolidated financial statements are available from its registered office, 2 Chestnut House, Farm Close, Shenley, Hertfordshire, United Kingdom, WD7 9AD.
1.2
Going concern
At the time of approving the financial statements, the director has a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the director continues to adopt the going concern basis of accounting in preparing the financial statements.
The validity of the assumption depends entirely on the continuing support of the company’s fellow subsidiaries. The financial statements do not include adjustments that would result if the support were not made available. The director has indicated that the company’s fellow subsidiaries will continue to provide support and that it is therefore appropriate for the financial statements to be prepared on the going concern basis.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
Revenue from the sale of 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.
PURPLE SURGICAL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
1
Accounting policies
(Continued)
- 12 -
1.4
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
1.5
Intangible fixed assets other than goodwill
Development costs are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
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:
Development costs
10 years straight line
1.6
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
5% on cost
Plant and equipment
10% on reducing balance & 33% on reducing balance
Fixtures and fittings
10% on reducing balance & 33% on cost
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.7
Impairment of fixed assets
At each reporting period end date, the company 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.
1.8
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.9
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.
PURPLE SURGICAL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
1
Accounting policies
(Continued)
- 13 -
1.10
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
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 company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
PURPLE SURGICAL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
1
Accounting policies
(Continued)
- 14 -
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
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.11
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.12
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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
PURPLE SURGICAL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
1
Accounting policies
(Continued)
- 15 -
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 when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.13
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.
1.14
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.15
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.16
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.17
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.
PURPLE SURGICAL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 16 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Useful life of assets
Management reviews the useful lives of depreciable assets at each reporting date, based on expected utility of the assets. Uncertainties in these estimates relate to the period that the company intends to derive future economic benefits from the use of these assets. Depreciation and amortisation are disclosed in note 10 and 11.
Stock
Stock is valued at the lower of cost and net realisable value. Net realisable value includes, where necessary, provisions for slow moving and obsolete inventories. Calculation of these estimates requires judgements to be made, which include forecasting consumer demand and the economic environment. This is reviewed by the management on a regular basis. The stock provision at the year end is £326,075 (2023: £246,395).
Bad debt and litigation provisions
During 2020 the company entered into litigation in connection with the supply of PPE and advance payments made to suppliers where the supplier was unable to fulfil their obligations or return the advanced payments. The directors are in regular contact with the appointed lawyers. Following professional advice, the provision has been estimated by the directors' based upon expectations of the outcomes of the on-going litigation. Until the litigation is finalised and settled, the provision will remain uncertain.
At 30 June 2024 provisions of £1,700,870 (2023: £1,700,870) are included in the balance sheet relating to this on-going litigation. In 2020, an expense of £1,700,870 was recognised in the profit and loss account within Exceptional costs - bad debt and litigation provision.
3
Turnover and other revenue
2024
2023
£
£
Turnover analysed by geographical market
United Kingdom
11,190,477
11,585,056
4
Operating loss
2024
2023
Operating loss for the year is stated after charging/(crediting):
£
£
Government grants
-
(30,000)
Depreciation of owned tangible fixed assets
178,012
189,805
Amortisation of intangible assets
232,935
144,039
PURPLE SURGICAL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 17 -
5
Auditor's remuneration
2024
2023
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
21,150
21,150
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2024
2023
Number
Number
Production staff
52
60
Distribution staff
12
17
Administrative staff
31
32
Total
95
109
Their aggregate remuneration comprised:
2024
2023
£
£
Wages and salaries
2,411,951
2,750,928
Social security costs
209,490
210,633
Pension costs
70,501
73,502
2,691,942
3,035,063
The remuneration of key management personnel totalled £87,314 (2023: £94,938).
7
Interest receivable and similar income
2024
2023
£
£
Interest income
Other interest income
4,846
8
Interest payable and similar expenses
2024
2023
£
£
Interest on bank overdrafts and loans
9,649
-
Interest on finance leases and hire purchase contracts
-
7,987
Other interest
911
9,649
8,898
PURPLE SURGICAL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 18 -
9
Taxation
2024
2023
£
£
Current tax
Adjustments in respect of prior periods
9,895
Deferred tax
Origination and reversal of timing differences
10
49,813
Total tax charge
9,905
49,813
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:
2024
2023
£
£
Loss before taxation
(1,792,967)
(969,710)
Expected tax credit based on the standard rate of corporation tax in the UK of 25.00% (2023: 25.00%)
(448,242)
(242,428)
Tax effect of expenses that are not deductible in determining taxable profit
1,579
203
Adjustments in respect of prior years
9,895
Group relief
430,568
232,442
Effect on capital allowances and depreciation
16,095
9,783
Provision for deferred tax
10
49,813
Taxation charge for the year
9,905
49,813
PURPLE SURGICAL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 19 -
10
Intangible fixed assets
Development costs
£
Cost
At 1 July 2023
1,883,707
Additions
886,648
At 30 June 2024
2,770,355
Amortisation and impairment
At 1 July 2023
249,554
Amortisation charged for the year
232,935
At 30 June 2024
482,489
Carrying amount
At 30 June 2024
2,287,866
At 30 June 2023
1,634,153
11
Tangible fixed assets
Leasehold improvements
Plant and equipment
Fixtures and fittings
Total
£
£
£
£
Cost
At 1 July 2023
1,488,939
1,804,428
326,110
3,619,477
Additions
62,165
21,395
83,560
At 30 June 2024
1,488,939
1,866,593
347,505
3,703,037
Depreciation and impairment
At 1 July 2023
583,382
1,070,233
221,862
1,875,477
Depreciation charged in the year
74,447
86,822
16,743
178,012
At 30 June 2024
657,829
1,157,055
238,605
2,053,489
Carrying amount
At 30 June 2024
831,110
709,538
108,900
1,649,548
At 30 June 2023
905,557
734,195
104,248
1,744,000
PURPLE SURGICAL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 20 -
12
Stocks
2024
2023
£
£
Raw materials and consumables
2,785,157
3,332,345
Finished goods and goods for resale
3,246,677
5,009,592
6,031,834
8,341,937
The stock balance above is shown net of stock provisions of £326,075 (2023: £246,395).
13
Debtors
2024
2023
Amounts falling due within one year:
£
£
Trade debtors
50,550
27,210
Advance payments made to suppliers
639,835
226,543
Amounts owed by group undertakings
4,994,401
4,861,309
Prepayments and accrued income
151,006
131,584
5,835,792
5,246,646
14
Creditors: amounts falling due within one year
2024
2023
£
£
Trade creditors
1,057,027
1,624,684
Amounts owed to group undertakings
23,625,502
22,210,967
Corporation tax
531,330
Other taxation and social security
583,715
497,241
Other creditors
22,199
18,010
Accruals and deferred income
79,768
102,867
25,368,211
24,985,099
15
Creditors: amounts falling due after more than one year
2024
2023
Notes
£
£
Bank loans and overdrafts
16
205,049
The bank loan is secured by a fixed and floating charge over the assets of the company.
PURPLE SURGICAL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 21 -
16
Loans and overdrafts
2024
2023
£
£
Bank loans
205,049
Payable after one year
205,049
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2024
2023
Balances:
£
£
Accelerated capital allowances
200,876
200,866
2024
Movements in the year:
£
Liability at 1 July 2023
200,866
Charge to profit or loss
10
Liability at 30 June 2024
200,876
The deferred tax liability set out above relates to accelerated capital allowances. The deferred tax liability is expected to reverse over the estimated useful life of tangible fixed assets.
18
Retirement benefit schemes
2024
2023
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
70,501
73,502
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
19
Share capital
2024
2023
2024
2023
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary A shares of £1 each
85,085
85,085
85,085
85,085
Ordinary C shares of £1 each
15,015
15,015
15,015
15,015
100,100
100,100
100,100
100,100
PURPLE SURGICAL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
19
Share capital
(Continued)
- 22 -
The A Ordinary and C Ordinary shares rank pari-passu in all respects except with regards to dividends, voting and capital rights.
20
Operating lease commitments
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2024
2023
£
£
Within one year
324,375
324,375
Between two and five years
943,875
1,061,750
In over five years
619,500
826,000
1,887,750
2,212,125
PURPLE SURGICAL MANUFACTURING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2024
- 23 -
21
Related party transactions
The company was under the control of R Sharpe throughout the current and previous year.
The company trades on a commercial basis with fellow subsidiary undertaking Purple Surgical UK Limited. Included in the profit and loss account are sales to Purple Surgical UK Limited of £5,543,433 (2023: £5,190,249).
The company also trades on a commercial basis with Purple Surgical International Limited, a fellow subsidiary undertaking.
Sales to Purple Surgical International Limited during the year amounted to £5,403,505 (2023: £6,207,428).
Also included in the profit and loss account is income in respect of warehouse charges charged to Purple Surgical UK Limited of £280,000 (2023: £280,000) and Purple Surgical International Limited of £280,000 (2023: £280,000).
At the year end the company owed £21,717,286 (2023: £19,949,568) to Purple Surgical UK Limited and £1,908,216 (2023: £2,261,399) to Purple Surgical International Limited, all fellow subsidiaries.
In addition, the company rented premises from the R Sharpe Pension Fund, of which R Sharpe is a Trustee. Rent paid during the year amounted to £206,5000 (2023: £206,500).
22
Ultimate controlling party
The parent company is Purple Surgical Holdings Limited, a company incorporated in England whose registered office is 2 Chestnut House, Farm Close, Shenley, Hertfordshire, United Kingdom, WD7 9AD.
The ultimate controlling party throughout the current and previous year was Robert Sharpe.
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