The directors present the strategic report for the year ended 30 September 2024.
This strategic report provides an overview of the business review, key performance indicators, principal risks and uncertainties, and future outlook for Simkiss Group (SCS) Ltd and its subsidiary, Simkiss Control Systems Ltd, in compliance with the Companies Act 2006 requirements for medium-sized groups.
The group specialises in the design, manufacturing, and installation of control systems for gas and electricity creation, transmission and distribution.
Our operations are focused on providing reliable, cost effective and efficient solutions to meet the increasing UK demand for energy systems.
The group also supports a number of locally based International Manufacturers with skilled labour and project management.
Our ongoing strategy is centred on 3 central pillars with which to support the needs of our customers, with new initiatives created, measured and delivered during each accounting year:
Strengthen foundations: Through the implementation, audit and improvement of systems, processes and procedures to increase efficiency, reduce stress and support growth.
Simkiss People: Manage, develop, encourage, retain & recruit Simkiss people through a range of permanent and one-off initiatives, including improved employee benefits, training provision and creation of employee representative group.
Sustainable Growth: Forecast and achieve financial objectives & plan for delivery of the company 5-year plan, with a combination of organic growth across the existing industries and customer base, supported with strategic acquisitions.
Performance Overview
The Simkiss Senior Management team demonstrated strength and resiliency despite significant local, regional, and national challenges in 2023/24. Although we encountered relentless inflation, less-than-optimal raw material availability, an armed conflict in Europe, emerging recessionary concerns, and other challenges, we continue to grow our business and have achieved the following:
Revenue: 29% increase to £15,518,175 (2023: £12,000,299).
EBITDA: Increase of 64% to £2,065,407 (2023: £1,260,265).
Net Profit: Increase of 78% to £1,272,646 (2023: £714,074).
Gross Profit per head: £57,972 (2023: £40,425).
Net Profit per head: £12,477 (2023: £7,597).
Financing: 69% reduction in interest fees to £21,448 (2023: £70,222).
Employee headcount: Growth of 9% to 102 (2023: 94).
Operational highlights
Through operational plans created under the three central strategic pillars, notable achievements during the year include:
Successful revenue growth with current blue-chip clients across power and utility industries.
Strengthened the organisational structure of each of the three Divisions with targeted recruitment, improvement to systems and processes, to support further significant growth in the short and longer term.
Continued to develop our ‘people of the future’ by increasing the number of apprentices to 12, representing 10% of our employed workforce.
Successfully protected and increased gross margins across all divisions while taking the final steps in becoming a living wage employer, which was awarded shortly after the financial year end.
To measure progress for review in monthly Senior Management meetings, we track the following KPIs, as detailed in various sections of the statutory accounts:
Revenue and profit margins, EBITDA.
Profit per head.
Employee growth.
Employee turnover.
H&S statistics (Including total man hours, reportable injuries, lost time accidents, first aid incidents, near misses, non-reportable incidents, non-conformances).
Carbon emissions reductions.
Simkiss operates in dynamic and competitive industries, with multiple risks and uncertainties that could impact our business. Key risks include:
Operational risk: The risk posed to ongoing growth through lack of available space for employees and equipment had become significant over the past 18 months, and a decision was made to relocate the company to larger premises. With support from Rochdale council, new premises were found within the borough with a footprint more than 3 times as large as the current property, and the process of relocating the company began in July 2024. Complete relocation of the company was finalised after the year end in December 2024 with minimal disruption to manufacturing and other services.
Credit Risk: Trade debtors are one of the principal financial assets of the company. As the majority of revenue is derived from blue chip clients, this partially mitigates this risk. For all other clients, limits are set for its customers based on recommendation from third-party credit references and payment history. These limits are reviewed on an ongoing basis alongside aged debt reports.
Liquidity Risk: Liquidity risk is inherent in most contract manufacturing companies, with payment due upon completion of the manufacturing process. The tremendous growth experienced in the manufacturing sectors the company operates poses a risk of low liquidity, Simkiss Control Systems mitigates some of this risk by keeping a blend of longer and shorter duration projects running side by side, and further hedges this risk with the diverse nature of its revenue from design and site installation work, which are predominately invoiced via monthly applications for payment.
Interest Rate Risk: The changes to BOE Interest rates and fluctuations this causes in the wider markets had led to monthly reviews of this risk being undertaken as the company has a blend of variable and fixed rate financing and savings.
Currency Risk: As the company has all sales in sterling, and purchases less than 0.3% of all materials and services in other currencies, the company is not directly exposed to currency risk, however it can have an indirect effect on material prices.
Economic Risk: While the company operates primarily in recession resilient sectors, the directors and senior management team regularly review all the market sectors, underlying labour and supply chain markets, along with the wider construction industry, for any potential negative or positive impacts on business, and will continue to do so going forward as and when new developments arise.
Cyber/IT Risk: With the company’s ongoing growth, the amount of company data (and customer data) has increased significantly. The company has invested in a number of monitoring and training platforms that allow for employee education on cyber security and phishing, along with regular simulated phishing attacks on all users. Further investment in software and hardware has been made during the past year to add layers to the company’s security, and to further strengthen the reliability of the systems used in day to day operations.
As a manufacturer and engineering company, we embrace our responsibilities and strive to create sustainable value for all our stakeholders, employees, customers, communities, shareholders, and the communities where we operate.
The company culture is built on trust, respect, execution, and inclusion, which guide our commitment to take care of our customers, respect our employees and the environment, create value for our shareholders and support the communities in which we live and work.
Our Approach: The sustainability strategy has three central pillars, Environmental footprint, Product blueprint and Social imprint, and these are centred on a foundation of Governance and ethics, designed to ensure broad engagement and appropriate oversight for sustainability and ESG initiatives throughout the Company using a continued improvement approach.
Our Focus: This framework supports the company as it focuses on key sustainable business activities, namely its climate and carbon footprint, product stewardship and life cycle assessment, occupational health and safety, talent acquisition and employee engagement.
Goals and Objectives: The company has identified a number of goals it wishes to see achieved by 2030, using 2024 data as a baseline now that the company has relocated its trading premises.
Environmental Footprint - Doing Our Part for the Planet: We apply a continuous improvement approach to reducing our carbon emissions, energy consumption and waste generation while expanding our renewable energy use and decreasing the amount of waste generated by our operations.
We have identified and introduced projects to drive efficiency in production, energy, and reduction of waste.
Our efforts included prioritising technology enhancements such as LED lighting at our current and new facility, and have already piloted the use of electric and hybrid vehicles with a goal to enhance our fleet.
The aim of such projects will be to meet the following objectives;
Greenhouse Gas Emissions: Reduce our Scope 1 and 2 greenhouse gas emissions by 30%.
Renewable Energy: Increase electricity from renewable sources to 50% of total electricity usage.
Energy Efficiency: Increase operational energy efficiency by 20%.
Waste Reduction: Reduce waste disposal intensity by 25%.
Environmental Metrics:
Energy Consumption | FY22-23 | FY23-24 |
Natural Gas (kWh) | 12,633 | 22,481 |
Electricity (kWh) | 87,603 | 99,015 |
Diesel (Mileage) | 304,297 | 358,685 |
Hybrid (Mileage) | 23,478 | 74,963 |
EV (Mileage) | 511 | 56,358 |
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Carbon Footprint (kg CO2) | FY22-23 | FY23-24 |
Total Scope 1 | 83,013 | 101,617 |
Total Scope 2 | 19,272 | 37,221 |
Total Scope 1 & 2 | 102,285 | 138,838 |
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Turnover (£) | 12,200,299 | 15,518,175 |
Employees | 94 | 102 |
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Revenue Intensity Ratio (kg CO2 / £) | 0.0084 | 0.0089 |
Employee Intensity Ratio (kg CO2 / e’ee) | 1,088 | 1,361 |
We remain focused on enriching our Product Blueprint. Our goals include the following;
Product Innovation: Establish a Sustainability by Design Stage-Gate process to look at product innovation and growth development.
Supply Chain Management: Enhance our supplier engagement component of our Product Blueprint strategy.
Recognition: Refine our definition of ‘sustainability’ in relation to our products. Look for third party recognition.
Business Development: Enhance our culture of internal engagement to further embed sustainability into our business culture.
Social Imprint - Elevating a Culture of Safety, Inclusion and Community: We are committed to advancing a culture of excellence that values people, inclusion, and community. Our commitment is reflected in our unwavering efforts to promote the safety, health, and well-being of our people; foster a culture of inclusion, diversity, and equality where individual differences are celebrated; and support those in the communities where we live and work.
We are committed to working with our suppliers to ensure that human rights are respected and that no trafficking of persons, forced labour or child labour exists at any level in our supply chain.
Our goals in this area are as follows;
Non-reportable accident rates: Reduce recordable case rate to 0.8 by 2027.
Ergonomic Intervention: Reduce ergonomic injuries by implementing 2 ergonomic interventions per year.
Volunteering: Increase our fund-raising activities by 25%.
Community Network: Develop our community network to support 3 local charities every year.
Staff Wellness: Expand on health and well-being programmes that have been introduced for staff and other social initiatives.
Our people are the foundation for our success. We believe that our employees deserve to feel valued and appreciated for who they are and the unique perspectives they bring to our workforce and workplace. Our family-like culture has continued to build on the ingenuity, passions, and talents of our team members.
Governance - Upholding ethical business practices and ensuring compliance with all regulatory standards: A complete overhaul of the companies Integrated Management System (IMS) is currently underway, with the aim of delivering transparent, efficient and auditable policies, procedures and processes across all areas of the business, including Diversity & inclusion, Health & safety, employee welfare and codes of conduct, Quality control, data security, procurement, risk management, internal controls, regulatory compliance.
As outlined in our Code of Conduct, we encourage employees to report potential policy or ethics violations and any type of harassment, threats, or safety concerns to management, at the earliest convenience.
The IMS is divided into the essential components of Culture, Planning, Implementation and Operations, Verifications and Process Accountability, and Action Management and Continuous Improvement to help facilitate improvement within these select areas. The IMS contains a suite of processes and tools, including site plan templates, checklists, and worksheets - which are adaptable for all parts of the organisation.
All manufacturing distribution, operational sites and technical/admin centres must conform to our IMS, which is in strong alignment with third-party certifications, such as the ISO 14001 standard for environmental management and the Occupational Safety and Health standard ISO 45001, and ISO 9001 Quality management standard to support best practices.
The global shift towards renewable energy and smart grids presents significant growth opportunities for Simkiss. Our focus for the coming years includes:
Continuing to develop & grow our skilled teams to maximise growth opportunities, while maintaining our living wage employer status.
Organic growth by offering additional services to our existing blue-chip clients.
Bolt on additional services, client opportunities and skilled people through strategic acquisitions in the power and utility industries.
Investing in digital transformation to enhance operational efficiency. We are confident that our strategic initiatives will position us for sustained growth and value creation for stakeholders.
Group re-organisation
During the year, the group completed a re-organisation where its subsidiary company, Simkiss Home Automation Limited, was moved outside of the group. Its figures do not therefore form part of the 2024 group accounts.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 September 2024.
The results for the year are set out on page 7.
Ordinary dividends were paid amounting to £73,494. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
We have audited the financial statements of Simkiss Group (SCS) Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 September 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the entity through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £73,494 (2023 - £0 profit).
The notes on pages 17 to 32 form part of these financial statements.
Simkiss Group (SCS) Limited is a private limited company limited by shares and incorporated in England and Wales. The registered office is The Railway Works, Fishwick Street, Rochdale, England, OL16 5NA.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Simkiss Group (SCS) Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 30 September 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:
Rendering of services
Turnover from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
the amount of turnover can be measured reliably;
it is probable that the company will receive the consideration due under the contract;
the stage of completion of the contract at the end of the reporting period can be measured reliably; and
the costs incurred and the costs to complete the contract can be measured reliably.
Amounts invoiced in advance of work being undertaken are included in the balance sheet within 'amounts invoiced in advance on long term contracts'. Where the stage of completion of a contract is ahead of invoices raised, accrued income is recognised in the balance sheet. Similarly, contract related costs are deferred or accrued on the balance sheet as appropriate, in 'amounts recoverable on long term contracts' or 'accruals' respectively.
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.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method. Financial assets classified as receivable within one year are not amortised.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors and bank loans, are initially recognised at transaction price. 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. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
The group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the group has no further payment obligations. The contributions are recognised as an expense in the profit and loss account when they fall due. Amounts not paid are shown in accruals as a liability in the balance sheet. The assets of the plan are held separately from the group in independently administered funds.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The estimates and assumptions that present risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:
Goodwill
The carrying value of goodwill is assessed annually for impairment.
Stage of contract completion
Where long term contract accounting is applied, there is an inherent level of estimation in both assessing the stage of completion of a contract at the balance sheet date, and the profit margin which is expected to be achieved across the entire contract.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
On 29 February 2024, Simkiss Control Systems Limited, a subsidiary of the company, transferred its own investment in a subsidiary company, Simkiss Home Automation Limited, to the company at book value of £20,685. The company immediately transferred this investment to a related company outside the group, Simkiss Holding (SHA) Limited, again at book value of £20,685.
Details of the company's subsidiaries at 30 September 2024 are as follows:
Included within other debtors is an invoice discounting debtor of £788,140 (2023: £nil) due back to the group. The corresponding amount in the prior year was a creditor of £209,089, disclosed within creditors under "advances against the security of book debts".
Advances against the security of book debts are secured by book debts and an all assets debenture dated 27 February 2019.
Net obligations under finance leases are secured against the assets to which they relate.
The bank loan relates to an amount drawn down under the Coronavirus Business Interruption Loan Scheme.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The group operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund. At the balance sheet date, the group owed £31,627 (2023: £25,962) to the pension scheme.
On 19 October 2023, the company redesignated 76,289 A Ordinary shares of £1 each as B Ordinary shares of £1 each.
On 29 February 2024, the company cancelled 76,289 B Ordinary shares as part of the group reorganisation referred to in Note 25, resulting in the creation of a capital redemption reserve.
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:
At the balance sheet date, the group was owed £157,967 (2023: £28,532) from P Simkiss, a director of the company. Dividends totalling £73,494 (2023: £60,000) were paid to P Simkiss in the year.
At the balance sheet date, the group was owed £153,726 (2023: £nil) by Simkiss Home Automation Limited, a company under common control (2023: a group company). This amount is interest free and repayable on demand.
At the balance sheet date, the group was owed £1,324,241 (2023: £281,639) by Simkiss Limited, a related party by way of common control. During the year, rent was payable to Simkiss Limited amounting to £248,700 (2023: £39,310).
The above balances are repayable on demand, and disclosed within other debtors.
Group re-organisation (2023)
These are the first full set of consolidated financial statements of Simkiss Group (SCS) Limited following the group re-organisation in 2023, whereby Simkiss Group (SCS) Limited became the new parent company of the group comprising of Simkiss Control Systems Limited, and its subsidiary Simkiss Home Automation Limited.
The consolidated financial statements have been prepared under the merger method of accounting because the transaction under which the company became the holding company of Simkiss Control Systems Limited was a group reconstruction with no change in the ultimate ownership of the group at that time. All of the shares of Simkiss Control Systems Limited were exchanged via a share-for-share exchange effective 30 September 2023.
The result of the application of merger accounting for the group reorganisation is to present the financial statements as if the company had always owned the group - these financial statements, for the comparative year ended 30 September 2023, have been presented as if Simkiss Group (SCS) Limited was always the ultimate parent of Simkiss Control Systems Limited and Simkiss Home Automation Limited.
The principal steps of the reorganisation were as follows:
The company was incorporated on 9 November 2022 as a company limited by shares in the United Kingdom, with share capital of 1 Ordinary share of £1. On 3 October 2023 (effective date 30 September 2023 for statutory accounts purposes) the company issued a further 249,999 A Ordinary shares of £1.
The company became the ultimate holding company of the group on the same day, with Simkiss Control Systems Limited becoming the company's direct subsidiary by way of a share-for-share exchange. The insertion of the company as a new holding company constitutes a group reorganisation and the transaction is accounted for as a capital reorganisation and merger relief applied in accordance with section 612 of the Companies Act 2006.
Under merger relief the shares issued in this transaction were recorded in the consolidated statement of financial position at the nominal value of the shares issued (£250,000) less the nominal value of shares acquired (£20,785), which was recorded as a merger reserve of £229,215 in the group financial statements. The assets and liabilities of the subsidiaries are consolidated at book value in the group financial statements and the consolidated reserves of the group are adjusted to reflect the statutory share capital, share premium and merger reserve of the group as if it had always existed.
Group re-organisation (2024)
On 19 October 2023, the company redesignated 76,289 A Ordinary shares of £1 each as 76,289 B Ordinary shares of £1 each. On 29 February 2024, the company bought back and cancelled these shares, resulting in the creation of a capital redemption reserve.
On 29 February 2024, Simkiss Control Systems Limited transferred its own investment in subsidiary undertaking, Simkiss Home Automation Limited, to the company at book value of £20,685. The company immediately transferred this investment to a company under the same ownership outside the group, Simkiss Holding (SHA) Limited, again at book value of £20,685. This resulted in an increase to the merger reserve equivalent to Simkiss Home Automation Limited’s share capital of £20,685, and a group reorganisation difference of £104,191 through other comprehensive income.
The result of the application of merger accounting for the group reorganisation is to present the financial statements as if the company had always owned the group - these financial statements, for the year ended 30 September 2024, have been presented as if Simkiss Group (SCS) Limited was always the ultimate parent company of Simkiss Control Systems Limited, excluding Simkiss Home Automation Limited, from 1 October 2023.