Company registration number 09473112 (England and Wales)
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
COMPANY INFORMATION
Directors
M J Doyle
J A Temple
A Maher
G Thomas
(Appointed 29 January 2024)
Company number
09473112
Registered office
Wellesbourne Distribution Park
Unit 16, Loxley Road
Wellesbourne
Warwick
Warwickshire
CV35 9JY
Auditor
Burgis & Bullock
23-25 Waterloo Place
Leamington Spa
Warwickshire
CV32 5LA
Bankers
Santander Corporate Banking
West Midlands Regional Business Centre
1 Cornwall Street
Birmingham
B3 2DX
Solicitors
BHW Solicitors
1 Smith Way
Grove Park
Enderby
Leicestershire
LE19 1SX
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 9
Group statement of comprehensive income
10
Group balance sheet
11
Company balance sheet
12
Group statement of changes in equity
13
Company statement of changes in equity
14
Group statement of cash flows
15
Company statement of cash flows
16
Notes to the financial statements
17 - 45
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -

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

Fair review of the business

 

2023 concluded as a year of mixed fortunes with periods of promise and mild disappointment in equal measure.

 

Following a largely positive 2022, and with that feeling of positivity continuing through into the early stages of 2023, and with the business holding a robust orderbook, growth plans were implemented to capitalise on the upward trajectory. The business committed its working capital resources to increased machine stock to ensure that inventory was available to react on the promise of growth. The business also looked to expand its product portfolio dipping its toe into the Metal Fabrication market having been approached by a high quality Swiss manufacture requesting representation.

 

Over the course of the year revenues did indeed grow by 6.2%, and Gross Profit grew by 5.3%, however the growth was fuelled by an increase in sales from bespoke and standard workholding and spares parts, and not from machine sales as expected.

 

Robust economic indicators throughout the year did not translate fully into investment decisions for Capital Equipment resulting in machines sales being fairly flat in 2023 compared to 2022. With growth in machine sales not materialising the financial resources devoted created a technical breach of the banking facility. The pressure on cashflow was alleviated through deferring further stock purchases until stock levels were normalised, albeit at a reduced margin. As a result, whilst there was a higher proportion of Workholding and Spares sales, the overall Gross Margin % fell by 0.3%.

 

In addition to the working capital employed, the Group invested in greater resources to prepare for and support growth, increasing overheads by 8.9%. The increase in overhead was larger than the increase in Gross Margin resulting in a reduction in the Group’s EBITDA for the year. The EBITDA reduced from 4.2% of sales to 3.1% of sales, the final EBITDA for 2023 being £691,662 (2022: £874,136). However the investment in people and enhancement in skills will benefit the Group in the future years.

 

A significant success during the year was the securing of one of the largest long-term machine supply and support orders seen in the industry. ETG brokered, on a commission basis, an order with a major player in the defence sector. The agreement to supply multiple multi-million-pound machines over a three year period with a subsequent 10 year support program. The revenues from this order will underpin growth and profitability for the business for the next 13 years.

 

The reduced EBITDA coupled with the rapid rise in interest rates created additional interest expense pushed the PBT for the Group into a loss position of (£118,452).

 

The Group continues to secure Turnkey Projects with an increasing focus on automation with average order values increasing year over year as more companies seek to focus on productivity. Looking ahead it is acknowledged that 2023 promised growth in Capital Equipment yet failed to deliver. The financing of the growth plan that created a technical breach in the banking facility, whilst waived by the bank, highlighted the need for a more suitable Working Capital and this is the focus.

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -

Fair Review of the Business continued

 

The machine orderbook at the end of 2023 was further enhanced compared to the end of 2022 offering a positive start to 2024. The workholding orderbook also increased offering an improved outlook for 2024 for that aspect of the business This is a good indicator that the manufacturing economy remain buoyant and busy from a production perspective.

 

Summarising the Groups traditional KPI’s, compared to the prior year turnover increased by 6.2% and Gross Margin increased by 5.3% in value terms.

 

Gross Margin as a % of sales decreased by 0.3 percentage points from 34.3% (2022) to 34.3% due to a lower proportionate content of machine sales compared to aftercare and workholding sales.

 

The Groups EBITDA for the period decreased by £182,474 to £691,662 (2022 – EBITDA Profit of £874,136).

 

The Group continues to invest in its Sales and Support functions across its Machine and Workholding divisions, as well enhancing its core brands, further strengthening and developing its Turnkey solution capability.

 

Principal Risks and Uncertainties

 

The principal short term risk and uncertainty continues to relate to the general economic environment. The ongoing war in the Ukraine, energy costs, and raw material prices are all having an impact on product costs and pricing. Whilst the issues are still valid current pricing has been adjusted and will take affect for new orders although due to the gestation period and lead-time of products the impact may not been seen until the middle of 2024 and into 2025. The longer term principal risks to the company remain the general fluctuations in the UK manufacturing economy, continued higher interest rates, and fluctuations in major currencies which may have an adverse effect on machine costs. These risks are mitigated by maintaining its current diversified spread of revenue between its Capital Equipment, Operations, and Manufacturing divisions, and increasing its diversification amongst the industries within the manufacturing sector. Exchange rate fluctuations would impact primarily on the Capital Equipment division. Currency movements are closely monitored with any fluctuations having a similar effect on the primary competitors which offers some mitigation. The risk is further mitigated through the use of currency sharing agreements with some key suppliers, as well as the groups’ concentration on added value services sourced in the UK.

 

The dynamic and balanced sectorial nature of the Group is such that resources can be deployed to focus on areas of the business with demand and the Group can adapt to new environments quickly which can mitigate such risks to a certain extent.

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -

Future Developments

The Directors are not expecting to make any significant changes in the nature of the business in the near future. Going forward the trade of the Group will continue to focus on the long term customer and supplier relationships across a number of industry sectors which suit the high technology, high productivity, turnkey solutions designed, developed, and implemented by the Group, supplemented with a first class aftersales service.

The Group will also continue to develop its product portfolio to increase its market share within the UK and Republic of Ireland.

 

On behalf of the board

M J Doyle
Director
18 April 2025
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -

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

Principal activities

The principal activity of the Company is that of a holding Company.

 

The Group provides bespoke turnkey solutions for UK and Irish manufacturers of aerospace, automotive, medical and defence components and related sectors. Through its subsidiary The ETG Group Ltd, the business supplies ranges of globally recognised premium brand machine tools, automation, and software as the basis for these turnkey solutions. The Group also has an engineering support division, ETG Engineering Solutions Ltd, which designs and implements the turnkey solutions. To complete the full turnkey package the Group is able to offer bespoke workholding solutions through its subsidiary Hyfore Workholding Ltd, which designs and manufactures these complementary products as part of a turnkey machining solution as well standalone solutions to improve the productivity and efficiency of its customers existing equipment.

Directors

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

M J Doyle
J A Temple
A Maher
G Thomas
(Appointed 29 January 2024)
Results and dividends

The results for the year are set out on page 10.

No ordinary dividends were paid. The directors do not recommend payment of a further dividend.

No preference dividends were paid. The directors do not recommend payment of a final dividend.

Financial instruments

The Group's financial risk management objective is to seek to make neither profit nor loss from exposure to interest rate risks. Its policy is to finance working capital through a combination of retained earnings and fixed and variable rate borrowings, and to finance fixed assets through rate borrowings over a term broadly expected to match the useful economic life of the asset.

 

The directors do not consider any other risks attaching to the use of financial instruments to be material to an assessment of its financial position or profit.

Auditor

The auditor, Burgis & Bullock, is deemed to be reappointed under section 487(2) of the Companies Act 2006.

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 5 -
Statement of directors' responsibilities

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company, and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to:

 

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the auditor of the company is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the auditor of the company is aware of that information.

On behalf of the board
M J Doyle
Director
18 April 2025
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
- 6 -
Opinion

We have audited the financial statements of The Engineering Technology Group Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2023 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows, 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 the financial statements:

Basis for opinion

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

Conclusions relating to going concern

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

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the 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 conclusions are based on the audit evidence obtained up to the date of our report. Any unpredicted future events or conditions could impact the group/company’s ability to continue as a going concern.

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

 

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
- 7 -

Other information

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

 

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

Matters on which we are required to report by exception

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

 

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

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the parent company or to cease operations, or have no realistic alternative but to do so.

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
- 8 -
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 gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates and assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

 

Based on our understanding of the group, company and industry we identified that the principal risk of non-compliance with laws and regulations related to breaches of Companies Act 2006, UK Tax Legislation and UK Employment Law. We also evaluated management incentive and opportunities for fraudulent manipulations of the financial statements.

Audit procedures performed included:

 

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
- 9 -

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 is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Wende Hubbard FCCA (Senior Statutory Auditor)
For and on behalf of Burgis & Bullock
18 April 2025
Chartered Accountants
Statutory Auditor
23-25 Waterloo Place
Leamington Spa
Warwickshire
CV32 5LA
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
2023
2022
Notes
£
£
Turnover
3
22,219,604
20,916,668
Cost of sales
(14,667,866)
(13,743,745)
Gross profit
7,551,738
7,172,923
Administrative expenses (excluding depreciation and amortisation)
(6,860,076)
(6,323,058)
Other operating income
-
24,271
Earnings before interest, taxation, depreciation and amortisation
691,662
874,136
Amortisation
(272,802)
(272,802)
Depreciation
(244,527)
(201,834)
Operating profit
4
174,333
399,500
Interest receivable and similar income
10
-
68
Interest payable and similar expenses
8
(292,785)
(189,868)
Gain on disposal of investment
9
-
66,639
(Loss)/profit before taxation
(118,452)
276,339
Taxation
11
(13,538)
(23,380)
(Loss)/profit for the financial year
(131,990)
252,959
(Loss)/profit 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.

The profit and loss account has been prepared on the basis that all operations are continuing operations.

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
GROUP BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 11 -
2023
2022
Notes
£
£
£
£
Fixed assets
Goodwill
14
143,984
416,786
Tangible assets
13
861,811
858,006
1,005,795
1,274,792
Current assets
Stocks
17
5,793,662
4,989,602
Debtors
18
4,073,479
4,697,256
Cash at bank and in hand
7,175
55,512
9,874,316
9,742,370
Creditors: amounts falling due within one year
19
(10,951,179)
(10,325,963)
Net current liabilities
(1,076,863)
(583,593)
Total assets less current liabilities
(71,068)
691,199
Creditors: amounts falling due after more than one year
20
(1,251,671)
(1,769,142)
Provisions for liabilities
24
(57,831)
(170,637)
Net liabilities
(1,380,570)
(1,248,580)
Capital and reserves
Called up share capital
27
3,225,285
3,225,285
Profit and loss reserves
(4,605,855)
(4,473,865)
Total equity
(1,380,570)
(1,248,580)
The financial statements were approved by the board of directors and authorised for issue on 18 April 2025 and are signed on its behalf by:
18 April 2025
M J Doyle
A Maher
Director
Director
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2023
31 December 2023
- 12 -
2023
2022
Notes
£
£
£
£
Fixed assets
Investments
15
7,131,043
7,131,043
Current assets
Debtors
18
59,586
59,586
Creditors: amounts falling due within one year
19
(8,799,179)
(8,138,433)
Net current liabilities
(8,739,593)
(8,078,847)
Total assets less current liabilities
(1,608,550)
(947,804)
Creditors: amounts falling due after more than one year
20
(975,000)
(1,475,000)
Net liabilities
(2,583,550)
(2,422,804)
Capital and reserves
Called up share capital
27
3,225,285
3,225,285
Profit and loss reserves
(5,808,835)
(5,648,089)
Total equity
(2,583,550)
(2,422,804)

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 £160,746 (2022 - £1,238,148 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 18 April 2025 and are signed on its behalf by:
18 April 2025
M J Doyle
A Maher
Director
Director
Company registration number 09473112 (England and Wales)
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 13 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2022
3,225,285
(4,726,824)
(1,501,539)
Year ended 31 December 2022:
Profit and total comprehensive income
-
252,959
252,959
Balance at 31 December 2022
3,225,285
(4,473,865)
(1,248,580)
Year ended 31 December 2023:
Loss and total comprehensive income
-
(131,990)
(131,990)
Balance at 31 December 2023
3,225,285
(4,605,855)
(1,380,570)
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 14 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2022
3,225,285
(4,409,942)
(1,184,657)
Year ended 31 December 2022:
Loss and total comprehensive income for the year
-
(1,238,147)
(1,238,147)
Balance at 31 December 2022
3,225,285
(5,648,089)
(2,422,804)
Year ended 31 December 2023:
Profit and total comprehensive income
-
(160,746)
(160,746)
Balance at 31 December 2023
3,225,285
(5,808,835)
(2,583,550)
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 15 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
34
1,445,576
565,767
Interest paid
(292,785)
(189,868)
Income taxes (paid)/refunded
(251)
74,661
Net cash inflow from operating activities
1,152,540
450,560
Investing activities
Purchase of tangible fixed assets
(53,641)
(189,138)
Interest received
-
0
68
Net cash used in investing activities
(53,641)
(189,070)
Financing activities
Repayment of borrowings
(39,094)
104,520
Repayment of bank loans
(500,000)
(500,000)
Payment of finance leases obligations
(167,474)
(67,964)
Net cash used in financing activities
(706,568)
(463,444)
Net increase/(decrease) in cash and cash equivalents
392,331
(201,954)
Cash and cash equivalents at beginning of year
(549,797)
(347,843)
Cash and cash equivalents at end of year
(157,466)
(549,797)
Relating to:
Cash at bank and in hand
7,175
55,512
Bank overdrafts included in creditors payable within one year
(164,641)
(605,309)
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
36
648,030
619,460
Interest paid
(148,030)
(119,460)
Net cash inflow from operating activities
500,000
500,000
Financing activities
Repayment of bank loans
(500,000)
(500,000)
Net cash used in financing activities
(500,000)
(500,000)
Net increase in cash and cash equivalents
-
-
Cash and cash equivalents at beginning of year
-
0
-
0
Cash and cash equivalents at end of year
-
0
-
0
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
1
Accounting policies
Company information

The Engineering Technology Group Holdings Limited (“the Company”) is a private Company, limited by shares, domiciled and incorporated in England and Wales. The registered office is Wellesbourne Distribution Park, Unit 16, Loxley Road, Wellesbourne, Warwickshire, CV35 9JY.

 

The Group consists of The Engineering Technology Group Holdings Limited and all of its subsidiaries.

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, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below.

1.2
Basis of consolidation

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.

The consolidated group financial statements consist of the financial statements of the parent company The Engineering Technology Group Holdings 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 December 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group. All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 18 -
1.3
Going concern

Although, as anticipated at the end of 2022, activity levels increased during 2023, due to general UK and Worldwide economic pressures, margins were inevitably squeezed. Also, because of the decision to acquire additional machine stock on the back of the success of 2022 and then customers delaying making capital goods investment, cashflow management once again became the focus for the management team. Unfortunately, by the end of 2023, the Group had breached one of the financial covenants required by its bankers and as a consequence its bank loan has been shown in the Balance Sheet as at 31 December 2023 as falling due on demand due to this technical default. However, the bank has subsequently issued a waiver in relation to this breach.

 

The Group entered the start of 2024 with a positive position however subsequent growth in sales has not been at the level anticipated, due to a combination of customers delaying purchasing decisions and the Group facing the challenges of an under-resourced sales force. Consequently, at the time of approving these financial statements, further breaches of the bank’s financial covenants have been noted and there have been additional pressures on the Group’s cash flows which continue to be managed with the support of creditors, including HMRC, and the shareholders.

 

The Directors have prepared short term cashflow forecasts and profit forecasts covering the year to 31 December 2026 and consider that these are based on attainable activity levels, despite the current uncertainty levels in the UK manufacturing sectors and the forthcoming increases in employment costs. These forecasts have been subject to sensitivity analysis to understand the possible impact should there be a slowdown in machine sales. This analysis indicates that should the Group see a significant downturn in sales orders compared to that forecast or compared to that achieved in 2024 it would need to consider sourcing additional headroom, either through changing their working capital finance model; extension of creditor and HMRC payment terms and/or financial support from the shareholders. The Board are already positively exploring alternative working capital models which may be more appropriate to deal with the volatility in the day to day working capital requirements which capital goods distributors typically experience. This volatility usually arises due to the quantum values associated with purchases of machinery as well as the need to hold some stock levels ready to meet customer demand. However, the value of machine order sales in the first quarter of 2025 reveals an increase over that achieved in the same period for 2024 and, based on current economic forecasts, the Directors believe that there is likely to be opportunity to see a further increase towards the end of 2025.

 

At the time of concluding this assessment, the USA have announced the potential implementation of tariffs on goods imported to the USA. The announcements have created worldwide economic uncertainty and it is not yet possible to conclude what the future impact might be on the UK economy, particularly as changes are continuing to be announced. The Directors have reviewed the Group’s customer base to understand how many could be impacted by the imposition of significant import tariffs, primarily those connected to the UK car manufacturing sector. Whilst it is acknowledged that some are likely to be negatively impacted, the Directors also recognise that some other customers may nevertheless gain a competitive advantage over their competitors who manufacture in countries who may face the imposition of higher tariff rates than the UK.

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 19 -

Going concern (continued)

Having, to date, demonstrated their ability to manage working capital whilst experiencing fluctuating sales patterns and together with their belief and confidence that appropriate funding resources will be made available for the foreseeable future and there being a return to suitable activity levels throughout 2025 and beyond, the Directors have continued to adopt the going concern basis of accounting for the preparation of these financial statements.

1.4
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.

Revenue from contracts for the provision of services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.

1.5
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 5 years.

 

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

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 20 -
1.6
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:

Vendor relationships
Over 5 years
Customer relationships
Over 5 years
Tradename/marks
Over 5 years
1.7
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:

Freehold land and buildings
2% straight line
Short leasehold land and buildings
Over the life of the lease
Plant and equipment
20-33.33% straight line
Fixtures and fittings
25% straight line
Computers
33.33% 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 profit and loss account.

1.8
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.

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 21 -

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.

An associate is an entity, being neither a subsidiary nor a joint venture, in which the Company holds a long-term interest and where the Company has significant influence. The Group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.

 

Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the Group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.

 

Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the Company has incurred legal or constructive obligations or has made payments on behalf of the associate.

 

In the parent company financial statements, investments in associates are accounted for at cost less impairment.

Entities in which the Group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.

1.9
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.

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

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.

1.10
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.

1.11
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.

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 23 -
1.12
Financial instruments

The Group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the Group's balance sheet when the group becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

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.

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 24 -
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

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 Group's contractual obligations expire or are discharged or cancelled.

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 25 -
1.13
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.

1.14
Derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

 

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability.

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 profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 26 -
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.

1.17
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the Company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.18
Retirement benefits

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

1.19
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

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.

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 27 -
1.20
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.

 

Government grants relating to income or expenditure are recognised as income over the periods when the related costs are incurred. Grants relating to an asset are recognised in income systematically over the asset's expected useful life. If part of such a grant is deferred it is recognised as deferred income rather than being deducted from the asset's carrying amount.

1.21
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

2
Judgements and key sources of estimation uncertainty

In the application of the Group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
2
Judgements and key sources of estimation uncertainty
(Continued)
- 28 -
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.

Warranties

The Group estimates the warranty provision based on the terms of warranties given in the year and historical costs incurred.

Stocks

In relation to potentially obsolete stocks, the directors have made key assumptions regarding the provision to be included within the financial statements. Stock included on the balance sheet is net of any provision.

Goodwill and other intangible assets

Goodwill with a remaining net book value of £143,984 relates to the acquisition of the HK Group in 2019 which is being amortised over 5 years. The directors have made key assumptions over the future profitability of the underlying business acquired and its amortisation period and they remain confident that the anticipated returns will match or exceed the the goodwill valuation.

3
Turnover and other revenue

An analysis of the group's turnover is as follows:

2023
2022
£
£
Turnover analysed by class of business
Machine sales
12,683,457
12,980,725
Engineering and spares
6,060,230
5,304,147
Workholding
3,475,917
2,631,796
22,219,604
20,916,668
2023
2022
£
£
Turnover analysed by geographical market
UK
18,541,925
18,882,689
Europe
3,673,252
1,957,223
Rest of world
4,427
76,756
22,219,604
20,916,668
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
3
Turnover and other revenue
(Continued)
- 29 -
2023
2022
£
£
Other revenue
Interest income
-
68
Grants received
-
23,854
4
Operating profit
2023
2022
£
£
Operating profit for the year is stated after charging/(crediting):
Exchange gains
(3,543)
(17,881)
Government grants
-
(23,854)
Depreciation of owned tangible fixed assets
118,364
178,591
Depreciation of tangible fixed assets held under finance leases
126,163
23,243
(Profit)/loss on disposal of tangible fixed assets
-
7,236
Amortisation of intangible assets
272,802
272,802
Stocks impairment losses recognised or reversed
33,608
(46,308)
Operating lease charges
552,319
474,558
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
19,500
18,500
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
Sales, engineering and administration
88
85
-
0
-
0
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
6
Employees
(Continued)
- 30 -

Their aggregate remuneration comprised:

Group
Company
2023
2022
2023
2022
£
£
£
£
Wages and salaries
4,117,838
3,804,006
-
-
Social security costs
488,653
483,226
-
-
Pension costs
414,166
319,940
-
-
5,020,657
4,607,172
-
0
-
0
7
Directors' remuneration
2023
2022
£
£
Remuneration for qualifying services
479,840
452,744
Company pension contributions to defined contribution schemes
52,783
16,714
532,623
469,458

Directors remuneration was paid by a subsidiary.

 

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2022 - 3).

Remuneration disclosed above includes the following amounts paid to the highest paid director:
2023
2022
£
£
Remuneration for qualifying services
251,853
253,300
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 31 -
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
273,280
174,285
Other finance costs:
Interest on finance leases and hire purchase contracts
15,904
11,982
Other interest
3,601
3,601
Total finance costs
292,785
189,868
9
Amounts written off investments
2023
2022
£
£
Gain on disposal on joint venture
-
66,639
10
Interest receivable and similar income
2023
2022
£
£
Interest income
Other interest income
-
68
11
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
18,868
10,032
Adjustments in respect of prior periods
(3,905)
-
0
Total current tax
14,963
10,032
Deferred tax
Origination and reversal of timing differences
(1,425)
13,348
Total tax charge
13,538
23,380
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
11
Taxation
(Continued)
- 32 -

The actual charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:

2023
2022
£
£
(Loss)/profit before taxation
(118,452)
276,339
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
(27,860)
52,504
Tax effect of expenses that are not deductible in determining taxable profit
28,493
15,607
Tax effect of utilisation of tax losses not previously recognised
-
0
22,065
Change in unrecognised deferred tax assets
(39,907)
125,115
Effect of change in corporation tax rate
(17,669)
(26,823)
Fixed asset differences
70,481
(1,139)
Exempt distribution income
-
0
(164,350)
Other tax adjustments, reliefs and transfers
-
0
401
Taxation charge
13,538
23,380
12
Impairments

Impairment tests have been carried out where appropriate and the following impairment losses have been recognised/(reversed) in profit or loss:

2023
2022
Notes
£
£
In respect of:
Stocks
17
33,608
(46,308)
Recognised in:
Cost of sales
33,608
(46,308)
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 33 -
13
Tangible fixed assets
Group
Freehold land and buildings
Short leasehold land and buildings
Plant and equipment
Fixtures and fittings
Computers
Total
£
£
£
£
£
£
Cost
At 1 January 2023
18,084
149,813
1,450,908
419,194
544,848
2,582,847
Additions
-
0
-
0
207,481
6,183
34,668
248,332
At 31 December 2023
18,084
149,813
1,658,389
425,377
579,516
2,831,179
Depreciation and impairment
At 1 January 2023
16,637
71,093
909,475
318,794
408,842
1,724,841
Depreciation charged in the year
310
13,935
131,946
42,669
55,667
244,527
At 31 December 2023
16,947
85,028
1,041,421
361,463
464,509
1,969,368
Carrying amount
At 31 December 2023
1,137
64,785
616,968
63,914
115,007
861,811
At 31 December 2022
1,447
78,720
541,433
100,400
136,006
858,006
The company had no tangible fixed assets at 31 December 2023 or 31 December 2022.

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

Group
Company
2023
2022
2023
2022
£
£
£
£
Plant and equipment
484,912
388,681
-
0
-
0
Computers
49,608
44,847
-
0
-
0
534,520
433,528
-
-
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 34 -
14
Intangible fixed assets
Group
Goodwill
Vendor relationships
Customer relationships
Tradename/marks
Total
£
£
£
£
£
Cost
At 1 January 2023 and 31 December 2023
2,382,130
3,563,000
1,806,000
461,023
8,212,153
Amortisation and impairment
At 1 January 2023
1,965,344
3,563,000
1,806,000
461,023
7,795,367
Amortisation charged for the year
272,802
-
0
-
0
-
272,802
At 31 December 2023
2,238,146
3,563,000
1,806,000
461,023
8,068,169
Carrying amount
At 31 December 2023
143,984
-
0
-
0
-
143,984
At 31 December 2022
416,786
-
0
-
0
-
416,786
The company had no intangible fixed assets at 31 December 2023 or 31 December 2022.
15
Fixed asset investments
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Investments in subsidiaries
16
-
0
-
0
7,131,043
7,131,043
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
15
Fixed asset investments
(Continued)
- 35 -
Movements in fixed asset investments
Company
Shares in subsidiaries
£
Cost or valuation
At 1 January 2023 and 31 December 2023
7,131,043
Carrying amount
At 31 December 2023
7,131,043
At 31 December 2022
7,131,043
16
Subsidiaries

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

Name of undertaking
Registered office
Nature of business
Class of
% Held
shares held
Direct
The Engineering Technology Group Limited
UK
Sales and servicing of high speed, high technology multi-axis machining centres
Ordinary
100.00
ETG Bridgeport UK Limited
UK
Dormant
Ordinary
100.00
ETG CNC Machinery Limited
Republic of Ireland
Sales and servicing of high speed, high technology twin spindle turning centres
Ordinary
100.00
ETG Engineering Solutions Limited
UK
Sales of engineering services
Ordinary
100.00
Chiron Werke UK Limited
UK
Dormant
Ordinary
100.00
Hyfore Workholding Limited
UK
Manufacture of high quality, bespoke work holding solutions for metal cutting, welding and assembly applications
Ordinary
100.00
Turning Technologies UK Limited
UK
Dormant
Ordinary
100.00
H K (Holdings) Limited
UK
Dormant
Ordinary
100.00
H K Laser Services Limited *
UK
Dormant
Ordinary
100.00
H K 3D Solutions Limited *
UK
Dormant
Ordinary
100.00
H K Technologies Limited *
UK
Dormant
Ordinary
100.00
Hahn & Kolb (Great Britain) Limited *
UK
Dormant
Ordinary
100.00
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
16
Subsidiaries
(Continued)
- 36 -

* Shares are held by HK ( Holdings) Limited

** Shares are held by H K Technologies Limited

 

The registered office of all UK subsidiaries apart from Hyfore Workholding Limited is Unit 16, Wellesbourne Distribution Park Loxley Road, Wellesbourne, Warwick, England, CV35 9JY, UK.

 

The registered office of Hyfore Workholding Limited is Unit 2, 67 Blackhorse Road, Longford, Coventry, West Midlands, England, CV6 6DP, UK.

 

The registered office of ETG CNC Machinery Limited is Unit 17, Newbridge Industrial Estate, Athgarvan, Newbridge, Co. Kildare, EH28 8PJ, Republic of Ireland.

17
Stocks
Group
Company
2023
2022
2023
2022
£
£
£
£
Work in progress
104,056
149,774
-
-
Finished goods and goods for resale
5,689,606
4,839,828
-
0
-
0
5,793,662
4,989,602
-
-
18
Debtors
Group
Company
2023
2022
2023
2022
Amounts falling due within one year:
£
£
£
£
Trade debtors
2,857,894
4,086,189
-
0
-
0
Corporation tax recoverable
14,591
14,591
14,591
14,591
Other debtors
106,009
106,010
44,995
44,995
Prepayments and accrued income
989,288
384,769
-
0
-
0
3,967,782
4,591,559
59,586
59,586
Deferred tax asset (note 23)
105,697
105,697
-
0
-
0
4,073,479
4,697,256
59,586
59,586
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 37 -
19
Creditors: amounts falling due within one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Debenture loans
22
500,000
500,000
500,000
500,000
Bank loans and overdrafts
22
664,641
1,105,309
500,000
500,000
Obligations under finance leases
21
163,131
123,427
-
0
-
0
Other borrowings
22
696,469
735,563
-
0
-
0
Trade creditors
4,530,457
4,581,668
-
0
-
0
Amounts owed to group undertakings
-
0
-
0
7,756,233
7,095,487
Corporation tax payable
25,329
10,617
-
0
-
0
Other taxation and social security
1,912,873
1,384,169
42,946
42,946
Deferred income
25
90,068
225,264
-
0
-
0
Other creditors
125,629
90,945
-
0
-
0
Accruals and deferred income
2,242,582
1,569,001
-
0
-
0
10,951,179
10,325,963
8,799,179
8,138,433
20
Creditors: amounts falling due after more than one year
Group
Company
2023
2022
2023
2022
Notes
£
£
£
£
Bank loans and overdrafts
22
975,000
1,475,000
975,000
1,475,000
Obligations under finance leases
21
262,076
274,563
-
0
-
0
Deferred income
25
14,595
19,579
-
0
-
0
1,251,671
1,769,142
975,000
1,475,000
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 38 -
21
Finance lease obligations
Group
Company
2023
2022
2023
2022
£
£
£
£
Future minimum lease payments due under finance leases:
Within one year
163,131
123,427
-
0
-
0
In two to five years
262,076
274,563
-
0
-
0
425,207
397,990
-
-

Finance lease payments represent rentals payable by the Company or Group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 3 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

22
Loans and overdrafts
Group
Company
2023
2022
2023
2022
£
£
£
£
Debenture loans
500,000
500,000
500,000
500,000
Bank loans
1,475,000
1,975,000
1,475,000
1,975,000
Bank overdrafts
164,641
605,309
-
0
-
0
Other loans
696,469
735,563
-
0
-
0
2,836,110
3,815,872
1,975,000
2,475,000
Payable within one year
1,861,110
2,340,872
1,000,000
1,000,000
Payable after one year
975,000
1,475,000
975,000
1,475,000

The bank loans and overdrafts are secured by a debenture over all the assets and undertakings of the Group, together with cross corporate guarantees with all UK subsidiary companies.

 

The debenture loan notes are secured by a debenture over all the assets and undertakings of the Group, no interest is payable on the debenture loan notes.

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
22
Loans and overdrafts
(Continued)
- 39 -

The Senior bank loan is repayable in quarterly instalments over 5 years at a current rate of interest of 3.5% + Bank of England base rate. The year end balance on this loan was £1,200,000.

 

The RLS bank loan is repayable in quarterly instalments over 5 years at a current rate of interest of 4.45% + Bank of England base rate. The year end balance on this loan was £275,000.

 

The RLS bank loan is 80% guaranteed by the Government.

 

Other loans are secured by a charge over trade debtors.

23
Deferred taxation

Deferred tax assets and liabilities are offset where the Group or Company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

Liabilities
Liabilities
Assets
Assets
2023
2022
2023
2022
Group
£
£
£
£
ACAs
57,831
59,256
-
-
Tax losses
-
-
105,697
105,697
57,831
59,256
105,697
105,697
The company has no deferred tax assets or liabilities.
Group
Company
2023
2023
Movements in the year:
£
£
Asset at 1 January 2023
(46,441)
-
Credit to profit or loss
(1,425)
-
Asset at 31 December 2023
(47,866)
-
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
23
Deferred taxation
(Continued)
- 40 -

The deferred tax liability set out above relates predominantly to fair value adjustments that are expected to reverse in line with the goodwill accounting policy.

24
Provisions for liabilities
Group
Company
2023
2022
2023
2022
£
£
£
£
-
111,381
-
-
Movements on provisions:
Group
£
At 1 January 2023
2,737
Reversal of provision
(2,737)
At 31 December 2023
-

Other provisions relate to future warranty costs anticipated to be incurred in relation to goods sold up to the balance sheet date.

25
Deferred income
Group
Company
2023
2022
2023
2022
£
£
£
£
Arising from government grants
19,599
24,583
-
-
Other deferred income
85,064
220,260
-
-
104,663
244,843
-
-
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
25
Deferred income
(Continued)
- 41 -

Deferred income is included in the financial statements as follows:

Current liabilities
90,068
225,264
-
0
-
0
Non-current liabilities
14,595
19,579
-
0
-
0
104,663
244,843
-
-

Government grants were recognised in the year for the purchase of capital assets.

26
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
414,166
319,940

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.

At the year end, contributions amounting to £40,475 (2022 - £28,173) were payable and are included within other creditors.

27
Share capital
Group and company
2023
2022
Ordinary share capital
£
£
Issued and fully paid
269,372 A Ordinary of £1 each
269,372
269,372
371,990 B Ordinary of £1 each
371,990
371,990
2,583,723 C Ordinary of £1 each
2,583,723
2,583,723
100 D Ordinary of £1 each
100
100
3,225,185
3,225,185
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
27
Share capital
(Continued)
- 42 -
Preference share capital
Issued and fully paid
100 Preference of £1 each
100
100
Preference shares classified as equity
100
100
Total equity share capital
3,225,285
3,225,285

C Ordinary Shares are non-voting, other than in relation to any proposed change of class rights and have no dividend entitlement. On any sale or return of capital the C Ordinary Shares as a class are entitled to a varying % of total equity consideration received based on certain thresholds of consideration being achieved.

 

D Ordinary Shares are non-voting, other than in relation to any proposed change of class rights and have no dividend entitlement. On any sale or return of capital the D Ordinary Shares as a class are entitled to a varying % of total equity consideration received based on certain thresholds of consideration being achieved. Their entitlement to consideration also varies depending on whether the return is within 5 years of the date of issue of the shares or thereafter.

 

Any equity proceeds not allocated to the C and D Ordinary Shares will be distributed to the holders of the A and B Ordinary Shares pro rata to their holdings as currently set out in the Articles of Association.

 

The preference shareholders are not entitled to dividends or to vote other than in relation to any proposed change of class rights and the shares are redeemable at par value on exit only. The preference shareholders are entitled to participate in a distribution on a return of capital, on liquidation or capital reduction of the company following the payment of any unpaid arrears of dividends declared but not paid to the holders of Ordinary shares.

28
Disposals

On 1 September 2022 the group disposed of its 50% holding in Advance Manufacturing Training Centre Limited. Included in these financial statements in the comparative figures are profits of £2,728 arising from the company's interests in up to the date of its disposal.

 

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 43 -
29
Financial commitments, guarantees and contingent liabilities

Group

 

As at 31 December 2023 the Group had entered into short-term forward foreign currency exchange contracts amounting to £1,031,335 (2022 - £309,925).

 

There is a contingent liability in respect of a guarantee given by Santander UK PLC to HMRC for £100,000 (2022 - £100,000) with recourse to the Group under counter indemnity.

 

The directors have given a personal indemnity in favour of the Group's bankers in respect for any potential losses on the Company's invoice discounting agreement.

 

Company

 

An unlimited debenture has been given by the Company in favour of the Group's bankers in respect of loans and overdrafts due by Group undertakings. The balance on these bank loans and overdrafts at the year end was £164,641 (2022 - £605,309).

30
Operating lease commitments
Lessee

Operating lease payments represent rentals payable by the Group for properties and motor vehicles.

 

The property lease has a term of ten years from 2020 with an option to break after five years. The vehicle rentals are predominantly fixed for three years.

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
482,764
389,042
-
-
Between two and five years
1,415,123
1,133,530
-
-
In over five years
346,039
578,697
-
-
2,243,926
2,101,269
-
-
31
Related party transactions

As at 31 December 2023 £500,000 (2022 - £500,000) was owed to J Temple.

THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 44 -
32
Directors' transactions

During a previous year the Group made a loan of £45,000 to a director, interest was charged at the beneficial rate of 2.5% - 3% and £46,048 (2022 - £ 46,048) was outstanding at the year end. There is no fixed date for repayment.

 

During a previous year the Group made a loan of £44,895 to a director, the loan is interest free and £44,895 (2022 - £44,895) was outstanding at the year end. There is no fixed date for repayment.

33
Controlling party

The company's ultimate controlling party is Mr M J Doyle.

The controlling party is Mr M J Doyle.

34
Cash generated from group operations
2023
2022
£
£
(Loss)/profit after taxation
(131,990)
252,959
Adjustments for:
Taxation charged
13,538
23,380
Finance costs
292,785
189,868
Investment income
-
0
(68)
(Gain)/loss on disposal of tangible fixed assets
-
7,236
Amortisation and impairment of intangible assets
272,802
272,802
Depreciation and impairment of tangible fixed assets
244,527
201,834
Other gains and losses
-
(66,639)
Decrease in provisions
(111,381)
(18,746)
Movements in working capital:
Increase in stocks
(804,060)
(2,023,366)
Decrease/(increase) in debtors
623,777
(2,226,544)
Increase in creditors
1,185,758
4,172,664
Decrease in deferred income
(140,180)
(219,613)
Cash generated from operations
1,445,576
565,767
THE ENGINEERING TECHNOLOGY GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 45 -
35
Analysis of changes in net debt - group
1 January 2023
Cash flows
New finance leases
31 December 2023
£
£
£
£
Cash at bank and in hand
55,512
(48,337)
-
7,175
Bank overdrafts
(605,309)
440,668
-
(164,641)
(549,797)
392,331
-
(157,466)
Borrowings excluding overdrafts
(3,210,563)
539,094
-
(2,671,469)
Obligations under finance leases
(397,990)
167,474
(194,691)
(425,207)
(4,158,350)
1,098,899
(194,691)
(3,254,142)
36
Cash generated from operations - company
2023
2022
£
£
Loss for the year after tax
(160,746)
(1,238,147)
Adjustments for:
Finance costs
148,030
119,460
Reversal of impairment
-
1,073,793
Movements in working capital:
(Increase)/decrease in debtors
-
1,817
Increase in creditors
660,746
662,537
Cash generated from operations
648,030
619,460
37
Analysis of changes in net debt - company
1 January 2023
Cash flows
31 December 2023
£
£
£
Borrowings excluding overdrafts
(2,475,000)
500,000
(1,975,000)
2023-12-312023-01-01falsefalseCCH SoftwareCCH Accounts Production 2024.310M J DoyleJ A TempleA MaherG 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