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Registration number: 01329239

Graham Engineering Limited

Annual Report and Financial Statements

for the Period from 1 September 2023 to 30 August 2024

 

Graham Engineering Limited

Contents

Company Information

1

Chairman's Overview

2

Strategic Report

3 to 4

Directors' Report

5

Statement of Directors' Responsibilities

6

Independent Auditor's Report

7 to 9

Profit and Loss Account

10

Statement of Comprehensive Income

11

Balance Sheet

12

Statement of Changes in Equity

13

Statement of Cash Flows

14

Notes to the Financial Statements

15 to 27

 

Graham Engineering Limited

Company Information

Directors

Mrs S Davall

Mr T Eckford

Mr S Fraser

Mr J Haran

Mr F Kelly

Registered office

Edward Street
Whitewalls Industrial Estate
Nelson
Lancashire
BB9 8SY

Auditors

KM
Chartered Accountants & Statutory Auditors1st Floor, Block C
The Wharf
Manchester Road
Burnley
Lancashire
BB11 1JG

 

Graham Engineering Limited

Chairman's Overview for the Period from 1 September 2023 to 30 August 2024

The period has continued to be challenging with our order book still at a lower level although now increasing to pre-covid levels. There has been a reduction in demand from Sellafield, however we are now beginning to see significant growth from them both in their direct award contract and the new HISSCII contract.

Noting the revised trading position, we have reduced the headcount to match. In respect of this revision, we have achieved a result significantly better than breakeven with a much brighter horizon in respect of both secured orders and tendering prospects giving an increased trading profile for next year. This includes Siemens who have awarded us a 5 year extension to our existing contract and also a contract award from NRS for the Hunterston Box contract, this is alongside the placement for an extended delivery of slotted cans for Sellafield and an anticipated new order from Rapiscan.


Tony Eckford
Chairman

 

Graham Engineering Limited

Strategic Report for the Period from 1 September 2023 to 30 August 2024

The directors present their strategic report for the period from 1 September 2023 to 30 August 2024.

Principal activity

The principal activities of the company are those of precision stainless steel fabricators, deep drawn press work, 5 axis machining, laser cutting, laser engraving and 5 axis welding, all to high quality standards supported by our in-house detail drawings office.

Fair review of the business

Once again, we have a number of wider factors beyond operations affecting the results for the period. The continuing process of the sale of the company has remained dominant and has resulted in further exceptional costs of £138k affecting performance. There are also wider matters related to the sale which have inherently caused a drag on the result that aren’t quantified here.

The process of the company sale is continuing but we are now expecting a completion before the end of the fourth quarter 2024/25 where we will see a more stable and focused ‘drive’ going forward. The increases seen last year in the costs of employment have continued and have also impacted our insurance costs. Overall, in order to retain the core skills and competences needed for the 167 headcount, a small increase in numbers from last year, we have seen a 6.71% increase in our wage costs. The utility costs of the business too have increased by 52.51% from 2023.

At £14,978,717 we have seen marginal growth of 5.74% in turnover from last year with sales to Sellafield down by 4.87% now making up only 37.91% of total turnover. Better performance has been seen with the security scanners for Rapiscan as their market recovers with growth of 193.56%, similarly with the consumables for Rolls Royce with a pick up back to more normal levels reflecting growth of 65.78%. We have also seen the first element of growth through Magnox/NRS on box manufacture with that contract and another ancillary item adding over £1m to the top line.

Profit is at £276k pre-tax which is a marked improvement on 2022/23 and with the ten-year HISSCII contract with Sellafield signed in November 2023 we can see growth in turnover and profit continuing forward as we get the new production lines established.

Our targets to develop manufacturing solutions for new products have continued and we have made some progress in the defence sector with a new customer but this remains at a nominal level and with current tendering and work won, we see ourselves being challenged again to keep our dependence on one particular customer in the nuclear sector to below the 50% level.

Business capital investment continued at £450k spend on machining, press and laser capabilities with some disposals of handling equipment and old robotics at £103k.

In July 2024 we achieved the accreditation to the AS9100 standard that should allow us to expand our footprint in the aerospace and defence markets. Our developments continue in the cyber security environment with Cyber Essentials Plus still under way and List X our next target.

We continue to operate under ISO9001, ISO14001 and ISO45001(2018) and we achieved commended in the Manufacturing Industry Sector of the ROSPA awards 2024.

 

Graham Engineering Limited

Strategic Report for the Period from 1 September 2023 to 30 August 2024

Key performance indicators (KPI's)

The company's key financial and other performance indicators during the period were as follows:

(As restated)

Period ended

30 August 2024

31 August 2023

31 August 2022

Turnover

£14,978,717

£14,165,481

£16,434,983

Turnover growth

5.74%

(13.81)%

(10.76)%

Gross profit margin

19.04%

14.30%

15.53%

Profit before tax

£275,926

£5,429

£542,457

Principal risks and uncertainties

There are as always a number of risks and uncertainties which could have an impact on the company’s performance, both in the forthcoming year and in the longer term.

Risk management is an intrinsic part of this business to ensure that we manage the needs of stakeholders and that strategic objectives are met.

As uncertainty regarding global markets prevails with America's new approach, the continuing war in Europe and unresolved matters in the Middle East and now Asia our essentially UK based sales are generally protected. There are some wider potential risks for our customers in health and security in their respective international markets but neither customer perceives any problem at this time. Our suppliers again are basically UK based and may see some impacts with tariffs but we are not aware of anything of any significance in this area. We believe the company can reasonably be expected to continue in operation and meet its liabilities for the foreseeable future. Whilst we cannot predict with any certainty the duration or extent of these international events we believe we are actively managing the risks to our resources, assets, relationships and our staff on an ongoing basis.

Once the company sale process has completed a number of matters regarding balance sheet amounts and management focus should resolve themselves in the immediate future.

The core of our market remains in the UK nuclear sector and as such our industry is not as susceptible to the economic climate as other companies. Our main product is intrinsic in the protection of the environment and demand is very much determined by our customers processing abilities. We remain competitive in this area through high quality skills and flexibility.

The company’s operations are exposed to a variety of financial risks that include the effects of changes to customer credit risk and supply chain risk. The company has in place a risk management programme that seeks to limit the adverse effects on the financial performance of the company.

Policies are in place to limit the exposure to excess stock being carried forward from one period to the next. The company has no significant concentrations of credit risk. Receivable balances are monitored on an ongoing basis to ensure the company’s bad debt exposure is not significant.

Approved and authorised by the Board on 12 June 2025 and signed on its behalf by:
 

.........................................
Mr T Eckford
Director

 

Graham Engineering Limited

Directors' Report for the Period from 1 September 2023 to 30 August 2024

The directors present their report and the financial statements for the period from 1 September 2023 to 30 August 2024.

Directors of the company

The directors who held office during the period were as follows:

Mrs S Davall

Mr T Eckford

Mr S Fraser

Mr J Haran

Mr F Kelly

Results

The results for the company are set out in the financial statements.

Dividends

Dividends totalling £Nil (2023 - £500,000) were paid during the period.

Future developments

As part of our business development model we are continually looking for new markets. We are working with a number of potential opportunities in both aerospace and defence and we continue to develop our internal information systems security to support further work in both development and production in these sectors. We are bidding for and winning work from existing and new nuclear customers and await further release of box manufacture type contracts from the nuclear market. As emerging energy solutions develop, we look to enter those supply chains early in order to add our capabilities and see future significant growth outside of our current offering.

Research and development

The company will continue its policy of investment in research and development in order to retain a competitive position in the market.

Risk policies

As required by schedule 7.6(1)(a) and 7.6(1)(b) of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 the following information required to be disclosed in the directors report has been disclosed in the Strategic Report on page 3:
• an indication of financial risk management objectives and policies:
• an indication of the different risks the company is exposed to.

Disclosure of information to the auditors

Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.

Approved and authorised by the Board on 12 June 2025 and signed on its behalf by:
 

.........................................
Mr T Eckford
Director

 

Graham Engineering Limited

Statement of Directors' Responsibilities

The directors acknowledge their responsibilities 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 company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

select suitable accounting policies and apply them consistently;

make judgements and accounting estimates that are reasonable and prudent;

state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

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

 

Graham Engineering Limited

Independent Auditor's Report to the Members of Graham Engineering Limited

Opinion

We have audited the financial statements of Graham Engineering Limited (the 'company') for the period from 1 September 2023 to 30 August 2024, which comprise the Profit and Loss Account, Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Statement of Cash Flows, and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

give a true and fair view of the state of the company's affairs as at 30 August 2024 and of its profit for the period then ended;

have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

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

Conclusions relating to going concern

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

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 original financial statements were authorised for issue.

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

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. 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.

 

Graham Engineering Limited

Independent Auditor's Report to the Members of Graham Engineering Limited

Opinion on other matter prescribed by the Companies Act 2006

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

the information given in the Strategic Report and Directors' Report for the financial period for which the financial statements are prepared is consistent with the financial statements; and

the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.

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

adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

the financial statements are not in agreement with the accounting records and returns; or

certain disclosures of directors' remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities [set out on page 6], 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 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 company or to cease operations, or have no realistic alternative but to do so.

Auditor 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. Based on our understanding of the company and the nature of the industry, we identified that the principal risks of non-compliance with laws and regulations related to UK tax legislation, employment regulations, health and safety regulations, anti-bribery, corruption and fraud, money laundering and we considered the extent to which non-compliance might have a material effect on the financial statements. We also identified financial reporting standards and the Companies Act 2006 as having a direct impact on the preparation of financial statements.

Our audit procedures were designed to respond to those identified risks, including non-compliance with laws and regulations (irregularities) and fraud that are material to the financial statements. Our audit procedures included but are not limited to:

 

Graham Engineering Limited

Independent Auditor's Report to the Members of Graham Engineering Limited

Discussing with the directors and management their policies, procedures and related controls regarding compliance with laws and regulations and if there are any known instances with non-compliance;

Communicating identified laws and regulations throughout our engagement team and remaining alert to any indications of non-compliance throughout our audit;

Considering the risk of acts by the company which were contrary to applicable laws and regulations, including fraud;

Making enquiries of the directors and management on whether they had knowledge of any actual, suspected or alleged fraud;

Gaining an understanding of the internal controls established to mitigate risks related to fraud;

Discussing amongst the engagement team the risks of fraud; and

Addressing the risks of fraud through management override of controls by performing journal entry testing.

There are inherent limitations in the audit procedures described above and the primary responsibility for the prevention and detection of irregularities including fraud rests with management. As with any audit, there remained a risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal controls.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our 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.

......................................
Mark Heaton FCCA (Senior Statutory Auditor)
For and on behalf of KM, Statutory Auditor
 1st Floor, Block C
The Wharf
Manchester Road
Burnley
Lancashire
BB11 1JG

25 June 2025

 

Graham Engineering Limited

Profit and Loss Account for the Period from 1 September 2023 to 30 August 2024

Note

2024
£

2023
£

Turnover

4

14,978,717

14,165,481

Cost of sales

 

(12,126,046)

(12,140,165)

Gross profit

 

2,852,671

2,025,316

Distribution costs

 

(97,533)

(61,669)

Administrative expenses

 

(2,453,095)

(1,955,157)

Other operating income

5

(10,166)

19,700

Operating profit

6

291,877

28,190

Other interest receivable and similar income

7

33,322

29,722

Interest payable and similar expenses

8

(49,273)

(52,483)

Profit before tax

 

275,926

5,429

Tax on profit

12

(121,235)

(21,901)

Profit/(loss) for the financial period

 

154,691

(16,472)

The above results were derived from continuing operations.

 

Graham Engineering Limited

Statement of Comprehensive Income for the Period from 1 September 2023 to 30 August 2024

2024
£

2023
£

Profit/(loss) for the period

154,691

(16,472)

Movement in deferred tax on property revaluation

5,211

4,755

Total comprehensive income for the period

159,902

(11,717)

 

Graham Engineering Limited

(Registration number: 01329239)
Balance Sheet as at 30 August 2024

Note

2024
£

2023
£

Fixed assets

 

Tangible assets

13

8,376,362

8,508,089

Current assets

 

Stocks

14

2,055,948

1,493,679

Debtors

15

5,611,104

5,018,622

Cash at bank and in hand

 

669,974

1,887,508

 

8,337,026

8,399,809

Creditors: Amounts falling due within one year

16

(2,662,939)

(2,891,162)

Net current assets

 

5,674,087

5,508,647

Total assets less current liabilities

 

14,050,449

14,016,736

Creditors: Amounts falling due after more than one year

16

(141,926)

(263,811)

Provisions for liabilities

17

(1,660,749)

(1,665,053)

Net assets

 

12,247,774

12,087,872

Capital and reserves

 

Called up share capital

100,000

100,000

Revaluation reserve

1,713,408

1,729,040

Retained earnings

10,434,366

10,258,832

Shareholders' funds

 

12,247,774

12,087,872

Approved and authorised by the Board on 12 June 2025 and signed on its behalf by:
 

.........................................
Mr T Eckford
Director

 

Graham Engineering Limited

Statement of Changes in Equity for the Period from 1 September 2023 to 30 August 2024

Share capital
£

Revaluation reserve
£

Retained earnings
£

Total
£

At 1 September 2023

100,000

1,729,040

10,258,832

12,087,872

Profit for the period

-

-

154,691

154,691

Other comprehensive income

-

(15,632)

20,843

5,211

Total comprehensive income

-

(15,632)

175,534

159,902

At 30 August 2024

100,000

1,713,408

10,434,366

12,247,774

Share capital
£

Revaluation reserve
£

Retained earnings
£

Total
£

At 1 September 2022

100,000

1,743,303

10,756,286

12,599,589

Loss for the period

-

-

(16,472)

(16,472)

Other comprehensive income

-

(14,263)

19,018

4,755

Total comprehensive income

-

(14,263)

2,546

(11,717)

Dividends

-

-

(500,000)

(500,000)

At 31 August 2023

100,000

1,729,040

10,258,832

12,087,872

 

Graham Engineering Limited

Statement of Cash Flows for the Period from 1 September 2023 to 30 August 2024

Note

2024
£

2023
£

Cash flows from operating activities

Profit/(loss) for the period

 

154,691

(16,472)

Adjustments to cash flows from non-cash items

 

Depreciation and amortisation

6

554,448

597,087

Loss on disposal of tangible assets

26,642

4,636

Finance income

7

(33,322)

(29,722)

Finance costs

8

49,273

52,483

Corporation tax expense

12

121,235

21,901

 

872,967

629,913

Working capital adjustments

 

Increase in stocks

14

(562,269)

(174,183)

Increase in trade debtors

15

(488,762)

(744,087)

(Decrease)/increase in trade creditors

16

(276,652)

419,157

Cash generated from operations

 

(454,716)

130,800

Corporation taxes (paid)/received

12

(92,409)

270,044

Net cash flow from operating activities

 

(547,125)

400,844

Cash flows from investing activities

 

Interest received

7

33,322

29,722

Acquisitions of tangible assets

(151,527)

(178,261)

Proceeds from sale of tangible assets

 

161

2,500

Net cash flows from investing activities

 

(118,044)

(146,039)

Cash flows from financing activities

 

Interest paid

8

(49,273)

(52,483)

Repayment of bank borrowing

 

-

(7,687)

Repayment of other borrowing

 

-

(1,116)

Payments to finance lease creditors

 

(503,092)

(504,465)

Dividends paid

22

-

(500,000)

Net cash flows from financing activities

 

(552,365)

(1,065,751)

Net decrease in cash and cash equivalents

 

(1,217,534)

(810,946)

Cash and cash equivalents at 1 September

 

1,887,508

2,698,454

Cash and cash equivalents at 30 August

 

669,974

1,887,508

 

Graham Engineering Limited

Notes to the Financial Statements for the Period from 1 September 2023 to 30 August 2024

1

General information

The company is a private company limited by share capital, incorporated in England and Wales.

The address of its registered office is:
Edward Street
Whitewalls Industrial Estate
Nelson
Lancashire
BB9 8SY

2

Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and the Companies Act 2006.

Basis of preparation

These financial statements have been prepared on a going concern basis using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

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 £.

Going concern

The financial statements have been prepared on a going concern basis.

Revenue recognition

Turnover represents amounts chargeable, net of value added tax, in respect of the sale of goods to customers. Turnover is recognised when goods are invoiced, which corresponds to their delivery to customers. Payments on account on long-term contracts or in advance of work undertaken are excluded from turnover within the year and shown within stocks on the balance sheet. When contract obligations are met and profitability is assured these are then released to turnover.

Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

A grant that specifies performance conditions is recognised in income when the performance conditions are met. When a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

 

Graham Engineering Limited

Notes to the Financial Statements for the Period from 1 September 2023 to 30 August 2024

Corporation tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

The current tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and on unused tax losses or tax credits in the Company. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

The carrying amount of deferred tax assets are reviewed at each reporting date and a valuation allowance is set up against deferred tax assets so that the net carrying amount equals the highest amount that is more likely than not to be recovered based on current or future taxable profit.

Tangible assets

Tangible assets are stated at cost or valuation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land over their estimated useful lives, as follows:

Asset class

Depreciation method and rate

Freehold property

2% per annum on cost or valuation

Motor vehicles

25% per annum on cost

Plant and machinery

10% per annum on reducing balance basis

Trade debtors

Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.

Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.

Stocks

Stocks of raw materials and consumables are valued at the lower of cost and net realisable value.

Work in progress is valued on the basis of cost plus an appropriate portion of fixed and variable overheads based on normal levels of activity. Profit on individual contracts is only taken at an appropriate stage in the contract when the margins earned to date and the proportion of that prudently forecast at completion can be reasonably ascertained. Profit on major contracts is taken only at 50% completion stage in the contract. Provision is made for any foreseeable losses, where appropriate, taking a prudent view of future non-recoverable costs. Profit for the period includes the benefit of claims for recovery of additional costs incurred on contracts completed in prior years.

 

Graham Engineering Limited

Notes to the Financial Statements for the Period from 1 September 2023 to 30 August 2024

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price.

Borrowings

Loans and borrowings are initially recognised at the transaction price including transaction costs. Subsequently they are measured at amortised cost using the effective interest rate method. If an arrangement constitutes a finance transaction it is measured at present value.

Leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit and loss on a straight-line basis over the period of the lease.

Finance leases giving rights approximating to ownership are capitalised and depreciated over the expected life of the asset. Lease payments are apportioned between the finance charges and the reduction of the outstanding lease liability using the effective interest method.

Assets acquired under hire purchase agreements are capitalised and depreciated over the expected life of the asset. Hire purchase payments are apportioned between the finance charges and the reduction of the outstanding hire purchase liability using the effective interest method.

Share capital

Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.

Dividends

Dividend distribution to the company’s shareholders is recognised as a liability in the financial statements in the reporting period in which the dividends are declared.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

Financial instruments

Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as financial assets and financial liabilities.

 

Graham Engineering Limited

Notes to the Financial Statements for the Period from 1 September 2023 to 30 August 2024

3

Judgements and key sources of estimation uncertainty

Judgements

In the application of the company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilites 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 periods.

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Revenue recognition

Individual contracts can be long term in nature. An assessment is made of the stage of completion at a period end, requiring an element of judgement. These judgements are regularly reviewed to reflect the changing environment.

Profit recognition

Individual contracts can be long term in nature. An assessment is made of the profit on individual contracts at a period end, requiring an element of judgement. These judgements are regularly reviewed to reflect the changing environment.

Depreciation

The depreciation expense is the recognition of the decline in the value of the asset and allocation of the cost of the asset over the periods in which the asset will be used. Judgements are made as to the estimated useful life of the assets. These judgements are regularly reviewed to reflect the changing environment.

Impairment of fixed assets

The company assesses the impairment of tangible fixed assets and intangible assets subject to depreciation whenever events or changes in circumstances indicate that the carrying value may not be recoverable. These judgments are regularly reviewed to reflect the changing environment.

4

Turnover

The analysis of the company's turnover for the period from continuing operations is as follows:

2024
£

2023
£

Sale of goods and long-term contract income

14,978,717

14,165,481

5

Other operating income

The analysis of the company's other operating income for the period is as follows:

2024
£

2023
£

Miscellaneous other operating income

(10,166)

19,700

 

Graham Engineering Limited

Notes to the Financial Statements for the Period from 1 September 2023 to 30 August 2024

6

Operating profit

Arrived at after charging/(crediting)

2024
£

2023
£

Depreciation expense

554,448

597,087

Operating lease expense - plant and machinery

117,820

49,570

Loss on disposal of plant and machinery

26,642

4,636

Exceptional administrative expenses

137,917

-

7

Interest receivable and similar income

2024
£

2023
£

Interest income on bank deposits

26,247

18,788

Other finance income

7,075

10,934

33,322

29,722

8

Interest payable and similar expenses

2024
£

2023
£

Interest on bank overdrafts and borrowings

-

164

Interest on obligations under finance leases and hire purchase contracts

49,273

52,319

49,273

52,483

9

Staff costs

The aggregate payroll costs (including directors' remuneration) were as follows:

2024
£

2023
£

Wages and salaries

6,237,806

5,834,758

Social security costs

629,259

594,385

Pension costs, defined contribution scheme

277,835

266,526

7,144,900

6,695,669

The average number of persons employed by the company (including directors) during the period, analysed by category was as follows:

2024
No.

2023
No.

Production

94

87

Administration and support

73

77

167

164

 

Graham Engineering Limited

Notes to the Financial Statements for the Period from 1 September 2023 to 30 August 2024

10

Directors' remuneration

The directors' remuneration for the period was as follows:

2024
£

2023
£

Remuneration

334,950

324,006

Contributions paid to money purchase schemes

79,565

85,493

414,515

409,499

During the period the number of directors who were receiving benefits and share incentives was as follows:

2024
No.

2023
No.

Share options

2

2

Accruing benefits under money purchase pension schemes

3

3

In respect of the highest paid director:

2024
£

2023
£

Remuneration

105,082

107,028

Company contributions to money purchase pension schemes

36,647

41,199

11

Auditors' remuneration

2024
£

2023
£

Audit of the financial statements

18,500

19,246

Other fees to auditors

All other services

2,450

22,012


 

 

Graham Engineering Limited

Notes to the Financial Statements for the Period from 1 September 2023 to 30 August 2024

12

Taxation

Tax charged/(credited) in the profit and loss account

2024
£

2023
£

Current taxation

UK corporation tax

120,328

90,800

Deferred taxation

Arising from origination and reversal of timing differences

907

(68,899)

Tax on profit

121,235

21,901

The tax on profit before tax for the period is higher than the standard rate of corporation tax in the UK (2023 - higher than the standard rate of corporation tax in the UK) of 25% (2023 - 25%).

The differences are reconciled below:

2024
£

2023
£

Profit before tax

275,926

5,429

Corporation tax at standard rate

68,982

1,357

Effect of expense not deductible in determining taxable profit

35,460

22,483

Decrease from effect of tax incentives

-

(4,023)

Tax increase from effect of capital allowances and depreciation

16,793

16,791

Tax decrease from changes in tax legislation

-

(14,707)

Total tax charge

121,235

21,901

Deferred tax

Deferred tax liabilities

2024

Asset
£

Liability
£

Difference between accumulated depreciation and capital allowances

-

1,089,613

Deferred tax on property revaluation

-

571,136

-

1,660,749

2023

Asset
£

Liability
£

Difference between accumulated depreciation and capital allowances

-

1,088,706

Deferred tax on property revaluation

-

576,347

-

1,665,053

 

Graham Engineering Limited

Notes to the Financial Statements for the Period from 1 September 2023 to 30 August 2024

13

Tangible assets

Land and buildings
£

Motor vehicles
 £

Plant and machinery
£

Total
£

Cost or valuation

At 1 September 2023

4,449,468

122,799

11,707,137

16,279,404

Additions

-

-

449,524

449,524

Disposals

-

-

(102,500)

(102,500)

At 30 August 2024

4,449,468

122,799

12,054,161

16,626,428

Depreciation

At 1 September 2023

658,122

114,961

6,998,232

7,771,315

Charge for the period

67,590

7,235

479,624

554,449

Eliminated on disposal

-

-

(75,698)

(75,698)

At 30 August 2024

725,712

122,196

7,402,158

8,250,066

Carrying amount

At 30 August 2024

3,723,756

603

4,652,003

8,376,362

At 31 August 2023

3,791,346

7,838

4,708,905

8,508,089

Included within the net book value of land and buildings above is £3,723,756 (2023 - £3,791,345) in respect of freehold land and buildings.
 

Revaluation

The fair value of the company's freehold land and buildings was revalued on 31 August 2013 by an independent valuer. Had this class of asset been measured on a historical cost basis, the carrying amount would have been £1,439,212 (2023 - £1,485,959).

Assets held under finance leases and hire purchase contracts

The net carrying amount of tangible assets includes the following amounts in respect of assets held under finance leases and hire purchase contracts:

2024
£

2023
£

Plant and machinery

1,332,124

1,469,139

Motor vehicles

-

7,838

1,332,124

1,476,977

 

Graham Engineering Limited

Notes to the Financial Statements for the Period from 1 September 2023 to 30 August 2024

14

Stocks

2024
£

2023
£

Raw materials and consumables

121,029

146,828

Work in progress

1,934,919

1,617,444

Long-term contracts - payments on account

-

(270,593)

2,055,948

1,493,679

15

Debtors

2024
£

2023
£

Trade debtors

3,005,288

2,833,289

Other debtors

1,584,370

1,261,679

Prepayments

508,958

514,886

Corporation tax recoverable

512,488

408,768

5,611,104

5,018,622

16

Creditors

Note

2024
£

2023
£

Due within one year

 

Loans and borrowings

20

362,195

445,405

Trade creditors

 

1,247,666

1,058,585

Social security and other taxes

 

518,877

768,583

Outstanding defined contribution pension costs

 

35,369

37,920

Accruals

 

274,784

168,260

Corporation tax liability

12

224,048

92,409

Dividends payable

 

-

320,000

 

2,662,939

2,891,162

Due after one year

 

Loans and borrowings

20

141,926

263,811

 

Graham Engineering Limited

Notes to the Financial Statements for the Period from 1 September 2023 to 30 August 2024

17

Provisions for liabilities

Deferred tax
£

Total
£

At 1 September 2023

1,665,053

1,665,053

Decrease arising from origination and reversal of timing differences

907

907

Decrease in deferred tax on property revaluation

(5,211)

(5,211)

At 30 August 2024

1,660,749

1,660,749

The deferred tax liability includes a provision for deferred tax on the gain on the revaluation of the company's freehold land and buildings.

18

Pension and other schemes

Defined contribution pension scheme

The company operates a defined contribution pension scheme. The pension cost charge for the period represents contributions payable by the company to the scheme and amounted to £277,835 (2023 - £266,526).

Contributions totalling £35,369 (2023 - £37,920) were payable to the scheme at the end of the period and are included in creditors.

19

Share capital

Allotted, called up and fully paid shares

2024

2023

No.

£

No.

£

Ordinary shares of £1 each

100,000

100,000

100,000

100,000

       
 

Graham Engineering Limited

Notes to the Financial Statements for the Period from 1 September 2023 to 30 August 2024

20

Loans and borrowings

Non-current loans and borrowings

2024
£

2023
£

Hire purchase contracts

141,926

263,811

Current loans and borrowings

2024
£

2023
£

Hire purchase contracts

362,195

445,405

Hire purchase contracts

Hire purchase contracts are secured on the assets concerned.

21

Obligations under leases and hire purchase contracts

Hire purchase contracts

The total of future minimum lease payments is as follows:

2024
£

2023
£

Not later than one year

383,864

491,014

Later than one year and not later than five years

168,849

278,700

552,713

769,714

Operating leases

The total of future minimum lease payments is as follows:

2024
£

2023
£

Not later than one year

15,629

13,723

Later than one year and not later than five years

25,000

629

40,629

14,352

The amount of non-cancellable operating lease payments recognised as an expense during the period was £18,723 (2023 - £24,136).

22

Dividends

   

2024

 

2023

   

£

 

£

Dividend of £Nil (2023 - £5.00) per ordinary share

 

-

 

500,000

         
 

Graham Engineering Limited

Notes to the Financial Statements for the Period from 1 September 2023 to 30 August 2024

23

Commitments

Capital commitments

The total amount contracted for but not provided in the financial statements was £Nil (2023 - £40,938).

24

Related party transactions

Key management compensation

2024
£

2023
£

Salaries and other short term employee benefits

420,735

413,866

Transactions with directors and former directors

2024

At 1 September 2023
£

Advances to director
£

Interest
£

At 30 August 2024
£

Executors of Mr CT Graham deceased

Loans from the company

1,024,759

-

-

1,024,759

         

Mrs P Graham

Loans from the company

104,844

17,772

2,464

125,080

         

Mr P Manley

Loans from the company

-

29,620

-

29,620

         

2023

At 1 September 2022
£

Interest
£

At 31 August 2023
£

Executors of Mr CT Graham deceased

Loans from the company

1,024,759

-

1,024,759

       
     

Mrs P Graham

Loans from the company

102,663

2,181

104,844

       
     

 

Graham Engineering Limited

Notes to the Financial Statements for the Period from 1 September 2023 to 30 August 2024

 

Summary of transactions with other related parties

CT Graham Discretionary Trust
(The director Mrs S Davall is a trustee)

Loans to related parties

2024

Other related parties
£

Total
£

At start of period

132,075

132,075

Advanced

248,804

248,804

Interest

4,448

4,448

At end of period

385,327

385,327

2023

Other related parties
£

Total
£

At start of period

127,308

127,308

Advanced

180,000

180,000

Repaid

(180,000)

(180,000)

Interest

4,767

4,767

At end of period

132,075

132,075

25

Controlling party

The company is controlled by CT Graham Discretionary Trust who own 84% of the issued share capital. The ultimate controlling party is the Trustees of CT Graham Discretionary Trust being Mrs P Graham, Mrs S Davall, Mrs C Graham-Hodson and Mrs K Sparkes.