The directors have pleasure in presenting their report and the financial statements of the company for the year ended 31st December 2024.
Strategy and Objectives
Howorth Air Technology Limited (Howorth) is internationally recognised as a leading innovator of Air Containment and Management solutions for the Healthcare and Life Sciences sectors. The principal activities of the company continue to be the design, manufacture and installation of:
ultra clean air products and building systems for the healthcare sector
toxic substance containment equipment for the pharmaceutical industry
aseptic pharmaceutical manufacturing solutions
decontamination products and services
aftersales service, maintenance and spare part sales covering all sectors.
Howorth entered 2024 with a strong opening order position of £17.0m and in 2024, we saw our overall Order Intake level fall slightly behind the 2023 level at £25.1m in 2024 (2023: £25.7m). Despite the dip, 2 of our 3 business units actually saw an increase to the 2024 order intake levels. There continues to be a strong pipeline of opportunities for 2025, with our strongest Q1 of order intake recorded in 2025.
The key Financial Metrics for the year were:
Order Intake at £25.1m in 2024 (2023: £25.7m; 2022: £19.9m)
Turnover in line with prior year at £23.5m (2023: £23.6m)
EBITDA was down 76% to £387,162 (2023: £1,628,830)
Howorth continues to develop its people and the culture within the business to increase employee engagement to further improve the Customer experience and creating a strong foundation for the business to take on new opportunities.
2024 also saw the business make a significant investment in relocating to a modern facility, incurring £120,000 of relocation costs. We also had a further £320,000 of one-off costs in the year impacting on our overall EBITDA figure, adjusting for these costs would show our EBITDA at £825,670.
Business Model
The Group structure remained unchanged in 2024, with Howorth Air Technology Limited focused on all International geographic markets, except for North America and Canada which is managed through the wholly owned subsidiary, Howorth Air Technology, Inc. Whilst all design and manufacturing is delivered from the UK, approximately 56% of revenue in 2024 was derived from overseas contracts.
In North America and Canada, the strengthening of the leadership team has continued to see a focus on increasing our presence in this critical market for the business. This market is a key area of opportunity for the business and the company will continue to increase its offerings in this market.
In the UK Healthcare market, our approach involves providing solutions to meet the needs of the end users. The delivery of these solutions requires us to partner with a number of third parties. The business continues to ensure that all operations and activities are executed within the UK's legislation and within that of the local Countries in which we operate, and we maintained an exceptional health and safety record through the year. Business policies relating to Employees, Anti-Bribery, Social and Environmental Responsibilities are reviewed with strict governance in place.
Business Enviroment
Trends and Factors
Howorth has continued to see an increase in the number of long-term service contracts being secured by our Aftermarket business unit, driven by our commitment to provide a quality products and exceptional service. We have also seen an increased demand for our products and installation due to lifecycle replacements.
Our Medical Capital projects team, however, saw a significant decrease in the level of order intake through 2024 with the UK elections seeing lengthy delays to project approval and investment. We expect to see an improved sense of confidence in the sector during 2025, as we see the NHS start to release budgets for capital investment. We remained well positioned with steady demand for our Ultra Clean Ventilation systems, and we continue to see a number of opportunities in our future pipeline.
We are still seeing strong demand from our strategic markets, in particular the US market and we are well positioned to take advantage of these opportunities. The pipeline of international opportunities remains very strong.
We also saw significant increases to our cost base during 2024 because of global inflationary pressures. Given the project nature of our business, we had to absorb a large proportion of these costs, however, we are seeing these pressures ease during 2025 and also made adjustments to our commercial terms and practices to mitigate these issues moving forward.
There has been no change to the key factors that could affect Howorth's operational financial performance in the short to medium term (one to five years), and these can be considered in two separate categories, Internal Operations and External Market Dynamics. We continue to invest in our design infrastructure to improve the efficiency of our operations and continuously assess the structure and resources required to deliver operational excellence.
There remains some uncertainty in the political environment as we move forward, and 2024 results were significantly impacted by this. Whilst we expect some disruption this year, we are also seeing an increased level of opportunity, both in the US market as well as other markets, including the UK.
We continue to monitor business KPIs on an appropriate and regular basis and have generated improved views for the requirements of the business in terms of resources etc., which has further supported the stability of the business.
Considering external factors affecting the business, the key market sectors in which we operate, Life Sciences (Pharmaceutical) and Healthcare, have long-term stability and show signs of continued growth. The demand drivers of an escalating and aging global population, along with the impact of the pandemic on the healthcare sector, will continue to drive demand for medication and healthcare services. This need, in addition to the increasing complexity of pharmaceutical manufacturing, will call for increased capacity from both medical infrastructure providers and the pharmaceutical industry. We envisage an improvement of the current growth rate within our existing and target markets.
The competitive landscape in 2024 remained constant and consistent. In both the Life Sciences and Healthcare markets, the majority of projects are sourced through competitive tender with, typically, a subset of our known competitors being approached. Given the nature of our customer's requirements, each project is considered on its own individual merits.
The Company maintains its ISO 9001-2015 and ISO 45001-2018 accreditations and successfully upheld its accreditation status for another 3 years in 2025. The company is committed to maintaining these standards and is continues to focus on improving these areas. Specific Procedures in place include:
Non-Conformance
Sustainability
Waste Control
Emergency Preparedness
Training
Recycling, including all waste being segregated & recycled
Operations Control
Energy, which is monitored quarterly.
The above are reviewed annually and subject to audit by Achilles and ISOQAR as part of our integrated operating systems. Environmental aspects form part of our construction site audits and workplace inspections.
Formalised training for the entire workforce was maintained in 2024, with online and practical Health and Safety being a priority.
The policy to support apprentices and sponsor individuals with external training has been continued and expanded to include creating opportunities for internships as well as industrial placements from local further educational institutions.
During 2024 we continued to undertake an employee engagement survey and maintained the high level of engagement in our survey scores. We will continue this process so that we become the employer of choice in our sector and locality.
We have maintained our focus on improving the mental fitness and well-being of our team in 2024, deepening our links with Rugby League Cares.
The business has also kept up its support of the local charity Bolton Lads & Girls club by remaining a bronze patron as well as supporting fundraising events. We recognise the importance of providing young people with a safe haven to spend their free time in the Bolton area and making a difference to people's lives.
Howorth Air Technology are committed to play its part in making a difference to the world's sustainability needs and this remains a key strategic focus of the business.
Analysis of Performance and Position
The company was essentially at a break-even level in 2024, with a small net loss before tax of £80,674, and expects to see a significant improvement on this in 2025. The company was able to improve its overall cash inflow from operating activities at £2.1m from £1.7m in 2023, improving our overall cash position by £1.2m at the end of 2024.
Performance with Regard to KPIs
The business utilises financial and non-financial KPIs to monitor the performance of the business on a monthly and quarterly basis. These measurements cover all stages of the business lifecycle from sales through production to delivery and are complemented by the typical financial KPIs for a SME business. We continue to research from external data sources against which the effectiveness of the business can be measured.
Howorth continues to track its operational effectiveness through on-time delivery and project profitability. Both metrics have improved significantly through 2024, and we have currently embarked on a number of initiatives to improve further into 2025.
Delivering a quality solution for our customers is a key value driver for the business. We have introduced a Corrective Action loop to our NCR framework to ensure continuous improvement and monitor this at board level.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2024.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, DJH Audit Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Identification of the information for which the company has chosen, in accordance with S414C(11) of the Companies Act, to set out in the company's strategic report which would otherwise be required by Schedule 7 of the 'Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008' to be contained in the directors' report.
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
We have audited the financial statements of Howorth Air Technology Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2024 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
As part of our planning process:
We enquired of management the systems and controls the group has in place, the areas of the financial statements that are mostly susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud.
We obtained an understanding of the legal and regulatory frameworks applicable to the group. We determined that the following were most relevant: FRS 102, Companies Act 2006, Health and Safety at Work 1974, Employment Act 2002, Construction Design and Management Regulations 2015 and General Data Protection Regulations (GDPR).
We considered the incentives and opportunities that exist in the group, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailored our risk assessment accordingly.
Using our knowledge of the group, together with the discussions held with the company at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Identifying and testing journal entries, in particular those that were significant and unusual.
Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.
Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates, in particular in relation to the calculation of depreciation, capitalisation of development costs, turnover recognition on long term contracts and the valuation of stock.
Assessing the extent of compliance, or lack of, with the relevant laws and regulations in particular those that are central to the entities ability to continue in operation.
Testing key turnover lines, in particular cut-off, for evidence of management bias.
Performing a physical verification of key assets , including stock.
Obtaining third-party confirmation of material bank and loan balances.
Documenting and verifying all significant related party and consolidated balances and transactions.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.
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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £41,085 (2023 - £700,313 profit).
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
Howorth Air Technology Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Unit F2C Multiply, Logistics Way, Lomax Way, Bolton, United Kingdom, BL5 1FQ.
The group consists of Howorth Air Technology Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The consolidated group financial statements consist of the financial statements of the parent company Howorth Air Technology 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 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
At 31 December 2024 the Group reported losses in the current year of £97,988 and now has positive shareholder funds of £3,183,181. Within the Group's debtors are shareholder and related party loans totalling £4,450.
The Group has a strong pipeline of work post year end. As at the 31 May 2025 the company's management accounts reflect a positive Profit and loss account and are forecasting profits for the year ended 31 December 2025. The Group meets its day to day working capital requirement through invoice discounting and overdraft facilities. In respect of the overdraft facility the Group continues to enjoy the support of its lender post year end. The invoice discounting facility is cancellable by either party by giving 3 months' notice. The providers have indicated there is no known reason for them to withdraw their support. The directors are in negotiations to secure a long term facility.
After making enquiries the directors believe they have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. The directors therefore continue to adopt the going concern basis in preparing Group's financial statements.
Turnover comprises the value of sales (excluding VAT, similar taxes and trade discounts) of goods and services provided in the normal course of business.
Turnover is recognised when goods are despatched, which is the same day as goods are delivered and hence is the point at which the risks are rewards of ownership pass to the buyer.
Turnover from the rendering of services is measured by reference to the stage of completion of the service transaction at the end of the reporting period provided that the outcome can be reliably estimated. When the outcome cannot be reliably estimated, turnover is recognised only to the extent that it is probable the expenses recognised will be recovered.
Turnover derived from long term contracts reflect the value of work in the period as a proportion of the total contract value.
The amount by which turnover exceed payments on account is classified as accrued income in debtors, to the extent that payments on account exceed relevant turnover, the excess is included as a creditor.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
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.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
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.
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.
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.
The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method 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, 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.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, 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.
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.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
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.
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.
On consolidation, the results of overseas operations are translated into GBP at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.
Exchange differences are recognised in the income statement in the Group entities' separate financial statements on the translation of long-term monetary items. These form part of the Group's net investment in the overseas operation concerned, and are reclassified to other comprehensive income and accumulated in the foreign exchange reserve on consolidation.
Work in progress
Turnover is recognised at the period end of each project and is based on costs incurred to date as a proportion of the estimated total costs of the project. The total cost is estimated in relation to previous construction runs with the assumption that common projects will likely incur similar costs. For new projects an evaluation is made into the design and production requirements of the project at commencement with the assumption that management have the experience to accurately predict the total costs.
Provisions
Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of the provision as an expense.
Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in the income statement unless the provision was originally recognised as part of the cost of an asset. When a provision is measured at the present value of the amount expected to be required to settle the obligation, the unwinding of the discount is recognised as a finance cost in the income statement in the period it arises.
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 estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.
Estimating the useful economic life of an asset and the anticipated residual value are considered the key judgement in calculating an appropriate depreciation charge.
Making a judgement that the expenditure incurred related to development costs is captialised based on the technical and economic feasibility of the project. In addition, in determining the amount of costs to be capitalised, the management has made assumptions into the future cash generation of the development assets.
Making judgement based on historical experience on the level of provision required for impairment of inventories.
Making a judgement on the level of income to be recognised on long term contracts in accordance with the accounting policy below. The key assumption in confirming the profitability and the turnover to be recognised at the period end of each project is based on costs incurred to date as a proportion of the estimated total cost of the project. The total cost is estimated in relation to previous construction runs with the assumption that common projects will likely incur similar costs. For new projects an evaluation is made into the design and production requirements of the project at commencement with the assumption that management have the experience to accurately predict the total costs.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 3 (2023 - 3).
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:
Included within motor vehicles are assets held under hire purchase agreements with a net book value of £238,627 (2023: £192,198).
All tangible assets are pledged as security for the group's bank overdraft and bank loan under a floating charge in favour of HSBC Bank PLC.
Details of the company's subsidiaries at 31 December 2024 are as follows:
Details of associates at 31 December 2024 are as follows:
All tangible assets are pledged as security for the group's bank overdraft and bank loan under a floating charge in favour of HSBC Bank Plc.
All tangible assets are pledged as security for the group's invoice discounting facility under a floating charge in favour of IGF Invoice Finance Limited. The amount secured as at 31 December 2024 was £452,837 (2023: £775,805).
Hire purchase liabilities are secured on the assets to which they relate.
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
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.
Retained earnings - All other net gains and losses and transactions with owners not recognised elsewhere.
Other reserves - Gains/losses arising on retranslating the net assets of overseas subsidiaries into GBP.
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:
The remuneration of key management personnel is as follows.
During the year the group entered into the following transactions with related parties:
The following amounts were outstanding at the reporting end date:
The following amounts were outstanding at the reporting end date:
Included within the balance is an amount owed by Howorth Westbury Holidngs Limited which is controlled by A Parker, the majority shareholder and director of Howorth Air Technology Limited. These amounts have been loaned to the company on an interest free basis but have no formal repayment terms.
The below advance is unsecured, interest free and repayable on demand. There were no individual advances that were considered material. The maximum overdrawn balance during the year was £1,302,885 (2023: £1,371,702)