The company operates in an ever increasing competitive market with continual pressure on revenue, material costs and gross margin. Every effort is being made to mitigate the impact on customers from these risks by engaging closely with customers and suppliers at all levels; capital investment; and responding quickly to opportunities.

The main trading activities are with UK-based subsidiaries of European manufacturers so risk from currency fluctuation is considered low.

The usual risks associated with selling on credit remain and credit risk is monitored closely. Exposure to this risk is mitigated through robust credit control procedures.

We continue to work closely with manufacturing partners and customers to deliver competitive, technical solutions. This is supported by continual investment in staff, technology and stock to ensure that we can meet the needs of our customers.

The level of business and the year-end financial position are considered satisfactory. Revenue and profits remained strong and in line with expectations. The level of activity is expected to be sustained for the foreseeable future.

Great importance is placed on the development and retention of staff. Our competitive edge comes from their relentless efforts and commitment to their customers. As a result, our customers enjoy high levels of customer service and technical support.

The Directors also consider the Key Performance Indicators that communicate financial performance and financial strength to be mainly revenue, gross margin and net assets.

The directors continue to work hard to improve revenue, pre-tax profit and net assets in a very competitive market.

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non compliance with laws and regulations, was as follows:

■ The engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;

■ We identified the laws and regulations applicable to the company through discussions with directors and other management;

■ We focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company.

To address the risk of fraud through management bias and override of controls, we:

■ Performed analytical procedures to identify any unusual or unexpected relationships;

■ Tested journal entries to identify unusual transactions;

■ Assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and

■ Investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

■ Agreeing financial statement disclosures to underlying supporting documentation;

■ Reading the minutes of meetings of those charged with governance;

■ Enquiring of management as to actual and potential litigation and claims;

■ Reviewing correspondence with HMRC, Companies House and the company’s legal advisors.

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

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

Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

An increase in the carrying amount of an asset as a result of a revaluation, is recognised in other comprehensive income and accumulated in equity, except to the extent it reverses a revaluation decrease of the same asset previously recognised in profit or loss. A decrease in the carrying amount of an asset as a result of revaluation, is recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity in respect of that asset. Where a revaluation decrease exceeds the accumulated revaluation gains accumulated in equity in respect of that asset, the excess shall be recognised in profit or loss.

Depreciation

Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:

Impairment of fixed assets

A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date.

For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets.

For impairment testing of goodwill, the goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the company are assigned to those units.

The Directors have not identified any material uncertainties related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern.

At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Post year end activity levels remain at a similar level and the company has a strong balance sheet. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Preparation of the financial statements require management to make significant judgements and estimates.  The items in the financial statements where these judgements and estimates have been made are summarised in the depreciation policy.

Provision is made for slow moving stock on a line by line basis based on historical usage, which management believe provides a guide to recoverable value.

The company has provided the Danske bank with the following securities:

          a) A fixed charge over the book debts

The company‘s bankers have legal mortgage over the following properties:

          a) 1 Aden Road, Enfield, EN3 7SE

The company’s financial instruments comprise trade and other debtors, cash and cash equivalents, trade and other creditors, bank loans and amounts owed to group undertakings.

Financial assets that are debt instruments are measured at amortised cost and include trade debtors, amounts owed by group undertakings, other debtors and cash and cash equivalents.

Financial liabilities measured at amortised cost include trade creditors, other creditors, bank loans and amounts owed to group undertakings.

The carrying amounts of the company’s financial assets and financial liabilities measured at amortised cost are disclosed within Notes 14 to 17 to these financial statements. The directors consider that the carrying amounts of the financial instruments approximate to their fair values due to the short-term nature of the balances, with the exception of bank loans which are measured at amortised cost using the effective interest method.

The amount recognised in profit or loss as an expense in relation to defined contribution plans was

£154,515 (2024 - £144,636).

Share premium account

There was no movement on the share premium account of £53,574 during the financial year.

The company is a wholly owned subsidiary of Underwoods Group Limited. The ultimate parent undertaking is Westbank Group Limited.

Balances with group undertakings at the reporting date are disclosed in Notes 14 and 17. These balances arose in the normal course of trading, are unsecured, interest-free and repayable on demand.