ACCOUNTS - Final Accounts

OPERATING PROFIT

The operating profit is stated after charging:

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Registered number: 01157634

RELATED FLUID POWER LIMITED

DIRECTORS' REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

RELATED FLUID POWER LIMITED

COMPANY INFORMATION

DIRECTORS	J B Spittle (resigned 14 June 2022)
	J P Spittle
	A J Spittle
	J F Spittle
	G Sturgess (resigned 30 July 2021)
	R Lennie
	J S Lee


COMPANY SECRETARY	J F Spittle


REGISTERED NUMBER	01157634


REGISTERED OFFICE	10 Elm Court
	Arden Street
	Stratford upon Avon
	Warwickshire
	CV37 6PA


INDEPENDENT AUDITORS	EQ Accountants LLP
	Chartered Accountants & Statutory Auditors
	14 City Quay
	Dundee
	DD1 3JA

RELATED FLUID POWER LIMITED

CONTENTS

	Page
Strategic report	1 - 2
Directors' report	3 - 4
Independent auditors' report	5 - 8
Statement of comprehensive income	9 - 10
Statement of financial position	10
Statement of changes in equity	11
Statement of cash flows	12
Analysis of net debt	13
Notes to the financial statements	14 - 30

RELATED FLUID POWER LIMITED

STRATEGIC REPORT

FOR THE YEAR ENDED 31 DECEMBER 2021

INTRODUCTION

The directors present the strategic report of the Company for the year ended 31 December 2021.

BUSINESS REVIEW

The principal activity of the Company continues to be that of the design, manufacture and supply of high quality, cost effective hydraulic products. The Directors are committed to improving efficiencies to allow the company to be more competitive and flexible in fluctuating market conditions. The company continues to build strong relationships with customers and suppliers, developing systems and processes to accommodate varying requirements. The company is also focused on environmental issues, both in its own workings and the development of products.
The performance in the last twelve months has continued to grow in challenging circumstances, both with existing and new projects. The Directors are confident this will continue in the coming months and years.

PRINCIPAL RISKS AND UNCERTAINTIES

Commercial risk
Following a challenging 2020 due to the Covid-19 pandemic, the Company saw continued growth throughout 2021 while navigating significant rising component, raw material and import freight costs. At times it has been difficult to pass on respective increases quickly to the Company’s customers, and towards the end of the period additional challenges posed by component shortages and lengthening lead times have necessitated regular review and flexibility in the face of continued difficult trading conditions.
Exchange rate risk
The Company imports raw materials/components from global suppliers, as well as selling worldwide and will experience fluctuations in foreign exchange rates. With the uncertainty around international trade in light of COVID-19 and Brexit, the Directors are mindful of the implications both can have on the Company and steps have been put in place to minimise impact accordingly.
Environmental risk
The Company recognises the importance of assessing any potential for causing harm to the environment and to put in place respective mitigation programs and procedures to reduce or eliminate any risk. It is intent on reducing carbon emissions and environmental waste where possible.
We engage with suppliers and customers on packing requirements to reduce waste and have introduced such programs as ‘returnable packaging’, ‘reduced /no plastic packaging’ and ‘consolidated / full pallet shipments’.
Health and safety legislation
The company recognises the importance of, and has policies and procedures in place to ensure, its health and safety requirements are met at all times.

FINANCIAL KEY PERFORMANCE INDICATORS

The Company measures KPIs on a monthly basis as part of its internal control processes and management accounts function.
The KPIs are turnover, gross profit, operating profit and net assets which all continue to show positive results.

OTHER KEY PERFORMANCE INDICATORS

There are no other key performance indicators that the Company uses to measure performance.

Page 1

RELATED FLUID POWER LIMITED

STRATEGIC REPORT (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2021

This report was approved by the board on 27 September 2022 and signed on its behalf.

J F Spittle

Director

Page 2

RELATED FLUID POWER LIMITED

DIRECTORS' REPORT

FOR THE YEAR ENDED 31 DECEMBER 2021

The directors present their report and the financial statements for the year ended 31 December 2021.

DIRECTORS' RESPONSIBILITIES STATEMENT

The directors are responsible for preparing the Strategic report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 for the Company's financial statements and then apply them consistently;

∙make judgments and accounting estimates that are reasonable and prudent;

∙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 to 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.

RESULTS AND DIVIDENDS

The profit for the year, after taxation, amounted to £715,422 (2020 - £689,458).

A dividend of £250,007 (2020 - £84,970) was paid during the year.

DIRECTORS

The directors who served during the year were:

J B Spittle (resigned 14 June 2022)

J P Spittle

A J Spittle

J F Spittle

G Sturgess (resigned 30 July 2021)

R Lennie

J S Lee

DISCLOSURE OF INFORMATION TO AUDITORS

Each of the persons who are directors at the time when this Directors' report is approved has confirmed that:

∙so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Page 3

RELATED FLUID POWER LIMITED

DIRECTORS' REPORT (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2021

POST BALANCE SHEET EVENTS

There have been no significant events affecting the Company since the year end.

AUDITORS

The auditors, EQ Accountants LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.

This report was approved by the board and signed on its behalf.

J F Spittle

Director

Date: 27 September 2022

Page 4

RELATED FLUID POWER LIMITED

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF RELATED FLUID POWER LIMITED

OPINION

We have audited the financial statements of Related Fluid Power Limited (the 'Company') for the year ended 31 December 2021, which comprise the Statement of comprehensive income, the Statement of financial position, the Statement of cash flows, the Statement of changes in equity and the related notes, 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 31 December 2021 and of its profit for the year 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 Auditors' 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 United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

CONCLUSIONS RELATING TO GOING CONCERN

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

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

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

OTHER INFORMATION

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

We have nothing to report in this regard.

Page 5

RELATED FLUID POWER LIMITED

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF RELATED FLUID POWER LIMITED (CONTINUED)

OPINION ON OTHER MATTERS 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 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.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

In the light of the 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 or the Directors' report.

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

∙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 Directors' responsibilities statement set out on page 3, 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.

Page 6

RELATED FLUID POWER LIMITED

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF RELATED FLUID POWER LIMITED (CONTINUED)

AUDITORS' 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 Auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates, and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the risk, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
We focussed on laws and regulations which could give rise to a material misstatement in the financial statements, including, but not limited to, the Companies Act 2006 and UK tax legislation. Our tests included agreeing the financial statement disclosures to underlying supporting documentation, enquiries with management. There are inherent limitations in the audit procedures described above and, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. We did not identify any key audit matters relating to irregularities, including fraud. As in all our audits, we also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.

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 Auditors' 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 Auditors' 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.

Page 7

RELATED FLUID POWER LIMITED

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF RELATED FLUID POWER LIMITED (CONTINUED)

Mark Gallacher (Senior statutory auditor)

for and on behalf of

EQ Accountants LLP

Chartered Accountants

Statutory Auditors

14 City Quay

Dundee

DD1 3JA

27 September 2022

Page 8

RELATED FLUID POWER LIMITED

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2021

	2021	2020
Note	£	£


Turnover	4	10,237,637	6,708,919
Cost of sales		(7,575,847)	(4,751,877)
Gross profit		2,661,790	1,957,042
Distribution costs		(120,066)	(86,835)
Administrative expenses		(1,697,165)	(1,611,448)
Other operating income	5	136,625	494,848
Operating profit	6	981,184	753,607
Interest receivable and similar income	10	-	221
Interest payable and similar expenses	11	(53,061)	(25,635)
Profit before tax		928,123	728,193
Tax on profit	12	(212,701)	(38,735)
Profit for the financial year		715,422	689,458

There were no recognised gains and losses for 2021 or 2020 other than those included in the statement of comprehensive income.

The notes on pages 14 to 30 form part of these financial statements.

Page 9

RELATED FLUID POWER LIMITED

STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2021

		2021		2020
Note		£		£

Fixed assets
Tangible assets	14		1,400,825		1,591,514
Investments	15		1,513		1,513
			1,402,338		1,593,027
Current assets
Stocks	16	2,180,883		1,628,259
Debtors: amounts falling due within one year	17	2,410,316		2,079,301
Cash at bank and in hand		734,152		651,417
		5,325,351		4,358,977
Creditors: amounts falling due within one year	18	(2,339,851)		(1,795,299)
Net current assets			2,985,500		2,563,678
Total assets less current liabilities			4,387,838		4,156,705
Creditors: amounts falling due after more than one year	19		(455,656)		(710,401)
Provisions for liabilities
Deferred tax	22	(125,319)		(104,855)
			(125,319)		(104,855)
Net assets			3,806,863		3,341,449

Capital and reserves
Called up share capital	23	137,806	137,806
Share premium account	24	6,000	6,000
Revaluation reserve	24	142,875	142,875
Capital redemption reserve	24	6,194	6,194
Profit and loss account	24	3,513,988	3,048,574
		3,806,863	3,341,449

The financial statements were approved and authorised for issue by the board and were signed on its behalf on 27 September 2022.

J P Spittle	A J Spittle
Director	Director

The notes on pages 14 to 30 form part of these financial statements.

Page 10

RELATED FLUID POWER LIMITED

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2021

	Called up share capital	Share premium account	Capital redemption reserve	Revaluation reserve	Profit and loss account	Total equity
	£	£	£	£	£	£
At 1 January 2020	137,806	6,000	6,194	-	2,444,086	2,594,086
Comprehensive income for the year
Profit for the year	-	-	-	-	689,458	689,458
Surplus on revaluation of freehold property	-	-	-	142,875	-	142,875
Dividends: Equity capital	-	-	-	-	(84,970)	(84,970)

At 1 January 2021	137,806	6,000	6,194	142,875	3,048,574	3,341,449
Comprehensive income for the year
Profit for the year	-	-	-	-	715,422	715,422
Dividends: Equity capital	-	-	-	-	(250,008)	(250,008)
At 31 December 2021	137,806	6,000	6,194	142,875	3,513,988	3,806,863

The notes on pages 14 to 30 form part of these financial statements.

Page 11

RELATED FLUID POWER LIMITED

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2021

			2021	2020
			£	£

Cash flows from operating activities
Profit for the financial year	715,422	689,458
Adjustments for:
Depreciation of tangible assets	249,813	278,865
Loss on disposal of tangible assets	(347)	(4,135)
Government grants	-	(150,000)
Interest paid	53,061	25,635
Interest received	-	(221)
Taxation charge	212,701	38,735
(Increase)/decrease in stocks	(552,624)	92,406
(Increase) in debtors	(338,765)	(237,688)
Increase/(decrease) in creditors	429,003	(397,817)
Corporation tax (paid)	(90,006)	(37,739)
Net cash generated from operating activities	678,258	297,499

Cash flows from investing activities
Purchase of tangible fixed assets	(66,783)	(104,559)
Sale of tangible fixed assets	8,006	16,000
Government grants received	-	150,000
Interest received	-	221
HP interest paid	(10,148)	(10,900)
Net cash from investing activities	(68,925)	50,762
Cash flows from financing activities
New secured loans	(91,425)	484,136
Repayment of loans	(12,828)	35,000
Repayment of/new finance leases	(129,424)	(71,535)
Dividends paid	(250,008)	(84,970)
Interest paid	(42,913)	(14,735)
Net cash used in financing activities	(526,598)	347,896
Net increase in cash and cash equivalents	82,735	696,157
Cash and cash equivalents at beginning of year	651,417	(44,740)
Cash and cash equivalents at the end of year	734,152	651,417

Cash and cash equivalents at the end of year comprise:
Cash at bank and in hand	734,152	651,417

The notes on pages 14 to 30 form part of these financial statements.

Page 12

RELATED FLUID POWER LIMITED

ANALYSIS OF NET DEBT

FOR THE YEAR ENDED 31 DECEMBER 2021


At 1 January 2021	Cash flows	At 31 December 2021
£	£	£

Cash at bank and in hand	651,417	82,735	734,152
Debt due after 1 year	(449,197)	122,771	(326,426)
Debt due within 1 year	(255,574)	(168,447)	(424,021)
Finance leases	(390,193)	129,424	(260,769)
	(443,547)	166,483	(277,064)

The notes on pages 14 to 30 form part of these financial statements.

Page 13

RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

1.	GENERAL INFORMATION

The company is limited by shares and incorporated in England; Registration Number: 01157634. The registered office address is 10 Elm Court, Arden Street, Stratford Upon Avon, Warwickshire, CV37 6PA. The trading address is Cupar Muir, Cupar, Fife, KY15 5SL.

2.ACCOUNTING POLICIES

2.1

BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies (see note 3).

The following principal accounting policies have been applied:

2.2

FOREIGN CURRENCY TRANSLATION

Functional and presentation currency

The Company's functional and presentational currency is GBP.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.

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RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

2.ACCOUNTING POLICIES (CONTINUED)

2.3

REVENUE

Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:

Sale of goods

Turnover from the sale of goods is recognised when all of the following conditions are satisfied:

∙the Company has transferred the significant risks and rewards of ownership to the buyer;

∙the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

∙the amount of turnover can be measured reliably;

∙it is probable that the Company will receive the consideration due under the transaction; and

∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.

2.4

RESEARCH AND DEVELOPMENT

In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
Where the company claims for research and development tax relief, the benefit is only recognised within the financial statements once the claim has been submitted and approved by HM Revenue & Customs.

2.5

GOVERNMENT GRANTS

Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Statement of comprehensive income in the same period as the related expenditure.

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RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

2.ACCOUNTING POLICIES (CONTINUED)

2.6

PENSIONS

Defined contribution pension plan

The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of financial position. The assets of the plan are held separately from the Company in independently administered funds.

2.7

CURRENT AND DEFERRED TAXATION

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

The current income 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 income.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:

∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and

∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

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RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

2.ACCOUNTING POLICIES (CONTINUED)

2.8

TANGIBLE FIXED ASSETS

Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives.

Depreciation is provided on the following basis:

Freehold property	-	2% straight line
Short-term leasehold property	-	2% straight line
Plant and machinery	-	10% straight line/ 25% of net book value
Motor vehicles	-	25% of net book value
Fixtures, fittings and equipment	-	15% of net book value/ 33.33% straight line

2.9

REVALUATION OF TANGIBLE FIXED ASSETS

Individual freehold and leasehold properties are carried at current year value at fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are undertaken with sufficient regularity to ensure the carrying amount does not differ materially from that which would be determined using fair value at the reporting date.
Fair values are determined from market based evidence normally undertaken by professionally qualified valuers.

Revaluation gains and losses are recognised in other comprehensive income unless losses exceed the previously recognised gains or reflect a clear consumption of economic benefits, in which case the excess losses are recognised in profit or loss.

2.10

STOCKS

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.

At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.

2.11

FINANCIAL INSTRUMENTS

The Company only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.

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RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

3.	JUDGMENTS IN APPLYING ACCOUNTING POLICIES AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the process of applying the accounting policies, management has not made any significant judgments that have a significant effect on the amounts recognised in the financial statements.
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the new financial year are discussed below:
Depreciation
Due to the nature of the company's activities, the plant and machinery depreciation policy is considered to be the most significant estimation within the company's financial statements. The net book value of the plant and machinery as at 31 December 2021 amounted to £723,606 (2020 - £905,888).
The plant and machinery depreciation policy, detailed at note 2.5, states the assets are depreciated at either 10% straight line or 25% of net book value.
Management review the depreciation policy regularly to determine whether the rates and methods are reasonable for each machine. If the net book values of these assets were considered to change significantly, a change in the depreciation rates may be required.

TURNOVER

The whole of the turnover is attributable to UK sales of the same class.

					2021	2020
					£	£

United Kingdom	7,794,524	5,845,812
Rest of the world	2,443,113	863,107
	10,237,637	6,708,919

5.	OTHER OPERATING INCOME
		2021	2020
		£	£

Government grants receivable	-	150,000
CRJS income	103,528	373,317
Sundry income	16,182	2,765
Foreign exchange difference - gain/(loss)	16,915	(31,234)
	136,625	494,848

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RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

	Exchange differences	(16,915)	31,234
	Other operating lease rentals	9,000	9,000

7.	AUDITORS' REMUNERATION
		2021	2020
		£	£

Fees payable to the Company's auditor and its associates for the audit of the Company's annual financial statements

13,350

10,300

8.	EMPLOYEES
		2021	2020
		£	£

Wages and salaries	1,635,801	1,516,954
Social security costs	156,018	149,583
Cost of defined contribution scheme	85,171	77,915
	1,876,990	1,744,452

The average monthly number of employees, including the directors, during the year was as follows:

	2021	2020
	No.	No.

Direct	38	42
Administration	6	6
Directors	7	7

	51	55

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RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

9.	DIRECTORS' REMUNERATION
		2021	2020
		£	£

Directors' emoluments	418,591	411,323
Company contributions to defined contribution pension schemes	59,949	55,986
	478,540	467,309

	During the year retirement benefits were accruing to 5 directors (2020 - 5) in respect of defined contribution pension schemes.
	The highest paid director received remuneration of £117,078 (2020 - £105,826).
	The value of the Company's contributions paid to a defined contribution pension scheme in respect of the highest paid director amounted to £18,291 (2020 - £14,277).

10.	INTEREST RECEIVABLE
		2021	2020
		£	£

Other interest receivable

221

11.	INTEREST PAYABLE AND SIMILAR EXPENSES
		2021	2020
		£	£

Bank interest payable	20,241	464
Other loan interest payable	22,672	14,271
Finance leases and hire purchase contracts	10,148	10,900
	53,061	25,635

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RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

Corporation tax
Current tax on profits for the year	192,237	150,045
Adjustments in respect of previous periods	-	(99,277)

	Deferred tax
	Origination and reversal of timing differences	20,464	(12,033)


	Taxation on profit on ordinary activities	212,701	38,735

Profit on ordinary activities before tax

928,123

728,193

Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2020 - 19%)	176,343	138,357
Effects of:
Expenses not deductible for tax purposes, other than goodwill amortisation and impairment	61	57
Depreciation for year in excess of capital allowances	16,849	12,523
Adjustments to tax charge in respect of prior periods	-	(4,095)
Other timing differences leading to an increase (decrease) in taxation	(950)	(60,146)
Adjustment in research and development tax credit leading to an increase (decrease) in the tax charge	-	(35,143)
Book profit on chargeable assets	(66)	(785)
Changes in provisions leading to an increase (decrease) in the tax charge	20,464	(12,033)
Total tax charge for the year	212,701	38,735

FACTORS THAT MAY AFFECT FUTURE TAX CHARGES

The only factors affecting tax charges are those imposed by HMRC.

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RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

13.	DIVIDENDS
		2021	2020
		£	£

Paid equity dividends on ordinary shares

250,008

84,970

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RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

14.	TANGIBLE FIXED ASSETS

	Freehold property	Short-term leasehold property	Plant and machinery	Motor vehicles	Fixtures, fitting and equipment	Total
	£	£	£	£	£	£
Cost or valuation
At 1 January 2021	480,000	35,181	3,005,873	221,795	344,584	4,087,433
Additions	-	3,056	-	-	63,727	66,783
Disposals	-	-	-	(52,082)	-	(52,082)
At 31 December 2021	480,000	38,237	3,005,873	169,713	408,311	4,102,134
Depreciation
At 1 January 2021	7,200	1,518	2,099,985	96,097	291,119	2,495,919
Charge for the year on owned assets	9,600	765	118,357	-	27,656	156,378
Charge for the year on financed assets	-	-	63,925	29,510	-	93,435
Disposals	-	-	-	(44,423)	-	(44,423)
At 31 December 2021	16,800	2,283	2,282,267	81,184	318,775	2,701,309
Net book value
At 31 December 2021	463,200	35,954	723,606	88,529	89,536	1,400,825
At 31 December 2020	472,800	33,663	905,888	125,698	53,465	1,591,514

The net book value of land and buildings may be further analysed as follows:
	2021	2020
	£	£

Freehold	463,200	472,800
Short leasehold	35,954	33,663
	499,154	506,463

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RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

14.TANGIBLE FIXED ASSETS (CONTINUED)

The net book value of assets held under finance leases or hire purchase contracts, included above, are as follows:
	2021	2020
	£	£


Plant and machinery	426,165	490,089
Motor vehicles	88,529	118,039
	514,694	608,128

Land and buildings were revalued by Graham and Sibbald on 11th March 2020. The market value of £480,000 was been calculated based on the estimated amount the property would realise in an arms length sale transaction. The directors consider that this has not changed materially in the current year.

If the land and buildings had not been included at valuation they would have been included under the historical cost convention as follows:
	2021	2020
	£	£


Accumulated depreciation	(213,337)	(213,337)
Net book value	(213,337)	(213,337)

15.	FIXED ASSET INVESTMENTS

		Investments in subsidiary companies
		£
	Cost or valuation
	At 1 January 2021	1,513
	At 31 December 2021	1,513

SUBSIDIARY UNDERTAKING
The following was a subsidiary undertaking of the Company:
Name	Registered office	Principal activity	Class of shares	Holding

Rapid Power International Limited

Cupar Muir, Cupar, Fife, KY15 5SL

Dormant

Ordinary

100%

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RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

16.	STOCKS
		2021	2020
		£	£

Raw materials and consumables	1,918,530	1,580,290
Work in progress (goods to be sold)	262,353	47,969
	2,180,883	1,628,259

17.

DEBTORS

					2021	2020
					£	£


Trade debtors	2,202,796	1,758,833
Other debtors	178,026	252,731
Prepayments and accrued income	29,494	67,737
	2,410,316	2,079,301

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RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

18.	CREDITORS: Amounts falling due within one year
		2021	2020
		£	£

Bank loans	111,111	92,593
Other loans	12,828	12,828
Trade creditors	1,416,131	1,001,173
Amounts owed to group undertakings	1,513	1,513
Other taxation and social security	325,575	357,487
Obligations under finance lease and hire purchase contracts	131,539	128,989
Other creditors	308,663	150,153
Accruals and deferred income	32,491	50,563
	2,339,851	1,795,299

The bank overdraft and bank loan is secured in favour of Clydesdale Bank plc who hold a fixed and floating charge over the assets of the Company and a standard security over the property.
The other loan of original value £35,000 is provided by The Energy Saving Trust and repayable via 60 equal repayments over a five year term. As long as the terms of this agreement are adhered to, no interest will be charged. In order to comply with the Financial Reporting Standard FRS102, loans of this nature are required to be shown at their 'fair value' at each year end. The directors consider that the fair value does not vary significantly from the amortised cost of the other loan and have therefore chosen not to make this adjustment.
Obligations under finance lease and hire purchase contracts are secured against the relevant tangible assets.
Other creditors include the amounts of £Nil (2020 - £Nil) in respect of trade debtor funding under a debt factoring agreement.

19.	CREDITORS: Amounts falling due after more than one year
		2021	2020
		£	£

Bank loans	297,464	407,407
Other loans	28,962	41,790
Net obligations under finance leases and hire purchase contracts	129,230	261,204
	455,656	710,401

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RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

Amounts falling due within one year
Bank loans	111,111	92,593
Other loans	12,828	12,828
	123,939	105,421
Amounts falling due 1-2 years
Bank loans	111,111	111,111
Other loans	12,828	12,828
	123,939	123,939
Amounts falling due 2-5 years
Bank loans	186,353	296,296
Other loans	16,134	28,962
	202,487	325,258

	450,365	554,618

Within one year	131,974	128,989
Between 1-5 years	129,230	261,204
	261,204	390,193

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RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

22.	DEFERRED TAXATION

		2021
		£

	At beginning of year	(104,855)
	Charged to profit or loss	(20,464)
	At end of year	(125,319)

The provision for deferred taxation is made up as follows:
	2021	2020
	£	£

Accelerated capital allowances

(125,319)

(104,855)

23.	SHARE CAPITAL
		2021	2020
		£	£

Allotted, called up and fully paid

47,499 (2020 - 47,499) Ordinary A shares of £1.00 each	47,499	47,499
47,499 (2020 - 47,499) Ordinary B shares of £1.00 each	47,499	47,499
42,808 (2020 - 42,808) Ordinary shares of £1.00 each	42,808	42,808

	137,806	137,806

24.

RESERVES

Share premium account

The balance on this account equates to the additional price paid in excess of par value for the share capital of the company when the shares were initially issued.

Revaluation reserve

The balance on this account equates to the uplift in the property value following revaluation.

Capital redemption reserve

The balance on this account equates to the par value of previously issued share capital that has been cancelled.

Profit and loss account

The profit and loss account includes all current and prior period retained profits and losses.

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RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

Contracted for but not provided in these financial statements

413,114

26.	PENSION COMMITMENTS

The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £85,054 (2020 - £77,915). Contributions totaling £NIL (2020 - £5,000) were payable to the fund at the reporting date and are included in creditors.

Not later than 1 year	10,007	10,150
Later than 1 year and not later than 5 years	7,772	13,500
	17,779	23,650

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RELATED FLUID POWER LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

28.	RELATED PARTY TRANSACTIONS
	The directors consider themselves to be the only key management personnel and remuneration is disclosed per note 9.

		2021 Sales	2021 Purchases	2020 Sales	2020 Purchases
		£	£	£	£

Entities with control, joint control or significant influence

541,610

1,560

327,370

					2021	2020
					£	£

Amounts owed to
Entities with control, joint control or significant influence	96,234	270,399
Key management personnel	240,075	127,312

					2021	2020
					£	£

Amounts owed by
Entities with control, joint control or significant influence	-	468
Key management personnel	7,750	-

29.	CONTROLLING PARTY

The Company has no ultimate controlling party.

The Company is exempt from producing consolidated accounts under the Companies Act 2006 section 405, as a result of the subsidiary undertaking being dormant, and whose assets are not material to the overall true and fair view of the financial statements.

Page 30