DIESELEC_HOLDINGS_LIMITED - Accounts

The directors present the strategic report for the year ended 30 June 2022.

The principal activity of the Group is the sale, installation, commissioning and maintenance of emergency standby and gas to power generators.

Our goal is to grow a sustainable business that is focused on meeting the needs of our customers and employees and we continued to make progress on this during the year - supporting our customers to transition to cleaner energy solutions whilst focusing on health and safety and the wellbeing of our people.

On 31 March 22 Dieselec Holdings Limited completed the acquisition of Power Electrics Generators (Holdings) Limited and its wholly owned subsidiary, Power Electrics Generators Limited, a group that generated turnover of £13.6m and profit before tax of £0.9m in the year to 31 March 2022. This acquisition will support our strategy to grow the business across the UK.

We are seeing strong demand for our sustainable energy products as customers seek solutions to the increased cost of energy whilst reducing their carbon footprint. The war in Ukraine further exacerbated volatility in the energy sector and supply chain. This uncertainty in the energy markets has driven further significant demand for our innovative new gas powered generators which provide energy security and use gas as a transitional fuel to reduce exhaust emissions, carbon footprint and cost.

Financially, it has been a challenging year in the aftermath of covid, particularly with significant disruption and uncertainty in our supply chain. The difficult trading conditions in our market resulted in a 6% reduction in reported turnover from £19.1m to £18.0m and an 11.5% reduction in like-for-like revenue. We continued to invest in our business for the long term which resulted in our first operating loss. This was particularly affected by:

• Negligible order intake for long lead-time project sales during both covid lockdowns resulting in our lowest ever order book to deliver and recognise post covid, despite having put in place an overhead base to deliver in excess of £25m of revenue.

• Major supply chain disruptions due to material shortages resulting in excessive lead-times and site programme complications.

• One of our Tier 1 suppliers going into administration post covid with considerable consequences spread across several live projects.

• One of our top 3 customers going into administration (due to the events sector lockdown) exposing us to substantial losses and a long period of damage limitation recovering assets and reselling at reduced prices.

These issues, while significant, were temporary in nature and we look forward with optimism having learned and adapted as a business. We are pleased that we have emerged in a strong position with a record order book, robust supply chain and visibility of healthy profitability in the year to 30 June 2023.

Credit Risk - The Group has a robust procedure to assess the credit risk applicable to customers, both new and ongoing;

Delivery Risk - works are managed and controlled through the Group's operating framework with due regard to all Health and Safety requirements;

Supply Chain risk - there is a risk of disruption to supply of imports of products and materials, cost, inflation and delivery delays. This is controlled through the diversification of suppliers to ensure supply is met, costs are minimised and alternatives are available; and

Liquidity risk - this reflects the risk that the Group will have insufficient reserves to meet its financial liabilities as they fall due. The Board ensures adequate funds are available to finance the business.

The Group's key performance indicators are turnover, profit for the year, cashflow and health and safety performance.

Future Developments

It is an exciting time for the Group as we introduce new products to support our customers on their transition to net zero. We will continue to deliver back up and prime power generators and associated support services whilst reducing the carbon footprint of our customers. As a result, we expect to see a significant increase in sales of our gas generators as well as helping our customers to switch away from diesel to Hydrotreated Vegetable Oil (HVO). This past year has seen continued investment in our people, systems and processes. The Group will continue this in the coming year to ensure the business is equipped for the anticipated growth across the United Kingdom. The directors are confident that the Group will continue to make progress against its strategic objectives.

On behalf of the board

The directors present their annual report and financial statements for the year ended 30 June 2022.

The principal activity of the Group is the sale, installation, commissioning and maintenance of emergency standby and gas to power generators.

On 31 March 2022, the Group purchased Power Electrics Generators (Holdings) Limited and its wholly owned subsidiary Power Electrics Generators Limited.

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

Ordinary dividends were paid amounting to £300,000. 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:

On 14 February 2023 the Group purchased the trade and assets of the service business division from ADE Power Limited (company number 03418827) for a nominal consideration.

Johnston Carmichael LLP were appointed as auditor to the group and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

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

In assessing the prospects of the Group for the purposes of going concern, the Directors have considered cashflow forecasts prepared by management for the 12 month period to 31 March 2024. These forecasts include a base case, based on current order book and pipeline, as well as inflationary increases in costs, and a sensitivity, which reflects a severe but plausible downside scenario.

The analysis undertaken by management allows the directors to conclude that the Group is cash generative and supports the entity's ability to continue as a going concern. As a result the directors conclude that is it appropriate for the financial statements to be prepared on a going concern basis.

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

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

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the ; and

•     prepare the on the going concern basis unless it is inappropriate to presume that the group and company will continue in business.

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

We have audited the financial statements of Dieselec Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2022 which comprise the group profit and loss account, 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).

In our opinion the financial statements:

•     give a true and fair view of the state of the group's and the parent company's affairs as at 30 June 2022 and of the group's loss 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 Auditor responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the 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

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

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

• 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.

In the light of our knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and 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 by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company 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.

As explained more fully in the Directors’ responsibilities statement set out on page 4, 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 group’s and parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the group or parent company or to cease operations, or have no realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

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.

Extent to which the audit is considered capable of detecting irregularities, including fraud (continued)

We assessed whether the engagement team collectively had the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations by considering their experience, past performance and support available.

All engagement team members were briefed on relevant identified laws and regulations and potential fraud risks at the planning stage of the audit. Engagement team members were reminded to remain alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and the parent company and the sector in which they operate, focusing on those provisions that had a direct effect on the determination of material amounts and disclosures in the financial statements. The most relevant frameworks we identified include:

• Companies Act 2006;

• VAT and Corporation Tax legislation; and

• UK Generally Accepted Accounting Practice.

We gained an understanding of how the group and the parent company are complying with these laws and regulations by making enquiries of management and those charged with governance. We corroborated these enquiries through our review of relevant correspondence with regulatory bodies and board meeting minutes.

We assessed the susceptibility of the group’s financial statements to material misstatement, including how fraud might occur, by meeting with management and those charged with governance to understand where it was considered there was susceptibility to fraud. This evaluation also considered how management and those charged with governance were remunerated and whether this provided an incentive for fraudulent activity. We considered the overall control environment and how management and those charged with governance oversee the implementation and operation of controls. We identified a heightened fraud risk in relation to:

• Management override of controls

• Revenue recognition

In addition to the above, the following procedures were performed to provide reasonable assurance that the financial statements were free of material fraud or error:

• Reviewing minutes of meetings of those charged with governance for reference to: breaches of laws and regulation or for any indication of any potential litigation and claims; and events or conditions that could indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud;

• Reviewing the level of and reasoning behind the group's procurement of legal and professional services

• Performing audit work procedures over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing judgements made by management in their calculation of accounting estimates for potential management bias;

• Completion of appropriate checklists and use of our experience to assess the Company’s compliance with the Companies Act 2006; and

• Agreement of the financial statement disclosures to supporting documentation.

Our audit procedures were designed to respond to the risk of material misstatements in the financial statements, 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 intentional concealment, forgery, collusion, omission or misrepresentation. There are inherent limitations in the audit procedures performed 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.

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 £153,201 (2021 - £716,826 profit).

Dieselec Holdings Limited (“the company”) is a private limited company domiciled and incorporated in Scotland. The registered office is Cadder House, 160 Clober Road, Milngavie, Glasgow, United Kingdom, G62 7LW.

The group consists of Dieselec Holdings 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 company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements (where applicable):

• Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;

• Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;

• Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

The consolidated group financial statements consist of the financial statements of the parent company Dieselec Holdings Limited together with all entities controlled by the parent company (its subsidiaries).

All financial statements are made up to 30 June 2022. 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 and to incorporate trading activity for non co-terminous year ends.

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.

In assessing the prospects of the business for the purposes of going concern, the Directors have considered cashflow forecasts prepared by management for the 12 month period to 31 March 2024. These forecasts include a base case, based on current order book and pipeline, as well as inflationary increases in costs, and a sensitivity, which reflects a severe but plausible downside scenario.

The analysis undertaken by management allows the directors to conclude that the Group is cash generative and supports the entity's ability to continue as a going concern. As a result the directors conclude that is it appropriate for the financial statements to be prepared on a going concern basis.

On 31 March 22 the Group completed the acquisition of Power Electrics Generators (Holdings) Limited and its wholly owned subsidiary, Power Electrics Generators Limited. This acquisition will support the strategy to grow the business in England and Wales and bring key resource as well as an established customer base and reputation. As discussed in the Strategic Review, we have a record order book position and have a number of initiatives underway, all of which support our view that the Group will be able to meet its obligations as they fall due.

Revenue is attributable to one continuing activity, the sale, installation, commissioning and maintenance of generators.

Revenue is recognised when there is an arrangement, primarily in the form of a contract or purchase order, with the customer, a fixed or determinable sales price is established with the customer, performance requirements are achieved, and it is probable that economic benefits associated with the transaction will flow to the Group.

Revenue is recognised as performance requirements are achieved in accordance with the following:

- Revenue from sales of equipment is recognised at the time title to the equipment and significant risks and rewards of ownership passes to the customer. This is generally at the time of shipment of the product to the customer.

- Revenue from product support includes sales of parts and servicing of equipment. For sales of parts, revenue is recognised when the part is shipped to the customer or when the part is installed in the customer's equipment. For servicing of equipment, revenue is recognised as the work is performed.

- Revenue is recognised on bill and hold arrangements when the buyer takes title, provided:

- it is probable that delivery will be made;

- the item is on hand, identified and ready for delivery to the buyer at the time the sale is recognised;

- the buyer specifically acknowledges the deferred delivery instructions; and

- the usual payment terms apply.

Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, VAT and other sales taxes or duty.

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 5 - 10 years.

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

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values evenly over their useful lives on the following bases:

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.

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.

Stock is stated at the lower of cost and net realisable value. Cost includes all costs incurred in bringing each product to its present location and condition, as follows:

•     Consumables and goods for resale- purchase cost on a first-in, first-out basis

•     Work in progress- cost of direct materials and labour, plus attributable overheads based on a normal level of activity.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks and other short-term liquid investments with original maturities of three months or less.

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.

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.

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 Group 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.

Assets obtained under hire purchase contracts or finance leases are capitalised in the balance sheet. Those held under hire purchase contracts are depreciated over their estimated useful lives. Those held under finance leases are depreciated over their estimated useful lives or the lease term, whichever is the shorter.

The interest elements of the rental obligations are charged in the profit and loss account over the periods of the leases and hire purchase contracts. The capital elements of future obligations are included as liabilities in the balance sheet.

Rentals paid under operating leases are charged in the statement of income and retained earnings on a straight line basis over the lease term.

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.

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

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.

Preference Shares

Preference shares are classified as debt based on the term and repayment requirements and dividends are treated as interest.

Other operating income

Payments under the UK Government's Coronavirus Job Retention Scheme are a form of grant. This grant money is receivable as compensation for expenses already incurred and has been recognised based on the accrual model. It is recognised in other operating income in the period in which it becomes receivable and the related expense is incurred.

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 as follows.

Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which goodwill has been allocated. The value in use calculation requires the group to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value. The directors have concluded that the carrying value of goodwill is supportable at the year end.

The turnover of the Group is attributable to one continuing activity, the sale, installation, commissioning and maintenance of power generators.

The average monthly number of persons (including directors) employed by the group and company during the year was:

Their aggregate remuneration comprised:

Pension contributions were paid to money purchase pension schemes for 2 directors in the year (2021 - 2). No directors received shares or share options during the current year or prior years in respect of qualifying services and no share options were exercised in the current or prior year by directors.

The actual (credit)/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:

Final dividends on ordinary shares of £2.809 (2021 - £6.086) were paid per 'A' and 'B' ordinary share.

Preference dividends of £94,457 (2021 - £94,457) were declared during the year with £31,313 outstanding at the year end (2021 - £31,313). Preference dividends are included within interest payable and similar charges.

Goodwill addition of £129,359 in the year relates to the purchase of Power Electrics Generators (Holdings) Limited and its wholly owned subsidiary Power Electrics Generators Limited on 31 March 2022. Acquisition details are shown in note 26 to these financial statements.

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

On 31 March 2022 the company purchased 100% of the share capital of Power Electrics Generators (Holdings) Limited.

Details of the company's subsidiaries at 30 June 2022 are as follows:

Registered office addresses (all UK unless otherwise indicated):

Included within other creditors is £400,000 deferred consideration for the purchase of Power Electrics (Generators) Holdings Limited.

The cumulative redeemable preference shares, being 944,571 in issue with a nominal value of £1 each, are convertible at the option of the company or the holder on or after 10 September 2020 with the amount payable being equal to the amount paid up on each share. The preference shares carry a dividend of 10% per annum, payable half yearly in arrears on 10 September and 10 March. We have obtained confirmation in writing from the shareholder that the shares will not be convertible within 12 months of signing these financial statements. Therefore, it is appropriate to classify as due in greater than one year.

The Group and company have issued loan notes of £899,571 from Nevis Capital LLP bearing an interest rate of 10%. The loan notes are secured by a floating charge.

Finance lease payments represent rentals payable by the company or group for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

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 independently administered funds.

'A' and 'B' ordinary shares hold voting rights, and rights to receive dividends and return on capital.

'D' shares do not hold voting rights or rights to receive dividends unless otherwise resolved by shareholder majority consent. 'D' shares hold no right to return on capital on liquidation or capital reduction but do hold a right to return on capital on disposal.

Profit and loss reserves represent cumulative profits and losses, net of dividends and other adjustments.

On 31 March 2022 the group acquired 100 percent of the issued capital of Power Electrics Generators (Holdings) Limited. Power Electrics Generators (Holdings) Limited has one trading subsidiary Power Electrics Generators Limited.

The cost of investment includes legal and professional fees of £71,510.

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:

On 14 February 2023 the Group purchased the trade and assets of the service business division from ADE Power Limited (company number 03418827) for a nominal consideration.

All directors and senior management who have authority and responsibility for planning, directing and controlling the activities of the Group are considered to be key management personnel. Total remuneration in respect of these individuals is £522,059 (2021 - £436,722).

The trading balance due at 30 June 2022 to Nevis Capital LLP, a related party as a shareholder in Dieselec Holdings Limited, was £30,932 (2021 - £29,348). The trading transactions during the year amounted to £245,158 (2021 - £235,703). Nevis Capital LLP have issued loan notes of £899,571 to Dieselec Holdings Limited, this amount remains due to Nevis Capital LLP at 30 June 2022 (2021 - £899,571).

Mr Moore's immediate family own 944,571 preference shares of £1 each in the company. A dividend of £94,457 (2021 - £94,457) was declared during the year with £31,313 (2021 - £31,313) outstanding at the year end.