Hayley Group Holding Limited - Limited company accounts 22.3

REGISTERED NUMBER: 10164743 (England and Wales)

HAYLEY GROUP HOLDING LIMITED

Group Strategic Report, Report of the Directors and

Consolidated Financial Statements for the Year Ended 31 December 2022

Page

Company Information

1

Group Strategic Report

2

to

6

Report of the Directors

7

to

10

Report of the Independent Auditors

11

to

13

Consolidated Statement of Comprehensive Income

14

Consolidated Statement of Financial Position

15

Company Statement of Financial Position

16

Consolidated Statement of Changes in Equity

17

Company Statement of Changes in Equity

18

Consolidated Statement of Cash Flows

19

Notes to the Consolidated Statement of Cash Flows

20

Notes to the Consolidated Financial Statements

21

to

36

Directors:

B C Noakes

G N Brinton

P Massonneau

J R Toremans

W C M Du Bouexic De Pinieu

Registered office:

Shelah Road

Halesowen

West Midlands

B63 3XL

Registered number:

10164743 (England and Wales)

Auditors:

Haines Watts Birmingham LLP

5-6 Greenfield Crescent

Edgbaston

Birmingham

West Midlands

B15 3BE

Bankers:

Royal Bank of Scotland

79-83 Colmore Row

Birmingham

B3 2BA

Principal activity

The principal activity of the Group in the period under review was that of the sales and distribution of engineering products including but not limited to, bearings, seals, power transmissions, fasteners, fluid, power tools, lubricants, protective clothing, janitorial supplies, pumps and gearbox repairs. The principal activity of the Company was that of a holding company.

Business review and key performance indicators

The Group's key performance indicators for the year ended 31 December 2022 are turnover,which was £259.2m (2021 - £220.3m) and profit before tax which was £12.0m (2021 - £7.4m). Net assets at 31 December 2022 were £99.6m (2021 - £101.6m). The Directors are satisfied with the Group's result and expect the performance seen during the period to be maintained. The business has continued to grow both levels of turnover and profitability.

The Directors continue to focus on maximising the gross profit margins of the group, which is seen as a key performance indicator for the business.

During the year a stock initiative was introduced in order to increase the stockholding of specific product lines so that the service and offering to existing and new customers could be provided at the highest possible standard. For the year ended 31 December 2022 the Group had a stock holding value of £42.3m (2021 - £37.2m)

To further expand the business the Directors have reviewed and plan the opening of new branches in strategic locations to enhance the national coverage of the Group. This strategy will in turn enhance the Group's offering to customers and fulfil the Group's policy of Stock : Service : People

There are no non-financial key performance indicators.

Given the geographic coverage of the business, the Directors have not experienced significant down-side implications resulting from the exit from the European Union and changes in legislation and do not expect this to significantly impact the 2023 results.

Principal risks and uncertainties

The management of the business and the nature of the Group's strategy are subject to a number of risks. The success of the business is affected by economic cycles, particularly in the engineering and transport infrastructure sectors in which the Group's customers operate. This risk is partially mitigated by the geographical spread of the Group's branches and no single customers representing a significant proportion of turnover. Pressures arising from the general economic situation, together with the highly competitive market in which the Group operates, results in constant pressure on margins. The risk is mitigated by high levels of customer service provided.

Financial risk management objectives and policies

The Group's principal financial instruments comprise cash at bank, invoice discounting facilities and finance lease agreements, along with items such as trade debtors and creditors which arise directly from its operations. The main purpose of these instruments is to finance the Group's operations.

During the year the Group has been exposed to credit risk, liquidity risk and foreign exchange risk.

Foreign exchange risk

Where necessary, the Group places forward contracts for foreign exchange in order to minimise exposure to exchange rate fluctuations.

Credit risk

The Group's principal financial assets are cash at bank and trade debtors, which represent the most significant exposure to credit risk in relation to financial assets. Credit risk on customers is managed by continually evaluating the creditworthiness of individual customers. Trade debtors are stated net of provisions for specific doubtful debts, which are based on the circumstances of individual customers in the context of the prevailing economic climate.

The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

The Group has no significant concentration of credit risk, with exposure spread over a large number of customers.

The environment

The Group has continued to adopt policies and procedures, which take into account the need to preserve and protect the environment. The Directors are committed to compliance and environmental best practice in all aspects of the business. This is demonstrated through achievement of ISO 14001:2015, environmental accreditation as part of the Group's Integrated Management System, and a continuous improvement programme.

Occupational health and safety

The Group has shown its commitment to the health, safety and welfare of its staff and external parties by developing a clearly defined occupational health and safety management system. By having a clearly defined management system in place to identify and control health and safety risks, the Company is able to minimise risks to their workforce, visitor or external contractors on their premises.

This has been demonstrated with the Management System being audited by an independent certification body and has been certified to ISO 45001:2018 standards.

The standards enable the Group to continually review and improve occupational health and safety and provides a framework to meet our legal obligations in the workplace.

Corporate social responsibility

The Group is committed to sound corporate responsibility policies and practices as an integral part of the business. The alignment of the Group's values and strategy and responsible and ethical business polices and practices throughout the Group's supply chain helps enhance employee engagement and is a driver for sustainable growth and success.

Group's policy for payment of creditors

The Group's policy in relation to payment of suppliers is to seek the best possible terms from suppliers appropriate to its business and in placing orders gives consideration to quality, price and terms of payment which will be agreed with suppliers when the details of the transactions are settled. The Group will continue to honour its contractual obligations and pay creditors on the dates agreed in contracts and purchase orders. The payment profile for the period was in line with the previous year at 60 days.

Quality assurance

The Group is committed to providing the highest quality service to its valued customer by meeting or exceeding their expectations for product range, quality and performance, timely delivery of products and services and the continuous improvement of processes and systems. The Group has invested in an online integrated Management System, ISO-Active, which enables the group to continue to meet the exacting requirements of ISO 9001:2015.

Employee involvement

The Group employed around 1068 people in the UK as at 31 December 2022 (2021 - 995). The Group considers the skills and support from employees to be extremely important to the business.

The Group is committed to engaging with employees on a broad range of issues, and communicates with employees in a variety of ways appropriate to the circumstances. This includes communicating and sharing information with employees through formal team briefings and discussions, informal team meetings, email, the Group's email intranet and in-house newsletters.

The Group creates strong foundations for the sustainability of its business by ensuring equal employment opportunities and equal access to development opportunities. The Group remains committed to providing a work environment free from harassment and discrimination and to treating people with disabilities fairly in relation to job applications, training, promotion and career development.

The Group is committed to meeting all health and safety legislation, and approved Codes of Practice provided by the Health and Safety Executive. Each business within the group is responsible for ensuring the Group health and safety policy is maintained.

Section 172(1) statement

The Board of Directors of Hayley Group Holding Ltd consider, both individually and together, that they have acted in a way they consider to be in good faith, and would be most likely to promote the success of the Company for the benefit of its members as a whole (having regard to the shareholders and matters set out in s172(1)(a-f) of the act) in the decisions taken during the year ended 31st December 2022.

The Directors believe that key stakeholders of the Company includes employees, shareholders, customers, suppliers and the local community, and the business plan that the Directors have adopted includes the following key matters that are relevant to complying with S172(1) of the Companies Act 2006:-

Long term decisions

Our continuing plan and strategies are designed to have a long-term beneficial impact on the Group to both continue to grow the reputation of the Group in the market place, employ experienced personnel throughout the business and provide the best service and expertise to our existing and new customers.

Following the hold in previous years on opening new branches, the board has continued in 2022 to review the best options for the Group in order to target specific locations for expansion of the branch network as well as the possibility of the strategic expansion of existing branches into larger premises.

The board, therefore, continues to see this as a key to the long-term strategy of the Group and aims to commence the opening of new branches in the following year, when possible, in order to work towards the goal of full national coverage across the UK.

Employees

Our employees are fundamental to the delivery of the plan and major focus of our strategy, as the group values all of our people and are viewed as one of the key driving forces behind our business. We aim to be a responsible employer in our approach to the pay and benefits that our employees receive.

The health, safety and well-being of our employees is one of the primary considerations in the way that the Company does business. During the pandemic, the Group's leading focus has been on supporting our people physically, mentally and financially.

The Group also considers the importance of providing a pleasant, clean, safe and modern working environment for all of it employees. To this extent the Group continues to maintain all of its buildings to ensure that this goal continues to be achieved.

See Employee involvement and Occupational Health and Safety sections of the Strategic report for further details regarding how the Directors engage with employees and have regard to their interests.

Fostering good relations with customers and suppliers and maintaining a reputation for a high standard of business

conduct

Our intention as a board of Directors is to behave responsibly and ensure that management continue to operate the business in a responsible manner and in line with the code of conduct launched across the Group in the last quarter of 2019 by our parent company Descours & Cabaud SA.

The Group's adopted advisory code of conduct aims for maintaining a reputation for high standard of business conduct and service. When launched it was made available to all members of staff throughout Hayley and continues to be provided to new employees joining the Group.

As a Group we continue to have a strong commitment to compliance and an outstanding reputation for approaching and conducting business in an ethical and fair way.

This approach to conducting business in turn enables the Group to continue to build and enhance the distinguished reputation of the Hayley brand and the Descours & Cabaud Group for the present time and the years ahead.

Fostering positive and strategic long-term relationships with our customers and suppliers has been key to the Group's success and the board recognises the need to continue to develop and maintain such relationships. High quality service to customers is a key value and philosophy of the Hayley Group and central to how business is conducted and differentiates us from our competitors.

The Company's Directors, and employees at all levels in the business, are in regular ongoing communication with their counterparts from suppliers and customers. Key issues are escalated to the Directors to ensure that the Group's values and standards are consistent throughout.

See the Corporate social responsibility section and Group's policy for payment of creditors section of the Strategic Report for further detail of our engagement with suppliers.

The need to act fairly as between members of the Company

Representatives of all shareholder parties are on the board of the Company and are engaged in the running,overseeing and making key decisions for the business. The board conduct formal meetings, on a regular basis, to discuss and make decisions to the continued success of the Group.

Impact of the company's operations on the community and the environment

As a responsible business, the Hayley Group recognises that its operations have potential direct and indirect impacts on the environment. Consequently, the Group encourages efficiency across its branch network in order to limit any exposure to the environment and maintain the standards as set out in ISO 14001:2015.

Our Environmental Sustainable Policy seeks to purchase and supply goods and services in a way that is not harmful to the environment and the Group promotes the reduction in energy consumption, minimising waste disposed to landfill by reducing, reusing and recycling, reducing CO2 emissions, encouraging our suppliers to adopt environmental best practice and playing a positive role in developing sustainability.

The Group encourages the branch network to engage and support the local communities. This is conducted by way of sponsorship of local clubs, teams and organisations as well as participating in local community run events. The Group also supports and donates to local, national and international charities.

The Group is committed to the wellbeing of the health, safety and career progression of our employees. We recognise that local people and knowledge is important to the success of our branch network and consequently our recruitment policy is to recruit within the local area. In order to advance and develop our employees' knowledge and expertise we have continued to successfully operate the Hayley Group Training Academy which is available to all employees and operates a wide range of courses and training modules.

The Group has previously announced its commitment to the Science-Based Target Initiative's (SBTi) Business Ambition for 1.5•C. This represents the highest level of ambition that companies can take under the SBTi, and signals Hayley Group's strong intent to be part of the collective global effort to limit warming in-line with the Paris Agreement.

In collaboration with third-party consultancy support, the Group will design and submit a set of specific (near-term and long-term) targets across scope 1, 2 and 3 emissions, consistent with the latest science-based net-zero guidance (see SBTi Net-Zero Standard). Alongside the validation process, the Group will produce a Net-Zero Strategy, underpinned by robust carbon and financial modelling, to give a credible pathway to achieve its carbon reduction targets.

On behalf of the board:

B C Noakes - Director

28 March 2023

The directors present their report with the financial statements of the company and the group for the year ended 31 December 2022.

Principal activity

The principal activity is given in the Strategic Report on page 2.

Dividends

The total distribution of dividends for the year ended 31 December 2022 was £10,000,000.

Directors

The directors shown below have held office during the whole of the period from 1 January 2022 to the date of this report.

B C Noakes

G N Brinton

P Massonneau

J R Toremans

Other changes in directors holding office are as follows:

L N W Willitts - resigned 31 July 2022

M G Le Doze - resigned 21 September 2022

W C M Du Bouexic De Pinieu - appointed 21 September 2022

Matters covered by the strategic report

The business review, principal risks and uncertainties and financial risk management objectives and policies have been included in the strategic report.

Going concern

After making enquiries and preparing integrated profit and loss and cash flow forecasts for the wider Hayley Group for one year from the date the financial statements are signed, the Directors have formed a judgement that, as at the date of approving the financial statements, there is a reasonable expectation that the Company, with any required support from the wider Group, has adequate resources to continue in existence for the foreseeable future. The preparation of the forecasts has been produced using known and unknown certainties, as described in more detail below.

Management have continued to implement logistical and organisational changes to underpin the Group's strengths and maintain its resilience to being negatively affected from changing global and local events and economic conditions, with the key focus being protecting all personnel, minimising the impact on critical work streams and ensuring business continuity.

For these reasons the generation of sufficient operating cash flows remain a potential risk, however management believe the Group and company will generate sufficient working capital and cash flows to continue in operational existence for the foreseeable future.

In making this assessment the Board of Directors has continued to regularly undertake a thorough review of the Hayley group's budgets and forecasts and has produced detailed and realistic cash flow projections based on the group's existing significant cash resources as at the 24 March 2023 and an unused invoice discounting facility of £12m.

These cash flow projections, when considered in conjunction with the group's significant existing cash balances and available facilities, demonstrate that the Hayley Group has sufficient working capital for the foreseeable future. In light of the assessment and sensitivities prepared, the directors remain of the view that the forecast is achievable.

For the reasons and assumptions used in the cash flow projections the directors are of the opinion that the headroom within the forecast should be sufficient to enable the Group and Company to operate and meet its liabilities as they fall due for at least a year from the date of approval of these financial statements. The financial statements have accordingly been prepared on a going concern basis.

Streamlined energy and carbon reporting

The Group fulfils its statutory requirements for Streamlined Energy and Carbon Reporting which includes disclosure of the Company's carbon emissions. Under the Companies Act 2006 / SECR Regulations, 'Large' companies are required to report their annual emissions within the Directors' report.

The Group's Streamlined Energy and Carbon Reporting statement covers the period for the financial year ended 31 December 2022 and has been prepared in line with the requirements of the Streamlined Energy and Carbon Reporting regulations and the relevant areas of the Greenhouse Gas ('GHG') Protocol Corporate Accounting and Reporting Standard.

As the Group expands and new branches are opened these are furnished with energy efficiency and sustainability assessments in mind. This includes the utilisation within the branches of LED lighting, efficient heating and cooling systems, smart meters and smart controls.

The scope of this energy and carbon report includes all activities and sites controlled by the Hayley Group. All sites and activities are situated and operate within the United Kingdom.

A 'Dual Reporting' methodology has been used to indicate emissions using UK electricity grid average emission factors (known as the 'Location Based' method), and also emissions using specific generation emission factors (the 'Market Based' method).

Methodology

Energy data has therefore been collected from the following sources:

Data Type

Scope 1 Data Source

Commercial Vehicle Fleet Diesel Consumption

Fuel Card monthly consumption invoiced in litres

Company Car Fleet Diesel Consumption

Fuel Card monthly consumption invoiced in litres

Fuel Oil Consumption

Consumption as per invoiced purchase records

Gas Consumption

Energy Contract Consultants who monitor and record
usage from invoiced consumption

Data Type

Scope 2 Data Source

Electricity Consumption

Energy Contract Consultants who monitor and record
usage from invoiced consumption

Data Type

Scope 3 Data Source

Employee Own Vehicle Business Use

Accounting records of the company for employee
expense claims

Transmission and Distribution

Energy Contract Consultants who monitor and record
usage from invoiced consumption

Following the above data being collated by the analysts, this was converted to kWh and tCO2e using standardised conversion rates.

Data Verification

There are a number of processes in place to ensure that the data collected is accurate, transparent and verifiable by audit review. All necessary records have been retained which contain the data utilised for the purposes of producing this summary report.

Fuel consumption utilised by the commercial and car transport has been collated from the invoices received from the fleet management providers to which these records are controlled and stored by the Group's Finance Department.

For the electricity usage, and those sites that utilise gas, the metered usage for both types of energy is assessed and collated by external analysts from the data contained within the invoice based on consumption.

An annual ISO 14001 Continuing Assessment is conducted by the British Assessment Bureau ('BAB') at the Head Office site over the course of 2-3 days. As part of this annual assessment the BAB independently assures the completeness of the Group's energy data and the effectiveness of the energy performance improvement actions being undertaken.

Energy performance data has been reviewed by top level management as part of the Group's internal communications and management review process.

This energy and carbon report has been reviewed by independent environment and energy consultants, NUS Consulting Group Limited, Company No. 842122.

This is a continuation from previous years of the Group's Streamline Energy and Carbon Reporting and therefore the comparative data for 2021 has been recorded against the current years data.

Greenhouse Gas Emissions (Location Based Method Data)

Tonnes C02e

2022

2021

Scope 1 - emissions from gas, transport and other fuel use

3,486

2,161

Scope 2 - emissions from electricity usage

313

328

Scope 3 - emissions from indirect sources

57

54

Total greenhouse gas emissions

3,856

2,543

Greenhouse Gas Emissions (Market Based Method Data)

Tonnes C02e

2022

2021

Scope 1 - emissions from gas, transport and other fuel use

3,486

2,161

Scope 2 - emissions from electricity usage

65

3

Scope 3 - emissions from indirect sources

35

25

Total greenhouse gas emissions

3,586

2,189

The Carbon Intensity of Greenhouse Gas Emissions of tCO2e per £m sales revenue during 2022 was as follows:

2022

2021

Location Based Method Data

14.88

11.54

Market Based Method Data

13.83

9.95

All figures based on Group's sales revenue for 2022 of £259M (2021: £220M).

The Group strategy has been to purchase renewable energy backed by Renewable Electricity Guarantees of Origin (REGO) certificates. Through this strategy, within the above 2022 total energy consumption, the company has sourced a total of 1,370,003 (2021: 1,536,030) kWh of REGO backed (zero emission) electricity equating to 84.7% (2021: 99.2%) of total electricity use.

Statement of directors' responsibilities

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group 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 accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

-	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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Statement as to disclosure of information to auditors

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditors are aware of that information.

Auditors

The auditors, Haines Watts Birmingham LLP, are deemed to be reappointed under Section 487 (2) of the Companies Act 2006.

On behalf of the board:

B C Noakes - Director

28 March 2023

Opinion

We have audited the financial statements of Hayley Group Holding Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2022 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Company Statement of Financial Position, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Statement of Cash Flows and Notes to the Consolidated Statement of Cash Flows, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the group's and of the parent company affairs as at 31 December 2022 and of the group's 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 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 the 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 directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

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

-	the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Directors 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 group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors.

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

-	adequate accounting records have not been kept 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.

Responsibilities of directors

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

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 a Report of the Auditors 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We obtained an understanding of the legal and regulatory framework applicable to both the Group itself and the industry in which it operates. We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our sector experience and through discussion with the directors and other management. The most significant were identified as the Companies Act 2006, UK GAAP (FRS102) and relevant tax legislation.

We considered the extent of compliance with those laws and regulations as part of our procedures on the related financial statements. Our audit procedures included, but were not limited to:

-

making enquires of directors and management as to where they consider there to be a susceptibility to
fraud and whether they have any knowledge or suspicion of fraud;

-

obtaining an understanding of the internal controls established to mitigate risks related to fraud or
non-compliance with laws and regulations;

-

assessing the design effectiveness of the controls in place to prevent and detect fraud;

-

assessing the risk of management override including identifying and testing journal entries;

-

challenging the assumptions and judgements made by management in its significant accounting
estimates.

Whilst our audit did not identify any significant matters relating to the detection of irregularities including fraud, and despite the audit being planned and conducted in accordance with ISAs (UK), there remains an unavoidable risk that material misstatements in the financial statements may not be detected owing to inherent limitations of the audit, and that by their very nature, any such instances of fraud or irregularity would likely involve collusion, forgery, intentional misrepresentations, or the override of internal controls.

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

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 a Report of the Auditors 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.

Kevin Hodgetts (Senior Statutory Auditor)

for and on behalf of Haines Watts Birmingham LLP

5-6 Greenfield Crescent

Edgbaston

Birmingham

West Midlands

B15 3BE

30 March 2023

Turnover

4

259,189

220,300

Cost of sales

(172,237

)

(142,932

)

Gross profit

86,952

77,368

Administrative expenses

(75,577

)

(70,602

)

11,375

6,766

Other operating income

5

624

609

Operating profit

7

11,999

7,375

Interest receivable and similar income

8

7

8

Profit before taxation

12,006

7,383

Tax on profit

9

(4,044

)

(3,279

)

Profit for the financial year

7,962

4,104

Other comprehensive income

-

Total comprehensive income for the year

7,962

4,104

Profit attributable to:

Owners of the parent

7,962

4,104

Total comprehensive income attributable to:

Owners of the parent

7,962

4,104

Fixed assets

Intangible assets

12

34,595

43,720

Tangible assets

13

11,307

11,054

Investments

14

-

45,902

54,774

Current assets

Stocks

15

42,347

37,222

Debtors

16

58,378

49,548

Cash at bank

17

14,177

14,128

114,902

100,898

Creditors

Amounts falling due within one year

18

60,132

53,344

Net current assets

54,770

47,554

Total assets less current liabilities

100,672

102,328

Creditors

Amounts falling due after more than one
year

19

-

(4

)

Provisions for liabilities

22

(1,069

)

(683

)

Net assets

99,603

101,641

Capital and reserves

Called up share capital

23

500

Share premium

24

51,040

Other reserves

24

53,078

Retained earnings

24

(5,015

)

(2,977

)

Shareholders' funds

99,603

101,641

The financial statements were approved by the Board of Directors and authorised for issue on 28 March 2023 and were signed on its behalf by:

B C Noakes - Director

Fixed assets

Intangible assets

12

-

Tangible assets

13

-

Investments

14

65,403

Current assets

Debtors

16

1

Creditors

Amounts falling due within one year

18

13,856

Net current liabilities

(13,855

)

(13,855

)

Total assets less current liabilities

51,548

Capital and reserves

Called up share capital

23

500

Share premium

24

51,040

Retained earnings

24

8

Shareholders' funds

51,548

Company's profit for the financial year

10,000

The financial statements were approved by the Board of Directors and authorised for issue on 28 March 2023 and were signed on its behalf by:

B C Noakes - Director

Called up

share

Retained

Share

Other

Total

capital

earnings

premium

reserves

equity

£'000

Balance at 1 January 2021

500

2,919

51,040

53,078

107,537

Changes in equity

Dividends

-

(10,000

)

-

(10,000

)

Total comprehensive income

-

4,104

-

4,104

Balance at 31 December 2021

500

(2,977

)

51,040

53,078

101,641

Changes in equity

Dividends

-

(10,000

)

-

(10,000

)

Total comprehensive income

-

7,962

-

7,962

Balance at 31 December 2022

500

(5,015

)

51,040

53,078

99,603

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

£'000

Balance at 1 January 2021

500

8

51,040

51,548

Changes in equity

Dividends

-

(10,000

)

-

(10,000

)

Total comprehensive income

-

10,000

-

10,000

Balance at 31 December 2021

500

8

51,040

51,548

Changes in equity

Dividends

-

(10,000

)

-

(10,000

)

Total comprehensive income

-

10,000

-

10,000

Balance at 31 December 2022

500

8

51,040

51,548

Cash flows from operating activities

Cash generated from operations

1

15,891

21,694

Tax paid

(2,926

)

(3,159

)

Net cash from operating activities

12,965

18,535

Cash flows from investing activities

Purchase of intangible fixed assets

(3

)

(2

)

Purchase of tangible fixed assets

(3,156

)

(3,338

)

Sale of tangible fixed assets

243

282

Interest received

7

8

Net cash from investing activities

(2,909

)

(3,050

)

Cash flows from financing activities

Capital repayments in year

(7

)

(3

)

Equity dividends paid

(10,000

)

(10,000

)

Net cash from financing activities

(10,007

)

(10,003

)

Increase in cash and cash equivalents

49

5,482

Cash and cash equivalents at beginning
of year

2

14,128

8,646

Cash and cash equivalents at end of year

2

14,177

14,128

1.	Reconciliation of profit before taxation to cash generated from operations

2022

2021

£'000

Profit before taxation

12,006

7,383

Depreciation charges

2,854

2,830

Profit on disposal of fixed assets

(194

)

(206

)

Amortisation charges

9,128

9,323

Finance income

(7

)

(8

)

23,787

19,322

Increase in stocks

(5,125

)

(305

)

Increase in trade and other debtors

(9,478

)

(7,544

)

Increase in trade and other creditors

6,707

10,221

Cash generated from operations

15,891

21,694

2.	Cash and cash equivalents

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 31 December 2022

31/12/22

1/1/22

£'000

Cash and cash equivalents

14,177

14,128

Year ended 31 December 2021

31/12/21

1/1/21

£'000

Cash and cash equivalents

14,128

8,646

3.	Analysis of changes in net funds

At 1/1/22

Cash flow

At 31/12/22

£'000

Net cash

Cash at bank

14,128

49

14,177

14,128

49

14,177

Debt

Finance leases

(7

)

7

-

(7

)

7

-

Total

14,121

56

14,177

1.	Statutory information

Hayley Group Holding Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the General Information page.

2.	Accounting policies

Basis of preparing the 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 Group management to exercise judgement in applying the Group's accounting policies (see note 3).

The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.

The following principal accounting policies have been consistently applied:

Basis of consolidation

The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases.

Going concern

After making enquiries and preparing integrated profit and loss and cash flow forecasts for the wider Hayley Group for one year from the date the financial statements are signed, the Directors have formed a judgement that, as at the date of approving the financial statements, there is a reasonable expectation that the Company, with any required support from the wider Group, has adequate resources to continue in existence for the foreseeable future. The preparation of the forecasts has been produced using known and unknown certainties, as described in more detail below.

Management have continued to implement logistical and organisational changes to underpin the Group's strengths and maintain its resilience to being negatively affected from changing global and local events and economic conditions, with the key focus being protecting all personnel, minimising the impact on critical work streams and ensuring business continuity.

For these reasons the generation of sufficient operating cash flows remain a potential risk, however management believe the Group and Company will generate sufficient working capital and cash flows to continue in operational existence for the foreseeable future.

In making this assessment the Board of Directors has continued to regularly undertake a thorough review of the Hayley group's budgets and forecasts and has produced detailed and realistic cash flow projections based on the group's existing significant cash resources and an unused invoice discounting facility of £12m.

These cash flow projections, when considered in conjunction with the Group's significant existing cash balances and available facilities, demonstrate that the Hayley Group has sufficient working capital for the foreseeable future. In light of the assessment and sensitivities prepared, the directors remain of the view that the forecast is achievable.

For the reasons and assumptions used in the cash flow projections the directors are of the opinion that the headroom within the forecast should be sufficient to enable the group and company to operate and meet its liabilities as they fall due for at least a year from the date of approval of these financial statements. The financial statements have accordingly been prepared on a going concern basis.

Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue 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 revenue is recognised:

Sale of goods

Revenue from the sale of goods is recognised when all of the following conditions are satisfied;

- the Group has transferred the significant risks and rewards of ownership to the buyer;

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

- the amount of revenue can be measured reliably;

- it is probable that the Group 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.

Interest income

Interest income is recognised in profit or loss using the effective interest method.

Finance costs

Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

Goodwill

Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer's interest in the fair value of the Group's share of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is amortised on a straight line basis to the Consolidated Statement of Comprehensive Income over 10 years.

Intangible assets

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.

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.

The Group adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when the cost is incurred, if the replacement part is expected to provide incremental future benefits to the Group. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.

Depreciation is provided on the following basis:

Long-term leasehold property

- straight line over the life of the lease

Plant and machinery

- 20% reducing balance

Motor vehicles

- 20% straight line and 20%-25% reducing balance

Fixtures and fittings

- 10%-20% reducing balance

Computer equipment

- 20% straight line (included in fixtures and fittings)

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Consolidated Statement of Comprehensive Income.

Investments in subsidiaries

Investments in subsidiaries are measured at cost less accumulated impairment.

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 weighted average basis.

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 the Consolidated Statement of Comprehensive Income.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Consolidated Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the statement of financial position date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies

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 is 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 the Consolidated Statement of Comprehensive Income except when deferred in other comprehensive income as qualifying cash flow hedges.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated Statement of Comprehensive Income within 'financial income or costs'. All other foreign exchange gains and losses are presented in the Consolidated Statement of Comprehensive Income within 'other operating income'.

On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.

Defined contribution pension plan

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

The contributions are recognised as an expense in the Consolidated Statement of Comprehensive Income 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 Group in independently administered funds.

Operating leases: the company as a lessee

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the lease term.

Finance leases (lessee)

Where assets are financed by leasing agreements that give rights approximating to ownership (finance leases), the assets are treated as if they had been purchased outright. The amount capitalised is the present value of the minimum lease payments payable over the term of the lease. The corresponding leasing commitments are shown as amounts payable to the lessor. Depreciation on the relevant assets is charged to profit or loss over the shorter of estimated useful economic life and the term of the lease.

Lease payments are analysed between capital and interest components so that the interest element of the payment is charged to profit or loss over the term of the lease and is calculated so that it represents a constant proportion of the balance of capital repayments outstanding. The capital part reduces the amounts payable to the lessor.

The Group has taken advantage of the transition relief available under FRS 102 which allows lease incentives n leases entered into before the date of transition to continue to be charged over the period to the first market rent review rather than the term of the lease.

Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Consolidated Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Group's cash management.

Debtors and creditors receivable/payable within one year

Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at the transaction price. Any losses arising from impairment are recognised in the profit and loss account in other administrative expenses.

Holiday pay accrual

A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the Statement of Financial Position date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement accrued at the Statement of Financial Position date.

Provision for liabilities

Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.

Provisions are charged as an expense to the Consolidated Statement of Comprehensive Income in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the Statement of Financial Position date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.

When payments are made, they are charged to the provision carried in the Statement of Financial Position.

Financial instruments

The Group 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 non-puttable ordinary shares.

Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms of financed at a rate of interest that is not a market rate or in case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated Statement of Comprehensive Income.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the reporting date.

Financial assets and liabilities are offset and the net amount reported in the Consolidated Statement of Financial Position when there is an 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.

3.	Critical accounting judgements and key sources of estimation uncertainty

Preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for assets, liabilities, revenues and expenses.

The estimates and associated assumptions are based on historic experiences and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities and are not readily apparent from other sources. Actual results may differ from these estimates. The judgements, estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are:

Trade debtors

Trade debtors consist of amounts due from customers. An allowance for doubtful debts is maintained for estimated losses resulting from the inability of the Company's customers to make required payments. The allowance is based on the Company's regular assessment of the credit worthiness and financial conditions of customers.

Stock

Certain factors could affect the realisable value of the Company's stocks, including customer demand and market conditions. The Company considers usage, anticipated sale price, effect of new product introductions, product obsolescence and other factors when evaluating the value.

Goodwill and amortisation

The Group recognises a significant amount of goodwill on consolidation. The useful economic life considered appropriate by the Directors is 10 years. The Directors consider whether there are any indicators of impairment by considering the economic viability and expected future financial performance of the asset.

Tangible and intangible assets impairment

Tangible and intangible assets are assessed at each reporting date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use.

Tangible fixed assets depreciation

Tangible fixed assets are depreciated over their useful economic lives taking into account residual values where appropriate. The actual lives of these assets are assessed annually and may vary depending on a number of factors. In assessing asset lives, factors such as life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as the remaining life of the asset and projected disposal values.

Investments

The investments in subsidiaries are assessed at each reporting date to determine whether there is any indication the assets are impaired. Where there is any indication that an asset has been impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use.

Going concern

When making the assessment upon the Group and Company's ability to continue as a going concern, the Directors consider various factors, including current trading and market conditions, the expectations of future trading and the ability of the company to operate within available funding facilities, contingent liabilities, and any other relevant facts or circumstances. This assessment covers at least twelve months following the date of approval of the financial statements. Note 2 contains more information in respect of this.

4.

Turnover

The turnover and profit before taxation are attributable to the one principal activity of the group.

An analysis of turnover by class of business is given below:

2022

2021

£'000

Engineering products

259,189

220,300

259,189

220,300

The Group's business segments operate primarily in the UK.

5.	Other operating income

2022

2021

£'000

RDEC income

624

517

Furlough income and government grants

-

92

624

609

6.	Employees and directors

2022

2021

£'000

Wages and salaries

37,463

35,992

Social security costs

4,634

4,379

Other pension costs

2,851

2,565

44,948

42,936

The average number of employees during the year was as follows:

2022

2021

Employees not including Directors

1,030

974

Directors

5

6

1,035

980

The Company has no employees other than Directors, who did not receive any remuneration from the Company itself (2021 - £Nil).

2022

2021

£

Directors' remuneration

446,382

2,260,861

Directors' pension contributions to money purchase schemes

17,100

21,000

Information regarding the highest paid director is as follows:

2022

2021

£

Emoluments etc

183,333

994,156

During the year retirement benefits were accruing to nil Directors (2021 - nil) in respect of defined contribution pension schemes.

The value of the Group's contribution paid to a defined benefit contribution pension scheme in respect of the highest paid Director amounted to £Nil (2021 - £Nil).

7.	Operating profit

The operating profit is stated after charging/(crediting):

2022

2021

£

Depreciation of tangible fixed assets

2,854

2,830

Amortisation of intangible assets, including goodwill

9,128

8,926

(Gain)/loss on foreign exchange

(282

)

(189

)

Other operating lease rentals - land and buildings

2,688

2,314

Other operating lease rentals - other

1,661

1,757

(Profit)/loss on sale of tangible assets

(194

)

(206

)

Auditors' remuneration

2022

2021

£

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

106

93

Taxation compliance services

-

Other services relating to taxation

-

All other services

-

14

8.

Interest receivable and similar income

2022

2021

£'000

Other interest receivable

7

8

9.

Taxation

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

2022

2021

£'000

Current tax:

UK corporation tax

3,895

3,139

Adjustments in respect of

prior year

(247

)

(15

)

Total current tax

3,648

3,124

Deferred tax:

Origination and reversal of

timing differences

396

180

Adjustments in respect of

prior periods

-

14

Effect of changes in tax rates

-

(39

)

Total deferred tax

396

155

Tax on profit

4,044

3,279

UK corporation tax has been charged at 19 % (2021 - 19 %).

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below:

2022

2021

£'000

Profit before tax

12,006

7,383

Profit multiplied by the standard rate of corporation tax in the UK of 19 %
(2021 - 19 %)

2,281

1,403

Effects of:

Expenses not deductible for tax purposes

1,807

1,752

Income not taxable for tax purposes

(118

)

(98

)

Adjustments to tax charge in respect of previous periods

(248

)

(1

)

Other timing differences

3

(2

)

Effects of changes in tax rates

-

(39

)

Fixed asset differences

319

264

Total tax charge

4,044

3,279

Factors the may effect future tax charges

The main rate of corporation tax in force at the Statement of Financial Position date was 19%. A resolution to amend the corporation tax rate from 1 April 2023 was passed on 3 March 2021, at which point the main rate of corporation tax will increase to 25%. A small profits rate of 19% for companies with profits not exceeding £50k will take effect from the same date.

The deferred taxation balance has therefore been calculated at 25%, being the rate substantively enacted at the Statement of Financial Position date.

10.	Individual statement of comprehensive income

As permitted by Section 408 of the Companies Act 2006, the Statement of Comprehensive Income of the parent company is not presented as part of these financial statements.

11.

Dividends

2022

2021

£'000

Ordinary shares of £1 each

Interim

10,000

12.	Intangible fixed assets

Group

Computer

Goodwill

software

Totals

£'000

Cost

At 1 January 2022

93,302

18

93,320

Additions

-

3

At 31 December 2022

93,302

21

93,323

Amortisation

At 1 January 2022

49,588

12

49,600

Amortisation for year

9,123

5

9,128

At 31 December 2022

58,711

17

58,728

Net book value

At 31 December 2022

34,591

4

34,595

At 31 December 2021

43,714

6

43,720

13.	Tangible fixed assets

Group

Fixtures

Long

Plant and

and

Motor

leasehold

machinery

fittings

vehicles

Totals

£'000

Cost

At 1 January 2022

5,008

88

7,882

5,990

18,968

Additions

364

13

767

2,012

3,156

Disposals

-

(10

)

(768

)

(778

)

At 31 December 2022

5,372

101

8,639

7,234

21,346

Depreciation

At 1 January 2022

1,497

40

3,226

3,151

7,914

Charge for year

380

9

864

1,601

2,854

Eliminated on disposal

-

(8

)

(721

)

(729

)

At 31 December 2022

1,877

49

4,082

4,031

10,039

Net book value

At 31 December 2022

3,495

52

4,557

3,203

11,307

At 31 December 2021

3,511

48

4,656

2,839

11,054

The net book value of assets held under finance leases or hire purchase contracts, included above amounted to £nil (2021 - £9k).

The depreciation charged in the period in respect of assets held under finance lease or hire purchase contracts amounted to £nil (2021 - £3k).

14.	Fixed asset investments

Company

Shares in

group

undertakings

£'000

Cost

At 1 January 2022

and 31 December 2022

65,403

Net book value

At 31 December 2022

65,403

At 31 December 2021

65,403

The following was a direct subsidiary undertaking of the Company:

Name

Principal activity

Class of shares

Holding

Hayley Group Limited

Sales and distribution of bearings

Ordinary

100%

The following were indirect subsidiary undertakings of the Company:

Name

Principal activity

Class of shares

Holding

Bearing Man Limited

Sales and distribution of bearings

Ordinary

100%

Advanced Maintenance Supplies
Limited

Sales and distribution of bearings

Ordinary

100%

Hayley Holdings Limited

Dormant

Ordinary

100%

Hayley Bearing Company Limited

Sales and distribution of bearings

Ordinary

100%

Bearing Transmission and Lubricant
Supplies Limited

Non trading

Ordinary

100%

Albion Leasing (West Midlands)
Limited

Renting and leasing of cars and light
motor vehicles

Ordinary

100%

Mercury Bearings Limited

Sales and distribution of bearings

Ordinary

100%

Mercury Holdings (London) Limited

Non trading holding company

Ordinary

100%

Swan Industrial Drives Limited

Sales and distribution of bearings

Ordinary

100%

World of Supply Limited

Non trading

Ordinary

100%

All companies in the Group have the registered office of Shelah Road, Halesowen, West Midlands, B63 3XL in England and Wales.

Hayley Group Holding Limited has agreed to guarantee the liabilities of its subsidiaries Bearing Transmission and Lubricant Supplies Limited (registered number 04203035), Albion Leasing (West Midlands) Limited (registered number 04289340) and Hayley Bearing Company Limited (registered number 08999728), thereby allowing them to take exemption from audit under Section 479A of the Companies Act 2006.

15.

Stocks

Group

2022

2021

£'000

Raw materials and consumables

104

57

Finished goods and goods for

resale

42,243

37,165

42,347

37,222

The difference between purchase price or production cost of stocks and their replacement cost is not material.

An impairment loss of £839k (2021 - £779k) was recognised in cost of sales against stock during the period due to slow-moving and obsolete stock.

16.

Debtors: amounts falling due within one year

Group

2022

2021

£'000

Trade debtors

53,025

44,363

Amounts owed by associates

3

Other debtors

1,437

522

Amounts owed by related

parties

-

61

Tax recoverable

55

703

Prepayments

3,858

3,896

58,378

49,548

An impairment loss of £121k (2021 - £7k) was recognised in respect of trade debtors.

17.	Cash at bank

Group

2022

2021

£'000

Cash at bank and in hand

14,177

14,128

18.

Creditors: amounts falling due within one year

Group

Company

2022

2021

2022

2021

£'000

Hire purchase contracts (see note 20)

-

3

-

Trade creditors

37,430

32,964

-

Amounts owed to group undertakings

-

2

6,924

Corporation tax

327

253

-

Social security and other taxes

1,129

1,388

-

VAT

2,474

1,843

-

Other creditors

940

1,162

-

Amounts owed to related

parties

767

748

-

Amounts owed to parent

undertaking

6,932

Accruals and deferred income

10,133

8,049

-

60,132

53,344

13,856

Obligations under finance leases are secured on the related assets.

Amounts owed to group undertakings are unsecured with no set repayment date, and do not bear interest. All transactions with group undertakings are at arms length on normal business terms.

19.

Creditors: amounts falling due after more than one year

Group

2022

2021

£'000

Hire purchase contracts (see note 20)

-

4

Obligations under finance leases are secured on the related assets.

20.	Leasing agreements

Minimum lease payments fall due as follows:

Group

Hire purchase contracts

2022

2021

£'000

Net obligations repayable:

Within one year

-

3

Between one and five years

-

4

-

7

At 31 December 2022 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2022

2021

£'000

Land and buildings

Not later than 1 year

2,661

2,381

Later than 1 year and not later than 5 years

6,211

4,141

Later than 5 years

3,088

425

11,960

6,947

2022

202

£'000

Other

Not later than 1 year

439

285

Later than 1 year and not later than 5 years

698

303

Later than 5 years

1

-

1,138

587

21.	Financial instruments

Group

Company

2022

2021

2022

2021

£

Financial assets

Financial assets measured at amortised cost

72,500

62,973

-

Financial liabilities

Financial liabilities measured at amortised
cost

56,202

49,860

(13,856

)

(13,856

)

Financial assets measured at amortised cost comprise cash and cash equivalents, trade debtors, amounts owed by group undertakings, other debtors and prepayments.

Financial liabilities measured at amortised cost comprise trade creditors, amounts owed to group undertakings and related parties, other creditors, obligations under finance lease and hire purchase contracts and accruals.

22.	Provisions for liabilities

Group

2022

2021

£'000

Deferred tax

Accelerated capital allowances

729

335

Other timing differences

(60

)

(52

)

669

283

Other provisions

400

Aggregate amounts

1,069

683

Group

Deferred

Other

tax

provisions

£'000

Balance at 1 January 2022

283

400

Charge to Statement of Comprehensive Income during year

386

-

Balance at 31 December 2022

669

400

The other provisions relate to property lease obligations in respect of dilapidation obligations which it is anticipated may be payable as the leases on these properties expire and in the event the company vacates the property.

23.	Called up share capital

Allotted, issued and fully paid:

Number:

Class:

Nominal

2022

2021

value:

£'000

500,000

Ordinary

£1

500

24.

Reserves

Group

Retained

Share

Other

earnings

premium

reserves

Totals

£'000

At 1 January 2022

(2,977

)

51,040

53,078

101,141

Profit for the year

7,962

Dividends

(10,000

)

(10,000

)

At 31 December 2022

(5,015

)

51,040

53,078

99,103

Company

Retained

Share

earnings

premium

Totals

£'000

At 1 January 2022

8

51,040

51,048

Profit for the year

10,000

Dividends

(10,000

)

(10,000

)

At 31 December 2022

8

51,040

51,048

Share premium account

The share premium reserve includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium.

Merger reserve

The merger reserve in the consolidated accounts represents the difference between the fair value and nominal value of shares issued in respect of prior acquistions, where merger relief has been adopted in the Statement of Financial Position of the parent entity.

Profit and loss account

Profit and loss account includes all current and prior period retained profits and losses, less distributions to owners.

25.	Contingent liabilities

The Royal Bank of Scotland hold an unlimited multi-party guarantee dated 10 February 2010 executed by Hayley Group Limited, Hayley Holdings Limited, Bearing Man Limited and Advanced Maintenance Supplies Limited over borrowings of £Nil (2021 - £Nil).

26.	Pension commitments

The Group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund and amounted to £2,826k (2021 - £2,541k). Contributions totalling £244k (2021 - £219k) were payable to the fund at the Statement of Financial Position date.

27.	Related party disclosures

HG Pension Scheme

The Group leases premises owned by the HG Pension Scheme. The amount included in the Consolidated Statement of Comprehensive Income in respect of rentals is £164k (2021 - £116k) and this is in respect of freehold property located a Unit 9, Queensway Meadows Industrial Estate, Newport, Gwent and Shelah Road, Halesowen, West Midlands.

The Company has taken advantage of the exemption under FRS 102 Related Party Disclosures not to disclose transactions with members of the Group headed by Hayley Group Holding Limited on the grounds that 100% of the voting rights in these companies are controlled by the Company.

During the year, the Group entered into the following transactions with other related parties:

Sales

Purchases

Sales

Purchases

2022

2021

£

Mediahut Limited

-

206

-

184

Shelah Properties Limited

-

240

-

55

HG Pension Scheme

-

166

-

193

At the Statement of Financial Position date the Company owed the following amounts to related parties:

2022

2021

£

Mediahut Limited

(8

)

(45

)

Shelah Properties Limited

-

(55

)

HG Pension Scheme

(31

)

(8

)

Hayley Group Holding Limited is related to Mediahut Limited, Shelah Properties Limited and the HG Pension Scheme by virtue of common shareholding or ownership by Messrs L N Willitts and B C Noakes.

During the year the Group made sales of £922k (2021 - £831k) and purchases of £6,471k (2021 - £4,302k) from Descours & Cabaud SA. At the Statement of Financial Position date the Group was owed £nil (2021 - £61k) from these companies and owed £767k (2021 - £748k) to these companies.

28.	Controlling party

Hayley Group Holding Limited was owned at 31 December 2022 by Descours & Cabaud SA, a company registered in France.

The results of Hayley Group Holding Limited and its subsidiaries are included in the consolidated accounts of Descours & Cabaud SA.

There is no ultimate controlling party.