Michael Davies and Associates Limited Company accounts

MICHAEL DAVIES AND ASSOCIATES LIMITED - Company Information

false false false true false false false false false false true false false true true true true true true true No description of principal activity 2022-01-01 Sage Accounts Production Advanced 2021 - FRS102_2021 572 679 31,003 11,110 3,100 14,210 16,793 19,893 xbrli:pure xbrli:shares iso4217:GBP 02165614 2022-01-01 2022-12-31 02165614 2022-12-31 02165614 2021-12-31 02165614 2021-01-01 2021-12-31 02165614 2021-12-31 02165614 core:NetGoodwill 2022-01-01 2022-12-31 02165614 bus:RegisteredOffice 2022-01-01 2022-12-31 02165614 bus:OrdinaryShareClass1 2022-01-01 2022-12-31 02165614 bus:LeadAgentIfApplicable 2022-01-01 2022-12-31 02165614 bus:Director6 2022-01-01 2022-12-31 02165614 bus:Director1 2022-01-01 2022-12-31 02165614 bus:Director2 2022-01-01 2022-12-31 02165614 bus:Director4 2022-01-01 2022-12-31 02165614 bus:Director5 2022-01-01 2022-12-31 02165614 bus:Director6 2022-12-31 02165614 core:WithinOneYear 2022-12-31 02165614 core:WithinOneYear 2021-12-31 02165614 core:AfterOneYear 2022-12-31 02165614 core:AfterOneYear 2021-12-31 02165614 core:NetGoodwill 2021-12-31 02165614 core:NetGoodwill 2022-12-31 02165614 core:LandBuildings 2021-12-31 02165614 core:PlantMachinery 2021-12-31 02165614 core:FurnitureFittings 2021-12-31 02165614 core:LandBuildings 2022-12-31 02165614 core:PlantMachinery 2022-12-31 02165614 core:FurnitureFittings 2022-12-31 02165614 core:LandBuildings 2022-01-01 2022-12-31 02165614 core:PlantMachinery 2022-01-01 2022-12-31 02165614 core:FurnitureFittings 2022-01-01 2022-12-31 02165614 core:UKTax 2022-01-01 2022-12-31 02165614 core:UKTax 2021-01-01 2021-12-31 02165614 core:RetainedEarningsAccumulatedLosses 2021-12-31 02165614 core:RetainedEarningsAccumulatedLosses 2020-12-31 02165614 core:RetainedEarningsAccumulatedLosses 2022-12-31 02165614 core:RetainedEarningsAccumulatedLosses 2021-12-31 02165614 core:ShareCapital 2022-12-31 02165614 core:ShareCapital 2021-12-31 02165614 core:BetweenOneFiveYears 2022-12-31 02165614 core:BetweenOneFiveYears 2021-12-31 02165614 core:MoreThanFiveYears 2022-12-31 02165614 core:NetGoodwill 2021-12-31 02165614 core:AcceleratedTaxDepreciationDeferredTax 2022-12-31 02165614 core:AcceleratedTaxDepreciationDeferredTax 2021-12-31 02165614 core:ProvisionsDeferredTax 2022-12-31 02165614 core:ProvisionsDeferredTax 2021-12-31 02165614 core:LandBuildings 2021-12-31 02165614 core:PlantMachinery 2021-12-31 02165614 core:FurnitureFittings 2021-12-31 02165614 core:LeasedAssetsHeldAsLessee core:PlantMachinery 2022-12-31 02165614 core:LeasedAssetsHeldAsLessee core:PlantMachinery 2021-12-31 02165614 core:DeferredTaxation 2021-12-31 02165614 core:DeferredTaxation 2022-12-31 02165614 bus:LeadAgentIfApplicable 2021-01-01 2021-12-31 02165614 bus:HighestPaidDirector 2022-01-01 2022-12-31 02165614 bus:HighestPaidDirector 2021-01-01 2021-12-31 02165614 bus:FRS102 2022-01-01 2022-12-31 02165614 bus:Audited 2022-01-01 2022-12-31 02165614 bus:FullAccounts 2022-01-01 2022-12-31 02165614 bus:LargeMedium-sizedCompaniesRegimeForAccounts 2022-01-01 2022-12-31 02165614 bus:PrivateLimitedCompanyLtd 2022-01-01 2022-12-31 02165614 bus:OrdinaryShareClass1 2022-12-31 02165614 bus:OrdinaryShareClass1 2021-12-31 02165614 core:LandBuildings core:OwnedOrFreeholdAssets 2022-01-01 2022-12-31 02165614 core:DecommissioningRestorationDilapidations 2022-01-01 2022-12-31 02165614 core:OfficeEquipment 2021-12-31 02165614 core:OfficeEquipment 2022-01-01 2022-12-31 02165614 core:OfficeEquipment 2022-12-31 02165614 core:DecommissioningRestorationDilapidations 2021-12-31 02165614 core:DecommissioningRestorationDilapidations 2022-12-31 02165614 core:RetainedEarningsAccumulatedLosses 2022-01-01 2022-12-31

COMPANY REGISTRATION NUMBER: 02165614

Michael Davies and Associates Limited

Financial Statements

31 December 2022

Michael Davies and Associates Limited

Financial Statements

Year ended 31 December 2022

Contents	Page

Strategic report	1

Directors' report	2

Independent auditor's report to the members	4

Statement of income and retained earnings	8

Statement of financial position	9

Notes to the financial statements	10

Michael Davies and Associates Limited

Strategic Report

Year ended 31 December 2022

The directors present their strategic report for the year ended 31 December 2022.

Review of the business

The business operates as a multi-channel logistics solutions specialist. We saw a return to some form of normality in the wider economy following the pandemic. This resulted in our client's activity levels increasing towards pre pandemic levels. Our diversification strategy continues apace with strong activity from core product clients across the year. For the reported period turnover of £53.8m increased by 21% versus 2021 with EBITDA of £5.7m increasing by 27% versus 2021. The operating profit for the year of £1.3m compares to an operating loss in 2021 of (£0.058m). In both these numbers, within administrative expenses, there is the non-cash impactive posting of goodwill amortisation of £3.100m. In the middle of the year, we extended our warehouse estate by opening a seventh site. We believe this will enable us to continue the upwards trajectory of the business over recent times.

Principal risks and uncertainties

(i) Inflation The high levels of inflation have shown no sign of abating since the war in Ukraine commenced. As a business, we continue to be confident that we have robust procedures and controls in place to mitigate any cost increases and whilst being cognisant of all cost lines we are confident that there will not be any material impact upon profitability. (ii) Employment Recruitment in the UK labour market has been challenging for most of the past two years, compounded in 2022 by the cost of living crisis. In order to help with staff retention and the general wellbeing of staff as a board we took the decision to pay bonuses earlier than normal in 2022 and we have brought forward a significant portion of the annual pay review. The availability of labour continues to be a challenge and we have continued our focus in this area with more resource in recruitment to ensure we attract new colleagues in the future.

This report was approved by the board of directors on 9 May 2023 and signed on behalf of the board by:

B McQuillan

Director

Registered office:

MDA

Walker Park

Blackamoor Road

Blackburn

BB1 2LG

Michael Davies and Associates Limited

Directors' Report

Year ended 31 December 2022

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

Directors

The directors who served the company during the year were as follows:

W Chapman
B Clavier
T Mortier
BD Whitby
B McQuillan	(Appointed 1 November 2022)

Dividends

The directors do not recommend the payment of a dividend.

Future developments

Following the addition of a seventh unit to our warehouse estate in the year the business is well positioned to continue its recent growth. The diversification of the business continues to remain a key and important focus, as activity from our POS/Print clients whilst not declining, has remained stagnant in recent years. The strides we have already made to diversify, with several key client wins over the past two years, puts us in good stead to continue to grow the business further.

Employment of disabled persons

It is the company's policy that applications from disabled persons should be considered for employment and career development on the basis of their aptitude and abilities. Employees who become disabled during their working life will be retained in employment wherever possible and given help with rehabilitation or training.

Employee involvement

The directors recognise the importance of good communication and relations with employees, particularly in an organisation such as this where employees are based at a number of different locations. Measures taken to achieve these aims include in-house bulletins, briefing meetings and audio-visual presentations and a colleague forum.

Directors' responsibilities statement

The directors are responsible for preparing the strategic report, directors' report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with 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 profit or loss of the company for that period. In preparing these financial statements, the directors are required to: - select suitable accounting policies and then apply them consistently; - make judgments and accounting estimates that are reasonable and prudent; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Auditor

Each of the persons who is a director at the date of approval of this report confirms that:

- so far as they are aware, there is no relevant audit information of which the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information.

This report was approved by the board of directors on 9 May 2023 and signed on behalf of the board by:

B McQuillan

Director

Registered office:

MDA

Walker Park

Blackamoor Road

Blackburn

BB1 2LG

Michael Davies and Associates Limited

Independent Auditor's Report to the Members of Michael Davies and Associates Limited

Year ended 31 December 2022

Opinion

We have audited the financial statements of Michael Davies and Associates Limited (the 'company') for the year ended 31 December 2022 which comprise the statement of income and retained earnings, statement of financial position and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In our opinion the financial statements: - give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its profit for the year then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; - 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's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the 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 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. 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 there is a material misstatement in the financial statements or a material misstatement of the other information. 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 strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

- the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: - adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or - the financial statements are not in agreement with the accounting records and returns; or - certain disclosures of directors' remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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. 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: Based on our understanding of the company, we identified that the principal risks of non-compliance related to those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006 and FRS 102. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to manipulate financial results and management bias in accounting estimates. Appropriate audit procedures were therefore performed to address those risks including testing journal entries and challenging assumptions and judgements made by management in their significant accounting estimates. There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. - Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Use of own 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.

Dominic Huxley

(Senior Statutory Auditor)

For and on behalf of

Wrigley Partington

Chartered accountants & statutory auditor

Sterling House

501 Middleton Road

Chadderton

Oldham

OL9 9LY

9 May 2023

Michael Davies and Associates Limited

Statement of Income and Retained Earnings

Year ended 31 December 2022

		2022	2021
Note		£000	£000
Turnover	4	53,823	44,380

Cost of sales	31,689	26,751
	--------	--------
Gross profit	22,134	17,629

Administrative expenses		20,891	18,177
Other operating income	5	45	490
		--------	--------
Operating profit/(loss)	6	1,288	( 58)

Other interest receivable and similar income	10	95	47
Interest payable and similar expenses	11	39	41
		--------	--------
Profit/(loss) before taxation		1,344	( 52)

Tax on profit/(loss)	12	772	627
		-------	----
Profit/(loss) for the financial year and total comprehensive income		572	( 679)
		-------	----

Retained losses at the start of the year	( 1,991)	( 1,312)
	-------	-------
Retained losses at the end of the year	( 1,419)	( 1,991)
	-------	-------

All the activities of the company are from continuing operations.

Michael Davies and Associates Limited

Statement of Financial Position

31 December 2022

	2022		2021
Note	£000	£000	£000	£000

Fixed assets

Intangible assets	13	16,793	19,893
Tangible assets	14	4,964	4,985
		--------	--------
		21,757	24,878

Current assets

Stocks	15	305	146
Debtors	16	19,100	17,103
Cash at bank and in hand		12,697	8,931
		--------	--------
		32,102	26,180

Creditors: amounts falling due within one year	17	16,168		13,886
		--------		--------
Net current assets			15,934		12,294
			--------		--------
Total assets less current liabilities			37,691		37,172

Creditors: amounts falling due after more than one year	18		623		820

Provisions	20	1,523	1,379
		--------	--------
Net assets		35,545	34,973
		--------	--------

Capital and reserves

Called up share capital	24	36,964	36,964
Profit and loss account	25	( 1,419)	( 1,991)
		--------	--------
Shareholders funds		35,545	34,973
		--------	--------

These financial statements were approved by the board of directors and authorised for issue on 9 May 2023 , and are signed on behalf of the board by:

B McQuillan

Director

Company registration number: 02165614

Michael Davies and Associates Limited

Notes to the Financial Statements

Year ended 31 December 2022

1. General information

The company is a private company limited by shares, registered in England and Wales. The address of the registered office is MDA, Walker Park, Blackamoor Road, Blackburn, BB1 2LG.

2. Statement of compliance

These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.

3. Accounting policies

Basis of preparation

The financial statements have been prepared on the historical cost basis, as modified by the revaluation of certain financial assets and liabilities and investment properties measured at fair value through profit or loss. The financial statements are prepared in sterling, which is the functional currency of the entity.

Disclosure exemptions

The entity satisfies the criteria of being a qualifying entity as defined in FRS 102. Its financial statements are consolidated into the financial statements of Staci SAS which are available from head office at ZI du Vert Galant, 36 Avenue du Fond de Vaux, Saint-Ouen-l'Aumône 95310, France. As such, advantage has been taken of the following disclosure exemptions available under paragraph 1.12 of FRS 102: (a) Disclosures in respect of each class of share capital have not been presented. (b) No cash flow statement has been presented for the company. (c) Disclosures in respect of financial instruments have not been presented. (d) No disclosure has been given for the aggregate remuneration of key management personnel.

Judgements and key sources of estimation uncertainty

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Key accounting estimates and assumptions Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome . The key assumptions and other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows: (i) Goodwill amortisation The company establishes a reliable estimate of the useful life of goodwill and intangible assets arising on business combinations. This estimate is based on a variety of factors such as the expected use of the acquired business, the expected usual life of the cash generating units to which the goodwill is attributed, any legal, regulatory or contractual provisions that can limit useful life and assumptions that market participants would consider in respect of similar businesses. (ii) Provisions Provision is made for dilapidations. Provisions require management’s best estimate of the costs that will be incurred based on legislative and contractual requirements. In addition, the timing of the cash flows and the discount rates used to establish net present value of the obligations require management’s judgement.

Revenue recognition

Turnover is measured at the fair value of the consideration received or receivable for goods supplied and services rendered, net of discounts and Value Added Tax. Revenue from the sale of goods is recognised when the significant risks and rewards of ownership have transferred to the buyer (usually on despatch of the goods); the amount of revenue can be measured reliably; it is probable that the associated economic benefits will flow to the entity; and the costs incurred or to be incurred in respect of the transactions can be measured reliably. Revenue from the rendering of services is measured by reference to the stage of completion of the service transaction at the end of the reporting period provided that the outcome can be reliably estimated. When the outcome cannot be reliably estimated, revenue is recognised only to the extent that it is probable the expenses recognised will be recovered.

Income tax

The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date.

Deferred tax is recognised in respect of all timing differences at the reporting date. Unrelieved tax losses and other 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.

Operating leases

Lease payments are recognised as an expense over the lease term on a straight-line basis. The aggregate benefit of lease incentives is recognised as a reduction to expense over the lease term, on a straight-line basis.

Goodwill

Goodwill arises on business acquisitions and represents the excess of the cost of the acquisition over the company's interest in the net amount of the identifiable assets, liabilities and contingent liabilities of the acquired business. Goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. It is amortised on a straight-line basis over its useful life. Where a reliable estimate of the useful life of goodwill or intangible assets cannot be made, the life is presumed not to exceed ten years.

Amortisation

Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful life of that asset as follows:

	Goodwill	-	10% straight line

If there is an indication that there has been a significant change in amortisation rate, useful life or residual value of an intangible asset, the amortisation is revised prospectively to reflect the new estimates.

Tangible assets

Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses. Any tangible assets carried at revalued amounts are recorded at the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. An increase in the carrying amount of an asset as a result of a revaluation, is recognised in other comprehensive income and accumulated in equity, except to the extent it reverses a revaluation decrease of the same asset previously recognised in profit or loss. A decrease in the carrying amount of an asset as a result of revaluation, is recognised in other comprehensive income to the extent of any previously recognised revaluation increase accumulated in equity in respect of that asset. Where a revaluation decrease exceeds the accumulated revaluation gains accumulated in equity in respect of that asset, the excess shall be recognised in profit or loss.

Depreciation

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

Land and buildings	-	10-50 years straight line
Plant and machinery	-	3-5 years straight line
Fixtures and fittings	-	4-10 years straight line
Equipment	-	3-10 years straight line

Impairment of fixed assets

A review for indicators of impairment is carried out at each reporting date, with the recoverable amount being estimated where such indicators exist. Where the carrying value exceeds the recoverable amount, the asset is impaired accordingly. Prior impairments are also reviewed for possible reversal at each reporting date. For the purposes of impairment testing, when it is not possible to estimate the recoverable amount of an individual asset, an estimate is made of the recoverable amount of the cash-generating unit to which the asset belongs. The cash-generating unit is the smallest identifiable group of assets that includes the asset and generates cash inflows that largely independent of the cash inflows from other assets or groups of assets. For impairment testing of goodwill, the goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the company are assigned to those units.

Stocks

Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the stock to its present location and condition.

Finance leases and hire purchase contracts

Assets held under finance leases and hire purchase contracts are recognised in the statement of financial position as assets and liabilities at the lower of the fair value of the assets and the present value of the minimum lease payments, which is determined at the inception of the lease term. Any initial direct costs of the lease are added to the amount recognised as an asset. Lease payments are apportioned between the finance charges and reduction of the outstanding lease liability using the effective interest method. Finance charges are allocated to each period so as to produce a constant rate of interest on the remaining balance of the liability.

Government grants

Government grants are recognised at the fair value of the asset received or receivable. Grants are not recognised until there is reasonable assurance that the company will comply with the conditions attaching to them and the grants will be received. Government grants are recognised using the accrual model and the performance model. Under the accrual model, government grants relating to revenue are recognised on a systematic basis over the periods in which the company recognises the related costs for which the grant is intended to compensate. Grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs are recognised in income in the period in which it becomes receivable. Grants relating to assets are recognised in income on a systematic basis over the expected useful life of the asset. Where part of a grant relating to an asset is deferred, it is recognised as deferred income and not deducted from the carrying amount of the asset. Under the performance model, where the grant does not impose specified future performance-related conditions on the recipient, it is recognised in income when the grant proceeds are received or receivable. Where the grant does impose specified future performance-related conditions on the recipient, it is recognised in income only when the performance-related conditions have been met. Where grants received are prior to satisfying the revenue recognition criteria, they are recognised as a liability.

Provisions

Provisions are recognised when the entity has an obligation at the reporting date as a result of a past event, it is probable that the entity will be required to transfer economic benefits in settlement and the amount of the obligation can be estimated reliably. Provisions are recognised as a liability in the statement of financial position and the amount of the provision as an expense. Provisions are initially measured at the best estimate of the amount required to settle the obligation at the reporting date and subsequently reviewed at each reporting date and adjusted to reflect the current best estimate of the amount that would be required to settle the obligation. Any adjustments to the amounts previously recognised are recognised in profit or loss unless the provision was originally recognised as part of the cost of an asset. When a provision is measured at the present value of the amount expected to be required to settle the obligation, the unwinding of the discount is recognised as a finance cost in profit or loss in the period it arises.

Financial instruments

A financial asset or a financial liability is recognised only when the company becomes a party to the contractual provisions of the instrument. Basic financial instruments are initially recognised at the transaction price, unless the arrangement constitutes a financing transaction, where it is recognised at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Debt instruments are subsequently measured at amortised cost. Where investments in non-convertible preference shares and non-puttable ordinary shares or preference shares are publicly traded or their fair value can otherwise be measured reliably, the investment is subsequently measured at fair value with changes in fair value recognised in profit or loss. All other such investments are subsequently measured at cost less impairment. Other financial instruments, including derivatives, are initially recognised at fair value, unless payment for an asset is deferred beyond normal business terms or financed at a rate of interest that is not a market rate, in which case the asset is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. Other financial instruments are subsequently measured at fair value, with any changes recognised in profit or loss, with the exception of hedging instruments in a designated hedging relationship.

Financial assets that are measured at cost or amortised cost are reviewed for objective evidence of impairment at the end of each reporting date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss immediately. For all equity instruments regardless of significance, and other financial assets that are individually significant, these are assessed individually for impairment. Other financial assets are either assessed individually or grouped on the basis of similar credit risk characteristics. Any reversals of impairment are recognised in profit or loss immediately, to the extent that the reversal does not result in a carrying amount of the financial asset that exceeds what the carrying amount would have been had the impairment not previously been recognised.

Defined contribution plans

Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund. When contributions are not expected to be settled wholly within 12 months of the end of the reporting date in which the employees render the related service, the liability is measured on a discounted present value basis. The unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.

4. Turnover

Turnover arises from:

	2022	2021
	£000	£000
Sale of goods	4,700	3,126
Rendering of services	49,123	41,254
	--------	--------
	53,823	44,380
	--------	--------

The whole of the turnover is attributable to the principal activity of the company wholly undertaken in the United Kingdom.

5. Other operating income

	2022	2021
	£000	£000
Government grant income	45	490
	----	----

6. Operating profit

Operating profit or loss is stated after charging:

	2022	2021
	£000	£000
Amortisation of intangible assets	3,100	3,101
Depreciation of tangible assets	1,234	1,157
Loss on disposal of tangible assets	2	–
Foreign exchange differences	7	4
Operating lease charges	3,280	2,823
	-------	-------

7. Auditor's remuneration

	2022	2021
	£000	£000
Fees payable for the audit of the financial statements	24	23
	----	----

8. Staff costs

The average number of persons employed by the company during the year, including the directors, amounted to:

	2022	2021
	No.	No.
Administrative staff	90	91
Management staff	11	11
Number of sales staff	11	10
Number of warehouse staff	371	322
	----	----
	483	434
	----	----

The aggregate payroll costs incurred during the year, relating to the above, were:

	2022	2021
	£000	£000
Wages and salaries	12,688	10,414
Social security costs	1,150	874
Other pension costs	359	310
	--------	--------
	14,197	11,598
	--------	--------

9. Directors' remuneration

The directors' aggregate remuneration in respect of qualifying services was:

	2022	2021
	£000	£000
Remuneration	306	269
Company contributions to defined contribution pension plans	38	25
	----	----
	344	294
	----	----

Remuneration of the highest paid director in respect of qualifying services:

	2022	2021
	£000	£000
Aggregate remuneration	160	147
Company contributions to defined contribution pension plans	32	20
	----	----
	192	167
	----	----

The number of directors who accrued benefits under company pension plans was 3 (2021: 2).

10. Other interest receivable and similar income

	2022	2021
	£000	£000
Interest on cash and cash equivalents	95	47
	----	----

11. Interest payable and similar expenses

	2022	2021
	£000	£000
Interest on obligations under finance leases and hire purchase contracts	39	41
	----	----

12. Tax on profit/(loss)

Major components of tax expense

	2022	2021
	£000	£000

Current tax:

UK current tax expense	844	627
Adjustments in respect of prior periods	( 72)	–
	----	----
Total current tax	772	627
	----	----
	----	----
Tax on profit/(loss)	772	627
	----	----

Reconciliation of tax expense

The tax assessed on the profit/(loss) on ordinary activities for the year is higher than (2021: higher than) the standard rate of corporation tax in the UK of 19 % (2021: 19 %).

	2022	2021
	£000	£000
Profit/(loss) on ordinary activities before taxation	1,344	( 52)
	-------	----
Profit/(loss) on ordinary activities by rate of tax	255	( 10)
Adjustment to tax charge in respect of prior periods	( 72)	–
Effect of expenses not deductible for tax purposes	–	48
Effect of goodwill amortisation	589	589
	-------	----
Tax on profit/(loss)	772	627
	-------	----

13. Intangible assets

	Goodwill
	£000
Cost
At 1 January 2022 and 31 December 2022	31,003
	--------
Amortisation
At 1 January 2022	11,110
Charge for the year	3,100
	--------
At 31 December 2022	14,210
	--------
Carrying amount
At 31 December 2022	16,793
	--------
At 31 December 2021	19,893
	--------

14. Tangible assets

	Land and buildings	Plant and machinery	Fixtures and fittings	Equipment	Total
	£000	£000	£000	£000	£000
Cost
At 1 January 2022	1,889	2,075	3,589	848	8,401
Additions	148	242	679	149	1,218
Disposals	–	( 7)	–	–	( 7)
	-------	-------	-------	----	-------
At 31 December 2022	2,037	2,310	4,268	997	9,612
	-------	-------	-------	----	-------
Depreciation
At 1 January 2022	211	876	1,809	520	3,416
Charge for the year	67	384	658	125	1,234
Disposals	–	( 2)	–	–	( 2)
	-------	-------	-------	----	-------
At 31 December 2022	278	1,258	2,467	645	4,648
	-------	-------	-------	----	-------
Carrying amount
At 31 December 2022	1,759	1,052	1,801	352	4,964
	-------	-------	-------	----	-------
At 31 December 2021	1,678	1,199	1,780	328	4,985
	-------	-------	-------	----	-------

The net book value of land and buildings comprises freehold of £1,320,000 (2021: £1,360,000) and short leasehold of £439,000 (2021: £318,000).

Finance leases and hire purchase contracts

Included within the carrying value of tangible assets are the following amounts relating to assets held under finance leases or hire purchase agreements:

	Plant and machinery
	£000
At 31 December 2022	634
	----
At 31 December 2021	785
	----

15. Stocks

	2022	2021
	£000	£000
Raw materials and consumables	163	95
Work in progress	142	51
	----	----
	305	146
	----	----

16. Debtors

	2022	2021
	£000	£000
Trade debtors	12,352	11,459
Amounts owed by group undertakings	4,975	4,007
Prepayments and accrued income	1,685	1,525
Other debtors	88	112
	--------	--------
	19,100	17,103
	--------	--------

Amounts owed by group undertakings are unsecured, have no fixed date of repayment, are repayable on demand and have interest due. Trade debtors are stated after provisions for impairment of £150,000 (2021: £176,000).

17. Creditors: amounts falling due within one year

	2022	2021
	£000	£000
Trade creditors	6,309	5,072
Accruals and deferred income	7,531	6,826
Corporation tax	640	484
Social security and other taxes	1,276	1,082
Obligations under finance leases and hire purchase contracts	252	220
Other creditors	160	202
	--------	--------
	16,168	13,886
	--------	--------

Obligations under finance leases and hire purchase contracts are secured on the assets concerned.

18. Creditors: amounts falling due after more than one year

	2022	2021
	£000	£000
Accruals and deferred income	249	293
Obligations under finance leases and hire purchase contracts	374	527
	----	----
	623	820
	----	----

Obligations under finance leases and hire purchase contracts are secured on the assets concerned.

19. Finance leases and hire purchase contracts

The total future minimum lease payments under finance leases and hire purchase contracts are as follows:

	2022	2021
	£000	£000
Not later than 1 year	252	220
Later than 1 year and not later than 5 years	374	527
	----	----
	626	747
	----	----

20. Provisions

	Deferred tax (note 21)	Dilapidations	Total
	£000	£000	£000
At 1 January 2022	83	1,296	1,379
Additions	–	144	144
	----	-------	-------
At 31 December 2022	83	1,440	1,523
	----	-------	-------

The dilapidations provisions is as a consequence of leases on six of the company's sites which could expire between 2024 to 2032, and which require the company to make good dilapidations.

21. Deferred tax

The deferred tax included in the statement of financial position is as follows:

	2022	2021
	£000	£000
Included in provisions (note 20)	83	83
	----	----

The deferred tax account consists of the tax effect of timing differences in respect of:

	2022	2021
	£000	£000
Accelerated capital allowances	121	121
Provisions	( 38)	( 38)
	----	----
	83	83
	----	----

22. Employee benefits

Defined contribution plans

The amount recognised in profit or loss as an expense in relation to defined contribution plans was £ 358,983 (2021: £ 310,470 ).

23. Government grants

The amounts recognised in the financial statements for government grants are as follows:

	2022	2021
	£000	£000

Recognised in creditors:

Deferred government grants due within one year	44	45
Deferred government grants due after more than one year	249	293
	----	----
	293	338
	----	----

Recognised in other operating income:

Government grants recognised directly in income	–	442
Government grants released to profit or loss	45	48
	----	----
	45	490
	----	----

24. Called up share capital

Issued, called up and fully paid

	2022		2021
	No.	£000	No.	£000
Ordinary shares of £ 1 each	36,963,766	36,964	36,963,766	36,964
	-------------	--------	-------------	--------

25. Reserves

Profit and loss account - This reserve records retained earnings and accumulated losses .

26. Capital commitments

Capital expenditure contracted for but not provided for in the financial statements is as follows:

	2022	2021
	£000	£000
Tangible assets	205	195
	----	----

27. Operating leases

The total future minimum lease payments under non-cancellable operating leases are as follows:

	2022	2021
	£000	£000
Not later than 1 year	3,816	3,270
Later than 1 year and not later than 5 years	7,613	6,500
Later than 5 years	4,099	–
	--------	-------
	15,528	9,770
	--------	-------

28. Contingencies

The company has provided cross guarantees in respect of certain borrowings of a fellow group company. The guarantee is secured by a charge on the company’s bank balances and £4.88m of the amounts owed by group undertakings and is limited to the extent of these amounts.

29. Related party transactions

The company is exempt from disclosing related party transactions as they are with other companies that are wholly owned within the Group.

30. Controlling party

The company's immediate parent undertaking, and the smallest group in which the results of the company are consolidated is Staci SAS , a company incorporated in France. Copies of Staci SAS's financial statements can be obtained from the head office at ZI du Vert Galant, 5/7 Avenue des Gros Chevaux, 95310 Saint-Ouen l'Aumône, France . The ultimate parent undertaking and largest group in which the results of the company are consolidated is Augusta Progress . Copies of their financial statements can be obtained from 5 /7 Avenue des Gros Chevaux, ZAC du Vert Galant, 95310 Saint-Ouen l'Aumône, France . The ultimate controlling party is Ardian France.