Company Registration No. 02220727 (England and Wales)

GARIC LIMITED

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

GARIC LIMITED

COMPANY INFORMATION

Directors

P J Bibby

G F H Bibby

J G Lewis (Chair)

N C P Quinn

M Albiston (Chief Executive Officer)

C Malloy (Chief Finance Officer)

Secretary

Bibby Bros. & Co. (Management) Limited

Company number

02220727

Registered office

3^rd Floor Walker House

Exchange Flags

Liverpool

L2 3YL

United Kingdom

Auditor

Mazars LLP

Statutory Auditor

1 St Peters Square

Manchester

M2 3DE

United Kingdom

Bankers

HSBC Bank plc

4 Hardman Square

Spinningfields

Manchester

M3 3EB

REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022

CONTENTS

Strategic report

Directors' report

Directors' responsibilities statement

Independent auditor's report

Profit and loss account

Balance sheet

Statement of changes in equity

Cash flow statement

Note to the cash flow statement

Notes to the financial statements

STRATEGIC REPORT

FOR THE YEAR ENDED 31 DECEMBER 2022

The directors, in preparing this strategic report, have complied with s414C of the Companies Act 2006.

Business Model

Garic provides equipment services to support temporary work sites across the UK. The company provides a comprehensive range of specialist sustainable welfare and site setup solutions through:

·

Supplying sustainable products, leveraging Garic's heritage of developing renewable solutions for customers.

·

Ensuring our products are of the highest quality, supported by outstanding customer service.

·

Supporting all our clients service needs, aligned with changing technology and customer requirements.

·

Continuous innovation of our products, services, and ways of working.

Review of the Business

Turnover in the year to 31 December 2022 was 1% ahead of the previous year at £37.4m (2021: £37.3m).

Total hire and associated revenue increased by 2% in 2022 following a slowdown in the infrastructure market as it readjusted its activity levels following the uplift from the covid-19 pandemic. Revenue was further impacted by a return to the market of equipment used for Covid testing and vaccination centres. Ongoing supply chain issues and inflationary impacts suppressed the growth in new projects starts across the infrastructure sector. The company has been successful in transitioning its fleet to sustainable welfare by combining innovation with circular economy assets, providing our customers with a sustainable site setup.

Earnings before interest, tax and depreciation (EBITDA) was 4% below the previous year at £10.4m (2021: £10.8m), which reflected the slowdown in the market and the impact of inflationary increases, especially in fuel and employee costs. The performance in the year was strong given the market conditions and based on the fact we significantly increased our eco asset pool whilst forming a new executive team to strengthen our growth ambitions going forward.

Consistent trading and excellent working capital management supported the significant increase in capital expenditure with just under £8m invested in 2022 (2021: £4m). Asset investment in 2022 focused on the company's core-eco welfare products, which will provide incremental revenue streams in 2023. The net book value of our hire fleet increased by c£2m during the year.

The ratio of net external debt to EBITDA rose to 1.1 at the end of 2022 (2021: 0.9), with significant headroom available against current facilities.

Shareholders' funds at 31 December 2022 amounted to £19.6m (2021: £14.1m).

Strategy, Objectives and Principal Risks

The company's strategy is to grow revenue and profit by becoming the partner of choice for specialist sustainable welfare and site setup, enhanced by our support and service solutions. Our strategy is supported by a strong brand, customer centric service and innovative product portfolio that focuses on delivering its eco credentials.

Our customers work across rail, road, general infrastructure, and wider construction projects that require a partner to manage their site welfare requirements, whilst understanding the importance of driving a lower carbon footprint and improving the customer's labour retention.

Sustainable development is a core principle of Garic and the Bibby Line Group (its ultimate shareholder) and is a foundation of our strategy to develop Garic as a partner to our customers and a truly sustainable business.

Project Compass, operating across the whole of Bibby Line Group is our vehicle to achieve these aims through actively engaging our colleagues in providing quality products and services that our customers can trust, whilst developing talent in our people and positively impacting the communities in which we work.

The development and investment in products and services aims to deliver value added services whilst reducing the impact on natural resources for our customers and ourselves.

The company maintains a comprehensive risk register that sets out all identified risks and actions that are required to mitigate the risks.

As the company operates in the construction sector it is exposed to cyclical risk, although this is minimised through the spread of our customer base, which has a growing proportion of tier one revenue which has a lower cyclical risk. Our strategy to move into new sectors and continue to grow our innovative eco fleet will provide a wider spread of revenue generation.

STRATEGIC REPORT (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

The risk that the company's growth targets cannot be met because supply chain challenges limit expansion of our hire fleet is managed by maintaining good relationships with key suppliers, retaining capacity to manufacture certain products in-house and working to ensure high utilisation of our existing hire fleet assets.

The company is facing rising rent, energy, material, and other input costs. This risk is partly mitigated by careful management of controllable costs and seeking productivity gains where possible.

The risk that funding may not be available to enable the company's strategic growth plans is managed by arranging appropriate funding facilities and maintaining good relationships with external debt providers.

Health and safety

The company puts the provision of a safe and healthy working environment at the top of its key objectives and works hard to educate its employees in cultural safety behavior, with its right to stop approach. This approach, coupled with continuous improvement of safe systems of work and risk management, saw a further improvement in health and safety performance as measured by accident and lost time metrics. The company's operating procedures were continuously developed during the year to reflect emerging best practice.

Garic holds gold accreditation from the Fleet Operator Recognition Scheme (FORS) for the last five years running. This seal of approval shows Garic works lawfully and to best practice by meeting the highest of FORS compliance standards.

Garic also holds commendations from the Royal Society for the Prevention of Accidents (RoSPA) for the last four years. The RoSPA Gold Award demonstrates high levels of performance, well developed health-and-safety management systems, outstanding risk control and exceedingly low levels of error, harm and loss.

Research and Development:

Garic has a strong reputation in the market, with over 20 years of delivering sustainable solutions to its customers. That makes it well placed to develop and deliver new, innovative products as the sector pushes for widespread decarbonisation.

The company has a dedicated in-house Research & Development team who research and develop innovative eco-focused products and continuously develop more energy efficient iterations of existing products. The company's manufacturing facility is used to build, test and refine proto-type products in-house. The Research & Development team works closely with the sales team to ensure product development reflects evolving customer needs, reduces energy consumption, and lowers harmful emissions.

Garic's ambition to become the partner of choice for specialist sustainable welfare and site setup; the products and services developed aim to directly tackles the challenge of climate change by reducing the use of fossil fuels in construction and infrastructure operations.

Financial risk management

The company manages cash flow and liquidity risk by maintaining daily, weekly and monthly cash flow forecasts and by considering whether appropriate funding is in place before committing to major capital expenditure projects. The company is exposed to credit risk in respect of its customers which is closely managed through credit checks, setting, and monitoring credit limits, monitoring payment performance, placing credit insurance where possible and striving to maintain strong customer relationships. The company's policy is to minimise uninsured credit risk where it is considered cost effective to do so.

The company is exposed to interest rate risk on its debt facilities.

STRATEGIC REPORT (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

Key performance indicators

The following principal key performance indicators are monitored by the Board.

·

Turnover growth 1% (2021: 8%)

·

EBITDA: £10.4m (2021: £10.8m)

·

EBITDA margin: 27% (2021: 29%)

·

Operating profit margin: 13% (2021: 15%)

·

Hire fleet net book value: £26.3m (2021: £24.3m)

·

Ratio of net external debt to EBITDA: 1.1 (2021: 0.9)

·

Shareholders' funds: £19.6m (2021: £14.1m)

Future developments

The company is working on further development of innovative eco-related products, supported by ongoing investment in our people and driving operational efficiencies. Consideration is being given to expanding our current depot geography with a strategically located sixth addition. which will give us further range across the market. Focus will be on delivering organic growth with the option to enhance the growth through strategic acquisition if it supports the company's strategic objectives.

Parent undertaking

The company is a wholly owned subsidiary of Bibby Taurus Limited which is itself, indirectly, a wholly owned subsidiary of Bibby Line Group Limited, both of which are registered in England.

Going concern

In order to manage liquidity risk the company prepares daily, weekly and monthly cash flow forecasts, with the monthly cash flow forecasts looking forward for a rolling 15-month period. The key sensitivities are the level of cash expected to be generated from future trading and the timing of future capital expenditure. Capital expenditure commitments are at the discretion of the directors and are only made when funding is available.

In carrying out their duties in respect of going concern, the directors have carried out a review of the company's financial position and cash flow forecast for a period of at least 12 months from the date of signing these financial statements. The forecast was based on a detailed review of revenue, expenditure, and cash flows, taking into account specific business risks and uncertainties about the economic environment and events in the wider construction sector.

The company has an Asset Based Lending (ABL) facility with HSBC UK Bank that expires on 25 February 2024. The ABL facility comprises:

·

a rolling inventory facility secured on qualifying fixed assets; availability is based on the net book value and net orderly liquidated value of the assets and capped at £25m (2021: £25m); £10.5m was drawn on this facility at 31 December 2022 (2021: £9.5m);

·

a rolling invoice discounting facility secured on the company's debtor balances, capped at £7m (2021: £7m); £1.4m was drawn on this facility at 31 December 2021 (2021: £1.5m).

At 31 December 2022 the company owed £1.9m (2021: £4.6m) to Bibby Line Group Limited, all of which was due in more than one year.

After making due enquiries, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for at least 12 months from the date of approval of the financial statements. For this reason they continue to adopt the going concern basis in preparing the financial statements.

This report was approved by the Board of Directors on 20 April 2023 and signed on its behalf by:

Mark Albiston

Chief Executive Officer

20 April 2023

DIRECTORS' REPORT

FOR THE YEAR ENDED 31 DECEMBER 2022

Garic Limited ('the company') provides design, fabrication and purchase of plant and machinery for sale or hire. The company is a private company limited by shares and is incorporated in England. The address of its registered office is 3rd Floor, Walker House, Exchange Flags, Liverpool, L2 3YL.

The directors present their annual report and audited financial statements for the year ended 31 December 2022. The review of the business, principal activities, strategy, objectives, and risks, going concern and future developments are covered within the strategic report.

Results and dividends

The results for the year are set out on page 15.

No dividend (2021: £nil) has been paid in the year on the ordinary shares. No dividends have been proposed at the date of this report.

Future developments

Future developments are set out in the Strategic Report.

Research and Development

The company's research and development activities are set out in the Strategic Report.

Post balance sheet events

There are no post balance sheet events to disclose in these financial statements (2021: none).

Directors' indemnities

The company has made qualifying third-party indemnity provisions for the benefit of its directors which were made during the year and remain in force at the date of this report.

Directors

The directors of the company who served during the year and up to the point of signing, except as noted below, were as follows:

Appointed

Resigned

P J Bibby

G F H Bibby

J G Lewis

N C P Quinn

A J Goody

01 June 2022

M Albiston

M Tyldsley

30 June 2022

C Malloy

23 January 2023

Employees

During the year the company held regular online and in person briefing meetings to provide colleagues with information relevant to them and to invite feedback from colleagues on matters of concern to them. The company also provides a monthly written update to all colleagues covering company initiatives, financial performance and operational and health and safety matters. The company has invested in Peakon, a system which allows anonymous employee feedback to provide its employees an opportunity to highlight areas of strength or weakness.

The company is committed to the full and fair consideration of all applications for employment made by disabled persons, to continuing the employment of, and arranging training for, persons who become disabled during their employment, and to enabling the training, career development and promotion of disabled employees.

DIRECTORS' REPORT

FOR THE YEAR ENDED 31 DECEMBER 2022

Energy and carbon reporting

During 2022 the company used 12,277,529 KwH of energy (2021: 11,187,184) resulting in 2,926 tonnes of CO2 emissions (2021: 2,721). This equates to 325,258 KwH and 78 tonnes of CO2 emissions per million pounds of revenue (2021: 300,053 KwH and 73 tonnes of CO2 emissions). The carbon intensity of the company's operations, as measured by CO2 emissions per million pounds of revenue, increased by 8% in 2022 due to an increase in transport fleet and a reduction in the average length of hire resulting in more journeys. The company is committed to becoming a sustainable business, striving to minimise its own environmental impact, influencing positive change with its customers, colleagues and suppliers, and has introduced a sustainability policy. The company is committed to minimising its environmental impact and that of its customers, which is reflected in its sustainability policy and its commitment to achieve net zero carbon emissions by 2040 as part of Bibby Line Group's Project Compass ambitions.

Carbon reduction measures undertaken in 2022 include the continued replacement of older vehicles for new, more fuel-efficient models, optimisation of transport planning to reduce non-productive miles travelled, a switch to hybrid and electric company cars for business users, fully renewable electricity across all depots and offices and a program of work to map the company's scope 1,2 and 3 carbon emissions. Garic has invested in the role of Environmental Impact Analyst to support our ambitions of becoming a net zero carbon emission business.

The company's sustainability goals in 2023 include the transition to low carbon fuels where possible and fully signing up to science-based targets for carbon reduction. We continue to invest in data quality with the aspiration of gold and silver level data where possible.

Section 172(1) statement

The Board of directors consider in good faith, both individually and together, that during the year ended 31 December 2022 they acted in a way that promoted the success of the company for the benefit of its members as a whole (having regard to the stakeholders and matters set out in s.172 (1)(a-f) of the Companies Act). The stakeholders the Board considers in this regard are the company's employees, customers, suppliers, funders, shareholders and the local communities in which the company operates. The directors' approach to considering the matters referred to in s.172 (1)(a-f) of the Companies Act is summarised below.

·

The likely consequences of any decision in the long-term.

The company's principal purpose is to grow long term value for the benefit of its ultimate shareholders and at the same time to develop colleagues, delight customers and give back to communities. Long-term strategic opportunities are captured in the company's annual operating plan that covers a three-year horizon. A long-term incentive plan is in place for the executive directors of the company to assist in the delivery of long-term objectives. Investment decisions are typically evaluated using cash flow models that project future performance for at least five years. The Board strives to ensure that day-to-day decisions look ahead and anticipate the future needs of all stakeholders. A risk register is maintained to assist the Board in evaluating long and short-term risks.

·

The interests of the company's employees.

The directors strive to view our colleagues as the most important part of our business and to provide them with safe working environments and the tools, training and development they need to do their job effectively. During the year we further developed our Inclusion and Diversity Programme including a calendar of events to celebrate and promote our inclusive culture. We also continued our health and wellbeing program and offer mental health awareness training to all employees. Our learning and development program continued to gain momentum following the appointment of our first dedicated Learning and Development Manager in 2021. During the year the company continued to hold regular formal and informal engagement with colleagues to ensure the Board listens to, engages with and learns from all colleague perspectives on the business.

DIRECTORS' REPORT (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

·

The need to foster the company's business relationships with suppliers, customers and others. The directors hold regular meetings with customers, suppliers, banks and other stakeholders to ensure they understand what these stakeholders need from their business relationships with the company and to provide them with the information they require on our business. The key outcomes of these meetings are reported to and considered by the Board. The company regularly captures formal and informal customer feedback to help maintain and enhance our strong service provision. The company has a procurement and supply chain management policy that sets out how relationships will be fostered with suppliers.

·

The impact of the company's operations on the community and the environment.

The company is committed to minimising its environmental impact, creating safe places for our people to work, and supporting our communities. These commitments are set out in the company's sustainability policy. The Board considers the company's environmental impact through an annual report that sets out our environmental footprint and progress against carbon reduction targets. Progress on energy use and carbon emissions is summarised above. The Executive Directors review health, safety, and environmental matters each week and as required. The company designs and manufactures environmentally friendly products to help customers minimise the environmental impact of their operations. The company holds a Gold RoSPA award in recognition of its outstanding health and safety achievements. The company encourages its employees to fundraise and volunteer for causes close to their hearts, and to participate in the Giving Something Back Charitable programme organised by our parent company.

·

The desire of the company to maintain a reputation for high standards of business conduct.

The company's values provide the guiding framework for ensuring decisions and actions are safe, responsible, have integrity and consider those people and organisations that may be affected by them. Employee recruitment, training, development and appraisals are all based on these values. The company's corporate governance and standards of business conduct are reviewed by the company's shareholder, both informally and through periodic internal audits.

·

The need to act fairly as between members of the company.

The company has one corporate shareholder that it engages with through weekly discussions, monthly management information, formal Board meetings and the provision of ad hoc information as required.

The company is part of the Bibby Line Group's Compass programme that involves regular initiatives to promote and focus on our customers, our people, our communities and the environment.

Disclosure of Information to the auditor

This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.

DIRECTORS' REPORT (continued)

FOR THE YEAR ENDED 31 DECEMBER 2022

Independent Auditors

Mazars LLP have indicated their willingness to be re-appointed for another term and appropriate arrangements have been made for them to be deemed re-appointed as auditor in the absence of an Annual General Meeting.

Approved by the Board and signed on its behalf by:

Craig Malloy

Director

20 April 2023

DIRECTORS' RESPONSIBILITIES STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2022

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF GARIC LIMITED

Opinion

We have audited the financial statements of Garic Limited (the 'company') for the year ended 31 December 2022 which comprise the Statement of Profit or Loss, Balance Sheet, Statement of Changes in Equity, Cashflow Statement and 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 FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice).

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

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.

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF GARIC LIMITED (CONTINUED)

Matters on which we are required to report by exception

In 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.

Use of the audit 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.

Valerie Levi (Senior Statutory Auditor) for and on behalf of Mazars LLP

Chartered Accountants and Statutory Auditor

Manchester, United Kingdom

20 April 2023

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 DECEMBER 2022

Turnover

Cost of sales

Gross profit

Administrative expenses

Operating profit

Profit on disposal of non-fleet fixed assets

Profit before interest

Interest payable and similar charges

Profit / (loss) before taxation

Tax on profit / (loss)

Profit for the financial year

All results are derived from continuing operations.

There are no recognised gains and losses in either year other than those included in the profit and loss account above, therefore no separate statement of comprehensive income has been presented.

The notes on pages 20 to 28 form an integral part of these financial statements.

BALANCE SHEET

AS AT 31 DECEMBER 2022

Fixed assets

Tangible assets

Current assets

Stocks

Debtors

Cash at bank and in hand

Creditors: amounts falling due within one year

Net current assets

Total assets less current liabilities

Creditors: amounts falling due after more than one year

Provisions for liabilities

Net assets

Capital and reserves

Called up share capital

Profit and loss account

Shareholders' funds

The notes on pages 20 to 28 form an integral part of these financial statements.

The financial statements of Garic Limited, registered number 02220727 were approved by the Board of Directors and authorised for issue on 20 April 2023. They were signed on its behalf by:

Craig Malloy

20 April 2023

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2022

At 1 January 2021

Profit and total comprehensive income for the financial year

At 31 December 2021

Profit and total comprehensive income for the financial Year

At 31 December 2022

The notes on pages 20 to 28 form an integral part of these financial statements.

CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2022

Cash flows from operating activities

Operating profit for the financial year

Adjustments for:

Depreciation of tangible fixed assets

Profit on disposal of fixed assets

Decrease / (increase) in debtors

Decrease / (increase) in stock

(Decrease) / increase in creditors

Increase in provisions

Net cash inflow from operating activities

Cash flows from investing

activities Proceeds from sale of equipment

Purchases of property, plant and equipment

Net cash used in investing activities

Cash flows from financing activities

Interest paid

Repayment of intergroup loans

(Repayment) / drawdown of ABL inventory facility

Net cash from in financing activities

Net increase / (decrease) in cash and cash equivalents in the year

Cash and cash equivalents at the start of the year

Cash and cash equivalents at the end of the year

The notes on pages 20 to 28 form an integral part of these financial statements.

NOTE TO THE CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2022

Analysis of net debt

Net cash:

Cash at bank and in hand

Invoice discounting facility

Debt:

ABL inventory facility

Ultimate parent company loan

Net debt

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

Garic Limited is a company incorporated in the United Kingdom under the Companies Act. Garic Limited is a private company limited by shares and is registered in England. The address of the Company's registered office is 3^rd Floor, Walker House, Exchange Flags, Liverpool, L2 3YL. The principal activities of Garic Limited and the nature of the company's operations are set out in the strategic report on pages 4 to 6.

1

Principal Accounting policies

1.1

Accounting convention

The financial statements of Garic Limited have been prepared in compliance with United Kingdom Accounting Standards, including Financial Reporting Standard 102, 'The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland' ('FRS102') and the Companies Act 2006.

Garic Limited meets the definition of a qualifying entity under FRS 102 and has therefore taken advantage of the disclosure exemptions available to it in respect of its separate financial statements. Garic Limited is consolidated in the financial statements of its ultimate parent, Bibby Line Group Limited, which may be obtained at the address stated in note 19. Exemptions have been taken in these separate Company financial statements in relation to related party transactions, financial instruments disclosure and remuneration of key management personnel.

The functional currency is considered to be pounds sterling because that is the currency of the primary economic environment in which the company operates.

1.2

Accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

1.3

Going concern

In carrying out their duties in respect of going concern, the directors have carried out a review of the company's financial position and cash flow forecast for a period of at least 12 months from the date of signing these financial statements. Further information on this review is set out in the Strategic Report.

After making due enquiries, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for at least 12 months from the date of approval of the financial statements. For this reason they continue to adopt the going concern basis in preparing the financial statements.

1.4

Turnover

Turnover represents amounts receivable for goods and services net of VAT and trade discounts. It includes amounts received for the hire, transport and support of plant hire assets. In addition, it includes revenue received on the sale of ex-hire and new assets. Revenue is recognised when the service or item being sold is delivered to the customer or collected by the customer.

1.5

Tangible fixed assets and depreciation

Hire equipment

6.7% - 33.3% pa straight line

Plant and machinery

25% pa reducing balance

Fixtures, fittings & equipment

15% pa straight line

Motor vehicles

16% pa straight line

The cost of equipment for contract hire is capitalised. These costs comprise materials and labour directly attributable to the identifiable equipment. On disposal the proceeds are recorded within turnover and net book value eliminated via cost of sales. Assets in the course of construction are stated at cost. These assets are not depreciated until they are available for use.

Tangible fixed assets are assessed for indicators of impairment at each balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

1

Accounting policies (continued)

1.6

Leasing

Leases that do not transfer all the risks and rewards of ownership are classified as operating leases. Payments under operating leases are charged to the profit and loss account on a straight-line basis over the period of the lease.

1.7

Stock and work in progress

Raw materials, work in progress and finished goods are valued at the lower of cost and net realisable value. Cost of raw materials is determined on a first-in, first-out basis or using a weighted average cost formula, depending on the basis most suited to the type of inventory held. Cost of work in progress and finished goods comprises direct materials and, where applicable, direct labour costs and those direct and indirect overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value is based on estimated selling price less further costs to completion and disposal.

1.8

Debtors and provision for bad and doubtful debts

Debtors are initially stated at their transaction value. A provision for bad and doubtful debts is made against all debtors to the extent that they are estimated as being at high risk of non-recovery. Trade debtor balances are written off when recoverability is assessed as being remote.

1.9

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and amounts drawn on the company's invoice discount facility.

1.10

Provisions

1.11

Taxation

1.12

Interest and discounting costs

The company recognises interest and other finance-related costs as these costs are incurred.

1.13

Financial instruments

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

1

Accounting policies (continued)

1.14

Finance costs and bank borrowings

All borrowing costs are recognised in profit or loss in the period in which they are incurred. Interest bearing loans are recorded at the proceeds received net of direct issue costs.

1.15

Invoice discounting facility

The business has an invoice discounting agreement in place. The provider has recourse and therefore the bad debt risk remains with Garic Limited. Due to this, trade debtors are presented gross.

1.16

Government grants

Grants in respect of costs incurred by the entity are recognised when the grant becomes receivable. No government grants were received during the year (2021: Nil).

1.17

Employee Benefits

The company provides a range of benefits to employees, including annual bonus arrangements, paid holiday arrangements and defined contribution pension plans.

Short-term benefits, including holiday pay and other similar non-monetary benefits, are recognised as an expense in the period in which the service is received.

1.18

Critical accounting judgements and key sources of estimation uncertainty

Key source of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Depreciation of tangible assets

The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are reassessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets.

Rebate reclassification

In order to more fairly represent the revenue of the company we have reclassified rebate costs from cost of sales to revenue. The total impact of the reclassification is to decrease revenue in the current year by £161,000. There is no impact on reported profit or net assets from this reclassification. If the same adjustment was made in 2021 the impact on revenue would have been £259,000.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

2

Turnover

The total turnover of the company for the current and prior year has been derived from its principal activity wholly undertaken in the United Kingdom. An analysis of the company's turnover by class of business is set out below.

Hire and associated income

New Equipment Sales

Ex-Hire Equipment Sales

3

Profit for the financial year

Profit for the year is stated after charging/(crediting):

Depreciation of tangible assets:

 Owned

Profit on disposal of tangible assets

Operating lease rentals - land & buildings

Operating lease rentals - plant & machinery

Auditor's remuneration for the audit of the company's financial statements

There were no non audit fees payable to the auditor in either year.

4

5

Tax on profit

UK corporation tax

UK corporation tax

Adjustment in respect of prior periods

Current tax charge

Deferred tax

Deferred tax rate change

Adjustment in respect of prior periods

Total deferred tax (credit) / charge (see note 13)

Total tax (credit) / charge on profit

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

5.

6

The number of directors for whom retirement benefits are accruing under money purchase pension schemes amounted to two (2021: four).

7

Employees

Number of employees

The average monthly number of employees (including directors) during the year was:

Sales, operations, transport & administration

Employment costs

Wages and salaries

Social security costs

Other pension costs

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

8

Tangible fixed assets

At 1 January 2022

Additions

Transfers

Disposals

At 31 December 2022