Stairways (Midlands) Limited - Limited company accounts 23.1

REGISTERED NUMBER: 03146591 (England and Wales)

STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

FOR

STAIRWAYS (MIDLANDS) LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Statement of Income and Retained Earnings

8

Statement of Financial Position

9

Notes to the Financial Statements

10

DIRECTORS:

N C Stevens

K J Wood

REGISTERED OFFICE:

Southam Drive

Southam

Warwickshire

CV47 0FA

REGISTERED NUMBER:

03146591 (England and Wales)

AUDITORS:

TGFP

Chartered Accountants & Statutory Auditors

Fulford House

Newbold Terrace

Leamington Spa

Warwickshire

CV32 4EA

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

REVIEW OF BUSINESS

The Directors are satisfied with the performance of the company, with turnover returning to pre pandemic levels. Supplier demand and raw material cost increases have made the year challenging, as well as increases in fuel costs, causing margins to be tightened, but still increasing when compared to 2021 which is encouraging.

Turnover has increased at a more improved rate to 2021 and the order book remains healthy, giving the directors confidence that 2023 will show further improvements to the financials.

As important as ever, the company remains a strong advocator of KPI's which are deployed to monitor and manage the daily operations, as well as provide the business with clear direction and benchmarks when assessing annual performance, growth, profitability, debts and returns on investments. Non-financial performance indicators are percentage measures for customer growth, movements in customer accounts and daily spend.

The companies KPI's during the year are:

Increase in turnover by 7.44% (2021 - 6.15%)

Increase in gross profit by 4.77% (2021 - 19.53%)

Decrease in profit before taxation for the year 34.20% (2021 - 2.97%)

The Directors are optimistic about 2023 and are looking to continue the year as it has started, with the aim of bringing profitability pre pandemic levels.

PRINCIPAL RISKS AND UNCERTAINTIES

The principle risks identified by the directors are credit risk and liquidity risk. The company manages these risks by trading with creditworthy customers and financing its operations through retained profits.

The current economic climate creates uncertainty that could potentially impact on the level of demand and global raw materials costs. Whilst this presents a risk to the business the directors will continue to closely monitor the position as the implications become more known in order to ensure that the company will continue to trade successfully.

ON BEHALF OF THE BOARD:

K J Wood - Director

1 August 2023

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

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of the manufacture of timber and joinery products for the construction industry.

DIVIDENDS

The directors do not recommend the payment of a final dividend.

RESEARCH AND DEVELOPMENT

The group carries out research and development with the aim of modernising and stream lining the sales systems and processes for the bespoke products manufactured.

FUTURE DEVELOPMENTS

The group continues to develop its strategy of researching the availability and feasibility of new building materials and the development of the manufacturing processes with the aim to improve quality and subsequently profitability.

The directors remain confident that the strategy implemented to increase sales and improve profitability is having a positive effect and are committed to invest into its continued success.

DIRECTORS

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

N C Stevens

K J Wood

FINANCIAL INSTRUMENTS

The business' principal financial instruments comprise bank balances, trade debtors and trade creditors. The main purpose of these instruments is to finance the business' operations.

Credit risk arises from customers failing to meet their obligation under contracts of sale to pay. In order to minimise this risk, deferred terms are only granted to those customers who demonstrate an appropriate payment history and satisfy credit worthiness procedures. The company also maintains strong relationships with its key customers through its sales team.

Creditors liquidity risk is managed by ensuring sufficient funds are available to meet amounts due.

STRATEGIC REPORT

In accordance with section 414C(11) of the Companies Act 2006 (Strategic Report and Directors Report) Regulations 2013, the company has prepared a Strategic Report, which includes information that would have previously been included in the Directors' Report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the 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), including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

-	select suitable accounting policies and then apply them consistently;

-	make judgements 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.

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 company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, TGFP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

K J Wood - Director

1 August 2023

Opinion

We have audited the financial statements of Stairways (Midlands) Limited (the 'company') for the year ended 31 December 2022 which comprise the Statement of Income and Retained Earnings, Statement of Financial Position 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 Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the 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 directors are responsible for the other information. The other information comprises the information in the 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 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 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 company and its environment obtained in the course of the audit, we have not identified material misstatements in the 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, 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 Statement of Directors' Responsibilities set out on page four, 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 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.

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 have considered how irregularities, including fraud, can be detected in this Business and how they may occur. This is not a cash intensive business and the company holds no high value stock. However, we are aware there are always opportunities to manipulate the accounts, in particular by increasing or decreasing profits and window dressing by making the balance sheet look stronger than it may in reality be.

To mitigate these risks we have reviewed all Journals made during the year ensuring all are authorised and approved at the appropriate level. We have also reviewed any transactions outside of the business, and we have carried out a detailed analytical review of income and expenses highlighting any variances and obtaining reasons from Senior Management as to the reasons why. Materiality has been set at a level we feel more comfortable to include a greater range of testing to enable us to detect irregularities.

In respect of non- compliance with laws and regulations we have carried out the following enquiries:

Review minutes of meetings of those charged with governance.

Enquiry of management, those charged with governance and the Companies solicitors around actual and potential litigation and claims.

Reviewing the financial statements disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations.

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.

BENJAMIN R REYNOLDS (Senior Statutory Auditor)

for and on behalf of TGFP

Chartered Accountants & Statutory Auditors

Fulford House

Newbold Terrace

Leamington Spa

Warwickshire

CV32 4EA

25 August 2023

TURNOVER

3

11,611,081

10,807,447

Cost of sales

8,398,325

7,741,003

GROSS PROFIT

3,212,756

3,066,444

Administrative expenses

2,643,695

2,639,061

569,061

427,383

Other operating income

-

304,832

OPERATING PROFIT

5

569,061

732,215

Interest receivable and similar income

6

(38,968

)

73,432

530,093

805,647

Interest payable and similar expenses

7

-

40

PROFIT BEFORE TAXATION

530,093

805,607

Tax on profit

8

65,478

50,587

PROFIT FOR THE FINANCIAL YEAR

464,615

755,020

Retained earnings at beginning of year

5,113,270

6,708,250

Dividends

9

-

(2,350,000

)

RETAINED EARNINGS AT END OF YEAR

5,577,885

5,113,270

CURRENT ASSETS

Stocks

11

1,066,155

1,074,310

Debtors

12

2,393,131

1,132,407

Investments

13

1,011,263

1,074,370

Cash at bank

2,885,064

3,382,937

7,355,613

6,664,024

CREDITORS

Amounts falling due within one year

14

1,777,628

1,550,654

NET CURRENT ASSETS

5,577,985

5,113,370

TOTAL ASSETS LESS CURRENT LIABILITIES

5,577,985

5,113,370

CAPITAL AND RESERVES

Called up and paid share capital

17

100

100

Retained earnings

18

5,577,885

5,113,270

SHAREHOLDERS' FUNDS

5,577,985

5,113,370

The financial statements were approved by the Board of Directors and authorised for issue on 1 August 2023 and were signed on its behalf by:

N C Stevens - Director

1.	STATUTORY INFORMATION

Stairways (Midlands) 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 Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

Financial Reporting Standard 102 - reduced disclosure exemptions

FRS 102 allows a qualifying entity certain disclosure exemptions. The company has taken advantage of the following available exemptions:

1 - the requirement to prepare a statement of cash flows;

2 - financial instruments disclosures, including categories of financial instruments; and

3 - the disclosure of key management personnel remuneration in total.

Related party exemption

The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned group members.

Significant judgements and estimates

The preparation of financial statements in conformity with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company's accounting policies. For the year under review there were no specific areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates had a material bearing on the financial statements.

Turnover

Turnover comprises the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the company's activities. Turnover is shown net of value added tax, returns, rebates and discounts and is recognised when the amount of revenue can be reliably measured, and it is probable that future economic benefits will flow to the entity.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Tangible assets are stated in the statement of financial position at cost, less any subsequent accumulated depreciation and impairment losses.

The cost of tangible assets includes directly attributable incremental costs incurred in their acquisition and installation.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.

The cost of finished goods and work in progress comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. At each reporting date, stocks are assessed for impairment. If stocks are impaired, the carrying amount is reduced to its selling price less costs to complete and sell; the impairment loss is recognised immediately in profit or loss.

Financial instruments

Financial instruments are classified and accounted for as financial assets, financial liabilities or equity instruments, according to the substance of the contractual arrangement. Equity instruments are those that entitle the holder to a residual interest in the company's assets after deducting all of its liabilities.

Basic financial instruments are recognised at amortised cost, except for investments in non-convertible preference and non-puttable ordinary and preference shares, which are measured at fair value provided that this can be measured reliably. Derivative financial instruments are initially recorded at cost and thereafter at fair value with changes recognised in profit or loss.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the 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

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Leases

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

Trade debtors

Trade debtors are amounts due from customers for goods sold in the ordinary course of business.

Trade debtors are measured initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

Share capital

Ordinary and Ordinary B shares are classified as equity. Equity instruments are measured at fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments.

3.

TURNOVER

Turnover for the year from continuing operations all arose in the UK and was all attributable to its principal activity.

4.	EMPLOYEES AND DIRECTORS

2022

2021

£

£

Wages and salaries

2,915,674

2,723,069

Social security costs

252,232

234,461

Other pension costs

51,864

52,195

3,219,770

3,009,725

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

2022

2021

Production

58

71

Sales and administration

48

42

106

113

2022

2021

£

£

Directors' remuneration

17,036

17,036

The number of directors to whom retirement benefits were accruing was as follows:

Money purchase schemes

2

2

5.	OPERATING PROFIT

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

2022

2021

£

£

Hire of plant and machinery

353,164

345,659

Auditors' remuneration

6,500

6,500

Foreign exchange differences

(1,767

)

184

6.

INTEREST RECEIVABLE AND SIMILAR INCOME

2022

2021

£

£

Deposit account interest

16,863

2,814

Other interest received

512

11,404

Curr asset inv income

(56,343

)

59,214

(38,968

)

73,432

7.

INTEREST PAYABLE AND SIMILAR EXPENSES

2022

2021

£

£

Other interest payable

-

40

8.

TAXATION

Analysis of the tax charge

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

2022

2021

£

£

Current tax:

UK corporation tax

65,478

50,587

Tax on profit

65,478

50,587

UK corporation tax has been charged at 19% .

Reconciliation of total tax charge included in profit and loss

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

2022

2021

£

£

Profit before tax

530,093

805,607

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

100,718

153,065

Effects of:

Expenses not deductible for tax purposes

263

33

Research and development tax credit

(35,503

)

(102,511

)

Total tax charge

65,478

50,587

Legislation was announced to increase the rate of corporation tax to 25% with effect from 1 April 2023.

9.

DIVIDENDS

2022

2021

£

£

Ordinary shares of 1 each

Final

-

2,350,000

10.	TANGIBLE FIXED ASSETS

Plant and

machinery

£

COST

At 1 January 2022

and 31 December 2022

24,800

DEPRECIATION

At 1 January 2022

and 31 December 2022

24,800

NET BOOK VALUE

At 31 December 2022

-

At 31 December 2021

-

11.

STOCKS

2022

2021

£

£

Stocks

1,066,155

1,074,310

12.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2022

2021

£

£

Trade debtors

1,523,745

1,045,633

Amounts owed by group undertakings

623,007

-

Other debtors

181,583

15,466

Tax

136

15,102

Prepayments and accrued income

64,660

56,206

2,393,131

1,132,407

13.	CURRENT ASSET INVESTMENTS

2022

2021

£

£

Current asset investments

1,011,263

1,074,370

14.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

2022

2021

£

£

Trade creditors

956,597

767,252

Amounts owed to group undertakings

-

44,720

Social security and other taxes

446,575

350,544

Other creditors

11,538

1,559

Accruals and deferred income

362,918

386,579

1,777,628

1,550,654

15.	LEASING AGREEMENTS

Minimum lease payments under non-cancellable operating leases fall due as follows:

2022

2021

£

£

Within one year

8,795

18,302

Between one and five years

3,029

1,525

11,824

19,827

16.	SECURED DEBTS

The group contains a loan which is secured by way of fixed and floating charges on all assets within the group, which includes those of the company.

17.

CALLED UP AND PAID SHARE CAPITAL

Allotted, issued and fully paid:

Number:

Class:

Nominal

2022

2021

value:

£

£

100

Ordinary

1

100

100

5

Ordinary B

.01

-

-

100

100

The company has one class of ordinary shares which carry no right to fixed income. Additionally, the company has in issue 5 "B" shares of £0.01 each. These shares do not carry voting rights.

18.

RESERVES

Share capital represents the number of shares issued at nominal price.

The profit and loss account represents accumulated comprehensive income for the year and prior periods, after deduction of dividends paid.

19.	PENSION COMMITMENTS

The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £51,714 (2021 - £52,195).

At the year end there were amounts owing to the scheme of £11,261 (2021 - £1,447).

20.	ULTIMATE CONTROLLING PARTY

The ultimate parent company is Stairways (Holdings) Limited, incorporated in England & Wales, which is the parent of the smallest and largest group preparing consolidated financial statements that include the company.