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| 2. |
Summary of Significant Accounting Policies |
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The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the company's financial statements. |
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Statement of compliance |
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The financial statements of the company for the financial year ended 25 February 2023 have been prepared in accordance with the provisions of FRS 102 Section 1A (Small Entities) and the Companies Act 2006. |
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Basis of preparation |
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The financial statements have been prepared on the going concern basis and in accordance with the historical cost convention except for certain properties and financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets. |
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Turnover |
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Turnover comprises the invoice value of goods supplied by the company, exclusive of trade discounts and value added tax.
Revenue is recognised to the extent that the company obtains the right to consideration in exchange for its performance. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates,VAT and other sales taxes or duty. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. usually on dispatch of the goods and the amount of revenue can be measured reliably.It is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rendering of services
Revenue from the supply of services is recognised by reference to the stage of completion. Where the contract outcome cannot be measured reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable. |
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Impairment of financial and non financial assets. |
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The company assesses at each reporting date whether an asset may be impaired. If any such indication exists the company estimates recoverable amount of the asset. If it is not possible to estimate the recoverable amount of the individual asset, the company estimates, the recoverable amount of the cash generating unit to which the asset belongs. The recoverable amount of an asset or cash generating unit is the higher of its fair value less costs to sell and its value in use, If the recoverable amount is less than its carrying amount, the carrying amount of the asset is impaired and it is reduced to its recoverable amount through an impairment in profit and loss unless the asset is carried at a revalued amount where the impairment loss of a revalued asset is a revaluation decrease. An impairment loss recognised for all assets, including goodwill, is reversed in a subsequent period if and only if the reasons for the impairment loss have ceased to apply. |
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Intangible assets |
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Trademarks |
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Trademarks are valued at cost less accumulated amortisation. |
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Goodwill |
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Purchased goodwill arising on the acquisition of a business represents the excess of the acquisition cost over the fair value of the identifiable net assets including other intangible fixed assets when they were acquired. Purchased goodwill is capitalised in the Balance Sheet and amortised on a straight line basis over its economic useful life of 10 years, which is estimated to be the period during which benefits are expected to arise. On disposal of a business any goodwill not yet amortised is included in determining the profit or loss on sale of the business. |
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Tangible assets and depreciation |
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Tangible assets are stated at cost or at valuation, less accumulated depreciation. The charge to depreciation is calculated to write off the original cost or valuation of tangible assets, less their estimated residual value, over their expected useful lives as follows: |
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Long leasehold property |
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Over the lease term |
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Plant and machinery |
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15% Straight line |
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Motor vehicles |
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25% Straight line |
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Computer equipment |
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33.3% Straight line |
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The carrying values of tangible fixed assets are reviewed annually for impairment in periods if events or changes in circumstances indicate the carrying value may not be recoverable. |
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Leasing |
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Rentals payable under operating leases are dealt with in the Profit and Loss Account as incurred over the period of the rental agreement. |
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Investments |
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Investments held as fixed assets are stated at cost less provision for any permanent diminution in value. Income from other investments together with any related tax credit is recognised in the profit and loss account in the financial year in which it is receivable. |
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Stocks |
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Stocks are stated at the lower of cost and net realisable value. Cost includes all costs incurred in bringing each product to its present location and condition, as follows:
Raw materials, consumables and goods for resale - purchase cost on a first in, first out basis.
Work in progress and finished goods - cost of direct materials and labour plus attributable overheads based on level of activity.
Net realisable value is based on estimated selling price less any further costs expected to be incurred to completion and
disposal. |
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Trade and other debtors |
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Trade and other debtors are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method less impairment losses for bad and doubtful debts except where the effect of discounting would be immaterial. In such cases the receivables are stated at cost less impairment losses for bad and doubtful debts. |
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Borrowing costs |
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Borrowing costs relating to the acquisition of assets are capitalised at the appropriate rate by adding them to the cost of assets being acquired. Investment income earned on the temporary investment of specific borrowings pending their expenditure on the assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. |
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Trade and other creditors |
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Trade and other creditors are initially recognised at fair value and thereafter stated at amortised cost using the effective interest rate method, unless the effect of discounting would be immaterial, in which case they are stated at cost. |
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Related parties |
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For the purposes of these financial statements a party is considered to be related to the company if: |
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the party has the ability, directly or indirectly, through one or more intermediaries to control the company or exercise significant influence over the company in making financial and operating policy decisions or has joint control over the company; |
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the company and the party are subject to common control; |
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the party is an associate of the company or forms part of a joint venture with the company; |
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the party is a member of key management personnel of the company or the company's parent, or a close family member of such as an individual, or is an entity under the control, joint control or significant influence of such individuals; |
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the party is a close family member of a party referred to above or is an entity under the control or significant influence of such individuals; or |
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the party is a post-employment benefit plan which is for the benefit of employees of the company or of any entity that is a related party of the company. |
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Close family members of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the company. |
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Employee benefits |
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The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. |
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Taxation and deferred taxation |
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Current tax represents the amount expected to be paid or recovered in respect of taxable profits for the financial year and is calculated using the tax rates and laws that have been enacted or substantially enacted at the Balance Sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more tax in the future, or a right to pay less tax in the future. Timing differences are temporary differences between the company's taxable profits and its results as stated in the financial statements.
The unrelieved tax losses and other deferred assets are recognised only to the extent that the directors consider that it is probable that they wil be recovered against the reversal of deferred tax liabilities or future taxable profit within the foreseeable future.
Deferred tax is measured on an undiscounted basis at the tax rates that are anticipated to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the Balance Sheet date. |
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Foreign currencies |
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Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the Balance Sheet date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated at the rates of exchange ruling at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The resulting exchange differences are dealt with in the Profit and Loss Account. |
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Research and development |
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Development expenditure is capitalised in accordance with the accounting policy given below. Initial capitalisation of costs is based on managements judgement that technical and economic feasibility is ensured, usually when a product development project has reached a deemed milestone according to an established project management model. In determinating the amounts to be capitalised management makes assumptions regarding the expected future cash generation of the assets. discount rates to be applied and the expected period of benefits.If development expendire does not meet this criteria then it will be expensed as it is incurred.
Development Cost are amortised on a straight line basis over its economic useful life of 5 years, which is estimated to be the period during which benefits are expected to arise. |
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Financial Instruments |
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Financial Assets |
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Financial assets are initially recorded at cost and subsequently stated at cost less any provision for diminuation in value.All listed and unlisted investments are measured at fair value with changes in fair value being recognized in profit or loss. When fair value cannot be measured reliably or can no longer be measured reliably, investments are measured at cost less impairment. |
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Ordinary share capital |
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The ordinary share capital of the company is presented as equity. |
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| 5. |
Critical Accounting Judgements and Estimates |
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The prepatation of financial statements requires management to make judgements,estimates and assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for income and expenditure during the year.However the nature of the estimation means the actual outcomes could differ from the estimates.
The directors consider the accounting estimates and assumptions below to be its critical accounting judgements and estimates: |
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Development expenditure |
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The development expenditure during the year ended 25th February 2023 has been written off as incurred, in accordance with the policy on research and development. The directors have chosen not to capitalise the expenditure in 2023.
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Operating lease commitments |
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The company has entered into a commerical property lease.The classification of such a lease as operating or finance lease requires the company to determine ,based on an evaluation of the terms and conditions of the arrangemenrs,whether it retains or acquires the significant risks and rewards of ownership of the assets and accordingly whether the lease requires an asset and lliability to be recognised in the statement of financial position. |
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Deferred tax |
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The directors only recognise the deferred tax asset only to the extent that it is demeed recoverable in accordance with the accounting policy. The directors have disclosed the net unrecognised deferred tax asset in the notes to the accounts. |
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Warranty claims and provisions |
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Warranty claims:
The company assesses warnanty claims on a claim by claim basis.It is necessary to assess the likely outcome of each warranty claim and assign values to the amount of such claims based on the director's estimate of the likely outcome, although this can be uncertain. Any material uncertainties are disclosed in the financial statements.
Provisions:
The directors are required to assess any liability arising in respect of a diplapidation claim.Estimates in this regard were determined in conjunction with the relevant experts in this field, however, the outcome of any such claim is uncertain. |
