Applied Automation (UK) Limited - Period Ending 2023-03-31

APPLIED AUTOMATION (UK) LIMITED - Company Information

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Registration number: 02532117

Applied Automation (UK) Limited

Annual Report and Financial Statements

for the Year Ended 31 March 2023

Applied Automation (UK) Limited

Contents

Company Information	1
Strategic Report	2
Director's Report	3
Statement of Director's Responsibilities	4
Independent Auditor's Report	5 to 8
Statement of Income and Retained Earnings	9
Balance Sheet	10
Notes to the Financial Statements	11 to 26

Applied Automation (UK) Limited

Company Information

Director

Mr DH Rowe

Company secretary

Mrs V A Rowe

Registered office

Concept House
Eastern Wood Road
Langage Industrial Estate
Plympton
Plymouth
PL7 5ET

Auditors

Houndiscombe Consultants Limited
T/A Condy Mathias Chartered Accountants
6 Houndiscombe Road
Plymouth
Devon
PL4 6HH

Applied Automation (UK) Limited

Strategic Report for the Year Ended 31 March 2023

The director presents his strategic report for the year ended 31 March 2023.

Principal activity

The principal activity of the company is the design, manufacture and supply of pneumatic and hydraulic industrial control and manipulation equipment to industrial users and the supply of products for the marine industry.

Fair review of the business

The company has had a profitable year, and with ongoing support and profitable contracts the company hopes this will continue into the future.

The company's key financial and other performance indicators during the year were as follows:

Financial KPIs	Unit	2023	2022
Turnover	£	24,102,040	18,439,129
Gross profit	£	4,447,389	3,332,141
Gross profit percentage	%	19	18
Net profit percentage	%	8	7

Principal risks and uncertainties

The company operates in a competitive worldwide market that is influenced by the overall economy. It is also affected by fluctuations in exchange rates and therefore has foreign currency bank accounts to mitigate the risks.

Every effort is taken to minimise outgoings. The company uses specifically designed software that provides real-time visibility of costs incurred on work carried out. In addition to this, overhead costs are minimised by obtaining the best rates that are available. The company has tight credit controls in place. Financial health checks are carried out and prompt action is taken where required.

Brexit has proven a major source of uncertainty particularly around the continuity of supply of goods from Europe and the availability of labour. There is huge competition for both skilled and unskilled labour in the local market and this is serving to drive up costs. Whilst a Brexit deal was agreed by the end of 2020 importing and exporting goods has become increasingly costly and complicated. The company is investing in staff training and has strengthened relationships with major suppliers to ensure that the impacts of Brexit are minimised wherever possible.

The company remains in a good financial position, which has been sustained for a number of years. Any future expansion plans will be carefully considered alongside specific cash flow forecasts.

Approved by the director on 14 December 2023 and signed on their behalf by:

.........................................
Mr DH Rowe
Director

Applied Automation (UK) Limited

Director's Report for the Year Ended 31 March 2023

The director presents his report and the financial statements for the year ended 31 March 2023.

Director of the company

The director who held office during the year was as follows:

Mr DH Rowe

Objectives and policies

Trading activities expose the company to a number of financial risks. These risks include cash flow risk and overall liquidity risk. The company seeks to manage and mitigate these risks by adopting a policy of frequent monitoring of the bank balance. Management also remains hands-on reviewing cash flows, pre-empting future cash movements and planning accordingly. The director maintains regular contact with the company's bank and keeping them informed of business levels and results.

Price risk, credit risk, liquidity risk and cash flow risk

The principal risks are that of liquidity, cash flow and foreign exchange flucuations.

Liquidity risk is the risk that the company will encounter difficulty in meeting obligations associated with financial liabilities. The company aims to manage liquidity risk by managing cash generation by applying cash collection targets through the year. Liquidity is also managed via credit facilities and short-term debt.

Cash flow risk is the risk of exposure to variability in cash flows that is attributable to a particular asset or liability. The company manages this risk through the use of comprehensive cash flow and forecasting processes and hands-on management by the directors.

Foreign exchange risk is the risk of exposure to fluctuations in the currency exchange rates against the pound sterling. The risk is reduced by maintaining bank accounts in foreign currencies.

Disclosure of information to the auditors

The director has taken steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information. The director confirms that there is no relevant information that he knows of and of which he knows the auditors are unaware.

Approved by the director on 14 December 2023 and signed on their behalf by:

.........................................
Mr DH Rowe
Director

Applied Automation (UK) Limited

Statement of Director's Responsibilities

The director acknowledges his responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the director to prepare financial statements for each financial year. Under that law the director has 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 director must not approve the financial statements unless he is 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 director is required to:

•	select suitable accounting policies and apply them consistently;

•	make judgements and accounting estimates that are reasonable and prudent;

•	state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

•	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The director is 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 him to ensure that the financial statements comply with the Companies Act 2006. He is 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.

Applied Automation (UK) Limited

Independent Auditor's Report to the Members of Applied Automation (UK) Limited

Opinion

We have audited the financial statements of Applied Automation (UK) Limited (the 'company') for the year ended 31 March 2023, which comprise the Statement of Income and Retained Earnings, Balance Sheet, 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 March 2023 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 auditor 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 director's 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 original financial statements were authorised for issue.

Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.

Other information

The director is responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report 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 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.

Applied Automation (UK) Limited

Independent Auditor's Report to the Members of Applied Automation (UK) Limited

Opinion on other matter 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 Director's Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

•	the Strategic Report and Director's Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of our 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 and the Director's Report.

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 director's remuneration specified by law are not made; or
•	we have not received all the information and explanations we require for our audit.

Responsibilities of the director

As explained more fully in the Statement of Director's Responsibilities [set out on page 4], the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor 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.

Applied Automation (UK) Limited

Independent Auditor's Report to the Members of Applied Automation (UK) Limited

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 audit procedures are capable of detecting irregularities, including fraud is detailed below.

As part of our audit planning, through discussions with management, we obtained an understanding of the legal and regulatory framework that is applicable to the company and the sector in which it operates to identify the key laws and regulations affecting the company.

The key laws and regulations we identified were health and safety, and employment laws. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements, primarily the Companies Act 2006, the reporting framework (FRS 102), and relevant tax compliance regulations in the UK.

We discussed with management how the compliance with these laws and regulations is monitored and we discussed the policies and procedures in place. We also identified the individuals who have responsibility for ensuring that the entity complies with laws and regulations and deals with reporting any issues if they arise. As part of our planning procedures, we assessed the risk of any non-compliance with laws and regulations on the company’s ability to continue trading and the risk of material misstatement to the accounts.

Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved the following:

• Enquiries of management and those charged with governance regarding their knowledge of any non-compliance with laws and regulations that could affect the financial statements
• Reviewed legal and professional costs to identify any possible non-compliance or legal costs in respect of non-compliance

As part of our enquiries we discussed with management whether there have been any known instances, allegations or suspicions of fraud, of which there were none.

We also evaluated the risk of fraud through management override including that arising from management's incentives. The key risk we identified was fraudulent financial reporting.

In response to the identified risk, as part of our audit work we:
• Identified and tested journal entries throughout the year and year end adjustments, for appropriateness
• Reviewed estimates and judgements made in the accounts for any indication of bias and challenged assumptions used by management in making the estimates, in particular in relation to work in progress and
stock provision

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. 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.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Applied Automation (UK) Limited

Independent Auditor's Report to the Members of Applied Automation (UK) Limited

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 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.

......................................
Richard Baker FCA (Senior Statutory Auditor)
For and on behalf of Houndiscombe Consultants Limited, Statutory Auditor

T/A Condy Mathias Chartered Accountants
6 Houndiscombe Road
Plymouth
Devon
PL4 6HH

14 December 2023

Applied Automation (UK) Limited

Statement of Income and Retained Earnings for the Year Ended 31 March 2023

	Note	2023 £	2022 £
Turnover	3	24,102,040	18,439,129
Cost of sales		(19,654,651)	(15,106,988)
Gross profit		4,447,389	3,332,141
Distribution costs		(198,810)	(151,186)
Administrative expenses		(2,295,383)	(1,991,042)
Other operating income	4	46,326	98,386
Operating profit	6	1,999,522	1,288,299
Other interest receivable and similar income	8	555	43
Interest payable and similar charges	9	(7)	(50)
Profit before tax		2,000,070	1,288,292
Taxation	13	(383,030)	(255,531)
Profit for the financial year		1,617,040	1,032,761
Retained earnings brought forward		3,112,276	2,569,515
Dividends paid		(590,000)	(490,000)
Retained earnings carried forward		4,139,316	3,112,276

Applied Automation (UK) Limited

(Registration number: 02532117)
Balance Sheet as at 31 March 2023

	Note	2023 £	2022 £
Fixed assets
Tangible assets	14	556,834	519,479
Current assets
Stocks	16	13,942,993	10,562,898
Debtors	17	6,192,422	5,814,784
Cash at bank and in hand		2,197	450,679
		20,137,612	16,828,361
Creditors: Amounts falling due within one year	18	(16,279,963)	(13,966,621)
Net current assets		3,857,649	2,861,740
Total assets less current liabilities		4,414,483	3,381,219
Creditors: Amounts falling due after more than one year	18	(38,175)	(42,410)
Provisions for liabilities	19	(136,992)	(126,533)
Net assets		4,239,316	3,212,276
Capital and reserves
Called up share capital		100,000	100,000
Retained earnings		4,139,316	3,112,276
Shareholders' funds		4,239,316	3,212,276

Approved and authorised by the director on 14 December 2023

.........................................
Mr DH Rowe
Director

Applied Automation (UK) Limited

Notes to the Financial Statements for the Year Ended 31 March 2023

1	General information

The company is a private company limited by share capital, incorporated in England & Wales.

The address of its registered office is:
Concept House
Eastern Wood Road
Langage Industrial Estate
Plympton
Plymouth
PL7 5ET

The registered number of the company is 02532117.

2	Accounting policies

Summary of significant accounting policies and key accounting estimates

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.

Statement of compliance

These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland and the Companies Act 2006'.

Basis of preparation

These financial statements have been prepared using the historical cost convention except that as disclosed in the accounting policies certain items are shown at fair value.

Summary of disclosure exemptions

The entity satisfies the criteria of being a qualifying entity as defined in FRS102. Its financial statements are consolidated into the financial statements of Applied Automation (Holdings) Limited which are publicly available. As such, advantage has been taken of the following disclsoure exemptions under paragraph 1.12 of FRS102 that no cash flow statement has been presented for this company and no key management personnel compensation has been disclosed.

Key sources of estimation uncertainty

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Revenue recognition

Turnover is stated net of VAT and trade discounts and is recognised when the significant risks and rewards are considered to have been transferred to the buyer. Turnover for the sale of goods is recognised when the goods are physically delivered to the customer. Where a contract has only been partiallly completed at the Balance Sheet date turnover represents the fair value of the goods completed to date based on the stage of completion of the contract activity at the Balance Sheet date. Where payments are received from customers in advance of the goods provided, the amounts are recorded as deferred income and included as part of creditors due within one year.

Applied Automation (UK) Limited

Notes to the Financial Statements for the Year Ended 31 March 2023

Government grants

Deferred government grants in respect of capital expenditure are treated as deferred income and are credited to the profit and loss account over the estimated useful life of the assets to which they relate.

Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rate prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into the respective functional currency of the entity at the rates prevailing on the reporting period date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rate on the date when the fair value is re-measured.

Non-monetary items measured in terms of historical cost in a foreign currency are not retranslated.

Tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the profit and loss account, except that a change attributable to an item of income or expense recognised as other comprehensive income is also recognised directly in other comprehensive income.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates taxable income.

Deferred tax is recognised in respect of all timing differences between taxable profits and profits reported in the financial statements.

Unrelieved tax losses and other deferred tax assets are recognised when 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 and that are expected to apply to the reversal of the timing difference.

Tangible assets

Tangible assets are stated in the balance sheet at cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

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

Depreciation

Depreciation is charged so as to write off the cost of assets, other than land and properties under construction over their estimated useful lives, as follows:

Applied Automation (UK) Limited

Notes to the Financial Statements for the Year Ended 31 March 2023

Asset class	Depreciation method and rate
Plant and machinery	15% reducing balance
Furniture and fittings	15% straight line
Motor vehicles	25% straight line
Office equipment	33% straight line

Stocks

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, plus an element of expected profit. 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.

Provisions

Provisions are recognised when the company has an obligation at the reporting date as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

Assets held under finance leases are recognised at the lower of their fair value at inception of the lease and the present value of the minimum lease payments. These assets are depreciated on a straight-line basis over the shorter of the useful life of the asset and the lease term. The corresponding liability to the lessor is included in the Balance Sheet as a finance lease obligation.

Lease payments are apportioned between finance costs in the Profit and Loss Account and reduction of the lease obligation so as to achieve a constant periodic rate of interest on the remaining balance of the liability.

Defined contribution pension obligation

A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.

Applied Automation (UK) Limited

Notes to the Financial Statements for the Year Ended 31 March 2023

Critical accounting estimates and assumptions
The comapny makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

Revenue recognition and work in progress
Contracts for the manufacturing of goods often run for a period that spans the financial reporting date, with revenue and profit on these contracts being based on the degree of completion at the year end. The revenue and profit recognised is calculated using costs incurred to date as a percentage of total expected costs multiplied by the proportion of expected profit on completion. Estimates are required for the percentage of the contract completed at the reporting date, and also on the estimate of the overall profit to be generated.

Revenue

The analysis of the company's Turnover for the year from continuing operations is as follows:

	2023 £	2022 £
Sale of goods	24,102,040	18,439,129

The analysis of the company's Turnover for the year by market is as follows:

	2023 £	2022 £
UK	22,348,572	16,773,480
Europe	224,592	159,260
Rest of world	1,528,876	1,506,389
	24,102,040	18,439,129

4	Other operating income

The analysis of the company's other operating income for the year is as follows:

	2023 £	2022 £
Government grants	8,526	31,886
Rental income	37,800	66,500
	46,326	98,386

5	Other gains and losses

The analysis of the company's other gains and losses for the year is as follows:

	2023 £	2022 £
(Loss)/gain on disposal of property, plant and equipment	(2,913)	1,750

Applied Automation (UK) Limited

Notes to the Financial Statements for the Year Ended 31 March 2023

6	Operating profit

Arrived at after charging/(crediting)

	2023 £	2022 £
Depreciation expense	131,135	124,157
Amortisation expense	-	1
Operating lease expense - plant and machinery	60,780	61,738
(Profit)/loss on disposal of property, plant and equipment	2,913	(1,750)

7	Government grants

Grants received have been recognised in the financial statements on the accruals basis, as they relate to the improvements and refurbishment of fixed assets, and the income has been released in accordance with various depreciation policies.

The amount of grants recognised in the financial statements was £8,526 (2022 - £31,886).

8	Other interest receivable and similar income

	2023 £	2022 £
Interest income on bank deposits	555	43

9	Interest payable and similar expenses

	2023 £	2022 £
Interest expense on corporation tax liability	-	50
Foreign exchange gains/losses	7	-
	7	50

Applied Automation (UK) Limited

Notes to the Financial Statements for the Year Ended 31 March 2023

10	Staff costs

The aggregate payroll costs (including director's remuneration) were as follows:

	2023 £	2022 £
Wages and salaries	5,592,934	4,384,279
Social security costs	562,238	429,298
Pension costs, defined contribution schemes	108,303	110,984
Other employee expense	35,754	25,999
	6,299,229	4,950,560

The average number of persons employed by the company (including the director) during the year, analysed by category was as follows:

	2023 No.	2022 No.
Production	154	119
Administration and support	19	20
Distribution	14	24
	187	163

11	Director's remuneration

The director's remuneration for the year was as follows:

	2023 £	2022 £
Remuneration	8,400	8,400
Contributions paid to money purchase pension schemes	2,000	24,000
	10,400	32,400

During the year the number of directors who were receiving benefits and share incentives was as follows:

	2023 No.	2022 No.
Accruing benefits under money purchase pension scheme	1	1

Applied Automation (UK) Limited

Notes to the Financial Statements for the Year Ended 31 March 2023

12	Auditors' remuneration

	2023 £	2022 £
Audit of the financial statements	10,075	9,150
Other fees to auditors
Taxation compliance services	1,100	1,000
All other non-audit services	6,525	5,925
	7,625	6,925

Applied Automation (UK) Limited

Notes to the Financial Statements for the Year Ended 31 March 2023

Taxation

Tax charged/(credited) in the profit and loss account

	2023 £	2022 £
Current taxation
UK corporation tax	365,810	190,603
UK corporation tax adjustment to prior periods	6,761	(833)
	372,571	189,770
Deferred taxation
Arising from origination and reversal of timing differences	10,459	65,761
Tax expense in the income statement	383,030	255,531

The tax on profit before tax for the year is higher than the standard rate of corporation tax in the UK (2022 - higher than the standard rate of corporation tax in the UK) of 19% (2022 - 19%).

The differences are reconciled below:

	2023 £	2022 £
Profit before tax	2,000,070	1,288,292
Corporation tax at standard rate	380,013	244,775
Effect of expense not deductible in determining taxable profit (tax loss)	1,848	602
Deferred tax expense relating to changes in tax rates or laws	-	15,878
Deferred tax expense from unrecognised temporary difference from a prior period	10,459	49,883
Tax decrease from effect of capital allowances and depreciation	(16,051)	(54,442)
Other tax effects for reconciliation between accounting profit and tax expense (income)	6,761	(1,165)
Total tax charge	383,030	255,531

Other tax effects being that of over accrued tax from the prior year.

Applied Automation (UK) Limited

Notes to the Financial Statements for the Year Ended 31 March 2023

14	Tangible assets

	Motor vehicles £	Other tangible assets £	Total £
Cost or valuation
At 1 April 2022	99,447	1,665,832	1,765,279
Additions	-	171,387	171,387
Disposals	-	(3,950)	(3,950)
At 31 March 2023	99,447	1,833,269	1,932,716
Depreciation
At 1 April 2022	68,697	1,177,103	1,245,800
Charge for the year	9,000	121,675	130,675
Eliminated on disposal	-	(593)	(593)
At 31 March 2023	77,697	1,298,185	1,375,882
Carrying amount
At 31 March 2023	21,750	535,084	556,834
At 31 March 2022	30,750	488,729	519,479

Applied Automation (UK) Limited

Notes to the Financial Statements for the Year Ended 31 March 2023

15	Investments

Details of undertakings

The value of subsidiary companies for the year ended 31 March 2023 was £Nil (2022: £Nil) due to the subsidiary companies being dormant.

Details of the investments (including principal place of business of unincorporated entities) in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

Undertaking	Registered office	Holding	Proportion of voting rights and shares held
			2023	2022
Subsidiary undertakings
Net-IT Solutions Limited	6 Houndiscombe Road, Plymouth, PL4 6HH	Ordinary	100%	100%
	UK
Applied Automation Limited	Concept House, Eastern Wood Road, Langage Business Park, Plymouth, PL7 5ET	Ordinary	100%	100%
	UK

Subsidiary undertakings

Net-IT Solutions Limited

The principal activity of Net-IT Solutions Limited is dormant.

Applied Automation Limited

The principal activity of Applied Automation Limited is dormant.

Applied Automation (UK) Limited

Notes to the Financial Statements for the Year Ended 31 March 2023

Stocks

	2023 £	2022 £
Work in progress	10,510,471	7,800,183
Other inventories	3,432,522	2,762,715
	13,942,993	10,562,898

Debtors

Current	2023 £	2022 £
Trade debtors	5,349,072	5,030,471
Amounts owed by group undertakings	19,202	12,865
Other debtors	166,010	177,502
Prepayments	658,138	593,946
	6,192,422	5,814,784

Applied Automation (UK) Limited

Notes to the Financial Statements for the Year Ended 31 March 2023

Creditors

	Note	2023 £	2022 £
Due within one year
Loans and borrowings	22	2,110,256	1,480,241
Trade creditors		3,771,482	4,307,456
Amounts due to related parties		569,246	27,713
Social security and other taxes		721,739	288,149
Outstanding defined contribution pension costs		25,665	21,569
Other payables		175,600	78,293
Accruals		270,284	212,554
Corporation tax liability	13	365,810	135,101
Government grants		4,235	8,526
Payments on account		8,265,646	7,407,019
		16,279,963	13,966,621
Due after one year
Government grants		38,175	42,410

19	Provisions for liabilities

	Warranties £	Deferred tax £	Total £
At 1 April 2022	10,000	116,533	126,533
Additional provisions	-	10,459	10,459
At 31 March 2023	10,000	126,992	136,992

Applied Automation (UK) Limited

Notes to the Financial Statements for the Year Ended 31 March 2023

20	Pension and other schemes

Defined contribution pension scheme

The company operates two defined contribution pension schemes. The pension cost charge for the year represents contributions payable by the company to the schemes and amounted to £108,303 (2022 - £110,984).

Contributions totalling £25,665 (2022 - £21,569) were payable to the scheme at the end of the year and are included in creditors.

21	Share capital

Allotted, called up and fully paid shares

	2023		2022
	No.	£	No.	£
Ordinary of £1 each	100,000	100,000	100,000	100,000

Rights, preferences and restrictions

Ordinary shares have the following rights, preferences and restrictions:
Each share is entitled to one vote in any circumstances, is entitled pari passu to dividend payments or any other distribution and is entitled pari passu to participate in a distribution arising from a winding up of the company.

Applied Automation (UK) Limited

Notes to the Financial Statements for the Year Ended 31 March 2023

22	Loans and borrowings

	2023 £	2022 £
Current loans and borrowings
Bank overdrafts	271,493	263,662
Other borrowings	1,838,763	1,216,579
	2,110,256	1,480,241

Bank borrowings

HSBC bank overdraft is denominated in Sterling with a variable interest rate. The carrying amount at year end is £271,493 (2022 - £263,662).

Other borrowings

HSBC Invoice Financing is denominated in Sterling. The carrying amount at year end is £1,838,763 (2022 - £1,216,579).

HSBC Invoice Finance has a floating charge on all property, fixtures and fittings and plant and machinery.
The company may not take out any additional security against the charged assets.
The company may not dispose of any part of the fixed charged property.

23	Obligations under leases and hire purchase contracts

Operating leases

The total of future minimum lease payments is as follows:

	2023 £	2022 £
Not later than one year	462,318	313,302
Later than one year and not later than five years	1,407,677	198,517
Later than five years	181,479	-
	2,051,474	511,819

The amount of non-cancellable operating lease payments recognised as an expense during the year was £493,260 (2022 - £497,803).

Applied Automation (UK) Limited

Notes to the Financial Statements for the Year Ended 31 March 2023

Dividends

Interim dividends paid

	2023 £	2022 £
Interim dividend of £5.90 (2022 - £4.90) per each Ordinary	590,000	490,000

Applied Automation (UK) Limited

Notes to the Financial Statements for the Year Ended 31 March 2023

25	Related party transactions

Transactions with the director

2023	At 1 April 2022 £	Advances to director £	Repayments by director £	At 31 March 2023 £
Mr DH Rowe
Directors current account, debit balances at 2% per annum	9,624	38,631	(12,000)	36,255

2022	At 1 April 2021 £	Advances to director £	At 31 March 2022 £
Mr DH Rowe
Directors current account, debit balances at 2% per annum	(50,065)	59,689	9,624

26	Parent and ultimate parent undertaking

The company's immediate parent is Applied Automation (Holdings) Limited, incorporated in England & Wales.

The ultimate controlling party is David Rowe.