Kooltech Limited - Limited company accounts 23.2

REGISTERED NUMBER: SC293806 (Scotland)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 OCTOBER 2023

FOR

KOOLTECH LIMITED

Page

Company Information

1

Strategic Report

2

Report of the Directors

5

Report of the Independent Auditors

8

Statement of Comprehensive Income

12

Balance Sheet

13

Statement of Changes in Equity

14

Notes to the Financial Statements

15

DIRECTORS:

J M M Sharp

Mrs J Gray

Mrs S H Sharp

SECRETARY:

Mrs J Gray

REGISTERED OFFICE:

Strathaird

12 Mossland Road

Hillington Park

Glasgow

G52 4XZ

REGISTERED NUMBER:

SC293806 (Scotland)

SENIOR STATUTORY AUDITOR:

Susan Wood

AUDITORS:

Cornerstone Glasgow Ltd, Statutory Auditor

6th Floor

Gordon Chambers

90 Mitchell Street

Glasgow

Lanarkshire

G1 3NQ

BANKERS:

Barclays Bank PLC

Aurora Building

120 Bothwell Street

Glasgow

G2 7JT

The directors present their strategic report for the year ended 31 October 2023.

REVIEW OF BUSINESS

The directors are very pleased with the company's trading performance in the period with turnover increasing by 18.6% from 2022. The balance sheet position continues to be strong, with net assets of £18m representing an increase of £4m from 2022. The company has been able to finance the growth in recent years without taking on any debt. Profitability has also been excellent with an operating profit of £4m delivered in 2023.

The above represents an excellent achievement in a challenging economic environment and is a testament to the staff and business' ability to be adaptable and flexible in its own operations to meet customer demands, requirements and expectations.

Financial Key Performance Indicators (KPIs)

The directors use the KPIs of turnover, gross and net profit margins to review the company's performance during the year.

2023

2022

Growth in turnover

18.6%

20.5%

Gross profit percentage

12.8%

13.9%

Operating profit percentage

6.5%

8.2%

The company also maintained their status as a Certified Carbon Neutral Business during the year ended 31 October 2023. This represents a significant non-financial KPI for the business and is an ongoing focus for the business which has set a target of becoming carbon negative by the end of 2024.

PRINCIPAL RISKS AND UNCERTAINTIES

Financial Risk Management

The company's principal financial instruments comprise cash.

The company has various other financial instruments such as trade debtors and creditors that arise directly from its trading operations.

The main risks arising from the company's financial instruments are with liquidity and credit. The company has clear policies for managing these risks as summaries below.

Liquidity Risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. Investment levels and cash flows are carefully controlled, with authorisation limits operating at different levels up to company board level.

Credit Risk

Risk of financial loss due to a counterparts failure to honour its obligations arises principally in relation to transactions where the group provides goods on deferred credit terms. Company policies are aimed at minimising such losses, and require that deferred credit terms are granted only to customers who demonstrate an appropriate payment history and satisfy creditworthiness procedures.

Cash Flow Risk

The company finances on-going activities and capital expenditure through a combination of retained profits and bank borrowings. The company operates a strict regime of working capital management to mitigate cash flow risk. Detailed financial planning and regular monitoring of cash flow are used to manage the facilities and maintain the company's adherence with repayment schedules.

Competitive Risk Management

The company operates in a competitive environment; however the directors consider that the company, through its continued investment in information systems, relocation/refurbishment of sites and own branded products is well placed to continue developing the company's market share.

Uncertainties and Prospects

The main uncertainties facing the company is the extent to which competitors can gain market share from the company's target markets together with the costs of labour, energy and fuel being extremely volatile in the current economic environment.

The directors consider that the company is well placed, with its investment in facilities and key personnel, to meet available opportunities for growth within its target markets for the foreseeable future.

Future Developments

Despite the above uncertainties, the Board are extremely positive about the future outlook of the business for the following reasons:

-Acquisition of Kooltech Ltd by Wolseley Group Ltd - a deal was signed in December 2022 and will complete following review of the acquisition by the Competition Market Authority (CMA) which is expected to be concluded in March 2024.

- Legislative changes and the drive to net zero - the built environment, both domestically and commercially, is being required through legislative change and the increased role of social responsibility, to reduce its carbon footprint on the environment. These changes are driving demand for sustainable heating and cooling solutions which Kooltech are well placed to take advantage of.

SECTION 172(1) STATEMENT

Employees

At the core of Kooltech's success lies the staff employed by the company therefore ensuring their wellbeing is a focus for the management team. This focus has been heightened by the cost of living challenges affecting us all and we have introduced a number of measures to ensure that Kooltech is able to retain and attract the best possible people. These measures include regular reviews of remuneration packages, terms and conditions and employee incentives.

Product quality control

Maintaining a high level of quality in our products is critically important to the company and this applies both to our manufactured products as well as the products purchased for resale.

To mitigate the risk of product recalls and warranty claims, the company has a stringent quality control process in place for its manufactured products and only partners with suppliers with similar outlooks and controls on product quality. Quality control, supplier reviews and audits are performed by suitably qualified and experienced people who report to the company's management team.

Customers and suppliers

Strongly dependent on meeting company objectives is the need for strong and mutually beneficial relationships with suppliers and customers. Both customers and suppliers are kept up to date with business achievements, future strategy and ongoing business activities with a view to creating, nurturing and developing long term partnerships. Key customers and suppliers were personally contacted by the company to notify them of the decision to sell the company to Wolseley Group Ltd.

Environmental liabilities

The company conducts its operations in such a manner to ensure compliance with environmental laws and regulations. The company engages with a third party consultant to ensure compliance with laws and regulations and the business performs regular reviews to ensure the required standards are met. Where standards are not met then corrective action is taken to remedy the situation.

High standards of business conduct

The management team recognise the importance of conducting business in a way that is ethical and to a high standard. All members of staff undergo training appropriate to their role within the business to ensure these standards are adopted and adhered to.

Kooltech has adopted its own "Core Values" which has people, service, focus and integrity at the forefront of the values. This culture is adopted by the business in everyday operations when engaging with staff, customers, suppliers and other stakeholders.

ON BEHALF OF THE BOARD:

Mrs J Gray - Director

28 March 2024

The directors present their report with the financial statements of the company for the year ended 31 October 2023.

PRINCIPAL ACTIVITIES

The principal activities of the company in the year under review were those of the manufacture, assembly, wholesaling and servicing of refrigeration equipment together with consultancy assignments.

DIVIDENDS

Dividends of £Nil were paid during the year (2022: £nil).

POST BALANCE SHEET EVENTS

Information relating to events since the end of the year is included as part of Future Developments within the Strategic Report and included in the notes to the financial statements.

DIRECTORS

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

J M M Sharp

Mrs J Gray

Mrs S H Sharp

RESEARCH AND DEVELOPMENT

The Company partners and works closely with Mitsubishi Electric to develop niche solutions for Mitsubishi Electric equipment when used in a commercial or domestic setting. Regular workshops are held between both parties to identify research and development opportunities for assessment. During the year Kooltech looked to develop a solution to install isolation valves onto Mitsubishi Hybrid VRF system which was successfully achieved.

As well as the development partnership with Mitsubishi, the Company looked to explore how indoor air quality could be improved through the prevention and removal of contaminants in the air. Whilst we were unable to identify our own solution we did partner with a US firm who provides a solution in the form of needle point bi-polar ionisation and our challenge was to safely interface this solution with the existing ventilation and air conditions products we have access to which we achieved.

STREAMLINED ENERGY AND CARBON REPORTING

The company recognises that it has a responsibility to the environment and endeavours to be as environmentally friendly as possible in our business activities. We recognise our responsibility to mitigate the impact of our operations on climate change.

Quantification and reporting methodology

We have reported on all the emission sources required under the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013. This report complies with the requirements of Streamlined Energy and Carbon Reporting (SECR). Our calculations for greenhouse gas emissions are in line with the methodology set out in the UK Government's Environmental Reporting Guidelines, 2019 together with the UK Government GHG Conversion Factors.

Measures taken to improve energy efficiency

The company has set an ambitious target of becoming carbon negative by the end of 2024 therefore we are continually analysing ways in which we can reduce how much energy we consume as a business.

The consumption and emissions data for the organisation has been collated and is summarised below for the years ended 31 March 2023 and 31 March 2022:

Source of Energy& Emissions

Energy

Consumption

GHG

Emissions

(MWH)

(tCO2)

2023

2022

2023

2022

Combustion of natural gas

3

3

0.5

0.6

Combustion of fuel in Company vehicles

894

780

223.4

187.8

Scope 1 total

897

783

223.9

188.4

Generation of purchased electricity

420

397

81.2

76.8

Scope 2 total

420

397

81.2

76.8

Combustion of fuel in staff owned/rented vehicles

263

237

77.2

62.8

Scope 3 total

263

237

77.2

62.8

Grand total

1,580

1,417

382

328

Turnover £m

65

55

65

55

Intensity Ratio

24.3

25.8

5.9

6.0

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;

-	state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

-	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.

ON BEHALF OF THE BOARD:

Mrs J Gray - Director

28 March 2024

Opinion

We have audited the financial statements of Kooltech Limited (the 'company') for the year ended 31 October 2023 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity 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 October 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 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 six, 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 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 the financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures to respond to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we consider the following:

- The nature of the industry, control environment and business performance of the company

- The requests of our enquires with management and Directors about their own identification and assessment of

risks of irregularities.

- The matters discussed among the audit engagement team regarding how and where fraud might occur in the

financial statements and any potential indicators of fraud.

As a result of these procedures, we consider the opportunities and incentives that may exist within the company for fraud. In common with all audits under ISAs (UK), we perform specific procedures to respond to the risk of management override.

We also obtain an understanding of the legal and regulatory environment in which the company operates, focusing on those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements and those which may be fundamental to the company's ability to operate.

The most significant laws and regulations that have an indirect impact on the financial statements are those in relation to The Health and Safety at Work Act, and compliance with the FRS 102 and the Companies Act 2006.

The audit engagement team identified the risk of management override of controls, revenue recognition and stock valuation and compliance as the areas where the financial statements were most susceptible to material misstatement due to fraud. Audit procedures for management override of controls performed included but were not limited to testing manual journal entries and other adjustments and evaluating the business rationale in relation to significant, unusual transactions and transactions entered into outside the normal course of business. For revenue recognition procedures included but were not limited to testing revenue substantively, cut-off testing and testing of credit notes. For stock valuation and compliance procedures included but were not limited to stock take attendance, cost testing and review of legal fees and enquiring with management about any non compliance.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control.

- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

- Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the company to cease to continue as a going concern.

- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Use of 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.

Susan Wood (Senior Statutory Auditor)

for and on behalf of Cornerstone Glasgow Ltd, Statutory Auditor

6th Floor

Gordon Chambers

90 Mitchell Street

Glasgow

Lanarkshire

G1 3NQ

28 March 2024

TURNOVER

65,249,423

55,006,699

Cost of sales

56,905,667

47,347,213

GROSS PROFIT

8,343,756

7,659,486

Administrative expenses

4,079,822

3,411,241

4,263,934

4,248,245

Other operating income

-

250,000

OPERATING PROFIT

4

4,263,934

4,498,245

Interest receivable and similar income

275,541

102,041

4,539,475

4,600,286

Interest payable and similar expenses

6

12,000

12,113

PROFIT BEFORE TAXATION

4,527,475

4,588,173

Tax on profit

7

1,030,063

849,028

PROFIT FOR THE FINANCIAL YEAR

3,497,412

3,739,145

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

3,497,412

3,739,145

FIXED ASSETS

Tangible assets

8

833,159

392,947

Investments

9

-

50,000

833,159

442,947

CURRENT ASSETS

Stocks

10

5,410,157

5,026,358

Debtors

11

25,292,160

22,059,932

Investments

12

98,900

98,900

Cash at bank and in hand

4,715,478

2,510,163

35,516,695

29,695,353

CREDITORS

Amounts falling due within one year

13

18,058,067

15,477,137

NET CURRENT ASSETS

17,458,628

14,218,216

TOTAL ASSETS LESS CURRENT LIABILITIES

18,291,787

14,661,163

PROVISIONS FOR LIABILITIES

17

146,565

13,353

NET ASSETS

18,145,222

14,647,810

CAPITAL AND RESERVES

Called up share capital

18

1,000

1,000

Capital redemption reserve

19

1

1

Retained earnings

19

18,144,221

14,646,809

SHAREHOLDERS' FUNDS

18,145,222

14,647,810

The financial statements were approved and authorised for issue by the Board of Directors and authorised for issue on 28 March 2024 and were signed on its behalf by:

Mrs J Gray - Director

Called up

Capital

share

Retained

redemption

Total

capital

earnings

reserve

equity

£

£

£

£

Balance at 1 November 2021

1,000

10,907,664

1

10,908,665

Changes in equity

Total comprehensive income

-

3,739,145

-

3,739,145

Balance at 31 October 2022

1,000

14,646,809

1

14,647,810

Changes in equity

Total comprehensive income

-

3,497,412

-

3,497,412

Balance at 31 October 2023

1,000

18,144,221

1

18,145,222

1.	STATUTORY INFORMATION

Kooltech Limited is a private company, limited by shares , registered in Scotland. The company's registered number and registered office address can be found on the Company Information page.

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" ("FRS 102") and the requirements of the Companies Act 2006.

The financial statements are presented in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies are set out below.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows;

•

the requirement of paragraph 3.17(d);

•

the requirement of paragraph 33.7.

Significant judgements and estimates

In the application of the company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying value of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Critical judgements

The following judgements (apart from those involving estimates) have had the most significant effect on the financial statements.

Stock

In arriving at the valuation of stock it may be necessary for management to make an assessment over the carrying value of stock items and where applicable apply a provision to amend this carrying value to a more accurate level. These provisions are arrived at using management's knowledge and understanding of the business and the industry in which it operates and focuses on potentially obsolete or old items for which the full value may no longer be recoverable.

Turnover

Turnover is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates and value added tax. The following criteria must also be met before revenue is recognised:

Sale of goods

Turnover from the sale of goods is recognised on despatch from the company's warehouse facility.

Tangible fixed assets

Tangible fixed assets are initially recorded at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

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

Plant and machinery

- 20% on a straight line basis

Fixtures & computer equipment

- 20% on a straight line basis

Motor vehicles

- 25% on a straight line basis

Impairment of fixed assets

At each reporting end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Investments in subsidiaries

Investments in subsidiary undertakings are recognised at cost less any provision for impairment.

Stocks

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

Cost is calculated using the first-in, first-out method and includes all purchase, transport, and handling costs in bringing stocks to their present location and condition.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current Tax

The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities.

Foreign currencies

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

Pension costs and other post-retirement benefits

The company contributes to a defined contribution pension scheme on behalf of its staff and directors. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

Investments

Fixed asset and current asset investments are stated at cost less amounts written off for permanent diminution in value.

The company's subsidiary has not been consolidated. Group accounts have not been prepared and these financial statements present information about the company as an individual undertaking. The company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its subsidiary undertaking are included in the consolidated financial statements of its parent, Kooltech Holdings Limited, a company registered in Scotland.

Financial instruments

The company has elected to apply the provisions of Section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instruments Issues' of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset's original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company's contractual obligations expire or are discharged or cancelled.

Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Debtors and creditors receivable / payable within one year

Debtors and creditors with no stated interest rate and receivable or payable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the profit and loss account in other administrative expenses.

3.	EMPLOYEES AND DIRECTORS

2023

2022

£

£

Wages and salaries

5,602,018

4,869,443

Social security costs

583,898

521,363

Other pension costs

415,954

300,222

6,601,870

5,691,028

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

2023

2022

Admin

14

13

Sales

93

81

Manufacturing

14

14

121

108

2023

2022

£

£

Directors' remuneration

260,804

360,886

Directors' pension contributions to money purchase schemes

9,697

9,163

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

Money purchase schemes

1

1

Information regarding the highest paid director is as follows:

2023

2022

£

£

Emoluments etc

143,871

150,900

Pension contributions to money purchase schemes

9,697

9,163

4.	OPERATING PROFIT

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

2023

2022

£

£

Depreciation - owned assets

267,126

263,437

Profit on disposal of fixed assets

(50,976

)

(26,500

)

Auditors' remuneration

30,878

24,433

5.	EXCEPTIONAL ITEMS

2023

2022

£

£

Exceptional items

-

250,000

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

2023

2022

£

£

Bank interest

12,000

12,000

Hire purchase

-

113

12,000

12,113

7.

TAXATION

Analysis of the tax charge

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

2023

2022

£

£

Current tax:

UK corporation tax

896,851

901,898

Prior year overprovision

-

(25,276

)

Total current tax

896,851

876,622

Deferred tax

133,212

(27,594

)

Tax on profit

1,030,063

849,028

Reconciliation of total tax charge included in profit and loss

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

2023

2022

£

£

Profit before tax

4,527,475

4,588,173

Profit multiplied by the standard rate of corporation tax in the UK of 22.500% (2022 - 19%)

1,018,682

871,753

Effects of:

Expenses not deductible for tax purposes

36,447

22,395

Income not taxable for tax purposes

(11,470

)

(5,035

)

Capital allowances in excess of depreciation

(84,397

)

-

Depreciation in excess of capital allowances

-

34,068

Prior year overprovision

-

(25,276

)

Deferred tax movement

133,212

(27,594

)

Group relief

(62,411

)

(21,283

)

Total tax charge

1,030,063

849,028