The directors present the strategic report for the year ended 31 May 2023.
The results for the year and financial position of the group are as shown in the annexed financial statements.
The key performance indicators of the company are summarised as follows:
| 2023 |
| 2022 |
|
|
| £ |
| £ |
|
|
Turnover |
| 8,115,493 | 6,009,887 |
|
Gross profit |
| 4,215,836 | 3,092,145 |
|
Gross profit % |
| 51.95% | 51.45% |
|
Proft/(loss) before tax |
| 243,484 | (424,126) |
|
Net profit/(loss) % |
| 3.00% | (7.81%) |
|
At the balance sheet date, the cash at bank was £877,840 (2022 - £419,750), and the total net assets were £3,987,191 (2022 - £4,240,830).
The significant areas on the review of business in respect of the individual companies within the group were as follows:
Seiche Water Technology Group (SWTG) - Parent company
During the year SWTG received income of dividends and interest from its subsidiaries totalling £99,650 (2022 - £146,980). As at 31 May 2023 the company had a bank balance of £173 (2022 – £742). The net assets of the company as at 31 May 2023 were £4,063,756 (2021 - £4,142,055) which consists of investments, VAT, accruals and intercompany loans.
Dividends received during the year from the company’s subsidiaries were £99,650 (2022 - £146,980).
Seiche Limited
During the year the company's turnover has increased by £739,480 to £6,034,415 (2022 - £5,282,280) and had a profit before tax of £466,942 (2022 - £336,714).
The company continues to acquire and build new assets which totalled £448,660 during the year (2022 - 496,922) for continued use in the business to assist in growing turnover and profitability.
The cash reserves at the balance sheet date have decreased during the year by £457,672 to £737,102 (2022 - £279,430) which reflects the company's investment in capex and people. The net assets of the company as at 31 May 2023 were £4,330,972 (2022 - £3,999,959) which shows an overall increase of £331,013 (2022 - £191,827).
Seiche Training Limited
The company's turnover has increased by £63,808 between 2022 and 2023. The total turnover was £106,449 (2022 - £42,641). It is expected that turnover will continue to improve reflecting a market demand for the various visual and acoustic monitoring courses provided.
The cash reserves at the balance sheet date were £26,462 (2022 - £14,492) an increase in cash of £11,970. The net assets of the company have increased by £10,690, with net assets at the balance sheet date of £56,207 (2022 – £45,517). The company continues to be supported by subsidiaries of SWTG.
Ashridge Engineering Limited
The company's turnover has increased by £298,014 to £1,173,141 (2022 - £875,127). The company is increasing the level of turnover post Covid-19 due to increased demand in the industry.
The cash reserves at the balance sheet date have decreased by £46,530 to £45,405 (2022 - £91,935), however the company continues to be supported by other group companies within the SWTG group. The net assets of the company have decreased by £132,719 to £45,558 (2022 - £178,277).
Autonaut Limited
During the year the company's turnover has increased by £788,898 to £1,151,337 (2022 - £362,439).
The cash reserves of the company at the balance sheet date have fallen by £19,525 to £43,302 (2022 - £23,777) and the net assets of the company have decreased by £351,662 to become net liabilities of £237,959 (2022 – £113,703). The company has continued to receive financial support from the SWTG group subsidiary companies.
The company has a deferred tax asset of £262,196 which is not recongised in the financial statements. When the performance of the company improves this asset will start to be utilised and could be recognised in the future balance sheet of the company, once the trade improves sufficently.
Seiche Environmental Ltd
During the year the company had sales of £20,070 (2022: £nil).
The cash reserves of the company at the balance sheet date is £25,196 (2022 - £9,174) and the net assets of the company have increased by £9,885 to £63,267 (2022 - £53,382). The company declared a dividend to Seiche Water Technologies Group Ltd of £nil (2021 - £nil).
Seiche Measurements Limited
Seiche Measurements Limited remained dormant throughout the year. At the balance sheet date the net liabilities of the company were £145 (2022 - £145).
Ashridge Monitoring Limited
Ashridge Monitoring Limited remained dormant throughout the year. At the balance sheet date the net liabilities of the company were £45 (2022 - £45).
Seiche Operations Limited
Seiche Operations Limited at the balance sheet date the net liabilities of the company were £45 (2022 - £45)
On review of the above, the directors consider the overall results of the SWTG group companies to be
within expectations and remain optimistic regarding the group's growth and profitability going forward.
Principal risks and uncertainties
The directors have assessed the risks and uncertainties which could have an impact on the group's long term performance. The group has a risk management structure in place which is designed to highlight business risks at an early stage so that they may be managed within the business cycle. The principal risks facing the business are reviewed quarterly by the board who have identified the key controls needed to be in place to mitigate the risks faced. The broad categories of risk identified are as follows:
Regulatory Risks
The group is subject to laws and regulations, including those that relate to corporate governance, the Companies Act 2006 and FRS102. Failure to comply with these laws and regulations could affect the group's ability to operate. The group engages professional advisers to undertake audits and inspections to test compliance with regulations within their field of expertise to ensure the company is not in any breach of these laws and regulations.
Commercial Risks
There is also a risk that the group fails to generate sufficient margin on management charges to cover the administrative expenses. To mitigate this risk regular reviews of gross margins are undertaken to ensure that the group continues to trade profitably.
General Risks
General risks include loss of assets from fire, flood, sinking, and theft. The level of insurance cover is reviewed annually and, in the event of a significant change during the year to the asset values insured, the level of cover is updated accordingly. A variety of measures are in place to safeguard against theft including security systems and reviews of gross margins achieved.
Fraud risks could result in group assets being misappropriated resulting in a loss to the group. To mitigate the risk of fraud, an appropriate segregation of duties has been established, accounting records are reviewed regularly including reconciliations of control accounts and the financial performance is regularly reviewed.
IT Risks
Computer systems may fail and cause business disruption to trading and the completeness of record keeping. This risk is mitigated by taking daily backups of company data. The business is implementing a Cyber security programme to protect against external crime and fraud.
Financial Risks
Liquidity risk is the risk that the company will encounter difficulty in meeting obligations associated with financial liabilities. The group mitigates this risk by regularly reviewing cash flow and the banking facilities in addition to regular reviews of the financial performance against budgets.
An increase in interest rates could have an adverse impact on profitability. To mitigate this risk a quarterly review of the financial position of the company is undertaken by the board.
Changes in foreign exchange rates could have an adverse impact on profitability. In order to mitigate the currency risk the group maintains multiple currency bank accounts and carries out regular reviews of currency rates.
FUTURE OUTLOOK
The SWTG group will continue to diversify its trade to improve its financial performance and minimise risk. The company continues to expand into other markets and the directors remain optimistic as to the long-term outlook of the group.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 May 2023.
The results for the year are set out on page 10.
Ordinary dividends were paid amounting to £101,000 (2022: £144,000). The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The group invests in research and development in new and existing products and processes and collaborates in projects with customers and educational research facilities and universities. Costs incurred by the group during the period on research and development were as follows:
| 2023 |
| 2022 |
| |
| £ |
| £ |
| |
Seiche Limited |
| 764,722 | 176,551 | ||
Ashridge Engineering Limited |
| 104,019 | 229,498 | ||
Autonaut Limited |
| 35,113 | 297,798 |
The auditor, Azets Audit Services, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. As part of the regular budgeting and forecast review process, the directors have prepared cash flow forecasts covering a period in excess of 12 months from the approval of the financial statements and are satisfied the company will sufficient cash to meet its obligations as they fall due during this period. Accordingly, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
We have audited the financial statements of Seiche Water Technology Group Ltd (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 May 2023 which comprise the group profit and loss account, the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows and notes to the financial statements (1-31), including 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).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent 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 group's and parent 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 other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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 our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company 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.
As explained more fully in the directors' responsibilities statement, 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 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 directors are responsible for assessing the parent 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 parent company or to cease operations, or have no realistic alternative but to do so.
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.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we 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. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Reviewing minutes of meetings of those charged with governance;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the entity through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
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 a 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 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.
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.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £22,701 (2022 - £110,802 profit).
Seiche Water Technology Group Ltd (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is .
The group consists of Seiche Water Technology Group Ltd and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 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 prepared 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 including investment properties held at fair value. The principal accounting policies adopted are set out below.
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company Seiche Water Technology Group Ltd together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.
All financial statements are made up to 31 May 2023. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates.
Investments in joint ventures and associates are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.
If the group’s share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.
Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.
At the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. As part of the regular budgeting and forecast review process, the directors have prepared cash flow forecasts covering a period in excess of 12 months from the approval of the financial statements and are satisfied the company will sufficient cash to meet its obligations as they fall due during this period. Accordingly, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
Turnover is recognised to the extent that the group obtains the right to consideration in exchange for its performance. Turnover 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
Turnover from the sale of goods is recognised when the significant risks and reward of ownership of the goods have passed to the buyer, usually on despatch of the goods, the amount of turnover can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the company and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rendering of services
Turnover from the supply of equipment to costs is recognised based on an assessment of the usage period in which the equipment is used by customers and that the usage period can be measured reliably.
Rental income
Turnover on rental income is recognised based on the level of rental income due, plus any adjustments for the likely consideration received.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
In the event that an internally generated intangible asset arises from the company's development activities then it will be recognised only if all of the following conditions are met:
- an asset is created that can be identified (such as software and new processes);
- the project from which the asset arises meets the company's criteria for assessing technical feasibility;
- it is probable that the asset created will generate future economic benefits; and
- the development cost of the asset can be measured reliably.
Internally generated intangible assets are amortised on a straight-line basis over their useful lives. Where no internally generated intangible asset can be recognised, development expenditure is recognised as an expense in the period it is incurred.
Patents and licences
Royalties acquired have finite useful lives and are carried at cost less any accumulated amortisation and any accumulated impairment losses
Capitalised self-built assets which are available to lease to customers are depreciated over their estimated useful lives at a rate of 20-50% per annum.
The gain or loss arising on the disposal of an asset is determined as a difference between the sale proceeds and the carrying value of the asset, and is credited or charged to the Profit or loss.
AutoNaut vessels whose fair value can be measured reliably are held under the revaluation model and are carried at a revalued amount, being the fair value at the date of valuation less any subsequent accumulated depreciation and subsequent accumulated impairment reviews.
Revaluation gains and losses are recognised in other comprehensive income and accumulated in equity, except to the extent that a revaluation gain reverses a revaluation loss previously recognised in equity, such as gains and losses are recognised in profit or loss.
The consolidated financial statements incorporate the financial statements of the company and entities controlled by the group (its subsidiaries). Control is achieved where the group has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
The results of the subsidiaries acquired or disposed of during the year are included in total comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate using accounting policies consistent with those of the parent. All intra-group transactions, balance, income and expenses are eliminated in full on consideration.
Investments in subsidiaries are accounted for at cost less impairment in the individual financial statements.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the group’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent company financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities.
At each reporting period end date, the group 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.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
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.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and 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, 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.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group 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.
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 group after deducting all of its 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 payments 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.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
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 group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 if, and only if, there is a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
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.
The company operates a defined contribution pension plan for its employees. Contributions are recognised as an expense when they fall due. Amounts due but not yet paid are included within creditors on the balance sheet. The assets of the plan are held separately from the company in independently administered funds. Once contributions to the pension fun have been paid, there is no further obligation to the company.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight line basis over the lease term.
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount 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.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The group has informal lease agreements as a lessor on its investment property and as a lessee it obtains the use of property, plant and equipment. The classification of such leases as operating or finance lease requires the group to determine, based on an evaluation of the terms and conditions of the arrangements, whether it retains or acquires the significant risks and rewards of ownership of these assets and accordingly whether the lease requires an asset and liability to be recognised in the balance sheet.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The group carries its investment property at fair value, with changes in fair value being recognised in the profit and loss. The directors have used two professional market valuations actioned during the current financial year to determine the fair market value of the investment property
The group establishes a reliable estimate of the useful life of intangible assets arising on business combinations. The useful life of these assets is based on contractual provisions on acquisitions, plus a regular review of market conditions (where available) in respect of similar businesses.
The group carries AutoNaut vessels at fair value with movements from revaluation recognised in the revaluation reserve. Management estimations is required to determine the value of AutoNauts, based upon past sales and other information available, such as resale value
Where there are indicators of impairment of individual assets, the group carries out impairment tests of fair value less costs to sell, based on a reasonable estimate on the potential value of assets if they were sold using an arm’s length transaction. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the budgets for the next twelve months and do not include any restructuring activities that has not yet been permitted or significant future investments which will enhance the asset's performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash flows and the growth rate used for extrapolation purposes
The group establishes provisions based on reasonable estimates, for possible consequences of audits by the tax authorities of the consequences of audits by the tax authorities of the countries in which the group operate. The amount of such provisions is based on various factors, such as experience with previous tax audits and differing interpretations of tax regulations by the taxable company and the responsible tax authority.
Management estimation is required to determine the amount of deferred tax assets that can be recognised, based upon likely timing and the level of future taxable profits together with an assessment of the effect of future tax planning strategies.
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The actual charge/(credit) for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
AutoNauts included within Plant & Machinery with a carrying net book value of £252,500 were categorised and revalued on 31 May 2023 based on a Director’s valuation. The valuation is based on the previous sales values and reduced based on anticipated fair value.
The following assets are carried at valuation. If the assets were measured using the cost model, the carrying amounts would be as follows:
The investment property was professionally valued by Vickery Holman on 9 November 2022. The investment value was reviewed by the directors at 31st May 2023.
Details of the company's subsidiaries at 31 May 2023 are as follows:
Seiche Training Limited (company number 09312435) is exempt from the requirements of the Companies Act 2006 relating to the audit of it's individual accounts by virtue of s479A.
The long-term loans are secured by fixed charges over the fixed assets in Ashridge limited and fixed charges over the investment properties in Seiche Limited
The following are the major deferred tax liabilities and assets recognised by the group and company, and movements thereon:
The deferred tax asset set out above is expected to reverse within 12 months and relates to the utilisation of tax losses against future expected profits of the same period.
A deferred tax asset in relation to Autonaut Limited was recongnised in the prior year. In 2024 a deferred tax asset of £262,196 exists but has not been recongnised in the financial statements. If the performance of Autonaut Limited was to improve, this asset would be utilised and a proporition could be recongnised in the balance sheet going forward.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
As at 31 May 2023, two directors holding a participating interest was owed by the company £73 (2022 - £1,422 owed to the company). No interest has been charged on any of these loans as they are considered to be repayable on demand