Company registration number 03806395 (England and Wales)
WATER DIRECT LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
WATER DIRECT LIMITED
COMPANY INFORMATION
Directors
A T Johnson
J C Cockburn
R R Hernandez
S B Llanos
A P Smith
P A Wittet
Company number
03806395
Registered office
The Victor Building
Earls Colne Business Park
Earls Colne
Colchester
CO6 2NS
Auditor
MHA Moore and Smalley
Priory Close
St Marys Gate
Lancaster
LA1 1XB
WATER DIRECT LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Profit and loss account
8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Notes to the financial statements
12 - 24
WATER DIRECT LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 APRIL 2023
- 1 -
Introduction
The directors present the strategic report for the year ended 30 April 2023.
Business review
The Directors are delighted with the performance of the business during 2023. During the Financial Year the Company benefitted from several external tailwinds to deliver revenue of £25.5m (2022: 11.6m), a 119.8% increase compared to the prior financial year, and EBITDA of £9.1m (2021: £4.6 million). As a result of unprecedented demand, the Company had to significantly invest in additional headcount, both temporary and permanent, working capital and resources to service demand which created a slight drag on the GP margin.
Future developments
The Company will seek to develop deeper partnerships with both new and existing customers to ensure the development of our products and services suits their needs, as we seek to be the nation’s most trusted alternative drinking water supplier.
Principal risks and uncertainties
Market and competition risk
The Company is exposed risk that customers may seek to obtain alternative water supplies from elsewhere. Services offered by the business are diversified and the Directors are confident that the Company is innovating and adjusting to challenges to ensure its operations adapt.
Staff retention and recruitment
In order to recruit and retain staff, pay rates and benefits are periodically reviewed and adjusted to be industry leading, alongside the implementation of cultural and training initiatives.
Macro-economic pressures
The Company is exposed to inflationary pressures in its cost base. To retain margins and attract customers, the business continues to innovate, review pricing and optimise processes and procedures.
Financial risk management
The Company’s activities expose it to financial risks that include liquidity and cash flow risk. The Directors monitor these on a regular basis through cash flow modelling and forecasting.
Reputational and compliance risk
The supply of drinking water requires the Company to maintain the highest quality standards and comply with Regulations and best practice operating procedures. The Company ensures all of its technicians are appropriately trained and has unique monitoring, control and assurance systems. More detail can be found at water-direct.co.uk/quality-assurance/drinking-water-quality/.
Contract risk
The Company has a number of guaranteed response contracts with customers. The Company regularly reviews staff and asset availability to ensure we have sufficient resources to meet our contractual obligations.
Key performance indicators
The management team are developing a wide range of metrics, both financial and non-financial to monitor the performance of the business. The principal financial KPIs are sales, gross profit margin and EBITDA.
WATER DIRECT LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 2 -
A T Johnson
Director
1 November 2023
WATER DIRECT LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 APRIL 2023
- 3 -
The directors present their annual report and financial statements for the year ended 30 April 2023.
Principal activities
The principal activity of the company continued to be that of the provision and management of alternative water supply services.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
A T Johnson
J C Cockburn
R R Hernandez
S B Llanos
A P Smith
P A Wittet
Auditor
The auditor, MHA Moore and Smalley, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of principal risks and uncertainties, and future developments.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
A T Johnson
Director
1 November 2023
WATER DIRECT LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 APRIL 2023
- 4 -
The directors are responsible for preparing the annual report 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). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
WATER DIRECT LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF WATER DIRECT LIMITED
- 5 -
Opinion
We have audited the financial statements of Water Direct Limited (the 'company') for the year ended 30 April 2023 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, 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).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 30 April 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.
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 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.
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.
WATER DIRECT LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WATER DIRECT LIMITED
- 6 -
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.
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 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, 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 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 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 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.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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.
Enquiries with management about any known or suspect instances of non-compliance with laws and regulations and fraud;
An evaluation of the risk of management override of controls and subsequent testing, including through testing journal entries and other adjustments for appropriateness;
Auditing the risk of fraud in revenue by way of cut off testing, as well as sales transaction testing to obtain evidence that revenue is complete, has occurred and recognised in the correct accounting period;
An evaluation of the company's internal control environment; and
Reviewing board minutes and resolutions.
Because of the industry in which the client operates we identified the employment law, health and safety and compliance with the UK Companies Act and Tax regulations as the areas most likely to have a material impact on the financial statements.
WATER DIRECT LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF WATER DIRECT LIMITED
- 7 -
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.
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.
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.
Jenny McCabe
Senior Statutory Auditor
For and on behalf of MHA Moore and Smalley
Chartered Accountants
Statutory Auditor
Priory Close
St Marys Gate
Lancaster
LA1 1XB
3 November 2023
WATER DIRECT LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 APRIL 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
25,488,685
11,563,078
Cost of sales
(14,564,760)
(6,242,572)
Gross profit
10,923,925
5,320,506
Administrative expenses
(2,618,892)
(1,718,566)
Other operating income
37,306
102,558
Operating profit
4
8,342,339
3,704,498
Interest receivable and similar income
6
50,469
25,557
Interest payable and similar expenses
7
(51,762)
(39,611)
Profit before taxation
8,341,046
3,690,444
Tax on profit
8
(1,382,820)
(674,103)
Profit for the financial year
6,958,226
3,016,341
The profit and loss account has been prepared on the basis that all operations are continuing operations.
WATER DIRECT LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2023
- 9 -
2023
2022
£
£
Profit for the year
6,958,226
3,016,341
Other comprehensive income
-
-
Total comprehensive income for the year
6,958,226
3,016,341
WATER DIRECT LIMITED
BALANCE SHEET
AS AT
30 APRIL 2023
30 April 2023
- 10 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
666,415
1,368,490
Current assets
Stocks
11
652,258
127,791
Debtors
12
5,306,384
2,764,901
Cash at bank and in hand
5,176,202
1,685,307
11,134,844
4,577,999
Creditors: amounts falling due within one year
13
(2,776,408)
(3,591,182)
Net current assets
8,358,436
986,817
Total assets less current liabilities
9,024,851
2,355,307
Creditors: amounts falling due after more than one year
14
(288,682)
Net assets
9,024,851
2,066,625
Capital and reserves
Called up share capital
18
1,500
1,500
Profit and loss reserves
9,023,351
2,065,125
Total equity
9,024,851
2,066,625
The financial statements were approved by the board of directors and authorised for issue on 1 November 2023 and are signed on its behalf by:
A T Johnson
Director
Company Registration No. 03806395
WATER DIRECT LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2023
- 11 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 May 2021
1,500
3,996,785
3,998,285
Year ended 30 April 2022:
Profit and total comprehensive income for the year
-
3,016,341
3,016,341
Dividends
9
-
(4,948,001)
(4,948,001)
Balance at 30 April 2022
1,500
2,065,125
2,066,625
Year ended 30 April 2023:
Profit and total comprehensive income for the year
-
6,958,226
6,958,226
Balance at 30 April 2023
1,500
9,023,351
9,024,851
WATER DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 APRIL 2023
- 12 -
1
Accounting policies
Company information
Water Direct Limited is a private company limited by shares incorporated in England and Wales. The registered office is The Victor Building, Earls Colne Business Park, Earls Colne, Colchester, CO6 2NS.
1.1
Accounting convention
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. The principal accounting policies adopted are set out below.
This 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:
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 financial statements of the company are consolidated in the financial statements of Soris Acquisations Limited 30 April 2023. These consolidated financial statements are available from its registered officee The Victor Building, Earls Colne Business Park, Earls Colne, Colchester, CO2 2NS.
1.2
Going concern
Atruet 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. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
WATER DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 13 -
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from contracts for the provision of professional services is recognised by reference to the stage of completion when the stage of completion, costs incurred and costs to complete can be estimated reliably. The stage of completion is calculated by comparing costs incurred, mainly in relation to contractual hourly staff rates and materials, as a proportion of total costs. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that it is probable will be recovered.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Freehold land and buildings
20%
Plant and equipment
10% - 20%
Computers
33%
Motor vehicles
10% - 50%
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible 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.
WATER DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 14 -
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.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
Stocks held for distribution at no or nominal consideration are measured at the lower of cost and replacement cost, adjusted where applicable for any loss of service potential.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.7
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.
1.8
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 balance sheet 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.
WATER DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 15 -
Other financial assets
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.
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 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.
WATER DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 16 -
Other financial liabilities
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.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company 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 company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current 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 relate to taxes levied by the same tax authority.
WATER DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
1
Accounting policies
(Continued)
- 17 -
1.11
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.
1.12
Retirement benefits
The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit and loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in Independently administered funds.
1.13
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
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 leases 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.
WATER DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 18 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Lease Commitments
The company has entered into a range of lease commitments in respect of property, plant and equipment. The classification of these leases as either financial or operating leases require the directors to consider whether the terms and conditions of each lease are such that the company has acquired the risks and rewards associated with the ownership of the underlying assets.
3
Turnover and other revenue
The whole of the turnover is attributable to the principal activity of the company.
All turnover arose within the United Kingdom.
2023
2022
£
£
Other revenue
Interest income
50,469
25,557
4
Operating profit
2023
2022
Operating profit for the year is stated after charging/(crediting):
£
£
Fees payable to the company's auditor for the audit of the company's financial statements
37,505
22,072
Depreciation of owned tangible fixed assets
748,686
856,765
Profit on disposal of tangible fixed assets
(90,627)
(45,563)
Operating lease charges
329,284
253,947
WATER DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 19 -
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Employees
68
53
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,232,440
2,334,860
Social security costs
371,451
273,397
Pension costs
82,871
62,850
3,686,762
2,671,107
6
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
49,846
63
Interest receivable from group companies
25,494
Other interest income
623
Total income
50,469
25,557
7
Interest payable and similar expenses
2023
2022
£
£
Interest on finance leases and hire purchase contracts
20,976
26,553
Other interest
30,786
13,058
51,762
39,611
8
Taxation
2023
2022
£
£
Current tax
UK corporation tax on profits for the current period
1,450,115
785,139
WATER DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
8
Taxation
2023
2022
£
£
(Continued)
- 20 -
Deferred tax
Origination and reversal of timing differences
(67,295)
(100,517)
Changes in tax rates
(10,519)
Total deferred tax
(67,295)
(111,036)
Total tax charge
1,382,820
674,103
In March 2021 the Chancellor confirmed, in the budget, an increase in the corporation tax rate from 19% to 25%. The Finance Bill 2021 had its third reading on 24 May 2021 and is now considered substantively enacted. The timing differences expected to reverse on or after 1 April 2023 have been accounted for at 25%.
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit before taxation
8,341,046
3,690,444
Expected tax charge based on the standard rate of corporation tax in the UK of 19.49% (2022: 19.00%)
1,625,937
701,184
Tax effect of expenses that are not deductible in determining taxable profit
1,659
1,677
Adjustments in respect of prior years
(59,417)
Effect of change in corporation tax rate
(15,914)
(25,586)
Group relief
(168,735)
Permanent capital allowances in excess of depreciation
(710)
(3,172)
Taxation charge for the year
1,382,820
674,103
9
Dividends
2023
2022
£
£
Interim paid
4,948,001
WATER DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 21 -
10
Tangible fixed assets
Freehold land and buildings
Plant and equipment
Computers
Motor vehicles
Total
£
£
£
£
£
Cost
At 1 May 2022
209,331
1,072,603
58,212
3,141,559
4,481,705
Additions
7,188
6,425
35,421
49,034
Disposals
(4,783)
(149,158)
(153,941)
At 30 April 2023
209,331
1,075,008
64,637
3,027,822
4,376,798
Depreciation and impairment
At 1 May 2022
139,344
725,352
42,024
2,206,495
3,113,215
Depreciation charged in the year
40,735
170,215
11,609
526,127
748,686
Eliminated in respect of disposals
(2,583)
(148,935)
(151,518)
At 30 April 2023
180,079
892,984
53,633
2,583,687
3,710,383
Carrying amount
At 30 April 2023
29,252
182,024
11,004
444,135
666,415
At 30 April 2022
69,987
347,251
16,188
935,064
1,368,490
11
Stocks
2023
2022
£
£
Finished goods and goods for resale
652,258
127,791
12
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
3,125,506
1,736,128
Amounts owed by group undertakings
1,222,694
Other debtors
200
Prepayments and accrued income
746,544
884,228
5,094,744
2,620,556
2023
2022
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 16)
211,640
144,345
Total debtors
5,306,384
2,764,901
WATER DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 22 -
13
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Obligations under finance leases
15
295,560
473,234
Trade creditors
811,391
622,633
Amounts owed to group undertakings
391,251
Corporation tax
293,916
466,708
Other taxation and social security
465,071
598,155
Other creditors
72,692
459,601
Accruals and deferred income
837,778
579,600
2,776,408
3,591,182
14
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Obligations under finance leases
15
288,682
15
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
295,560
473,234
In two to five years
288,682
295,560
761,916
16
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2023
2022
Balances:
£
£
Accelerated capital allowances
211,640
144,345
WATER DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
16
Deferred taxation
(Continued)
- 23 -
2023
Movements in the year:
£
Asset at 1 May 2022
(144,345)
Credit to profit or loss
(67,295)
Asset at 30 April 2023
(211,640)
17
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
82,871
62,850
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
18
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary Shares of £1 each
1,500
1,500
1,500
1,500
19
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
328,500
315,000
Between two and five years
1,049,333
1,230,991
In over five years
113,750
218,750
1,491,583
1,764,741
WATER DIRECT LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 APRIL 2023
- 24 -
20
Capital commitments
Amounts contracted for but not provided in the financial statements:
2023
2022
£
£
Acquisition of tangible fixed assets
44,500
-
21
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Sales
Sales
Purchases
Purchases
2023
2022
2023
2022
£
£
£
£
Entities with control, joint control or significant influence over the company
650
175,610
27,760
Interest charged
2023
2022
£
£
Entities with control, joint control or significant influence over the company
-
25,494
The purchases in 2023 from related parties is split between directors services of £70,000 and a monitoring and advisory fee of £105,610.
The prior year related party transaction relate to transactions pre-acquisition (4 March 2022) within the previous ownership Group.
Other information
The company has taken advantage of the disclosure exemption relating to section 33.1A of the standard with regards to the requirement of disclosing transactions with fellow group entities.
22
Ultimate controlling party
The ultimate holding company is Soris Acquisition Limited, a company registered in England and Wales.
In the opinion of the directors there in no ultimate controlling party.
Copies of the consolidated financial statements of Soris Acquisition Limited, which is both the smallest and largest group for which consolidated financial statements are prepared, may be obtained from Soris Acquisition Limited, The Victor Building, Earls Colne Business Park, Earls Colne, Colchester, CO2 2NS.
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