Gear Pump Distributors (UK) Limited |
Strategic Report |
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Review of the business |
Company revenues increased during the year, as a result of passing on increased raw material and finished good costs. When considering the external environmental pressures that have been impressed on businesses, the company's strong balance sheet is a clear source of strength and ongoing security. |
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The Key Performance Indicators used by the business are: |
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Performance in 2022 |
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Performance in 2021 |
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Turnover |
£1.3m |
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£1.1m |
Gross Profit % |
44.4% |
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49.4% |
Net Profit Before Tax % |
4.2% |
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17.5% |
Sales Split % (UK : Europe : Rest of World) |
46% : 36% : 18% |
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51% : 35% : 14% |
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Principal risks and uncertainties |
The company's balance sheet continues to enable the business to be flexible and mitigate external factors that have occurred throughout the financial year. Remaining competitive at a time of increased energy and raw material cost is a key risk. |
The directors are continuing to look at ways in which the company can reduce its environmental impact. UK Government's decision on business support for energy remains a key concern, but is outside the company's control. The company is prepared in the event that a cessation of support occurs. |
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Future developments |
The company envisages a growing market during the next financial year. The company's main KPI remains a strong and stable gross profit margin despite the rise in material cost. |
The focus will be kept on the continued improvement of product quality, availability and service. |
The drivers for growth will be: |
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Continuously improve on the current product offering in order to provide a premium product at competitive pricing points; |
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Delivering products within 48 hours to any location within the company's territory; and |
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Expanding offerings throughout the UK. |
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This report was approved by the board on 30 August 2023 and signed on its behalf. |
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L Jacobs |
Director |
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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 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. |
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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. |
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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. |
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Opinions on other matters prescribed by the Companies Act 2006 |
In our opinion, based on the work undertaken in the course of the audit: |
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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 |
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the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. |
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Matters on which we are required to report by exception |
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: |
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enquiring of management, including obtaining and reviewing supporting documentation concerning policies and procedures relating to the identification, evaluation and compliance with laws and regulations, whether they were aware of any instances of non-compliance, review for actual and potential litigation and claims, detecting and responding to the risks of fraud, whether they have knowledge of any actual, suspected or alleged fraud, and internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations; |
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obtaining an understanding of the legal and regulatory framework that the company operates in, reviewing laws and regulations that may have a direct effect on the financial statements or are fundamental to the company's operations, and ensuring that appropriate financial statements disclosures are made in this respect; and |
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discussing among the engagement team those areas that may be susceptible to irregularities, ensuring that we remain vigilant, sceptical, open-minded, inquisitive and alert to any potential indicators of fraud. |
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performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; |
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assessing and challenging sensitive assumptions and management judgements that form part of significant estimates, looking for indicators of manipulation through management bias; and |
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observing any signs of management override of controls, testing the appropriateness of journal entries and other adjustments, assessing whether any judgements made in making accounting estimates are indicative of potential bias, and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. |
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Stocks |
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Stocks are measured at the lower of cost and estimated selling price less costs to complete and sell, after making due allowance for obsolete and slow-moving stocks. Cost is determined using the first in first out method. The carrying amount of stock sold is recognised as an expense in the period in which the related revenue is recognised. Work in progress is measured at the amount of material costs incurred in pump builds to the reporting date in excess of revenue generated from those jobs. Goods in transit from group suppliers are incorporated into the company's stock once the risks and rewards have substantially passed to the company. |
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Debtors |
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Short term debtors are measured at transaction price (which is usually the invoice price), less any impairment losses for bad and doubtful debts. |
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Creditors |
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Short term creditors are measured at transaction price (which is usually the invoice price). |
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Taxation |
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A current tax liability is recognised for the tax payable on the taxable profit of the current and past periods. Current tax liabilties are not discounted. Deferred taxation implications are not material. |
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Foreign currency translation |
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Transactions in foreign currencies are initially recognised at the rate of exchange ruling at the date of the transaction. At the end of each reporting period foreign currency monetary items are translated at the closing rate of exchange. Non-monetary items that are measured at historical cost are translated at the rate ruling at the date of the transaction. All differences are charged to profit or loss. |
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Leased assets |
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A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. All other leases are classified as operating leases. Operating lease payments are recognised as an expense on a straight line basis over the lease term. |
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Pensions |
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Contributions to defined contribution plans are expensed in the period to which they relate. |
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2 |
Critical accounting estimates and judgements |
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Slow moving stock provision - The company implements a policy of writing down slow moving and older stock items by certain percentages depending on the length of time they have been held in stock, to reduce those relevant items down to their anticipated recoverable value. |
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3 |
Analysis of turnover |
2022 |
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2021 |
£ |
£ |
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Sale of goods |
1,282,459 |
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1,085,357 |
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Services rendered |
34,988 |
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28,282 |
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1,317,447 |
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1,113,639 |
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By geographical market: |
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UK |
604,696 |
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572,337 |
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Europe |
480,001 |
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391,471 |
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Rest of world |
232,750 |
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149,831 |
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1,317,447 |
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1,113,639 |
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4 |
Operating profit |
2022 |
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2021 |
£ |
£ |
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This is stated after charging: |
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Depreciation of owned fixed assets |
4,445 |
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5,341 |
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Operating lease rentals - plant and machinery |
15,123 |
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10,733 |
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Operating lease rentals - land and buildings |
28,519 |
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24,546 |
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Auditors' remuneration for audit services |
3,360 |
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3,200 |
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Key management personnel compensation (including directors' emoluments) |
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67,367 |
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57,657 |
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Impairment of loan to group undertaking (exceptional item) |
126,000 |
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- |
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Carrying amount of stock sold |
649,963 |
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495,630 |
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5 |
Directors' emoluments |
2022 |
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2021 |
£ |
£ |
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Emoluments |
67,367 |
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57,657 |
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Company contributions to defined contribution pension plans |
1,321 |
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1,315 |
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68,688 |
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58,972 |
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Number of directors to whom retirement benefits accrued: |
2022 |
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2021 |
Number |
Number |
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Defined contribution plans |
1 |
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1 |
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6 |
Staff costs |
2022 |
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2021 |
£ |
£ |
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Wages and salaries |
231,849 |
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208,034 |
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Social security costs |
18,082 |
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15,198 |
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Other pension costs |
3,332 |
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3,174 |
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253,263 |
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226,406 |
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Average number of employees during the year |
Number |
Number |
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Administration |
2 |
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2 |
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Development |
1 |
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1 |
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Manufacturing |
4 |
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5 |
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7 |
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8 |
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7 |
Interest payable |
2022 |
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2021 |
£ |
£ |
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Other interest payable |
- |
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11 |
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8 |
Taxation |
2022 |
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2021 |
£ |
£ |
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Analysis of charge in period |
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Current tax: |
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UK corporation tax on profits of the period |
36,000 |
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37,884 |
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Adjustments in respect of previous periods |
- |
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(23) |
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36,000 |
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37,861 |
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Tax on profit on ordinary activities |
36,000 |
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37,861 |
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Factors affecting tax charge for period |
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The differences between the tax assessed for the period and the standard rate of corporation tax are explained as follows: |
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2022 |
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2021 |
£ |
£ |
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Profit on ordinary activities before tax |
55,446 |
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194,962 |
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Standard rate of corporation tax in the UK |
19% |
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19% |
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£ |
£ |
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Profit on ordinary activities multiplied by the standard rate of corporation tax |
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10,535 |
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37,043 |
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Effects of: |
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Expenses not deductible for tax purposes |
25,139 |
|
60 |
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Depreciation for period in excess of capital allowances |
326 |
|
781 |
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Adjustments to tax charge in respect of previous periods |
- |
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(23) |
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Current tax charge for period |
36,000 |
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37,861 |
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Factors that may affect future tax charges |
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Substantively enacted by Finance Bill on 24 May 2021 and receiving Royal Assent on 10 June 2021, Finance Act 2021 increases the main rate of corporation tax from 19% to 25% from 1 April 2023. |
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9 |
Tangible fixed assets |
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Plant and machinery |
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At cost |
£ |
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Cost or valuation |
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At 1 December 2021 |
103,104 |
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Additions |
1,796 |
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At 30 November 2022 |
104,900 |
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Depreciation |
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At 1 December 2021 |
86,845 |
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Charge for the year |
4,445 |
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At 30 November 2022 |
91,290 |
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Carrying amount |
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At 30 November 2022 |
13,610 |
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At 30 November 2021 |
16,259 |
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10 |
Stocks |
2022 |
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2021 |
£ |
£ |
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Work in progress |
22,882 |
|
26,143 |
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Finished goods and goods for resale |
663,960 |
|
455,945 |
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686,842 |
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482,088 |
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11 |
Debtors |
2022 |
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2021 |
£ |
£ |
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Trade debtors |
220,764 |
|
158,374 |
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Amounts due from group undertakings |
|
133,000 |
|
222,000 |
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Other debtors |
- |
|
8,593 |
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Prepayments and accrued income |
24,349 |
|
14,765 |
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|
378,113 |
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403,732 |
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12 |
Creditors: amounts falling due within one year |
2022 |
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2021 |
£ |
£ |
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Trade creditors |
43,161 |
|
22,813 |
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Amounts owed to group undertaking |
|
261,863 |
|
88,493 |
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Corporation tax |
5,684 |
|
- |
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Other taxes and social security costs |
23,678 |
|
6,245 |
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Other creditors |
29,889 |
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33,009 |
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364,275 |
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150,560 |
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13 |
Share capital |
Nominal |
|
2022 |
|
2022 |
|
2021 |
value |
Number |
£ |
£ |
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Allotted, called up and fully paid: |
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Ordinary shares |
£1 each |
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10 |
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10 |
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10 |
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The Ordinary shares have attached to them full voting, dividend and capital distribution (including on winding up) rights. They do not confer any rights of redemption. |
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14 |
Profit and loss account |
2022 |
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2021 |
£ |
£ |
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At 1 December |
1,406,871 |
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1,249,770 |
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Profit for the financial year |
19,446 |
|
157,101 |
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At 30 November |
1,426,317 |
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1,406,871 |
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15 |
Other financial commitments |
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Total future minimum lease payments under non-cancellable operating leases: |
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Land and buildings |
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Land and buildings |
Other |
Other |
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|
2022 |
|
2021 |
|
2022 |
|
2021 |
£ |
£ |
£ |
£ |
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Falling due: |
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within one year |
26,570 |
|
28,412 |
|
14,181 |
|
8,664 |
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within two to five years |
- |
|
28,854 |
|
40,334 |
|
15,779 |
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in over five years |
- |
|
- |
|
6,386 |
|
- |
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|
26,570 |
|
57,266 |
|
60,901 |
|
24,443 |
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16 |
Related party transactions |
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The company has taken advantage of the exemption provisions under paragraph 33.1A of FRS102 from disclosing transactions with wholly owned group companies. |
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17 |
Controlling party |
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The company is wholly owned by Hudaco Trading (Proprietary) Limited, a company incorporated in the Republic of South Africa. The directors regard the ultimate parent company to be Hudaco Industries Limited incorporated in the Republic of South Africa. That company is not under the control of any one individual. The largest and smallest group of undertakings to which the company belongs and which draws up consolidated accounts is Hudaco Industries Limited. The consolidated accounts are publicly available on their website or can be obtained from 1st Floor, Building 9, Greenstone Hill Office Park, Emerald Boulevard, Greenstone Hill, Edenvale (Private Bag 13, Elandsfontein, 1406). |
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18 |
Presentation currency |
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The financial statements are presented in Sterling. |
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19 |
Legal form of entity and country of incorporation |
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Gear Pump Distributors (UK) Limited is a private company limited by shares and incorporated in England. |
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20 |
Principal place of business |
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The address of the company's principal place of business and registered office is: |
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Unit 14 Aston Fields Trading Estate |
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Sugarbrook Road |
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Bromsgrove |
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Worcestershire |
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B60 3DW |