Company registration number 05426346 (England and Wales)
AESSEAL MARINE PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
AESSEAL MARINE PLC
COMPANY INFORMATION
Directors
C L Dickinson
A T Stephenson
(Appointed 1 January 2023)
Secretary
C L Dickinson
Company number
05426346
Registered office
Global Technology Centre
Mill Close
Bradmarsh Business Park
Rotherham
S60 1BZ
Auditor
BHP LLP
2 Rutland Park
Sheffield
S10 2PD
AESSEAL MARINE PLC
CONTENTS
Page
Strategic report
1
Directors' report
2
Directors' responsibilities statement
3
Independent auditor's report
4 - 6
Statement of comprehensive income
7
Balance sheet
8
Statement of changes in equity
9
Notes to the financial statements
10 - 20
AESSEAL MARINE PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The directors present the strategic report for the year ended 31 December 2022.
Review of the business
The results for the year to 31 December 2022 were satisfactory with sales improving 6.0% to £1,046,822 (2021: £980,477).
Operating profit has declined by 64.0% to £71,294 (2021: £119,142) mainly due to increased material costs and salaries.
Net assets as at 31 December 2022 were £293,004 (2021: £277,841).
Our confidence for the future is built on the excellence of our product and service offering.
Principal risks and uncertainties
Taking risks is an inherent part of entrepreneurial activity and the assessment of risk is part of our culture. Specifically we give careful consideration to the key risks in our business and how we can best mitigate those risks to meet our business objectives. The key risks affecting the business are:-
Credit risks The group has a very large customer base and a downturn in the economy leads to a slowing of payments from customers in some markets. | | A reduction of profit due to bad debt provisions and write offs. | | The group policy is that new customers are subject to credit checks. Customers have authorised credit limits which are subject to regular review. There is a continued focus on debt recovery, review and reporting at group level. |
Development and performance
The directors believe that the future growth will come from exploring the marine industry further through the successful trials of the AES stern tube seal.
AESSEAL Marine PLC is part of the larger AES Engineering Ltd group whom have continued to strive toward creating a more socially, environmentally, and economically sustainable business. The group regularly reviews its sustainability strategy and as such can positively state that the group went beyond Net Zero in the 12 month period to 30 September 2022, according to figures verified by the leading standards organisation British Standards Institution (BSI).
C L Dickinson
Director
22 June 2023
AESSEAL MARINE PLC
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
The directors present their annual report and financial statements for the year ended 31 December 2022.
Principal activities
The principal activity of the company continued to be that of assembly and distribution of mechanical seals.
Results and dividends
The results for the year are set out on page 7.
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:
C L Dickinson
R J Weaver
(Resigned 3 January 2023)
A T Stephenson
(Appointed 1 January 2023)
Auditor
In accordance with the company's articles, a resolution proposing that BHP LLP be reappointed as auditor of the company will be put at a General Meeting.
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
C L Dickinson
Director
22 June 2023
AESSEAL MARINE PLC
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
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.
AESSEAL MARINE PLC
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF AESSEAL MARINE PLC
- 4 -
Opinion
We have audited the financial statements of AESSEAL Marine PLC (the 'company') for the year ended 31 December 2022 which comprise 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 31 December 2022 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.
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.
AESSEAL MARINE PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF AESSEAL MARINE PLC
- 5 -
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.
Extent to which the audit was considered capable of detecting irregularities including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with management, and from our commercial knowledge and experience of the mechanical seals manufacturing and supply sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including Companies Act 2006, taxation legislation, data protections, anti-bribery, employment, environmental and health and safety legislation;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations
AESSEAL MARINE PLC
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF AESSEAL MARINE PLC
- 6 -
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions;
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
investigated the rationale behind significant or unusual transactions;
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentations;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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.
Paul Winwood
Senior Statutory Auditor
For and on behalf of BHP LLP
22 June 2023
Chartered Accountants
Statutory Auditor
2 Rutland Park
Sheffield
S10 2PD
AESSEAL MARINE PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 7 -
2022
2021
Notes
£
£
Turnover
3
1,046,822
980,477
Change in stocks of finished goods and in work in progress
5,785
(10,885)
Raw materials and consumables
(506,905)
(462,541)
Staff costs
6
(269,693)
(235,407)
Depreciation
4
(64,336)
(69,580)
Other operating expenses
(140,379)
(82,922)
Operating profit
4
71,294
119,142
Interest payable and similar expenses
7
(20,552)
(16,814)
Profit before taxation
50,742
102,328
Tax on profit
8
(35,579)
(25,269)
Profit for the financial year
15,163
77,059
The profit and loss account has been prepared on the basis that all operations are continuing operations.
AESSEAL MARINE PLC
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 8 -
2022
2021
Notes
£
£
£
£
Fixed assets
Intangible assets
9
2,722
2,722
Tangible assets
10
382,088
407,810
384,810
410,532
Current assets
Stocks
11
318,784
316,627
Debtors
12
130,885
312,202
Cash at bank and in hand
175,183
88,296
624,852
717,125
Creditors: amounts falling due within one year
13
(201,824)
(100,016)
Net current assets
423,028
617,109
Total assets less current liabilities
807,838
1,027,641
Creditors: amounts falling due after more than one year
14
(490,734)
(725,000)
Provisions for liabilities
Deferred tax liability
15
24,100
24,800
(24,100)
(24,800)
Net assets
293,004
277,841
Capital and reserves
Called up share capital
17
500,000
500,000
Profit and loss reserves
(206,996)
(222,159)
Total equity
293,004
277,841
The financial statements were approved by the board of directors and authorised for issue on 22 June 2023 and are signed on its behalf by:
C L Dickinson
Director
Company Registration No. 05426346
AESSEAL MARINE PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2021
500,000
(299,218)
200,782
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
77,059
77,059
Balance at 31 December 2021
500,000
(222,159)
277,841
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
15,163
15,163
Balance at 31 December 2022
500,000
(206,996)
293,004
AESSEAL MARINE PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 10 -
1
Accounting policies
Company information
AESSEAL Marine PLC is an unlisted public company limited by shares incorporated in England and Wales. The registered office is Global Technology Centre, Mill Close, Bradmarsh Business Park, Rotherham, S60 1BZ.
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 each category of financial instrument; 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 AES Engineering Limited. These consolidated financial statements are available from its registered office at Global Technology Centre, Mill Close, Bradmarsh Business Park, Rotherham S60 1BZ, United Kingdom.
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.
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.
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.
AESSEAL MARINE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 11 -
1.4
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
The costs incurred in registering trademarks have been capitalised. The directors consider the trademarks to be worth at least the amount stated in the balance sheet therefore no amortisation has been charged.
Trademarks
No amortisation charged
1.5
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:
Plant, fixtures and equipment
5 to 25% straight line
Motor vehicles
20 to 25% straight line
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.
1.6
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.
AESSEAL MARINE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 12 -
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.
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.
AESSEAL MARINE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
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.
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
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
AESSEAL MARINE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -
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.
1.14
Foreign exchange
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.
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.
Key sources of estimation uncertainty
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.
Useful economic lives of tangible assets
Tangible fixed assets are stated at cost less accumulated depreciation. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use.
Depreciation is calculated so as to write off the cost of tangible fixed assets, less their estimated residual value, on a straight-line basis over their estimated economic lives.
Stock provisions
Stocks are stated at the lower of cost and net realisable value. Management will assess the requirement for any provision for obsolete stock or value deterioration based on the ageing of stock, historical transactions, regular inspection and counting of physical items.
Bad debt provisions
Trade debtors are stated net of a bad debt provision. Management will assess the requirement for any provision against bad debts based on the ageing of debtors or any specific indicators that a debt is irrecoverable.
3
Turnover and other revenue
The company's turnover relates entirely to its principal activities.
As permitted by the Companies Act 2006 the directors have not disclosed segmental information as they consider it would be seriously prejudicial to the interests of the company.
AESSEAL MARINE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 15 -
4
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£
£
Exchange (gains)/losses
(4,311)
4,145
Depreciation of owned tangible fixed assets
64,336
69,880
Profit on disposal of tangible fixed assets
(300)
Operating lease charges
24,593
24,593
5
Auditor's remuneration
2022
2021
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
14,600
7,290
For other services
Taxation compliance services
1,400
735
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2022
2021
Number
Number
Directors
2
2
Workshop
4
4
Sales and administration
3
6
Total
9
12
Their aggregate remuneration comprised:
2022
2021
£
£
Wages and salaries
241,649
210,378
Social security costs
22,367
19,413
Pension costs
5,677
5,616
269,693
235,407
AESSEAL MARINE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 16 -
7
Interest payable and similar expenses
2022
2021
£
£
Other interest on financial liabilities
20,158
16,814
Other interest
394
20,552
16,814
8
Taxation
2022
2021
£
£
Current tax
UK corporation tax on profits for the current period
9,924
20,469
Adjustments in respect of prior periods
26,355
Total current tax
36,279
20,469
Deferred tax
Origination and reversal of timing differences
(700)
4,800
Total tax charge
35,579
25,269
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:
2022
2021
£
£
Profit before taxation
50,742
102,328
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
9,641
19,442
Adjustments in respect of prior years
26,355
Remeasurement of deferred tax for changes in tax rates
(167)
5,957
Deferred tax not recognised
(15)
(71)
Fixed asset differences
(235)
(59)
Taxation charge for the year
35,579
25,269
AESSEAL MARINE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 17 -
9
Intangible fixed assets
Trademarks
£
Cost
At 1 January 2022 and 31 December 2022
2,722
Amortisation and impairment
At 1 January 2022 and 31 December 2022
Carrying amount
At 31 December 2022
2,722
At 31 December 2021
2,722
10
Tangible fixed assets
Plant, fixtures and equipment
Motor vehicles
Total
£
£
£
Cost
At 1 January 2022
749,308
60,990
810,298
Additions
4,124
34,490
38,614
At 31 December 2022
753,432
95,480
848,912
Depreciation and impairment
At 1 January 2022
341,498
60,990
402,488
Depreciation charged in the year
62,899
1,437
64,336
At 31 December 2022
404,397
62,427
466,824
Carrying amount
At 31 December 2022
349,035
33,053
382,088
At 31 December 2021
407,810
407,810
11
Stocks
2022
2021
£
£
Raw materials and consumables
3,628
Finished goods and goods for resale
318,784
312,999
318,784
316,627
AESSEAL MARINE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
12
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
110,257
129,484
Corporation tax recoverable
7,586
26,355
Amounts owed by group undertakings
7,765
152,877
Other debtors
4,551
Prepayments and accrued income
726
3,486
130,885
312,202
13
Creditors: amounts falling due within one year
2022
2021
£
£
Trade creditors
2,418
10,799
Amounts owed to group undertakings
140,052
25,936
Corporation tax
20,469
Other taxation and social security
5,620
10,709
Other creditors
1,061
1,033
Accruals and deferred income
52,673
31,070
201,824
100,016
Amounts owed to group undertakings includes a loan from the parent company, with a balance of £542,990 (2021: £725,000), and accrued interest of £20,159 (2021: £16,814). The loan has a maximum drawdown of £1,500,000, bears interest at LIBOR + 1.5% and is repayable on or before 31 December 2025.
14
Creditors: amounts falling due after more than one year
2022
2021
£
£
Amounts owed to group undertakings
490,734
725,000
Amounts owed to group undertakings represent a loan from the parent company. The loan has a maximum drawdown of £1,500,000, bears interest at LIBOR + 1.5% and is repayable on or before 31 December 2025.
AESSEAL MARINE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 19 -
15
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
24,400
24,800
Short term timing differences
(300)
-
24,100
24,800
2022
Movements in the year:
£
Liability at 1 January 2022
24,800
Credit to profit or loss
(700)
Liability at 31 December 2022
24,100
16
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
5,677
5,616
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.
17
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
500,000
500,000
500,000
500,000
18
Financial commitments, guarantees and contingent liabilities
Along with the other group undertakings based in the United Kingdom, the company has given security in favour of HSBC Bank plc against group borrowings by way of an unlimited multilateral company guarantee to secure all liabilities of each other, and a debenture giving fixed and floating charges over assets of the company. At 31 December 2022 the overdraft balance in the company was £nil (2021: £nil). The combined net overdraft of the companies covered by the guarantee at 31 December 2022 was £nil (2021: £nil).
In the opinion of the directors, no loss will arise in respect of this matter.
AESSEAL MARINE PLC
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
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:
2022
2021
£
£
Within one year
24,593
24,593
Between two and five years
24,593
24,593
49,186
20
Related party transactions
Controlling Parties
The company is under the control of AES Engineering Limited. The ultimate controlling party is considered to be Mr C J Rea, by virtue of his shareholding in that company.
Related Party Transactions
The company did not enter into any transactions with the directors during the year.
During the year the company traded with subsidiaries of AES Engineering Limited, a company in which C J Rea has an interest. All the transactions were carried out on a normal commercial business.
Advantage has been taken of the exemption in FRS 102 from disclosing transactions with other group entities which are wholly owned members of the group.
Transactions with group entities not wholly owned are as follows. During the year the company made sales of £9,728 (2021: £2,511) to and purchases of £38,025 (2021: £31,161) from group entities not wholly owned. At the statement of financial position date the company had a debtor of £nil (2021: £nil) and a creditor of £7,788 (2021: £3,796) with group entities not wholly owned.
21
Ultimate controlling party
AES Engineering Limited, a company registered in England and Wales, is the company's only parent undertaking and ultimate holding company.
Copies of the accounts of AES Engineering Limited can be obtained from the Registered Office at Global Technology Centre, Mill Close, Bradmarsh Business Park, Rotherham S60 1BZ, United Kingdom.
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